S-3

As filed with the Securities and Exchange Commission on April 2, 2013.

Registration No. 333-            

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

CEI Funding LLC OE Funding LLC TE Funding LLC

(Registrants and Issuers of the Phase-In-Recovery Bonds)

(Exact name of registrant as specified in its charter)

Delaware	Delaware	Delaware
(State or other jurisdiction of incorporation or organization)	(State or other jurisdiction of incorporation or organization)	(State or other jurisdiction of incorporation or organization)
46-1367273	46-1367425	46-1367453
(I.R.S. Employer Identification No.)	(I.R.S. Employer Identification No.)	(I.R.S. Employer Identification No.)

The Cleveland Electric Illuminating Company Ohio Edison Company The Toledo Edison Company

(Registrants, Sponsors, Sellers and Initial Servicers)

(Exact name of registrant as specified in its charter)

Ohio	Ohio	Ohio
(State or other jurisdiction of incorporation or organization)	(State or other jurisdiction of incorporation or organization)	(State or other jurisdiction of incorporation or organization)
34-0150020	34-0437786	34-4375005
(I.R.S. Employer Identification No.)	(I.R.S. Employer Identification No.)	(I.R.S. Employer Identification No.)
	c/o FirstEnergy Corp. 76 South Main Street Akron, Ohio 44308 (800) 736-3402

Rhonda S. Ferguson, Esq.

Vice President and Corporate Secretary

FirstEnergy Corp.

76 South Main Street

Akron, Ohio 44308

(800) 736-3402

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Lucas F. Torres, Esq. Akin Gump Strauss Hauer & Feld LLP One Bryant Park New York, New York 10036 (212) 872-1000 Douglas E. Davidson, Esq. Morgan, Lewis & Bockius LLP
101 Park Avenue New York, New York 10178-0060 (212) 309-6000

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.  ¨

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.  x

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box.  ¨

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (do not check if a smaller reporting company)	Smaller reporting company	¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price per Certificate(1)	Proposed Maximum Aggregate Offering Price(2)	Amount of Registration Fee
Pass-Through Trust Certificates of FirstEnergy Ohio PIRB Special Purpose Trust 2013	$505,000,000	100%	$505,000,000	$68,882
Phase-In-Recovery Bonds of CEI Funding LLC	(2)	(2)	(2)	None
Phase-In-Recovery Bonds of OE Funding LLC	(2)	(2)	(2)	None
Phase-In-Recovery Bonds of TE Funding LLC	(2)	(2)	(2)	None
Total	$505,000,000	100%	$505,000,000	$68,882

(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended.

(2) No additional consideration will be paid by the purchasers of the Pass-Through Trust Certificates for the Phase-In-Recovery Bonds that secure the Pass-Through Trust Certificates.

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus supplement is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus supplement is not an offer to sell these securities nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated April 2, 2013

Prospectus Supplement to Prospectus, dated                     , 2013

$        

FirstEnergy Ohio PIRB Special Purpose Trust 2013

Issuing Entity

Pass-Through Trust Certificates

CEI Funding LLC OE Funding LLC TE Funding LLC

Issuers of the Phase-In-Recovery Bonds

The Cleveland Electric Illuminating Company

Ohio Edison Company The Toledo Edison Company

Sponsors, Sellers and Initial Servicers

Tranche

Expected Weighted Average Life (Years)

Principal Amount Issued

Certificate Interest  Rate

Price to Public

Underwriting Discounts  and Commissions

Proceeds to Issuing  Entity (Before Expenses)

Scheduled Final Payment Date

Final Maturity Date

[A-1]

$

%

%

%

%

[A-2]

$

%

%

%

%

[A-3]

$

%

%

%

%

The total price to the public is $         . The total amount of the underwriting discounts and commissions is $         . The total amount of proceeds to the issuing entity after underwriting discounts and commissions and before deduction of expenses is $         .

Investing in the pass-through trust certificates involves risks. Please read “Risk Factors” beginning on page 16 of the accompanying prospectus.

FirstEnergy Ohio PIRB Special Purpose Trust 2013, referred to herein as the trust, is issuing $         of             pass-through             trust certificates, referred to herein as the certificates, in [three] tranches. Each tranche of certificates will represent fractional undivided interests in the corresponding tranches of phase-in-recovery bonds, collectively referred to herein as the bonds, of CEI Funding LLC, a wholly-owned subsidiary of The Cleveland Electric Illuminating Company, OE Funding LLC, a wholly-owned subsidiary of Ohio Edison Company, and TE Funding LLC, a wholly-owned subsidiary of The Toledo Edison Company. CEI Funding LLC, OE Funding LLC and TE Funding LLC are collectively referred to herein as the bond issuers. The bonds will be 100% owned by the trust. The trust will grant to the Certificate trustee, for the benefit of the certificateholders, a lien on the bonds and other trust property relating to each tranche of bonds issued by each of the bond issuers. The Cleveland Electric Illuminating Company, Ohio Edison Company and The Toledo Edison Company are the sellers of the phase-in-recovery properties (described below) and will serve as the initial servicers with regard to the bonds.

Each of the bonds will be secured primarily by the right to impose, charge and collect irrevocable nonbypassable usage-based charges payable by retail electric customers in the service territories of The Cleveland Electric Illuminating Company, Ohio Edison Company and The Toledo Edison Company, as the case may be. Each of the bonds will be a non-recourse obligation of CEI Funding LLC, OE Funding LLC or TE Funding LLC, as the case may be. Neither the bonds nor the certificates will be legal obligations of CEI, OE or TE, as the sponsors, sellers and initial servicers.

Neither the certificates, the bonds nor the phase-in-recovery property securing the bonds is an obligation of the State of Ohio, the Public Utilities Commission of Ohio, or any political subdivision, governmental agency, authority or instrumentality of the State of Ohio or of FirstEnergy Corp., The Cleveland Electric Illuminating Company, Ohio Edison Company or The Toledo Edison Company or any of their respective affiliates, except for the bond issuers and the trust.

Neither the full faith and credit nor the taxing power of the State of Ohio, nor the Public Utilities Commission of Ohio, nor any political subdivision, agency, authority or instrumentality of the State of Ohio is pledged to the payment of principal of, or interest on, the certificates or the bonds, or the payments securing the bonds. Furthermore, neither the State of Ohio, nor the Public Utilities Commission of Ohio, nor any political subdivision, agency, authority or instrumentality of the State of Ohio will appropriate any funds for the payment of any of the certificates or the bonds.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The underwriters expect to deliver the certificates through the book-entry facilities of The Depository Trust Company against payment in immediately available funds on or about                     , 2013. Each certificate will be entitled to interest on             and             of each year. The first scheduled payment date is                     , 2013. Interest will accrue from                     , 2013 and must be paid by the purchaser if the certificates are delivered after that date. There currently is no secondary market for the certificates, and we cannot assure you that one will develop.

Prospectus Supplement dated                     , 2013

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

	Page
READING THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS		S-iii
SUMMARY OF THE TERMS		S-1
DESCRIPTION OF THE CERTIFICATES		S-8
Distributions of Interest and Principal		S-8
DESCRIPTION OF THE BONDS		S-9
Interest		S-9
Principal		S-10
EXPECTED AMORTIZATION SCHEDULES		S-12
Weighted Average Life Sensitivity		S-12
Assumptions		S-13
Fees and Expenses		S-13
THE PHASE-IN-RECOVERY PROPERTY		S-14
THE TRUSTEES		S-15
CREDIT ENHANCEMENT		S-16
Statutory True-Up Adjustment Mechanism for Payment of Scheduled Principal and Interest and Other Financing Costs		S-16
Collection Accounts and Subaccounts		S-16
HOW FUNDS IN THE COLLECTION ACCOUNT WILL BE ALLOCATED		S-18
Cap on Certain Financing Costs		S-19
UNDERWRITING		S-20
RATINGS		S-22
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES		S-23
LEGAL PROCEEDINGS		S-23
WHERE YOU CAN FIND MORE INFORMATION		S-23
LEGAL MATTERS		S-23
OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS		S-24

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PROSPECTUS

	Page
READING THIS PROSPECTUS		iv
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION		v
PROSPECTUS SUMMARY		1
RISK FACTORS		16
REVIEW OF PHASE-IN-RECOVERY PROPERTY		28
THE SECURITIZATION ACT		31
DESCRIPTION OF THE PHASE-IN-RECOVERY PROPERTY		36
SALE AGREEMENTS		40
BANKRUPTCY AND CREDITORS’ RIGHTS ISSUES		46
THE ISSUING ENTITY		50
THE TRUSTEES		51
THE BOND ISSUERS		53
THE SPONSORS, SELLERS AND INITIAL SERVICERS		56
SERVICING AGREEMENTS		66
DESCRIPTION OF THE BONDS		74
DESCRIPTION OF THE CERTIFICATES		85
WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE CERTIFICATES		94
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES		95
OHIO STATE TAXATION		99
CERTAIN ERISA AND OTHER CONSIDERATIONS		100
USE OF PROCEEDS		103
PLAN OF DISTRIBUTION		103
RATINGS		103
WHERE YOU CAN FIND MORE INFORMATION		104
REPORTS TO HOLDERS		105
LEGAL MATTERS		105
GLOSSARY OF DEFINED TERMS		106

Until 90 days after the date of this prospectus supplement, all dealers that effect transactions in these securities, whether or not participating in the offering described in this prospectus supplement, may be required to deliver a prospectus supplement and prospectus. This is in addition to the dealers’ obligation to deliver a prospectus supplement and prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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READING THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS

This prospectus supplement and the accompanying prospectus provide information about us, the certificates, the bonds, the bond issuers and The Cleveland Electric Illuminating Company, Ohio Edison Company and The Toledo Edison Company, as the sponsors, sellers and initial servicers.

The specific terms of the certificates are contained in this prospectus supplement. The accompanying prospectus provides general information about the certificates. You should read both of these documents in full before buying the certificates.

References in this prospectus supplement and the accompanying prospectus to the terms we, us, our or the issuing entity mean FirstEnergy Ohio PIRB Special Purpose Trust 2013, the entity which will issue the certificates. References to the pass-through trust certificates or the certificates, unless the context otherwise requires, means the trust certificates offered pursuant to this prospectus supplement. References to the certificateholders or the holders, unless the context otherwise requires, means the registered holders of the certificates. References to the bond issuers refer to CEI Funding LLC, OE Funding LLC and TE Funding LLC, as the case may be. References to the phase-in-recovery bonds or the bonds refer to the phase-in-recovery bonds issued by the bond issuers. References to the Ohio Companies, the sponsors, the sellers or the initial servicers refer to The Cleveland Electric Illuminating Company, Ohio Edison Company and The Toledo Edison Company, as the case may be. The Ohio Companies are also sometimes referred to respectively as CEI, OE and TE. FirstEnergy Corp., the parent of the Ohio Companies, is referred to herein and in the accompanying prospectus as FirstEnergy. References to the Securitization Act refer to Sections 4928.23 through 4928.2318 of the Ohio Revised Code, passed by the Ohio House of Representatives and the Ohio Senate in December 2011, and effective March 2012, which Securitization Act created the regulatory structure that allows electric utilities to issue bonds to securitize certain phase-in costs. Unless the context otherwise requires, the term customer or retail customer means a retail end user of electricity and related services provided by a retail electric service provider via the transmission and distribution system of an electric distribution utility. References to the Ohio commission or the PUCO refer to the Public Utilities Commission of Ohio. You can find a glossary of certain defined terms used in this prospectus supplement and the accompanying prospectus on page 106 of the accompanying prospectus.

We have included cross-references to sections in this prospectus supplement and the accompanying prospectus where you can find further related discussions.

You should rely only on information about the certificates provided in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not offering to sell the certificates in any jurisdiction where the offer or sale is not permitted. The information in this prospectus supplement is current only as of the date of this prospectus supplement.

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SUMMARY OF THE TERMS

The following section is a summary of selected information and will not provide you with all the information you will need to make your investment decision. You will find a detailed description of the offering of the certificates following this summary. To understand all of the terms of this offering of the certificates, carefully read the entire prospectus supplement and accompanying prospectus. This prospectus supplement and the accompanying prospectus contain terms, appearing in bold text at their first usage, that are specific to the regulated utility industry and to the certificates and may be technical in nature. Please refer to the Glossary of Defined Terms.

Securities Offered $         FirstEnergy Ohio PIRB Special Purpose Trust 2013 Pass-Through Trust Certificates.

Each tranche of certificates will represent fractional undivided beneficial interests in the corresponding tranches of bonds of each of the bond issuers. Holders of each tranche of certificates will receive payments received by the trust on the corresponding tranche of bonds of each bond issuer, which will be the primary source of distributions on a tranche of certificates. Please read “Description of the Certificates” and “Description of the Bonds” in this prospectus supplement and the accompanying prospectus.

Issuing Entity and Capital Structure FirstEnergy Ohio PIRB Special Purpose Trust 2013.

The trust was formed by the bond issuers on                     , 2013 specifically for the purpose of purchasing the bonds from the bond issuers and issuing the certificates offered hereby. The trust is a Delaware statutory trust. The principal assets of the trust will be the bonds. The declaration of trust does not permit the trust to engage in any activities other than holding the bonds, issuing the certificates and engaging in other related activities. The trust may not issue additional certificates other than in connection with transfers, exchanges or replacements permitted under the certificate indenture.

Each bond issuer will be capitalized by an upfront cash deposit by CEI, in the case of CEI Funding LLC, OE, in the case of OE Funding LLC and TE, in the case of TE Funding LLC, of 0.50% of the initial principal amount of the bonds of the related bond issuer (to be held in the capital subaccount) and will have an excess funds subaccount to retain, until the next payment date, any amounts collected remaining after all payments on the bonds have been made.

Relationship with the PUCO Pursuant to the financing order:

• the PUCO or its designated representative has a decision-making role co-equal with the sponsors with respect to the structuring and pricing of the certificates and all matters related to the structuring and pricing of the certificates will be determined through a joint decision of the sponsors and the PUCO or its designated representative or financial advisor;

• the PUCO’s financial advisor will participate fully in all plans and decisions related to the pricing, marketing and structuring of the bond and certificates and will be provided timely information as necessary to fulfill its obligation to advise the PUCO in a timely manner but makes no representations as to any of the information contained herein; and

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• the servicers will file periodic adjustments to the phase-in- recovery charges with the PUCO on our and the bond issuers’ behalf.

The bond issuers have agreed that certain reports concerning phase-in-recovery charge collections will be provided to the PUCO.

Our Address c/o FirstEnergy Service Company

76 South Main Street

Akron, Ohio 44308

Our Telephone Number (800) 736-3402

Bond Issuers CEI Funding LLC, or CEI Funding, OE Funding LLC, or OE Funding, and TE Funding LLC, or TE Funding. The address of the bond issuers is c/o FirstEnergy Service Company, 76 South Main Street, Akron, Ohio 44308. The telephone number of the bond issuers is (800) 736-3402.

Trustees U.S. Bank Trust National Association, a national banking association, will serve as the Delaware trustee of the issuing entity and U.S. Bank National Association, a national banking association, will serve as trustee under the certificate indenture and each bond indenture. Please read “The Trustees” in this prospectus supplement for a description of certain of the trustee’s relevant prior experience and “The Trustees” in the accompanying prospectus for a description of the trustee’s duties and responsibilities as certificate trustee under the certificate indenture and as bond trustee under each bond indenture.

Purpose of the Offering The issuance of the bonds and the certificates is intended to enable the sponsors to recover certain previously approved costs, referred to as phase-in costs, on terms more favorable to customers than would be achievable through the recovery methods previously approved by the PUCO. Please read “The Securitization Act” in the accompanying prospectus.

Phase-In-Recovery Property The phase-in-recovery property of each bond issuer generally consists of its irrevocable right to impose, charge and collect nonbypassable usage-based phase-in-recovery charges from retail electric customers in its sponsor’s service territory. Each bond issuer will purchase its phase-in-recovery property from its seller. See “The Phase-In- Recovery Property” in this prospectus supplement and “Description of the Phase-In-Recovery Property” in the accompanying prospectus.

Sponsors, Sellers and Initial Servicers The Cleveland Electric Illuminating Company, or CEI, is a public electric utility, which provides regulated electric distribution services in northeastern Ohio, and a wholly-owned subsidiary of FirstEnergy.

Ohio Edison Company, or OE, is a public electric utility, which provides regulated electric distribution services in central and northeastern Ohio, and a wholly-owned subsidiary of FirstEnergy.

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The Toledo Edison Company, or TE, is a public electric utility, which provides regulated electric distribution services in northwestern Ohio, and a wholly-owned subsidiary of FirstEnergy.

Each of the Ohio Companies has an address at 76 South Main Street, Akron, Ohio 44308. The telephone number of the sponsors, sellers and initial servicers is (800) 736-3402.

CEI, OE and TE, acting as the initial servicers, and any successor servicer(s), referred to in this prospectus supplement and the accompanying prospectus as the servicers, will service the phase-in-recovery property securing the bonds under separate servicing agreements with the bond issuers. Please read “Servicing” and “The Sponsors, Sellers and Initial Servicers of the Phase-In-Recovery Property” in the accompanying prospectus.

None of the Ohio Companies, FirstEnergy or any of their respective affiliates (other than the bond issuers and the trust) is an obligor on the bonds or the certificates.

Servicing Fees Each servicer will be entitled to receive an annual servicing fee in an amount equal to 0.10% of the initial principal balance of the bonds of the applicable bond issuer. If any servicer is replaced by a non-utility successor servicer, such non-utility successor servicer may be paid a servicing fee of up to 0.75% per year of the initial principal balance of the applicable bonds.

Each bond trustee will pay the unpaid servicing fees semiannually on each payment date to the extent of available funds prior to the distribution of any interest on and principal of its bonds.

Expected Settlement                     , 2013, settling flat. DTC, Clearstream and Euroclear.

State of Ohio Pledge The Securitization Act contains a pledge and agreement by the State of Ohio with the bondholders and bond issuers that the State of Ohio will not take or permit any action that impairs the value of phase-in-recovery property under a financing order or revises the phase-in-costs for which recovery is authorized under a financing order or, except for the approved adjustment mechanism authorized in a financing order and allowed under the Securitization Act, reduce, alter or impair phase-in-recovery charges until the bonds, all financing costs and all amounts to be paid under any ancillary agreement are paid or performed in full. The PUCO invoked this pledge on behalf of the State of Ohio in the financing order.

Optional Redemption Neither the certificate indenture nor the bond indentures permit an optional redemption of the certificates or the bonds, respectively.

Minimum Denomination of the Certificates $100,000 or integral multiples of $1,000 in excess thereof except for one certificate of each tranche, which may be of a smaller denomination.

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Ratings We expect the bonds and the certificates will receive credit ratings from three nationally recognized statistical rating organizations, or NRSROs. Please see “Ratings” in this prospectus supplement.

Initial Phase-In-Recovery Charges as a Portion of Customers Total Electricity Bill Phase-in-recovery charges are nonbypassable in that such charges cannot be avoided by any customer or other person obligated to pay the charges. Subject to the methodology approved in the financing order, the phase-in-recovery charges will apply to all customers of CEI, OE and TE, as the case may be, for as long as they remain customers of such electric distribution utility. If a customer of the electric distribution utility purchases electric generation service from a competitive retail electric service provider, the electric distribution utility is authorized by the Securitization Act to collect the phase-in-recovery charges directly from that customer.

The phase-in-recovery charges are separate and apart from CEI’s, OE’s and TE’s base rates, and are subject to adjustment semiannually (other than the initial adjustment, which will be completed within 12 months after the issuance date of the bonds, and adjustments in the last year each tranche of bonds is expected to be outstanding, in which case adjustments as frequently as monthly may be necessary). See “Phase-In-Recovery Property” in this prospectus supplement and “Description of the Phase-In-Recovery Property—Adjustments to the Phase-In-Recovery Charges” in the accompanying prospectus.

CEI customers are expected to have estimated initial phase-in-recovery charges of [    ] cents/kWh resulting in an estimated monthly cost of $[        ] for the typical residential bill (1,000 kWh), which represents approximately [        ]% of such monthly residential bill. Under current recovery methods, a 1,000 kWh residential customer would pay on average an estimated total monthly charge of [    ] cents/kWh resulting in a monthly cost of $[        ].

OE customers are expected to have estimated initial phase-in-recovery charges of [    ] cents/kWh resulting in an estimated monthly cost of $[        ] for the typical residential bill (1,000 kWh), which represents approximately [        ]% of such monthly residential bill. Under current recovery methods, a 1,000 kWh residential customer would pay on average an estimated total monthly charge of [    ] cents/kWh resulting in a monthly cost of $[        ].

TE customers are expected to have estimated initial phase-in-recovery charges of [    ] cents/kWh resulting in an estimated monthly cost of $[         ] for the typical residential bill (1,000 kWh), which represents approximately [        ]% of such monthly residential bill. Under current recovery methods, a 1,000 kWh residential customer would pay on average an estimated total monthly charge of [    ] cents/kWh resulting in a monthly cost of $[        ].

The amounts shown above are dependent on a number of assumptions and based on estimates and market conditions as of                     ,

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2013. Such amounts will also periodically change throughout the recovery period in accordance with the approved adjustment mechanism described in the accompanying prospectus.

True-Up Adjustment Mechanism for Payments on the Bonds and other Financing Costs Please read “Credit Enhancement” in this prospectus supplement and “Prospectus Summary—Adjustments to the Phase-In-Recovery Charges” and “Description of the Phase-In-Recovery Property—Adjustments to the Phase-In-Recovery Charges” in the accompanying prospectus.

Pursuant to the Securitization Act, the PUCO provided a description in the financing order of the adjustment mechanism to be used in the imposition, charging and collection of the phase-in-recovery charges, such phase-in-recovery charges to be reviewed and adjusted at least annually or more frequently as provided in the financing order, based on estimates of consumption for each customer class and other mathematical factors. The PUCO’s review of these requests is limited to determining whether there is any mathematical error in the servicer’s application of the adjustment mechanism to the phase-in-recovery charges, including the calculation of any proportionate charges allocated to governmental aggregation customers as directed in the financing order. Such adjustments will become automatically effective 60 days after the request is submitted unless otherwise ordered by the PUCO.

Priority of Payments Please read “How Funds in the Collection Account Will Be Allocated” in this prospectus supplement.

Use of Proceeds The trust will use the net proceeds received from the sale of the certificates to purchase the bonds from the bond issuers. Each bond issuer will use the net proceeds from the sale of its bonds to purchase the phase-in-recovery property from its seller and to pay its share of the costs of issuing the bonds and the certificates. The sellers will use the net proceeds from the sale of the phase-in-recovery properties primarily to repay outstanding debt. Net proceeds may also be used by any seller for other general corporate purposes to the extent set forth in the financing order.

Security/Credit Enhancement Each tranche of certificates will represent fractional undivided interests in the corresponding tranches of bonds of the bond issuers. The trust will grant to the certificate trustee, for the benefit of the certificateholders, a lien on the bonds and other trust property relating to each tranche of bonds issued by each of the bond issuers. See “Description of the Certificates” in this prospectus supplement and in the accompanying prospectus. The bonds issued by each bond issuer will be secured primarily by the phase-in-recovery property of such bond issuer, which will generally consist of its irrevocable right to impose, charge and collect nonbypassable usage-based phase-in-recovery charges from retail electric customers in its sponsor’s service territory. Credit enhancement for the bonds, through a true-up adjustment mechanism and capital subaccount, is intended to protect

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against losses or delays in scheduled payments on the bonds and accordingly, the certificates. Please read “The Phase-In-Recovery Property” and “Credit Enhancement” in this prospectus supplement, as well as “The Securitization Act” and “Description of the Phase-In-Recovery Property” in the accompanying prospectus.

Tax Status of the Certificates For federal income tax purposes, the trust will be treated as a “grantor trust,” and thus not taxable as a corporation, and each tranche of certificates will be treated as representing ownership of fractional undivided beneficial interests in the related tranche of bonds. Interest and original issue discount, if any, on the certificates, and any gain on the sale of the certificates, generally will be included in gross income of certificateholders for federal income tax purposes. See “Material U.S. Federal Income Tax Consequences.” Interest on the certificates and any profit on the sale of the certificates are subject to Ohio personal income taxes. For taxpayers other than a limited class of financial institutions, Ohio does not currently impose a personal property tax to which the certificates would be subject. See “Ohio State Taxation” in the accompanying prospectus.

ERISA See “Certain ERISA and Other Considerations,” which begins on page 100 of the accompanying prospectus.

Payment Dates and Interest Accrual Interest will be distributed on the certificates semi-annually, on             and             . The first scheduled interest and principal distribution date is                     , 2013. If any interest distribution date is not a business day, distributions scheduled to be made on such date may be made on the next succeeding business day and no interest shall accrue upon such payment during the intervening period. On each distribution date, the certificate trustee will distribute interest on and principal of the certificates to the extent interest and principal is received on the corresponding tranches of bonds to the holders of each tranche of certificates as of the close of business on the record date. Interest on the bonds will be calculated on a 30/360 basis. See “Description of the Certificates” and “Description of the Bonds” in this prospectus supplement and the accompanying prospectus.

Interest is due on each distribution date and principal is due upon the final maturity date for each tranche of certificates.

Continuing Disclosure Each bond issuer will or will cause its sponsor to, post on http://www.                    .com, a collective website to be used by all bond issuers, periodic reports containing the information required by the related bond indenture (which will include reports and other information required to be filed with the SEC and information regarding the phase-in-recovery charges). See “Description of the Bonds—Website Disclosure” in the accompanying prospectus.

Events of Default Events of default under each of the bond indentures include a default in the payment of interest on the applicable bonds and a default in the payment of unpaid principal on the final maturity date. An event of default under any of the bond indentures will constitute an event of

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default under the certificate indenture. Please read “Description of the Bonds—Bond Events of Default; Rights on Bond Event of Default” and “Description of the Certificates—Events of Default” in the accompanying prospectus. An event of default in respect of the bonds of one bond issuer will not constitute an event of default with respect to the bonds of any other bond issuers.

Risk Factors You should carefully consider the risk of investing in the certificates. See “Risk Factors,” which begins on page 16 of the accompanying prospectus.

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DESCRIPTION OF THE CERTIFICATES

Each tranche of certificates issued by the trust will represent fractional undivided beneficial interests in the corresponding tranches of bonds of CEI Funding, OE Funding and TE Funding, as the case may be, and the proceeds thereof. The trust will grant to the certificate trustee, for the benefit of the certificateholders, a lien on the bonds and other trust property relating to each tranche of bonds issued by each of the bond issuers. Each tranche of CEI Funding bonds, OE Funding bonds and TE Funding bonds will have the same interest rate, scheduled final distribution date and final maturity date as the related tranche of certificates. Taken together, the tranches of bonds of the bond issuers corresponding to tranches of certificates will have the same aggregate principal amount and expected amortization schedule as the related tranche of certificates. See “Description of the Bonds.” The trust will issue the certificates in minimum denominations of $100,000 or in integral multiples of $1,000 in excess thereof except for one certificate of each tranche, which may be of a smaller denomination. The initial principal amounts, the interest rates, the scheduled final distribution dates and final maturity dates of the certificates of each tranche are listed below:

Tranche	Expected Weighted Average Life (Years)	Principal Amount  Issued	Certificate Interest  Rate		Scheduled Final Distribution Date	Final Maturity Date
[A-1]		$		%
[A-2]		$		%
[A-3]		$		%

The scheduled final distribution date for a tranche of certificates is the date when the trust expects to receive in full all interest on, and principal of, the corresponding tranche of bonds of the bond issuers, and distribute such amounts as payment of all interest on, and principal of, that tranche of certificates. The final maturity date for a tranche of certificates is the legal maturity date of that tranche. The failure to distribute the portion of principal of any tranche of certificates representing principal of either the CEI Funding bonds, the OE Funding bonds or the TE Funding bonds in full by the final maturity date for that tranche is an event of default with respect to the bonds of the defaulting bond issuer, and, if that occurs, the certificate trustee may vote all, and upon the written direction of the holders of at least a majority (greater than 50%) in principal amount of all outstanding certificates, will vote a corresponding majority, of the bonds of the defaulting bond issuer in favor of declaring the unpaid principal amount of all such bonds and accrued interest thereon to be due and payable. A foreclosure on the phase-in-recovery property securing the bonds of a defaulting bond issuer upon the acceleration of the unpaid principal amount of the bonds of such defaulting bond issuer may be an inadequate remedy due to the limited market for phase-in recovery property. See “Risk Factors—Risks Related to Limited Source of Payments and Credit Enhancement—You could experience payment delays or losses as a result of limited sources of payment for the certificates and limited credit enhancement” in the accompanying prospectus. A default on the bonds of one bond issuer will not constitute a default with respect to the bonds of any other bond issuer or the certificates to the extent that they represent fractional undivided interests in the bonds of any non-defaulting bond issuer. See “Description of the Certificates—Events of Default” in the accompanying prospectus.

The fees and expenses related to retirement of the certificates will be allocated to the bond issuers pro rata based on the original principal amount of the bonds of each bond issuer.

Distributions of Interest and Principal

Interest on each tranche of certificates will accrue from its issuance date at the interest rate listed in the preceding table. The certificate trustee is required to make distributions of interest on and principal of the certificates semiannually on             and             (or, if any distribution date is not a business day, the following business day) of each year, beginning on                     , 2013. On each distribution date, the certificate trustee will distribute interest on and principal of the certificates to the extent interest and principal is received on the corresponding tranches of bonds to the holders of each tranche of certificates as of the close of business on the record date. The record date for any distribution of interest on, and principal of, the certificates will be the business day immediately before the distribution date. Each distribution date will also be a payment date for interest on, and principal of, the bonds.

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DESCRIPTION OF THE BONDS

Each of CEI Funding, OE Funding and TE Funding will issue and sell its respective bonds to the trust, in each case, in exchange for an allocable portion (based on the aggregate principal amount of the bonds of each bond issuer) of the net proceeds from the sale of the certificates by the trust. Each tranche of bonds of CEI Funding, OE Funding and TE Funding will provide funds for the payment of an allocable portion of the related tranche of certificates and will have the same interest rate, scheduled maturity date and final maturity date as the related tranche of certificates. Taken together, the tranches of bonds of the bond issuers corresponding to a tranche of certificates will have the same aggregate principal amount and expected amortization schedule as the corresponding trache of certificates.

The bonds will consist of the following tranches, in the initial principal amounts and bearing the interest rates and having the scheduled maturity dates and final maturity dates listed below:

CEI Funding LLC

Tranche	Expected Weighted Average Life (Years)	Principal Amount  Issued	Bond Interest Rate		Scheduled Final Payment Date	Final Maturity Date
[A-1]		$		%
[A-2]		$		%
[A-3]		$		%

OE Funding LLC

Tranche	Expected Weighted Average Life (Years)	Principal Amount  Issued	Bond Interest Rate		Scheduled Final Payment Date	Final Maturity Date
[A-1]		$		%
[A-2]		$		%
[A-3]		$		%

TE Funding LLC

Tranche	Expected Weighted Average Life (Years)	Principal Amount  Issued	Bond Interest Rate		Scheduled Final Payment Date	Final Maturity Date
[A-1]		$		%
[A-2]		$		%
[A-3]		$		%

The scheduled final payment date for a tranche of bonds is the final date by which the bond issuer expects to distribute in full all interest on, and principal of, that tranche of bonds. The final maturity date for a tranche of bonds is the legal maturity date of that tranche.

Interest

Interest on each tranche of bonds will accrue from its issuance date at the interest rate listed in the preceding table. The bond issuers are required to pay interest to the trust semiannually on             and             (or, if any payment date is not a business day, the following business day) of each year, beginning on                     , 2013.

The bond issuers will pay interest on the bonds prior to paying principal of the bonds. See “Description of the Bonds—Allocations and Payments” in the accompanying prospectus.

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On each payment date, each bond issuer will pay interest as follows:

• if there has been a payment default in respect of any tranche of the bonds of the bond issuer, any unpaid interest payable on any prior payment dates, together with interest at the applicable bond interest rate on any of this unpaid interest; and

• accrued interest on the principal balance of each tranche of bonds of the bond issuer as of the close of business on the preceding payment date, or the date of the original issuance of the tranche of bonds, if applicable, after giving effect to all payments of principal made on the preceding payment date, or the date of the original issuance of the tranche of bonds, if applicable.

If there is a shortfall in the amounts necessary to make these interest payments, the related bond trustee will distribute interest pro rata on each such tranche of bonds of the related bond issuer based on the respective amounts of interest owed on the bonds of each such tranche. The distributions to the certificateholders of the corresponding tranches will be reduced by an amount equal to the shortfalls in respect of the corresponding tranches of bonds.

The bond issuers will calculate interest on the basis of a 360-day year of twelve 30-day months.

Principal

After paying interest as described above, to the extent funds are available, each bond issuer will pay principal in respect of its bonds on each payment date in the following order of priority:

(1) to the holders of the [A-1] bonds, until the principal balance of that tranche has been reduced to zero;

(2) to the holders of the [A-2] bonds, until the principal balance of that tranche has been reduced to zero; and

(3) to the holders of the [A-3] bonds, until the principal balance of that tranche has been reduced to zero.

A bond issuer will not pay principal, however, on a payment date of any tranche of bonds if making the payment would reduce the principal balance of that tranche to an amount lower than that specified in the expected amortization schedule for that tranche on that payment date. If an event of default under the bond indenture applicable to a bond issuer has occurred and is continuing, the bond trustee may declare the unpaid principal amount of all outstanding bonds of that bond issuer and accrued interest on such bonds to be due and payable. Payments of principal due and payable on the bonds of a bond issuer as a result of an event of default, or upon final maturity, will be paid pro rata based on the respective outstanding principal amount of the bonds of each tranche of the defaulting bond issuer. An event of default under the bond indenture of one bond issuer will not constitute an event of default under the bond indenture of any other bond issuer.

The following expected amortization schedules list the scheduled outstanding principal balance for each tranche of bonds of the bond issuers on each payment date from the issuance date to the scheduled maturity date, after giving effect to the payments expected to be made on the payment dates. In preparing the following tables, we have assumed, among other things, that:

• the bonds are issued on                     , 2013;

• payments on the bonds are made on each payment date, commencing                     , 2013;

• annual servicing fee will equal 0.10% of the initial principal amount of the bonds of the respective bond issuers;

• there are no earnings on amounts on deposit in the collection accounts;

• annual operating expenses will equal approximately $         in the case of CEI Funding, approximately $         in the case of OE Funding, and approximately $         in the case of TE Funding, including the administration fee (which, as to each administrator is expected to be its pro rata portion, based on bond issuance amount, of $100,000, payable semiannually), amounts owed to the bond trustee, the Delaware

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trustee and the certificate trustee (which is not expected to exceed in the aggregate $         per year in the case of CEI Funding, $         per year in the case of OE Funding and $         per year in the case of TE Funding) and amounts owed to the independent directors of each bond issuer (which is not expected to exceed in the aggregate $         per year in the case of CEI Funding, $         per year in the case of OE Funding and $         per year in the case of TE Funding); and

• collections from phase-in-recovery charges are deposited in the collection accounts of the bond issuers as expected.

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EXPECTED AMORTIZATION SCHEDULES

Outstanding Bond Balances

CEI Funding LLC

Date Tranche [A-1] Tranche [A-2] Tranche [A-3]

OE Funding LLC

Date Tranche [A-1] Tranche [A-2] Tranche [A-3]

TE Funding LLC

Date Tranche [A-1] Tranche [A-2] Tranche [A-3]

Outstanding Certificate Balances

FirstEnergy Ohio PIRB Special Purpose Trust 2013

Date Tranche [A-1] Tranche [A-2] Tranche [A-3]

We cannot assure you that the principal balances of the tranches of bonds of any of the bond issuers, and the related tranches of certificates, will be amortized according to the tables above. The actual amortization of principal may be slower (but cannot be faster) than that indicated in the tables. See “Risk Factors” in the accompanying prospectus for various factors that may, individually or in the aggregate, affect the expected amortization of the principal balances of any tranches of bonds and the related tranches of certificates.

On each payment date, the trustee will make principal payments on the bonds to the extent the principal balance of each tranche of the bonds exceeds the amount indicated for that payment date in the tables above and to the extent of funds available in the collection account after payment of certain fees and expenses and interest. The bonds will not be in default if principal is not paid as specified in the tables above unless the principal of any tranche is not paid in full on or before the final maturity date of that tranche.

Weighted Average Life Sensitivity

Weighted average life refers to the average amount of time from the date of issuance of a security until each dollar of principal of the security has been repaid to the investor. The rate of principal payments, the amount of each interest payment and the final maturity date for each tranche of bonds, and, thus, a related portion of the certificates, will be dependent on the rate and timing of receipt of phase-in-recovery charge collections supporting the payment of such bonds. Please read “Weighted Average Life and Yield Considerations for the Certificates” in the accompanying prospectus for further information. Changes in the expected weighted average

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lives of the respective tranches of the bonds on an aggregate basis, and, thus, a related portion of the certificates, in relation to variances in actual energy consumption levels (retail electric sales) from forecast levels are shown below.

Tranche	Expected Weighted Average  Life (WAL) (Years)	Forecast Error of 5%		Forecast Error of 15%
		WAL (yrs)	Change (days)*	WAL (yrs)	Change (days)*

* Number is rounded to whole days.

Assumptions

For the purposes of preparing the above charts, the following assumptions, among others, have been made:

(i) the forecast error stays constant over the life of the bonds and is equal to an over-estimate of electricity consumption of 5% or 15%;

(ii) each servicer makes timely and accurate filings to true-up the phase-in-recovery charges semiannually (other than the initial adjustment, which will be completed within 12 months after the issuance date of the bonds and the last year each tranche of bonds is outstanding, during which adjustments may be made as frequently as monthly);

(iii) customer charge-off rates are held constant at 0.75% for each of CEI and TE and 0.55% for OE, in each case for all classes of customers;

(iv) operating expenses are equal to projections;

(v) there is no acceleration of the final maturity date of the bonds;

(vi) a permanent loss of all customers has not occurred; and

(vii) the closing date is                     , 2013.

(viii) There can be no assurance that the weighted average lives of the bonds and, thus, a related portion of the certificates, will be as shown.

Fees and Expenses

As set forth in the table below, we are obligated to pay fees to the servicers, the trustees, the independent directors and the administrators from the phase-in-recovery charge collections and investment earnings. The following table illustrates this arrangement.

Recipient	Fees and Expenses Payable
Each servicer	$[        ] per annum for each servicer (so long as such servicer is CEI, OE or TE or a successor electric distribution utility, as the case may be).
Bond trustee	$[        ] per annum plus expenses.
Certificate trustee	$[        ] per annum plus expenses.
Delaware trustee	$[        ] per annum plus expenses.
Independent directors	$[        ] per annum plus expenses.
Each administrator	Its pro rata portion (based on bond issuance amount) of $100,000 per annum.

If any servicer is replaced by a non-utility successor servicer, such non-utility successor servicer may be paid a servicing fee of up to 0.75% per year of the initial principal balance of the bonds.

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THE PHASE-IN-RECOVERY PROPERTY

The phase-in-recovery property of each bond issuer consists generally of its property, rights and interests under the financing order issued by the PUCO on October 10, 2012, as amended by the entry on rehearing, issued by the PUCO on December 19, 2012, and as further amended by the entry nunc pro tunc issued by the PUCO on January 9, 2013, collectively referred to herein as the financing order, including each bond issuer’s right:

• to impose, charge and collect irrevocable, nonbypassable phase-in-recovery charges from each retail customer within the service territory of CEI, OE or TE, as applicable, and

• to adjust those phase-in-recovery charges, in accordance with the adjustment mechanism set forth in the financing order, in an amount sufficient to pay principal and interest on its bonds and, subject to the cap to the extent applicable, other financing costs approved under the financing order.

Each bond issuer will purchase its phase-in-recovery property from its seller. The bonds of each bond issuer are secured primarily by the phase-in-recovery property of such bond issuer. The phase-in-recovery property is not a receivable and, as the primary collateral securing the bonds of the bond issuer, is not a pool of receivables. Collections from the phase-in-recovery charges, as such charges may be adjusted pursuant to the adjustment mechanism, will be used to pay principal and interest on the bonds and, subject to the cap to the extent applicable, other financing costs approved under the financing order. These irrevocable nonbypassable charges will be included in the customer bills of CEI, OE or TE, as applicable, and will be collected until the applicable bonds and approved financing costs are paid in full. Phase-in-recovery charges may not be reduced, impaired or adjusted by the PUCO except for periodic adjustments, in accordance with the adjustment mechanism, to correct overcollections or undercollections to ensure the recovery of amounts sufficient to timely provide all payments of principal and interest on the bonds and, subject to the cap to the extent applicable, other approved financing costs. All revenues and collections from the phase-in-recovery charges provided for in the financing order are part of the phase-in-recovery property. Please read “Credit Enhancement” in this prospectus supplement and “Description of the Phase-In-Recovery Property” in the accompanying prospectus for more information relating to the phase-in-recovery property.

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THE TRUSTEES

U.S. Bank Trust National Association, a national banking association, or U.S. Bank Trust, will serve as Delaware trustee of the issuing entity. U.S. Bank National Association, a national banking association, or U.S. Bank, will serve as trustee under the certificate indenture and each bond indenture. U.S. Bank will also act as paying agent and registrar in each trustee capacity. U.S. Bank Trust is a wholly-owned subsidiary of U.S. Bank. U.S. Bancorp, with total assets exceeding $354 billion as of December 31, 2012, is the parent of U.S. Bank, the fifth largest commercial bank in the United States. As of December 31, 2012, U.S. Bancorp served approximately 17 million customers and operated over 3,000 branch offices in 25 states. A network of specialized U.S. Bancorp offices across the nation provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses, governments and institutions.

U.S. Bank has one of the largest corporate trust businesses in the country with office locations in 48 domestic and three international cities. The certificate indenture and each bond indenture will be administered from U.S. Bank’s corporate trust office located at 190 S. LaSalle Street, 7th Floor, Chicago, IL 60603.

U.S. Bank has provided corporate trust services since 1924. As of December 31, 2012, U.S. Bank was acting as trustee with respect to over 87,000 issuances of securities with an aggregate outstanding principal balance of over $2.8 trillion. This portfolio includes corporate and municipal bonds, mortgage-backed and asset-backed securities and collateralized debt obligations.

The certificate trustee shall make available to the certificateholders via the certificate trustee’s website at www.usbank.com/abs all bond payments reports, certificate distribution reports, periodic reports and related information provided to the trustee by the respective bond issuers or their respective sponsors. Certificateholders with questions may direct them to the certificate trustee’s bondholder services group at (800) 934-6802.

U.S. Bank and U.S. Bank Trust serve or has served as trustee, paying agent and registrar on several issues of similar asset-backed securities.

Except for the information set forth in this section titled “The Trustees” neither U.S. Bank nor U.S. Bank Trust has participated in the preparation of this prospectus supplement or the accompanying prospectus and assumes no responsibility for their contents.

None of the bond trustee, the Delaware trustee or the certificate trustee has any obligation with respect to the bonds, the trust or the certificates except for its express obligations under the bond indenture, the declaration of trust or the certificate indenture, as the case may be.

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CREDIT ENHANCEMENT

Credit enhancement for the bonds is intended to protect you against losses or delays in scheduled payments on the bonds and, thus, the certificates.

Statutory True-Up Adjustment Mechanism for Payment of Scheduled Principal and Interest and Other Financing Costs

Consistent with the Securitization Act and the irrevocable financing order, phase-in-recovery charges on all retail electric customers in the sponsors’ respective service territories will be reviewed and adjusted within 12 months after the issuance of the bonds and then semiannually to ensure the recovery of amounts sufficient to timely provide payment of scheduled principal and interest on the bonds and other approved financing costs. During the last year that the bonds are outstanding, adjustment of the phase-in-recovery charges may occur as frequently as monthly. The PUCO will act pursuant to the financing order to ensure the full and timely imposition, charging, collection and adjustment, pursuant to the approved adjustment mechanism, of the phase-in-recovery charges. The State of Ohio has pledged and agreed in the Securitization Act and the PUCO has pledged in the financing order not to take or permit any action that impairs the value of the phase-in-recovery property or, except as allowed under the Securitization Act, reduces, alters or impairs phase-in-recovery charges that are imposed, charged, collected or remitted until the bonds and all other approved financing costs are paid in full. The obligations of the PUCO and the State of Ohio in the final financing order are direct, explicit, irrevocable and unconditional upon issuance of the bonds and are legally enforceable against the State of Ohio. Please read “The Phase-In-Recovery Property” in this prospectus supplement and “Description of the Phase-In-Recovery Property” and “The Securitization Act” in the accompanying prospectus.

While there is no “cap” on the level of phase-in-recovery charges that may be imposed on retail electric customers to pay on a timely basis scheduled principal and interest on the bonds and replenish capital subaccounts, there is a “cap” on certain approved financing costs that may be recovered through phase-in-recovery charges. Please read “How Funds in the Collection Account Will Be Allocated—Cap on Certain Financing Costs” in this prospectus supplement and “Description of the Bonds—Allocations and Payments” in the accompanying prospectus.

Collection Accounts and Subaccounts

The bond trustee for each bond issuer will establish a collection account to hold payments arising from the phase-in-recovery charges as well as the capital contributions made to that bond issuer. Each collection account will consist of three subaccounts:

• a general subaccount;

• a capital subaccount for the capital contributions to the bond issuer; and

• an excess funds subaccount.

Withdrawals from, and deposits to, these subaccounts will be made as described under “Description of the Bonds—Allocations and Payments” in the accompanying prospectus.

General Subaccount. The bond trustee for each bond issuer will deposit collected phase-in-recovery charges remitted to it by its servicer with respect to its bonds into the general subaccount. On each payment date, the bond trustee will allocate amounts in the general subaccount as described under “How Funds in the Collection Account Will Be Allocated” in this prospectus supplement and “Description of the Bonds—Allocations and Payments” in the accompanying prospectus.

Capital Subaccount. Prior to the issuance of the bonds, CEI will contribute capital of $         to CEI Funding, OE will contribute capital of $         to OE Funding and TE will contribute capital of $         to TE

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Funding, which amounts represent, with respect to each bond issuer, 0.50% of the initial principal amount of the bonds of the related bond issuer. The bond trustee for each bond issuer will deposit the capital into the capital subaccount of the bond issuer. A bond trustee will draw on amounts available in the capital subaccount of the related bond issuer, to the extent amounts available in the general subaccount and excess funds subaccount of that bond issuer are insufficient to pay interest on, and principal of, its bonds and, subject to the cap to the extent applicable, fees and expenses of servicing and retiring such bonds and an allocable portion of the certificates.

If a bond trustee uses amounts on deposit in a capital subaccount to make payments on the bonds of the related bond issuer on a payment date, then that capital subaccount will be replenished by the related bond issuer on subsequent payment dates to the extent the servicer remits payments arising from phase-in-recovery charges exceeding the amounts required to pay amounts having a higher priority of payment.

Excess Funds Subaccount. Each excess funds subaccount will be funded with collected phase-in-recovery charges and earnings on amounts in the collection account in excess of the amount necessary to:

• subject to the cap to the extent applicable, pay fees and expenses (including any indemnity payments) related to the servicing and retirement of the bonds (including trustee, independent director and administration fees and expenses) of that bond issuer and the portion of the certificates allocable to that bond issuer;

• pay interest on, and principal of, such bonds to the extent required to be paid on that payment date; and

• replenish the capital subaccount of that bond issuer to the required capital level.

A bond trustee will draw on amounts in the excess funds subaccount of a bond issuer to the extent amounts available in the bond issuer’s general subaccount are insufficient to pay the amounts listed above.

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HOW FUNDS IN THE COLLECTION ACCOUNT WILL BE ALLOCATED

On each semi-annual payment date, or for any amount payable under clauses (1) through (4) below, on any business day, a bond trustee will allocate or, subject to the cap (discussed below under “—Cap on Certain Financing Costs”) if applicable, pay all amounts on deposit in the collection account of the related bond issuer, including earnings on those amounts, as follows and in the following order of priority:

(1) first, all amounts owed by that bond issuer to the related bond trustee (including indemnity payments) will be paid, and second, all amounts owed by that bond issuer to the Delaware trustee, the certificate trustee and the certificate issuer under the applicable basic documents will be paid;

(2) the servicing fee and all unpaid servicing fees from any prior payment dates will be paid to that bond issuer’s servicer;

(3) the administration fee and all unpaid administration fees from prior payment dates and amounts due independent directors will be paid to that bond issuer’s administrator and the independent directors, respectively;

(4) payment of all other operating expenses, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the related servicing agreement, and taxes and indemnities payable by the bond issuer will be paid to the persons entitled thereto;

(5) first, any overdue interest on the bonds of that bond issuer after a payment default (together with, to the extent lawful, interest on overdue interest at the applicable bond interest rate) and second, interest currently due and payable on such bonds will be transferred to the certificate trustee, as bondholder, for distribution to the applicable certificateholders;

(6) first, funds necessary to pay any principal on the bonds of that bond issuer payable by that bond issuer as a result of a bond event of default or on the final maturity date of a tranche of bonds of that bond issuer and second, principal based on priorities described above under “Description of the Bonds—Principal” will be transferred to the certificate trustee, as bondholder, for distribution to the applicable certificateholders according to the expected amortization schedule for each tranche of bonds;

(7) unpaid operating expenses and indemnities owed by that bond issuer under the basic documents will be paid to the persons entitled thereto;

(8) the amount, if any, by which that bond issuer’s capital subaccount needs to be funded to equal the required capital level as of a payment date will be allocated to the capital subaccount;

(9) an amount equal to one-half of 6.85% of the required capital level will be paid to that bond issuer’s seller;

(10) allocation of the remainder, if any, to the excess funds subaccount; and

(11) following, first, the repayment of all bonds and the corresponding portion of the certificates and all approved financing costs, and, second, the payment of any unpaid amounts, due the Delaware trustee, the certificate trustee or the applicable bond trustee under clause (1) above, that exceeded the cap, the balance, together with all amounts in the capital subaccount and the excess funds subaccount, will be released to that bond issuer free and clear of the lien of the indenture.

If on any payment date, or for any amounts payable under clauses (1) through (4) above, on any business day, funds on deposit in the general subaccount of a bond issuer are insufficient to make the transfers contemplated by clauses (1) through (6) above, the related bond trustee will:

• first, draw from amounts on deposit in the excess funds subaccount of that bond issuer; and

• second, draw from amounts on deposit in the capital subaccount of that bond issuer,

up to the amount of the shortfall, in order to make the transfers described above.

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In addition, if on any payment date funds on deposit in the general subaccount of a bond issuer are insufficient to make the transfer described in clause (8) above, the related bond trustee will draw from amounts on deposit in the excess funds subaccount of that bond issuer to make the required transfer.

Cap on Certain Financing Costs

Pursuant to the financing order, certain approved ongoing financing costs recoverable through phase-in recovery charges (including those referenced in clauses (1) through (4) and clauses (7) and (9) above) may not exceed on an annual basis the aggregate amount approved for such ongoing financing costs by more than 5%. The sum of such approved ongoing financing costs ($1,072,732) plus an amount equal to 5% of such costs is equal to $1,126,369, which amount is referred to as the cap. The ongoing financing costs referenced in clauses (1) through (4) and clauses (7) and (9) above, to the extent in excess of the cap for any given annual period, may be recovered in any subsequent annual period (subject to the annual cap in such subsequent period). Unused cap amounts in a given year will not be available for recovery of any ongoing financing costs in a subsequent year. The foregoing amounts do not reflect a servicing fee that would be paid to any non-utility successor servicer which would result in a higher cap.

The initial servicer of each bond issuer will agree in its servicing agreement to indemnify each applicable trustee (i.e., its bond trustee and its allocable portion as to the certificate trustee and Delaware trustee) for all due and unpaid indemnity and other payments, of the applicable bond issuer under the applicable basic documents, that exceed the cap. Each servicing agreement will provide that this initial servicer obligation will continue as an obligation of such initial servicer in the event a successor servicer is appointed.

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UNDERWRITING

The trust, the bond issuers, CEI, OE, TE and the underwriters for the offering named below have entered into an underwriting agreement relating to the certificates. Assuming that conditions in the underwriting agreement are met, each underwriter has severally agreed to purchase the respective principal amount of certificates indicated in the following table.

Underwriters Tranche [A-1] Tranche [A-2] Tranche [A-3]

The underwriters are committed to take and pay for all of the certificates being offered, if any are taken. If an underwriter defaults, the underwriting agreement provides that the purchase commitment of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated, depending on the amount of certificates to which the default relates.

Certificates sold by the underwriters to the public will be initially offered at the initial public offering prices set forth on the cover of this prospectus supplement. We and the bond issuers have been advised that the underwriters propose initially to offer the certificates to dealers at the initial public offering prices, less a selling concession not to exceed the percentage of the certificate denomination set forth below, and that the underwriters may allow and dealers may reallow a discount not to exceed the percentage of the certificate denomination set forth below:

Tranche Selling
Concession Reallowance
Discount

If all the certificates are not sold at the initial offering price, the underwriters may change the offering price and the other selling terms.

The certificates are a new issue of securities with no established trading market. We and the bond issuers have been advised by the underwriters that the underwriters intend to make a market in the certificates but are not obligated to do so and may discontinue market making at any time without notice. The certificates will not be listed on any securities exchange. No assurance can be given as to the ability of holders of the certificates to resell the certificates.

In connection with the offering, the underwriters may purchase and sell certificates in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of certificates than they are required to purchase in the offering. Stabilizing transactions consist of certain bids or purchases made for the purpose of preventing or retarding a decline in the market price of the certificates while the offering is in progress.

The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased certificates sold by or for the account of such underwriter in stabilizing or short covering transactions.

These activities by the underwriters may stabilize, maintain or otherwise affect the market price of the certificates. As a result, the price of the certificates may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the underwriters at any time. These transactions may be effected in the over-the-counter market or otherwise.

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The bond issuers estimate that their share of the total expenses of the offering of the certificates, excluding underwriting discounts and commissions, will be approximately $         million.

The bond issuers and each of CEI, OE and TE have agreed to indemnify the underwriters and the trust against certain liabilities, including liabilities under the Securities Act.

The underwriters or their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for CEI, OE and TE, for which they received or will receive customary fees and expenses. Goldman, Sachs & Co., previously served as the structuring advisor to CEI, OE and TE, and in such role, it has rendered certain structuring services to CEI, OE and TE in respect of the bond issuers and the trust and received a fee for such services and reimbursement for certain expenses in connection with such services.

S-21

RATINGS

We expect that the certificates will receive credit ratings from three NRSROs.

A security rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn at any time by the assigning NRSRO. Each rating should be evaluated independently of any other rating. No person is obligated to maintain its rating on the certificates, and accordingly, we cannot assure you that a rating assigned to any tranche of the certificates upon initial issuance will not be revised or withdrawn by an NRSRO at any time thereafter. If a rating of any tranche of the certificates is revised or withdrawn, the liquidity of that tranche may be adversely affected. In general, ratings address credit risk and do not represent any assessment of the likelihood of any particular level of principal payments on the certificates other than payment in full of each tranche of the certificates by the applicable final maturity date, as well as the timely payment of interest.

Under Rule 17g-5 of the Exchange Act, NRSROs providing the sponsors with the requisite certification will have access to all information posted on a website by the sponsors for the purpose of determining the initial rating and monitoring the rating after the closing date in respect of the certificates. As a result, an NRSRO other than an NRSRO hired by the sponsor, referred to as a hired NRSRO may issue ratings on the certificates, or Unsolicited Ratings, which may be lower, and could be significantly lower, than the ratings assigned by a hired NRSRO. The Unsolicited Ratings may be issued prior to, or after, the closing date in respect of the certificates. Issuance of any Unsolicited Rating will not affect the issuance of the certificates. Issuance of an Unsolicited Rating lower than the ratings assigned by a hired NRSRO on the certificates might adversely affect the value of the certificates and, for regulated entities, could affect the status of the certificates as a legal investment or the capital treatment of the certificates. Investors in the certificates should consult with their legal counsel regarding the effect of the issuance of a rating by a non-hired NRSRO that is lower than the rating of a hired NRSRO.

In addition to the fees paid by the Ohio Companies to a hired NRSRO at closing, the sponsors may pay a fee to the NRSRO for ongoing surveillance for so long as the certificates are outstanding. However, no NRSRO is under any obligation to continue to monitor or provide a rating on the certificates. There can be no assurance that the credit ratings will be maintained.

S-22

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

Akin Gump Strauss Hauer & Feld LLP will issue an opinion, based on Revenue Procedure 2005-62, 2005-2 C.B. 507, that, for U.S. federal income tax purposes, (i) the underlying bonds of each bond issuer will be treated as obligations of CEI, OE or TE, as the case may be, (ii) the bond issuers will not be subject to U.S. federal income tax as entities separate from the sellers and (iii) the trust will not be a business entity classified as a corporation or a publicly traded partnership treated as a corporation, but will be treated as a grantor trust. Please read “Material U.S. Federal Income Tax Consequences” in the accompanying prospectus.

LEGAL PROCEEDINGS

There are no legal or governmental proceedings pending against us, the sponsors, sellers, bond issuers, bond trustees, certificate trustee or servicers, or of which any property of the foregoing is subject, that is material to the holders of the certificates.

WHERE YOU CAN FIND MORE INFORMATION

To the extent that we are required to file such reports and information with the SEC under the Exchange Act, we will file (or any of our sponsors, in its capacity as sponsor, will file on our behalf) annual, distribution and current reports and other information with the SEC. We are incorporating by reference any future filings which we (file no. 333-            ) or any sponsor, but solely in its capacity as a sponsor, makes with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering of the certificates, excluding any information that is furnished to, and not filed with, the SEC. These reports will be filed under the trust’s name as issuing entity. Please also read “Where You Can Find More Information” in the accompanying prospectus. We may voluntarily suspend or terminate our filing obligations as issuing entity with the SEC to the extent permitted by law.

LEGAL MATTERS

Certain legal matters relating to the issuing entity, bond issuers, the bonds and the certificates, including certain U.S. federal income tax matters, will be passed on by Akin Gump Strauss Hauer & Feld LLP, New York, New York, counsel to the issuing entity, the sellers and the bond issuers. Certain legal matters relating to the bonds and Ohio law will be passed upon by Calfee, Halter & Griswold LLP, Cleveland, Ohio, special local counsel to the sellers and the bond issuers. Certain legal matters relating to the issuing entity, the bond issuers and the certificates will be passed upon by Richards, Layton & Finger, P.A., Wilmington, Delaware, Delaware counsel to the issuing entity and the bond issuers. Morgan, Lewis & Bockius LLP, New York, New York, is counsel to the underwriters. Morgan, Lewis & Bockius LLP has in the past represented, and continues to represent, the Ohio Companies and certain of their affiliates on other matters.

S-23

OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS

NOTICE TO RESIDENTS OF SINGAPORE

EACH UNDERWRITER ACKNOWLEDGES THAT THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS HAVE NOT BEEN REGISTERED AS A PROSPECTUS WITH THE MONETARY AUTHORITY OF SINGAPORE. ACCORDINGLY, EACH UNDERWRITER REPRESENTS, WARRANTS AND AGREES THAT IT HAS NOT OFFERED OR SOLD ANY CERTIFICATES OR CAUSED THE CERTIFICATES TO BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, AND WILL NOT OFFER OR SELL ANY CERTIFICATES OR CAUSE THE CERTIFICATES TO BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, AND HAS NOT CIRCULATED OR DISTRIBUTED, NOR WILL IT CIRCULATE OR DISTRIBUTE THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS OR ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER OR SALE, OR INVITATION FOR SUBSCRIPTION OR PURCHASE, OF CERTIFICATES, WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS IN SINGAPORE OTHER THAN (I) TO AN INSTITUTIONAL INVESTOR UNDER SECTION 274 OF THE SECURITIES AND FUTURES ACT, CHAPTER 289 OF SINGAPORE (THE “SFA”), OR ANY PERSON PURSUANT TO SECTION 275(1A), AND IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA OR (II) TO A RELEVANT PERSON PURSUANT TO SECTION 275(1) OR ANY PERSON PURSUANT TO SECTION 275(1A) OF THE SFA, AND IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA OR (III) OTHERWISE PURSUANT TO, AND IN ACCORDANCE WITH THE CONDITIONS OF, ANY OTHER APPLICABLE PROVISION OF THE SFA.

WHERE THE CERTIFICATES ARE SUBSCRIBED OR PURCHASED UNDER SECTION 275 BY A RELEVANT PERSON WHICH IS:

(A) A CORPORATION (WHICH IS NOT AN ACCREDITED INVESTOR (AS DEFINED IN SECTION 4A OF THE SFA)) THE SOLE BUSINESS OF WHICH IS TO HOLD INVESTMENTS AND THE ENTIRE SHARE CAPITAL OF WHICH IS OWNED BY ONE OR MORE INDIVIDUALS, EACH OF WHOM IS AN ACCREDITED INVESTOR; OR

(B) A TRUST (WHERE THE TRUSTEE IS NOT AN ACCREDITED INVESTOR) WHOSE SOLE PURPOSE IS TO HOLD INVESTMENTS AND EACH BENEFICIARY OF THE TRUST IS AN INDIVIDUAL WHO IS AN ACCREDITED INVESTOR,

SHARES, DEBENTURES AND UNITS OF SHARES AND DEBENTURES OF THAT CORPORATION OR THE BENEFICIARIES’ RIGHTS AND INTEREST (HOWSOEVER DESCRIBED) IN THAT TRUST SHALL NOT BE TRANSFERRED WITHIN 6 MONTHS AFTER THAT CORPORATION OR THAT TRUST HAS ACQUIRED THE CERTIFICATES PURSUANT TO AN OFFER MADE UNDER SECTION 275 EXCEPT:

(1) TO AN INSTITUTIONAL INVESTOR (FOR CORPORATIONS, UNDER SECTION 274 OF THE SFA) OR TO A RELEVANT PERSON DEFINED IN SECTION 275(2) OF THE SFA, OR TO ANY PERSON PURSUANT TO AN OFFER THAT IS MADE ON TERMS THAT SUCH RIGHTS OR INTEREST ARE ACQUIRED AT A CONSIDERATION OF NOT LESS THAN S$200,000 (OR ITS EQUIVALENT IN A FOREIGN CURRENCY) FOR EACH TRANSACTION, WHETHER SUCH AMOUNT IS TO BE PAID FOR IN CASH OR BY EXCHANGE OF SECURITIES OR OTHER ASSETS, AND FURTHER FOR CORPORATIONS, IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA;

(2) WHERE NO CONSIDERATION IS OR WILL BE GIVEN FOR THE TRANSFER; OR

(3) WHERE THE TRANSFER IS BY OPERATION OF LAW. THE PROSPECTUS RELATING TO THE CERTIFICATES (“PROSPECTUS”) WILL, PRIOR TO ANY SALE OF SECURITIES PURSUANT TO THE

S-24

PROVISIONS OF SECTION 106D OF THE COMPANIES ACT (CAP.50), BE LODGED, PURSUANT TO SAID SECTION 106D, WITH THE REGISTRAR OF COMPANIES IN SINGAPORE, WHICH WILL TAKE NO RESPONSIBILITY FOR ITS CONTENTS. HOWEVER, NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE PROSPECTUS HAS BEEN AND NOR WILL THEY BE REGISTERED AS A PROSPECTUS WITH THE REGISTRAR OF COMPANIES IN SINGAPORE. ACCORDINGLY, THE CERTIFICATES MAY NOT BE OFFERED, AND NEITHER THIS PROSPECTUS SUPPLEMENT NOR ANY OTHER OFFERING DOCUMENT OR MATERIAL RELATING TO THE CERTIFICATES MAY BE CIRCULATED OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, TO THE PUBLIC OR ANY MEMBER OF THE PUBLIC IN SINGAPORE OTHER THAN TO INSTITUTIONAL INVESTORS OR OTHER PERSONS OF THE KIND SPECIFIED IN SECTION 106C AND SECTION 106D OF THE COMPANIES ACT OR ANY OTHER APPLICABLE EXEMPTION INVOKED UNDER DIVISION 5A OF PART IV OF THE COMPANIES ACT. THE FIRST SALE OF SECURITIES ACQUIRED UNDER A SECTION 106C OR SECTION 106D EXEMPTION IS SUBJECT TO THE PROVISIONS OF SECTION 106E OF THE COMPANIES ACT.

NOTICE TO RESIDENTS OF THE PEOPLE’S REPUBLIC OF CHINA

THE CERTIFICATES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES LAW OF THE PEOPLE’S REPUBLIC OF CHINA (AS THE SAME MAY BE AMENDED FROM TIME TO TIME) AND ARE NOT TO BE OFFERED OR SOLD TO PERSONS WITHIN THE PEOPLE’S REPUBLIC OF CHINA (EXCLUDING THE HONG KONG AND MACAU SPECIAL ADMINISTRATIVE REGIONS).

NOTICE TO RESIDENTS OF JAPAN

THE CERTIFICATES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES AND EXCHANGE LAW OF JAPAN (THE “SEL”), AND MAY NOT BE OFFERED OR SOLD IN JAPAN OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY RESIDENT OF JAPAN OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY RESIDENT OF JAPAN OR TO OTHERS FOR RE-OFFERING OR RESALE, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY RESIDENT OF JAPAN, EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, AND OTHERWISE IN COMPLIANCE WITH, THE SEL, AND IN COMPLIANCE WITH THE OTHER RELEVANT LAWS AND REGULATIONS OF JAPAN. AS USED IN THIS PARAGRAPH, “RESIDENT OF JAPAN” MEANS ANY PERSON RESIDENT IN JAPAN, INCLUDING ANY CORPORATION OR OTHER ENTITY ORGANIZED UNDER THE LAWS OF JAPAN.

NOTICE TO RESIDENTS OF HONG KONG

EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT:

IT HAS NOT OFFERED OR SOLD AND WILL NOT OFFER OR SELL IN HONG KONG, BY MEANS OF ANY DOCUMENT, ANY CERTIFICATES OTHER THAN (A) TO PERSONS WHOSE ORDINARY BUSINESS IS TO BUY OR SELL SHARES OR DEBENTURES (WHETHER AS PRINCIPAL OR AGENT); OR (B) TO PROFESSIONAL INVESTORS WITHIN THE MEANING OF THE SECURITIES AND FUTURES ORDINANCE (CAP. 571) OF THE LAWS OF HONG KONG AND ANY RULES MADE THEREUNDER; OR (C) IN CIRCUMSTANCES THAT DO NOT RESULT IN THE DOCUMENT BEING A “PROSPECTUS” AS DEFINED IN THE COMPANIES ORDINANCE (CAP. 32) OF THE LAWS OF HONG KONG OR THAT DO NOT CONSTITUTE AN OFFER TO THE PUBLIC WITHIN THE MEANING OF THAT ORDINANCE; AND

S-25

IT HAS NOT ISSUED OR HAD IN ITS POSSESSION FOR THE PURPOSE OF ISSUE, AND WILL NOT ISSUE OR HAVE IN ITS POSSESSION FOR THE PURPOSE OF ISSUE, WHETHER IN HONG KONG OR ELSEWHERE ANY ADVERTISEMENT, INVITATION OR DOCUMENT RELATING TO THE CERTIFICATES, WHICH IS DIRECTED AT, OR THE CONTENTS OF WHICH ARE LIKELY TO BE ACCESSED OR READ BY, THE PUBLIC OF HONG KONG (EXCEPT IF PERMITTED TO DO SO UNDER THE SECURITIES LAWS OF HONG KONG) OTHER THAN WITH RESPECT TO CERTIFICATES THAT ARE INTENDED TO BE DISPOSED OF ONLY TO PERSONS OUTSIDE HONG KONG OR ONLY TO “PROFESSIONAL INVESTORS” AS DEFINED UNDER THE SECURITIES AND FUTURES ORDINANCE (CAP. 571) OF THE LAWS OF HONG KONG AND ANY RULES MADE UNDER THAT ORDINANCE.

NOTICE TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA

IN RELATION TO EACH MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE, WHICH WE REFER TO HEREIN AS A RELEVANT MEMBER STATE, EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT WITH EFFECT FROM AND INCLUDING THE DATE ON WHICH THE PROSPECTUS DIRECTIVE IS IMPLEMENTED IN THAT RELEVANT MEMBER STATE (THE “RELEVANT IMPLEMENTATION DATE”), IT HAS NOT MADE AND WILL NOT MAKE AN OFFER OF CERTIFICATES TO THE PUBLIC IN THAT RELEVANT MEMBER STATE PRIOR TO THE PUBLICATION OF A PROSPECTUS IN RELATION TO THE CERTIFICATES WHICH HAS BEEN APPROVED BY THE COMPETENT AUTHORITY IN THAT RELEVANT MEMBER STATE OR, WHERE APPROPRIATE, APPROVED IN ANOTHER RELEVANT MEMBER STATE AND NOTIFIED TO THE COMPETENT AUTHORITY IN THAT RELEVANT MEMBER STATE, ALL IN ACCORDANCE WITH THE PROSPECTUS DIRECTIVE, EXCEPT THAT IT MAY, WITH EFFECT FROM AND INCLUDING THE RELEVANT IMPLEMENTATION DATE, MAKE AN OFFER OF CERTIFICATES TO THE PUBLIC IN THAT RELEVANT MEMBER STATE AT ANY TIME:

(A) TO QUALIFIED INVESTORS AS DEFINED IN THE PROSPECTUS DIRECTIVE;

(B) TO FEWER THAN 100 (OR, IF THE RELEVANT MEMBER STATE HAS IMPLEMENTED THE RELEVANT PROVISION OF THE 2010 PD AMENDING DIRECTIVE, 150) NATURAL OR LEGAL PERSONS (OTHER THAN QUALIFIED INVESTORS AS DEFINED IN THE PROSPECTUS DIRECTIVE) SUBJECT TO OBTAINING THE PRIOR CONSENT OF THE REPRESENTATIVES FOR ANY SUCH OFFER; OR

(C) IN ANY OTHER CIRCUMSTANCES WHICH DO NOT REQUIRE THE PUBLICATION BY THE ISSUING ENTITY OF A PROSPECTUS PURSUANT TO ARTICLE 3 OF THE PROSPECTUS DIRECTIVE.

FOR THE PURPOSES OF THIS PROVISION, THE EXPRESSION AN “OFFER OF CERTIFICATES TO THE PUBLIC” IN RELATION TO ANY CERTIFICATES IN ANY RELEVANT MEMBER STATE MEANS THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE CERTIFICATES TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE THE CERTIFICATES, AS THE SAME MAY BE VARIED IN THAT RELEVANT MEMBER STATE BY ANY MEASURE IMPLEMENTING THE PROSPECTUS DIRECTIVE IN THAT RELEVANT MEMBER STATE, THE EXPRESSION “PROSPECTUS DIRECTIVE” MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING MEASURE IN EACH RELEVANT MEMBER STATE AND THE EXPRESSION “2010 PD AMENDING DIRECTIVE” MEANS DIRECTIVE 2010/73/EU.

S-26

NOTICE TO RESIDENTS OF THE UNITED KINGDOM

THE UNDERWRITER HAS REPRESENTED AND AGREED THAT:

(A) IT HAS ONLY COMMUNICATED OR CAUSED TO BE COMMUNICATED AND WILL ONLY COMMUNICATE OR CAUSE TO BE COMMUNICATED AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED (THE “FSMA”)) RECEIVED BY IT IN CONNECTION WITH THE ISSUE OR SALE OF THE CERTIFICATES IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FSMA DOES NOT APPLY TO THE ISSUING ENTITY; AND

(B) IT HAS COMPLIED AND WILL COMPLY WITH ALL APPLICABLE PROVISIONS OF THE FSMA WITH RESPECT TO ANYTHING DONE BY IT IN RELATION TO THE CERTIFICATES IN, FROM OR OTHERWISE INVOLVING THE UNITED KINGDOM.

THIS OFFERING DOCUMENT IS DIRECTED ONLY AT PERSONS WHO (I) ARE OUTSIDE THE UNITED KINGDOM OR (II) ARE INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 AS AMENDED (THE “ORDER”) OR (III) ARE HIGH NET WORTH ENTITIES FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER OR (IV) SUCH OTHER PERSONS TO WHOM IT MAY LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS OFFERING DOCUMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS OFFERING DOCUMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.

S-27

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated April 2, 2013

PROSPECTUS

FirstEnergy Ohio PIRB Special Purpose Trust 2013

Issuing Entity

Pass-Through Trust Certificates

CEI Funding LLC

OE Funding LLC

TE Funding LLC

Issuers of the Phase-In-Recovery Bonds

The Cleveland Electric Illuminating Company

Ohio Edison Company

The Toledo Edison Company

Sponsors, Sellers and Initial Servicers

See “Risk Factors” beginning on page 16 to read about factors you should consider before buying the certificates.

The trust may sell one or more tranches of certificates as described in the prospectus supplement. Each tranche of certificates will represent fractional undivided beneficial interests in the corresponding tranches of bonds of CEI Funding LLC, OE Funding LLC and TE Funding LLC held by the trust. The assets of the trust will consist solely of the bonds, which are known as “phase-in-recovery bonds” under Ohio law. The trust will grant to the certificate trustee, for the benefit of certificateholders, a lien on the bonds and other trust property relating to each tranche of bonds issued by each of the bond issuers.

Each of the bonds will be secured primarily by the right to impose, charge and collect irrevocable nonbypassable usage-based charges payable by retail electric customers in the service territories of CEI, OE or TE, as the case may be. Each of the bonds will be a non-recourse obligation of CEI Funding LLC, OE Funding LLC or TE Funding LLC, as the case may be. Neither the bonds nor the certificates will be legal obligations of CEI, OE or TE, as the sponsors, sellers and initial servicers.

Neither the certificates, the bonds or the phase-in-recovery property securing the bonds are an obligation of the State of Ohio, the Public Utilities Commission of Ohio, or any political subdivision, governmental agency, authority or instrumentality of the State of Ohio or of FirstEnergy, CEI, OE or TE or any of their respective affiliates, except for the bond issuers and the trust.

Neither the full faith and credit or the taxing power of the State of Ohio, nor the Public Utilities Commission of Ohio, nor any political subdivision, agency, authority or instrumentality of the State of Ohio, is pledged to the payment of principal of, or interest on, the certificates or the bonds, or the payments securing the bonds. Furthermore, neither the State of Ohio, nor the Public Utilities Commission of Ohio, nor any political subdivision, agency, authority or instrumentality of the State of Ohio will appropriate any funds for the payment of any of the certificates or the bonds.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                     , 2013

TABLE OF CONTENTS

PROSPECTUS

	Page
READING THIS PROSPECTUS		iv
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION		v
PROSPECTUS SUMMARY		1
RISK FACTORS		16
Risks Related to Limited Source of Payments and Credit Enhancement		16
Risks Associated with Potential Judicial, Legislative or Regulatory Actions		16
Servicing Risks		19
Storm-Related Risks		21
Risks Related to the Phase-In-Recovery Property		22
Bankruptcy and Creditors’ Rights Issues		22
Other Risks Associated with an Investment in the Certificates		25
REVIEW OF PHASE-IN-RECOVERY PROPERTY		28
THE SECURITIZATION ACT		31
Background and Regulatory Overview		31
Recovery of Phase-In Costs		31
CEI, OE and TE and Other Utilities May Securitize Phase-In Costs		32
DESCRIPTION OF THE PHASE-IN-RECOVERY PROPERTY		36
Overview		36
Financing Order and Issuance Advice Letters		36
Phase-In-Recovery Property		37
Phase-In-Recovery Charges		37
Adjustments to the Phase-In-Recovery Charges		38
SALE AGREEMENTS		40
Seller Representations and Warranties		40
Seller Covenants		42
BANKRUPTCY AND CREDITORS’ RIGHTS ISSUES		46
True Sale		46
Substantive Consolidation		47
Estimation of Claims; Challenges to Indemnity Claims		48
Enforcement of Rights by the Bond Trustee		48
Bankruptcy of a Servicer		48
THE ISSUING ENTITY		50
THE TRUSTEES		51
Certificate Trustee		51
Bond Trustee		51
THE BOND ISSUERS		53
Restricted Purpose		53
Management		54
Limitation on Liabilities		54
Bond Issuers’ Relationship with the Ohio Companies		54
Relationship with PUCO		55
Administration Agreement		55
THE SPONSORS, SELLERS AND INITIAL SERVICERS		56
Revenues, Customer Base and Energy Consumption		56
Electricity Delivered to Retail Customers, Electric Delivery Revenues and Retail Customers		57
Forecasting Electricity Consumption		59

i

	Page
Billing and Collections		62
Credit Policy		62
Billing		63
Collection Process		63
Loss Experience		64
Days Sales Outstanding		64
Delinquencies		65
Where to Find Information about CEI, OE and TE		65
SERVICING AGREEMENTS		66
Servicing Procedures		66
Servicing Standards and Covenants		66
True-Up Adjustment Process		67
Remittances to Collection Account		68
Servicing Compensation		68
Third Party Billers		68
Servicer Representations and Warranties; Indemnification		69
Statements by Servicers		70
Evidence as to Compliance		71
Matters Regarding the Servicers		71
Servicer Defaults		72
Rights When a Servicer Defaults		72
Waiver of Past Defaults		73
Successor Servicer		73
Amendment		73
DESCRIPTION OF THE BONDS		74
Security		74
State Pledge		74
Collection Account		75
General Subaccount		76
Capital Subaccount		76
Excess Funds Subaccount		76
Interest and Principal		76
Optional Redemption		77
Allocations and Payments		77
Actions by Bondholders		78
Bond Events of Default; Rights on Bond Event of Default		79
Covenants of the Bond Issuers		80
Reports to Bondholders		82
Website Disclosure		83
Annual Compliance Statement		83
Bond Trustee Report to Bondholders		83
Legal Defeasance and Covenant Defeasance Options		83
DESCRIPTION OF THE CERTIFICATES		85
Payments and Distributions		85
Voting of the Certificates		86
Events of Default		87
Reports to Certificateholders		88
Website Disclosure		89
Annual Compliance Statement		89
Certificate Trustee Report to Certificateholders		89
Supplemental Certificate Indentures		89

ii

	Page
List of Certificateholders		90
Registration and Transfer of the Certificates		91
Book-Entry Registration and Definitive Certificates		91
WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE CERTIFICATES		94
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES		95
General		95
Treatment of the Certificates		96
Taxation of U.S. Certificateholders		96
Non-U.S. Certificateholders		97
Information Reporting and Backup Withholding		97
OHIO STATE TAXATION		99
CERTAIN ERISA AND OTHER CONSIDERATIONS		100
USE OF PROCEEDS		103
PLAN OF DISTRIBUTION		103
RATINGS		103
WHERE YOU CAN FIND MORE INFORMATION		104
REPORTS TO HOLDERS		105
LEGAL MATTERS		105
GLOSSARY OF DEFINED TERMS		106

iii

READING THIS PROSPECTUS

This prospectus provides information about us, the certificates, the bonds, the bond issuers and The Cleveland Electric Illuminating Company, Ohio Edison Company and The Toledo Edison Company, as the sponsors, sellers and initial servicers.

The specific terms of the certificates are contained in the prospectus supplement that accompanies this prospectus. This prospectus provides general information about the certificates. You should read both of these documents in full before buying the certificates.

References in this prospectus to the terms we, us, our or the issuing entity mean FirstEnergy Ohio PIRB Special Purpose Trust 2013, the entity which will issue the certificates. References to the pass-through trust certificates or the certificates, unless the context otherwise requires, means the trust certificates offered pursuant to this prospectus and the accompanying prospectus supplement. References to the certificateholders or the holders, unless the context otherwise requires, means the registered holders of the certificates. References to the bond issuers refer to CEI Funding LLC, OE Funding LLC and TE Funding LLC, as the case may be. References to the phase-in-recovery bonds or the bonds refer to the phase-in-recovery bonds issued by the bond issuers. References to the Ohio Companies, the sponsors, the sellers or the initial servicers refer to The Cleveland Electric Illuminating Company, Ohio Edison Company and The Toledo Edison Company, as the case may be. The Ohio Companies are also referred to respectively as CEI, OE and TE. FirstEnergy Corp., the parent of the Ohio Companies, is referred to herein as FirstEnergy. References to the Securitization Act refer to Sections 4928.23 through 4928.2318 of the Ohio Revised Code, passed by the Ohio House of Representatives and the Ohio Senate in December 2011, and effective March 2012, which Securitization Act created the regulatory structure that allows electric utilities to issue bonds to securitize certain phase-in costs. Unless the context otherwise requires, the term customer or retail customer means a retail end user of electricity and related services provided by a retail electric service provider via the transmission and distribution system of an electric distribution utility. References to the Ohio commission or the PUCO refer to the Public Utilities Commission of Ohio. You can find a glossary of certain defined terms used in this prospectus on page 106.

We have included cross-references to sections in this prospectus where you can find further related discussions.

You should rely only on information on the certificates provided in this prospectus and the accompanying prospectus supplement. We have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not offering to sell the certificates in any jurisdiction where the offer or sale is not permitted. The information in this prospectus is current only as of the date of this prospectus.

iv

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Some statements contained in this prospectus and the accompanying prospectus supplement concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts, including statements in the documents that are incorporated by reference as discussed in this prospectus under the heading “Where You Can Find More Information,” are forward-looking statements within the meaning of the federal securities laws. Actual events or results may differ materially from those expressed or implied by these statements. In some cases, you can identify our forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “will” or other similar words.

Forward-looking statements are based on beliefs, expectations and assumptions based on information available at the time the statements are made. Assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, we cannot assure you that actual results will not differ materially from those expressed or implied by these forward-looking statements. Some of the factors that could cause actual results to differ from those expressed or implied by our forward-looking statements are discussed in the section entitled “Risk Factors” beginning on page 16. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and the note issuers undertake no obligation to update or revise any forward-looking statement.

The following are some of the factors that could cause actual results to differ from those expressed or implied by our forward-looking statements:

• changes in customers’ demand for power, including but not limited to changes resulting from implementation of state and federal energy efficiency and peak demand restriction mandates and demographic patterns;

• weather variations and other natural disasters affecting retail electric customer energy usage in the Ohio Companies’ respective service territories;

• state and federal legislative and regulatory actions or developments affecting various aspects of the Ohio Companies’ respective businesses, including, among others, energy deregulation or re-regulation, health care reform, financial reform and tax legislation;

• the accuracy of the servicers’ forecast of electrical consumption or the payment of phase-in-recovery charges;

• non-payment of phase-in-recovery charges by retail electric customers;

• the reliability of the systems, procedures and other infrastructure necessary to operate the retail electric business in the Ohio Companies’ respective service territories;

• damage to and the general operating performance of the Ohio Companies’ facilities and the facilities of retail electric providers operating in the Ohio Companies’ respective service territories;

• the direct or indirect effects of cyber attacks, data security breaches or other attempts to disrupt the business of the Ohio Companies or retail electric providers operating in the Ohio Companies’ respective service territories;

• the servicers’ ability to perform their billing, collection and other functions;

• national or regional economic conditions affecting retail electric customer energy usage in the Ohio Companies’ respective service territories;

• acts of war or terrorism or other catastrophic events affecting retail electric customer energy usage in the Ohio Companies’ respective service territories; and

• other factors we discuss in this prospectus and the accompanying prospectus supplement.

You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statement.

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PROSPECTUS SUMMARY

This summary highlights some information from this prospectus. Because this is a summary, it does not contain all of the information that may be important to you. You should read both this prospectus and the accompanying prospectus supplement before you buy the certificates. This prospectus contains terms, appearing in bold text on their first usage, that are specific to the regulated utility industry and the certificates and may be technical in nature. Please refer to the Glossary of Defined Terms.

Issuing Entity FirstEnergy Ohio PIRB Special Purpose Trust 2013, a Delaware statutory trust to be formed prior to the offering of the certificates.

Certificates FirstEnergy Ohio PIRB Special Purpose Trust 2013 Pass-Through Trust Certificates.

The trust may issue certificates in one or more tranches under the certificate indenture between the trust and the certificate trustee. Each tranche of certificates will represent fractional undivided beneficial interests in the corresponding tranches of bonds of the bond issuers. Holders of each tranche of certificates will receive payments received by the trust on the related tranches of bonds of each bond issuer. These payments will be the primary source of distributions on a tranche of certificates. The trust may not issue additional certificates other than in connection with transfers, exchanges or replacements permitted under the certificate indenture. See “Description of the Certificates” in this prospectus.

Bonds CEI Funding bonds, OE Funding bonds and TE Funding bonds.

Each tranche of the CEI Funding bonds, OE Funding bonds and TE Funding bonds will have the same interest rate, scheduled maturity date and final maturity date as the related tranche of certificates. Taken together, the tranches of bonds of the bond issuers relating to the corresponding tranches of certificates will have the same aggregate principal amount and expected amortization schedule as the corresponding tranches of certificates, all as described in the accompanying prospectus supplement. The CEI Funding bonds will be secured primarily by the phase-in-recovery property relating thereto sold to it by CEI. The OE Funding bonds will be secured primarily by the phase-in-recovery property relating thereto sold to it by OE. The TE Funding bonds will be secured primarily by the phase-in-recovery property relating thereto sold to it by TE. See “Description of the Bonds” in this prospectus.

Purpose of the Offering The issuance of the bonds and the certificates is intended to enable the sponsors to recover certain previously approved costs, referred to as phase-in costs, on terms more favorable to customers than would be achievable through the recovery methods previously approved by the PUCO. Please read “The Securitization Act” in this prospectus.

Relationship with the PUCO Pursuant to the financing order:

• the PUCO or its designated representative has a decision-making role co-equal with the sponsors with respect to the structuring and pricing of the certificates and all matters related to the

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structuring and pricing of the certificates will be determined through a joint decision of the sponsors and the PUCO or its designated representative or financial advisor;

• the PUCO’s financial advisor will participate fully in all plans and decisions related to the pricing, marketing and structuring of the bonds and certificates and will be provided timely information as necessary to fulfill its obligation to advise the PUCO in a timely manner but makes no representations as to any of the information contained herein; and

• the servicers will file periodic adjustments to the phase-in recovery charges with the PUCO on our behalf.

The bond issuers have agreed that certain reports concerning phase-in-recovery charge collections will be provided to the PUCO.

Transaction Overview Ohio law permits electric distribution utilities, such as CEI, OE and TE, to issue bonds to securitize certain costs that have been previously approved by the Ohio commission to be deferred as regulatory assets and collected from customers at a later date, including certain fuel costs, purchase power costs, infrastructure costs and environmental clean-up expenses. Once securitized through bonds issued pursuant to a final financing order of the Ohio commission, these costs, which are referred to as phase-in costs, may be recovered through usage-based charges called phase-in-recovery charges that are imposed on an electric distribution utility’s customers.

Ohio law permits special purpose entities formed by electric distribution utilities to issue and sell bonds, referred to as phase-in-recovery bonds, secured by property, rights and interests of an electric distribution utility, or assignee, under a financing order, including the right to impose, charge and collect the phase-in-recovery charges to be used to pay and secure the payment of such phase-in-recovery bonds and financing costs, the right to obtain adjustments to those charges and any revenues, rights to payments, moneys or other proceeds arising from the rights and interests created under the financing order, if doing so would measurably enhance cost savings for the electric distribution utility’s customers and would mitigate rate impacts to customers as compared with the previously-approved recovery methods. The foregoing property, rights and interests are referred to as the phase-in-recovery property. See “Description of the Phase-In-Recovery Property” in this prospectus.

The following sets forth the primary steps of the transaction underlying the offering of the certificates:

• The Cleveland Electric Illuminating Company, or CEI, will sell its phase-in-recovery property to CEI Funding LLC, or CEI Funding, in exchange for the net proceeds from the sale of the bonds issued by CEI Funding.

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Ohio Edison Company, or OE, will sell its phase-in-recovery property to OE Funding LLC, or OE Funding, in exchange for the net proceeds from the sale of the bonds issued by OE Funding.

The Toledo Edison Company, or TE, will sell its phase-in-recovery property to TE Funding LLC, or TE Funding, in exchange for the net proceeds from the sale of the bonds issued by TE Funding.

Unless the context otherwise requires, we refer to the bonds issued by CEI Funding, OE Funding and TE Funding collectively as the bonds.

• Each of CEI Funding, OE Funding and TE Funding will sell its respective bonds to the trust, in each case in exchange for an allocable portion, based on the aggregate principal amounts of the bonds of each bond issuer, of the net proceeds from the sale of the certificates issued by the trust.

• The trust, whose principal assets are the bonds, will sell the certificates to the underwriters named in the accompanying prospectus supplement.

• CEI will act as the servicer of CEI Funding’s phase-in-recovery property and as the administrator of CEI Funding. OE will act as the servicer of OE Funding’s phase-in-recovery property and as the administrator of OE Funding. TE will act as the servicer of TE Funding’s phase-in-recovery property and as the administrator of TE Funding.

Neither the certificates, the bonds nor the phase-in-recovery property securing the bonds is an obligation of the State of Ohio, the PUCO or any political subdivision, governmental agency, authority or instrumentality of the State of Ohio or of CEI, OE, TE, FirstEnergy or any of their respective affiliates, except for the bond issuers and the trust.

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The following diagram shows the parties to the transaction related to this offering and summarizes their roles and their relationship to each other:

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Risk Factors You should consider and carefully read the risks described under “Risk Factors,” which begin on page 16 before investing in the certificates. These risks may delay the distribution of interest on, and principal of, the certificates or cause you to suffer a loss on your investment.

Sponsors, Sellers and Initial Servicers CEI is a public electric utility, which provides regulated electric distribution services in northeastern Ohio, and a subsidiary of FirstEnergy. It will be the seller of phase-in-recovery property to CEI Funding and will serve as the initial servicer for the CEI Funding bonds.

OE is a public electric utility, which provides regulated electric distribution services in central and northeastern Ohio, and a subsidiary of FirstEnergy. It will be the seller of phase-in-recovery property to OE Funding and will serve as the initial servicer for the OE Funding bonds.

TE is a public electric utility, which provides regulated electric distribution services in northwestern Ohio, and a subsidiary of FirstEnergy. It will be the seller of phase-in-recovery property to TE Funding and will serve as the initial servicer for the TE Funding bonds.

Please read “The Sponsors, Sellers and Initial Servicers” in this prospectus.

Our Address c/o FirstEnergy Service Company

76 South Main Street

Akron, Ohio 44308

Our Telephone Number (800) 736-3402

Bond Issuers CEI Funding, OE Funding and TE Funding, each having an address at 76 South Main Street, Akron, Ohio 44308. The telephone number of the bond issuers is (800) 736-3402.

Trustees U.S. Bank Trust National Association, a national banking association, will serve as the Delaware trustee of the issuing entity and U.S. Bank National Association, a national banking association, will serve as trustee under the certificate indenture and under each bond indenture. Please read “The Trustees” in the prospectus supplement for a description of certain of the trustee’s relevant prior experience and “The Trustees” in this prospectus for a description of the trustee’s duties and responsibilities as certificate trustee under the certificate indenture and as bond trustee under each bond indenture.

Interest Interest payable with respect to each tranche of certificates will represent the sum of the interest paid on the related tranches of bonds and will accrue at the interest rate specified in the accompanying prospectus supplement. The certificate trustee will distribute interest accrued on each tranche of certificates on each distribution date, to the extent interest is paid on the related tranches of bonds of each bond issuer on the related payment date.

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Principal The certificate trustee will distribute principal of each tranche of certificates, to the extent principal is paid on the corresponding tranches of bonds on the related payment date in the amounts and on the distribution dates specified in the expected amortization schedule in the accompanying prospectus supplement. See “Description of the Bonds—Allocations and Payments” and “Description of the Certificates—Payments and Distributions” in this prospectus.

On any payment date, the bond issuers will pay principal of their respective bonds only until the outstanding principal balances of the various tranches have been reduced to the principal balances specified for those tranches in the expected amortization schedules for such bonds. If cash is not available to a bond issuer to make such principal payments in respect of all tranches of bonds of that bond issuer, principal will be paid in respect of such tranches of bonds in the order of priority set forth in the accompanying prospectus supplement.

If an event of default under a bond indenture in respect of the bonds of a bond issuer has occurred and is continuing, the certificate trustee may vote all, and upon the written direction of the holders of at least a majority in principal amount of the outstanding certificates will vote a corresponding majority of, the bonds of that bond issuer held by the certificate trustee in favor of directing the bond trustee to declare the unpaid principal amount of the outstanding bonds of that bond issuer, and accrued interest thereon, to be due and payable. Principal due and payable on the bonds of a bond issuer as the result of an event of default will be paid pro rata based on the outstanding principal amount of the bonds of each tranche. See “Description of the Certificates—Events of Default” in this prospectus.

Final Payment / Final Maturity Date Failure to pay a scheduled principal payment on any payment date or the entire outstanding amount of the bonds of any tranche by the scheduled final payment date will not result in a default with respect to that tranche of bonds of a bond issuer. The failure to pay the entire outstanding principal balance of the bonds of any tranche will result in a default only if such payment has not been made by the final maturity date for such tranche. For the scheduled final payment date and the final maturity date of each tranche of bonds of each bond issuer, see “Description of the Bonds” in the accompanying prospectus supplement.

Payment and Record Dates The payment and record dates for the bonds and certificates will be specified in the prospectus supplement. See “Description of the Certificates—Distributions of Interest and Principal” and “Description of the Bonds” in the accompanying prospectus supplement.

Ratings We expect the bonds and the certificates will receive credit ratings from three nationally recognized statistical rating organizations, or NRSROs. Please see “Ratings” in this prospectus and in the accompanying prospectus supplement.

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Phase-In-Recovery Charges CEI, OE and TE have obtained from the PUCO, which regulates electric distribution utilities in Ohio, a financing order (i) designating the phase-in costs and approving certain financing costs associated with issuing and servicing the CEI Funding bonds, the OE Funding bonds and the TE Funding bonds, respectively, (ii) authorizing the sale of the phase-in-recovery property to CEI Funding, OE Funding and TE Funding and (ii) authorizing the trust structure. This order, referred to as the financing order, authorizes CEI, OE and TE to recover their respective phase-in costs and approved financing costs and authorizes the billing and collection by CEI, OE and TE of the respective phase-in-recovery charges (as defined in the glossary on page 106) as servicers of the bond issuers.

Phase-in-recovery charges are nonbypassable in that such charges cannot be avoided by any customer or other person obligated to pay the charges. Subject to the methodology approved in the financing order, the phase-in-recovery charges will apply to all retail customers of CEI, OE and TE, as the case may be, for as long as they remain retail customers of such electric distribution utility. If a customer of the electric distribution utility purchases electric generation service from a competitive retail electric service provider, the electric distribution utility is authorized by the Securitization Act to collect the phase-in-recovery charges directly from that customer.

The phase-in-recovery charges are separate and apart from CEI’s, OE’s and TE’s base rates, and are subject to adjustment semiannually (other than the initial adjustment, which will be completed within 12 months after the issuance date of the bonds, and adjustments in the last year each tranche of bonds is expected to be outstanding, in which case adjustments as frequently as monthly may be necessary). See “—Statutory Adjustments to the Phase-In-Recovery Charges” and “Description of the Phase-In-Recovery Property—Adjustments to the Phase-In-Recovery Charges” in this prospectus.

CEI customers are expected to have estimated initial phase-in-recovery charges of [            ] cents/kWh resulting in an estimated monthly cost of $[        ] for the typical residential bill (1,000 kWh), which represents approximately [        ]% of such monthly residential bill. Under current recovery methods, a 1,000 kWh residential customer would pay on average an estimated total monthly charge of [            ] cents/kWh resulting in a monthly cost of $[            ].

OE customers are expected to have estimated initial phase-in-recovery charges of [            ] cents/kWh resulting in an estimated monthly cost of $[            ] for the typical residential bill (1,000 kWh), which represents approximately [        ]% of such monthly residential bill. Under current recovery methods, a 1,000 kWh residential customer would pay on average an estimated total monthly charge of [            ] cents/kWh resulting in a monthly cost of $[            ].

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TE customers are expected to have estimated initial phase-in-recovery charges of [            ] cents/kWh resulting in an estimated monthly cost of $[            ] for the typical residential bill (1,000 kWh), which represents approximately [        ]% of such monthly residential bill. Under current recovery methods, a 1,000 kWh residential customer would pay on average an estimated total monthly charge of [            ] cents/kWh resulting in a monthly cost of $[            ].

The amounts shown above are dependent on a number of assumptions and based on estimates and market conditions as of ,2013. Such amounts will also periodically change throughout the recovery period in accordance with the approved adjustment mechanism described in this prospectus.

Customers All retail customers of CEI, OE and TE within their respective geographic territories will be subject to the phase-in-recovery charges.

Statutory Adjustments to the Phase-In-Recovery Charges Each of the servicers will calculate and set their respective initial phase-in-recovery charges at a level estimated to generate sufficient revenues (and taking into account the cap on certain ongoing financing costs):

• to pay fees and expenses related to the servicing and retirement of the bonds of the related bond issuer and of the certificates allocable to the bond issuer, including, without limitation, trustee fees and expenses, servicing costs, rating agency surveillance fees, legal and accounting fees and other ongoing financing costs, as well as adjustments for dealing with estimated and actual costs;

• to pay interest on the bonds;

• to pay principal of each tranche of such bonds according to the related expected amortization schedule;

• to replenish the capital subaccount to the required capital level; and

• to pay all additional fees, costs and charges and other financing costs approved under the financing order.

The initial adjustment to the phase-in-recovery charges will be completed within 12 months after the issuance date of the bonds. Thereafter, such adjustments will be made semiannually, with the exception of the last year each tranche of bonds is expected to be outstanding, in which case adjustments may be made as frequently as monthly, if necessary.

Each servicer will base adjustments to the related phase-in-recovery charges on actual overcollections and undercollections, debt service costs and updated assumptions as to various factors, including electricity usage by customers and rates of charge-offs. These adjustments will continue until interest on and principal of all tranches of the CEI Funding bonds, in the case of CEI, OE Funding bonds, in the case of OE and the TE Funding bonds, in the case of TE, have been paid in full.

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No later than November 1 and May 1 of each year after the initial adjustment, each servicer will file with the PUCO its semiannual request for approval of the adjusted phase-in-recovery charges. Such adjustments will become effective within 60 days after the request is submitted unless otherwise ordered by the PUCO. The PUCO’s review of these requests is limited to determining whether there is any mathematical error in the servicer’s application of the adjustment mechanism to the phase-in-recovery charges.

See “Description of the Phase-In-Recovery Property—Adjustments to the Phase-In-Recovery Charges” in this prospectus.

Security/Credit Enhancement The bonds will be secured primarily by the phase-in-recovery property of the related bond issuer, generally consisting of the respective bond issuer’s irrevocable right to impose, charge and collect nonbypassable usage-based phase-in-recovery charges from retail electric customers in the sponsors’ respective service territories. The certificates will be secured primarily by the bonds. Credit enhancement for the bonds, through a true-up adjustment mechanism and capital subaccount, is intended to protect against losses or delays in scheduled payments on the bonds and accordingly, the certificates. There will be no other forms of credit enhancement for the bonds except for amounts held in the capital subaccounts and excess funds subaccounts. We do not anticipate that the bonds or the certificates will have the benefit of any liquidity facility or of any third-party credit enhancement, such as guarantees, letters of credit or insurance. The bonds of a bond issuer will be payable only from its phase-in-recovery property and its other bond collateral and not from the phase-in-recovery property or other bond collateral of the two other bond issuers. See “The Securitization Act” and “Description of the Phase-In-Recovery Property” in this prospectus.

State of Ohio Pledge The Securitization Act and the financing order contains a pledge and agreement by the State of Ohio with the bondholders and bond issuers that the State of Ohio will not take or permit any action that impairs the value of phase-in-recovery property under the financing order or revises the phase-in-costs for which recovery is authorized under the financing order or, except for the approved adjustment mechanism authorized in the financing order and allowed under the Securitization Act, reduce, alter or impair phase-in-recovery charges until the bonds, all financing costs and all amounts to be paid under any ancillary agreement are paid or performed in full.

Optional Redemption Neither the certificate indenture nor the bond indentures permit an optional redemption of the certificates or the bonds, respectively.

Collection Accounts and Subaccounts Each bond issuer will establish a collection account to hold collections of its phase-in-recovery charges as well as the capital contributions made to that bond issuer. Each collection account will consist of three subaccounts:

• a general subaccount;

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• a capital subaccount for the initial capital contributions to the bond issuer; and

• an excess funds subaccount.

All amounts in a collection account not allocated to any other subaccount will be allocated to the general subaccount. Withdrawals from and deposits to these subaccounts will be made as described under “Description of the Bonds—Allocations and Payments.”

Capital Subaccounts Prior to issuance of the bonds, CEI will contribute capital to CEI Funding, OE will contribute capital to OE Funding and TE will contribute capital to TE Funding, in each case, in the amount specified in the accompanying prospectus supplement. Each bond issuer will deposit the capital into its capital subaccount. A bond trustee will draw on amounts available in the related bond issuer’s capital subaccount to the extent that amounts available in that bond issuer’s general subaccount and excess funds subaccount are insufficient to pay interest on, or principal of, its bonds and, subject to the cap, the fees and expenses of servicing and retiring such bonds and an allocable portion of the certificates.

If a bond trustee uses amounts on deposit in a capital subaccount to make payments on the related bonds on a payment date, then that capital subaccount will be replenished by the related bond issuer on subsequent payment dates to the extent the servicer remits payments arising from the phase-in-recovery charges exceeding the amounts required to pay amounts having a higher priority of payment. See “Description of the Bonds—Allocations and Payments” in this prospectus.

Excess Funds Subaccounts Each excess funds subaccount will be funded with collected phase-in-recovery charges and earnings on amounts in the collection account in excess of the amount necessary to:

• subject to the cap to the extent applicable, pay fees and expenses (including any indemnity payments) related to the servicing and retirement of the bonds (including trustee, independent director and administration fees and expenses) of that bond issuer and the portion of the certificates allocable to that bond issuer;

• pay interest on, and principal of, such bonds to the extent required to be paid on that payment date; and

• replenish the capital subaccount of that bond issuer to the required capital level.

A bond trustee will draw on amounts in the excess funds subaccount of a bond issuer to the extent amounts available in the bond issuer’s general subaccount are insufficient to pay the amounts listed above.

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Collections; Allocations; Distributions; Priority of Payments Starting with the first deemed collection date after the issuance of the bonds, each servicer will remit daily to the collection account for its bond issuer an amount equal to the actual phase-in-recovery charges billed, less an allowance for estimated charge-offs, within two business days after the day payments arising from the phase-in-recovery charges are deemed to be collected, subject to an annual reconciliation. See “Servicing Agreements—Remittances to Collection Account” in this prospectus.

On each semi-annual payment date, or for any amount payable under clauses (1) through (4) below, on any business day, each bond trustee will allocate or, subject to the cap to the extent applicable, pay all amounts in the collection account of the related bond issuer, including earnings on these amounts, as follows and in the following order of priority:

(1) first, all amounts owed by that bond issuer to the related bond trustee (including indemnity payments) will be paid, and second, all amounts owed by that bond issuer to the Delaware trustee, the certificate trustee and the certificate issuer under the applicable basic documents will be paid;

(2) the servicing fee and all unpaid servicing fees from any prior payment dates will be paid to the bond issuer’s servicer;

(3) the administration fee and all unpaid administration fees from any prior payment dates and amounts due independent directors will be paid to the bond issuer’s administrator and the independent directors, respectively;

(4) payment of all other operating expenses, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the related servicing agreement, and taxes and indemnities payable by the bond issuer will be paid to the person entitled thereto;

(5) first, any overdue interest after a payment default and second, semiannual interest in respect of the bonds of the bond issuer will be transferred to the certificate trustee, as bondholder, for distribution to the certificateholders;

(6) first, funds necessary to pay any principal payable as a result of a bond event of default or on the final maturity date, and second, principal based on priorities described in the accompanying prospectus supplement will be transferred to the certificate trustee, as bondholder, for distribution to the applicable certificateholders according to the expected amortization schedule for each tranche of bonds;

(7) unpaid operating expenses and indemnities owed by that bond issuer under the basic documents will be paid to the persons entitled thereto;

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(8) the amount, if any, by which that bond issuer’s capital subaccount needs to be funded to equal the required capital level as of a payment date will be allocated to the capital subaccount;

(9) an amount equal to one-half of 6.85% of the required capital level will be paid to that bond issuer’s seller;

(10) allocation of the remainder, if any, to the excess funds subaccount; and

(11) following, first, the repayment of all bonds and the corresponding portion of the certificates and all approved financing costs, and, second, the payment of any unpaid amounts, due the Delaware trustee, the certificate trustee, the applicable bond trustee under clause (1) above, that exceeded the cap, the balance, together with all amounts in the capital subaccount and the excess funds subaccount, will be released to that bond issuer free and clear of the lien of the indenture.

If, on any payment date, or for any amounts payable under clauses (1) through (4) above, on any business day, funds on deposit in the general subaccount of the bond issuer are insufficient to make the transfers contemplated by clauses (1) through (6) above, the bond trustee will first, draw from amounts on deposit in the excess funds subaccount of the bond issuer and second, draw from amounts on deposit in the bond issuer’s capital subaccount, up to the amount of the shortfall, in order to make the transfers described above. In addition, if on any payment date funds on deposit in the general subaccount of a bond issuer are insufficient to make the transfer described in clause (8) above, the related bond trustee will draw from amounts on deposit in the excess funds subaccount of that bond issuer to make the required transfer. See “Description of the Bonds—Allocations and Payments” in this prospectus.

The following diagram provides a general summary of the flow of funds from the customers of a bond issuer through the servicer to the collection account of that bond issuer, and the various allocations from the collection account:

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Cap on Certain Financing Costs Pursuant to the financing order, certain approved ongoing financing costs recoverable through phase-in-recovery charges (including those referenced in clauses (1) through (4) and clauses (7) and (9) above) may not exceed on an annual basis the aggregate amount approved for such ongoing financing costs by more than 5%. The sum of such approved ongoing financing costs ($1,072,732) plus an amount equal to 5% of such costs is equal to $1,126,369, which amount is referred to as the cap. The ongoing financing costs referenced in clauses (1) through (4) and clauses (7) and (9) above, to the extent in excess of the cap for any given annual period, may be recovered in any subsequent annual period (subject to the annual cap in such subsequent period). Unused cap amounts in a given year will not be available for recovery of any ongoing financing costs in a subsequent year. See “Description of the Bonds—Allocations and Payments.” The foregoing amounts do not reflect a servicing fee that would be paid to any non-utility successor servicer, which would result in a higher cap.

The initial servicer of each bond issuer will agree in its servicing agreement to indemnify each applicable trustee (i.e., its bond trustee and its allocable portion as to the certificate trustee and Delaware trustee) for all due and unpaid indemnity and other payments of the applicable bond issuer under the applicable basic amounts, which exceed the cap. Each servicing agreement will provide that this initial servicer obligation will continue as an obligation of such servicer in the event a successor servicer is appointed.

Servicing The servicers will service and administer the respective phase-in-recovery properties and bill and collect the respective phase-in-recovery charges in the same manner that they service and administer bill collections for their own account and the accounts they service for others, if any. See “Servicing Agreements—Servicing Standards and Covenants.”

Servicing Compensation Each servicer will be entitled to receive an annual servicing fee in an amount equal to 0.10% of the initial principal balance of the bonds of its bond issuer. If any of the servicers are replaced by a non-utility successor servicer, such non-utility successor servicer may be paid an annual servicing fee of up to 0.75% of the initial principal balance of the bonds.

The bond trustees will pay the unpaid servicing fees semiannually on each payment date to the extent of available funds prior to the distribution of any interest on and principal of its bonds.

Tax Status of the Certificates For federal income tax purposes, the trust will be treated as a “grantor trust,” and thus not taxable as a corporation, and each tranche of certificates will be treated as representing ownership of fractional undivided beneficial interests in the related tranches of bonds. Interest and original issue discount, if any, on the certificates, and any gain on

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the sale of the certificates, generally will be included in gross income of certificateholders for federal income tax purposes. See “Material U.S. Federal Income Tax Consequences.” Interest on the certificates and any profit on the sale of the certificates are subject to Ohio personal income taxes. For taxpayers other than a limited class of financial institutions, Ohio does not currently impose a personal property tax to which the certificates would be subject. See “Ohio State Taxation” in this prospectus.

ERISA See “Certain ERISA and Other Considerations” in this prospectus.

Payment Dates and Interest Accrual Interest will be distributed on the certificates semi-annually, on              and             . The first scheduled interest and principal distribution date is                     , 2013. If any interest distribution date is not a business day, distributions scheduled to be made on such date may be made on the next succeeding business day and no interest shall accrue upon such payment during the intervening period. On each distribution date, the certificate trustee will distribute interest on and principal of the certificates to the extent interest and principal is received on the corresponding tranches of bonds to the holders of each tranche of certificates as of the close of business on the record date. Interest on the bonds will be calculated on a 30/360 basis. See “Description of the Certificates” and “Description of the Bonds.”

Interest is due on each distribution date and principal is due upon the final maturity date for each tranche of certificates.

Continuing Disclosure Each bond issuer will or will cause its sponsor to, post on http://www.                .com, a collective website to be used by all bond issuers, period reports containing the information required by the related bond indenture (which will include reports and other information required to be filed with the SEC and information regarding the Phase-In-Recovery Charges). See “Description of the Bonds—Website Disclosure” in this prospectus.

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RISK FACTORS

Before investing in the certificates you should carefully consider the risks described below, as well as the other information contained in this prospectus and the accompanying prospectus supplement. These are risks we consider to be material to your decision whether to invest in the certificates. There may be risks that you view in a different way than we do, and we may omit a risk that we consider immaterial, but you consider important. If any of the risks discussed below occur, an investment in the certificates could be materially harmed.

Risks Related to Limited Source of Payments and Credit Enhancement

You could experience payment delays or losses as a result of limited sources of payment for the certificates and limited credit enhancement.

You could experience payment delays or losses on your certificates because payments on each tranche of bonds that correspond to your tranche of certificates are the primary source of distributions on the certificates. The bonds are the principal assets of the trust. The phase-in-recovery properties and the other bond collateral, which is expected to be of relatively small value, are in turn the only sources of payments on the bonds.

There will be no forms of credit enhancement for the bonds except for the right to adjust the phase-in-recovery charges and amounts held in the capital subaccounts and excess funds subaccounts. We do not anticipate that the bonds or the certificates will have the benefit of any liquidity facility or of any third-party credit enhancement, such as guarantees, letters of credit or insurance. The bonds of a bond issuer will be payable only from its phase-in-recovery property and its other bond collateral and not from the phase-in-recovery property or other bond collateral of any other bond issuer. The obligations of the bond issuers in respect of the bonds are separate and an event of default on the bonds of one bond issuer will not cause an event of default on the bonds of any other bond issuer.

If distributions are not made on the certificates in a timely manner as a result of nonpayment of the related bonds of one or more of the bond issuers, the holders of at least a majority of the outstanding principal amount of the certificates may direct the certificate trustee to bring an action against the defaulting bond issuer to foreclose on the phase-in-recovery property of that bond issuer and the other bond collateral securing its bonds. There is not likely to be a market, however, for the sale of the phase-in-recovery property and the other bond collateral.

Risks Associated with Potential Judicial, Legislative or Regulatory Actions

You could experience payment delays or losses as a result of amendment, repeal or invalidation of the Securitization Act or breach of the pledge of the State of Ohio.

In the Securitization Act, the State of Ohio and in the financing order, the PUCO on behalf of the State of Ohio, has pledged and agreed that it will not take or permit any action that impairs the value of the phase-in-recovery property or, except as allowed under the Securitization Act, reduce or impair phase-in-recovery charges that are imposed, charged or collected until the bonds and all other approved financing costs are paid in full. Even though the obligations of the PUCO and the State of Ohio in the financing order are direct, explicit, irrevocable and unconditional upon issuance of the bonds and are legally enforceable by the bond issuers, the bond trustee and the bond holders against the State of Ohio, it is possible that actions could be taken (even if such actions were ultimately found to be unlawful) to alter the provisions of the Securitization Act or limit or alter the phase-in-recovery properties or the financing order.

Ohio has both an initiative and a referendum process. The time for challenging the Securitization Act through referendum has expired, but the right of voters in Ohio to enact laws by initiative can be exercised at any time, provided a lengthy process is followed and successfully concluded. Supporters first must petition the Ohio legislature, and the legislature then has an opportunity to act on the proposed legislation. If the legislature rejects the proposed legislation or takes no action, then the initiative question will go to the ballot if additional signature requirements are met. Ohio voters may also initiate constitutional amendments by a similar process involving the Secretary of State, the Attorney General and the Ohio Ballot Board.

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Legislative Actions

Our counsel has opined to us that under applicable constitutional principles relating to the impairment of contracts, the State of Ohio could not repeal or amend the Securitization Act, or take or permit any action prohibited by, or fail to take any action required, under its pledge described above, if the repeal or amendment or the action or inaction would impair the value of the phase-in-recovery property or, except as allowed under the Securitization Act, reduce or impair phase-in-recovery charges that are imposed, charged or collected until the bonds and all other approved financing costs are paid in full, so as to cause a substantial impairment of the contractual obligation undertaken in the pledge, absent a demonstration by the State of Ohio that is a reasonable exercise of its sovereign power and of a character reasonable and appropriate to the public purpose justifying such action.

Although there have been numerous cases in which legislative or popular concerns with the burden of taxation or governmental charges have led to adoption of legislation reducing or eliminating taxes or charges that supported bonds or other contractual obligations entered into by public instrumentalities, courts have generally not considered these concerns by themselves to provide sufficient justification for a substantial impairment of the pledged security provided by the taxes or governmental charges for such bonds or obligations. Based on these court decisions (which, however, to date have not addressed directly the bonds and, thus, the certificates, or the State of Ohio’s pledge described above or any substantially similar bonds, certificates or pledges), it would appear unlikely that the State of Ohio could substantially impair the value of the phase-in-recovery property, or reduce or impair phase-in-recovery charges, unless the action is reasonable and appropriate to further a legitimate public purpose.

Moreover, in the opinion of our counsel, under the takings clauses of the United States and Ohio Constitutions, the State of Ohio could not repeal or amend the Securitization Act (by way of legislative process, or take or refuse to take any action in contravention of its pledge (described above)) without paying just compensation to the bondholders (and, thus, the certificateholders), as determined by a court of competent jurisdiction, if doing so would deny all economically beneficial or productive use of the phase-in-recovery property of the bondholders (and, thus, the certificateholders) or if the court determined that the State of Ohio’s action rose to the level of a taking based upon the character of the action, the economic impact of the State of Ohio’s regulation and the extent to which the regulation interfered with distinct investment-backed expectations of the bondholders and certificateholders in connection with their investments in the bonds and certificates, respectively. There is no assurance, however, that, even if a court were to award just compensation, it would be sufficient to pay the full amount of principal of and interest on the bonds and distributions on the certificates.

To the extent voter initiative is relevant, Article 2, Section 1 of the State of Ohio Constitution specifically limits the rights of the people themselves to enact laws to the same limits applicable to the General Assembly and provides that “[t]he limitations expressed in the constitution, on the power of the General Assembly to enact laws, shall be deemed limitations on the power of the people to enact laws.” Thus, any State of Ohio constitutional limitations with respect to impairment of legislation would also apply to any voter initiative.

We are not aware of any proposed or pending initiative petition or of any proposed or pending legislation in the State of Ohio that would affect any of the provisions of the Securitization Act, and we are not aware of any pending suit that challenges any of the provisions of the Securitization Act, relating to the issuance by the PUCO of a financing order, the creation or characterization of the phase-in-recovery property or the issuance of “phase-in-recovery bonds,” such as the bonds.

Nonetheless, we cannot assure you that a repeal or amendment of the Securitization Act will not be adopted or sought or that any action or refusal to act by the State of Ohio will not occur, any of which may constitute a violation of the State of Ohio’s pledge to the owners of the phase-in-recovery properties. If a violation of this pledge occurred, costly and time consuming litigation might ensue. Any litigation might adversely affect the price of the certificates and your ability to resell the certificates and might delay the timing of distributions on the

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certificates. Moreover, given the lack of controlling judicial precedent directly addressing the bonds and, thus, the certificates and the State of Ohio’s pledge, we cannot predict the outcome of any litigation with certainty, and, accordingly, you could experience a delay in receipt of distributions on or incur a loss on your investment in the certificates.

Court Decisions

If a court were to determine that the relevant provisions of the Securitization Act or the financing order are unlawful, invalid or unenforceable in whole or in part, it could adversely affect the validity of the bonds and the certificates or the trust’s ability to make distributions on the certificates. In either case, you could suffer a loss on your investment in the certificates.

CEI, OE or TE will not indemnify you for any changes in the law, including any amendment or repeal of the Securitization Act that may affect the value of your certificates. See “—Risks Related to the Phase-In-Recovery Property—Limited rights and remedies may impair ability to realize on collateral” below.

Litigation and other events in jurisdictions other than Ohio could adversely affect certificateholders.

Other states have passed laws permitting securitization by electric utilities similar to those permitted by the Securitization Act, and some of these laws have been challenged by judicial actions. To date, none of these challenges have succeeded, but future challenges might be made. A legal action successfully challenging under the U.S. Constitution or other federal law a state statute similar to the Securitization Act adopted by a jurisdiction other than the State of Ohio could establish legal principles that would serve as a basis to challenge the Securitization Act. Although the Securitization Act would not become invalid automatically as a result of a court decision invalidating another state’s statute, such a decision could establish a legal precedent for a successful challenge to the Securitization Act. Similarly, legislative, administrative, political or other actions in other states would not directly impact the Securitization Act or the interests of certificateholders, but could heighten awareness of the political and other risks associated with these types of securities as perceived by the capital markets, and in that way, limit the ability of certificateholders to resell the certificates and impair their value. We cannot assure you that future challenges to similar types of electric distribution utility securitizations in other states will not significantly impair your ability to resell the certificates or the value of the certificates.

The federal government might preempt the Securitization Act without full compensation.

Federal preemption of the Securitization Act could prevent bondholders from receiving payments on the bonds, and thus, certificateholders from receiving distributions on the certificates and cause a loss on your investment in the certificates. In the past, bills have been introduced in Congress to prohibit the recovery of charges similar to the phase-in-recovery charges, although Congress has not enacted any such law. As of the date of this prospectus, we are not aware of the House, the Senate, or committees thereof having primary relevant jurisdiction having considered legislation that would prohibit the recovery of charges similar to the phase-in-recovery charges. However, we can give no assurances that Congress may not do so in the future. Enactment of a federal law prohibiting the recovery of charges similar to the phase-in-recovery charges might have the effect of preempting the Securitization Act and thereby prohibiting the recovery of the phase-in-recovery charges, which would cause delays and losses on payments on the bonds and, thus, distributions on the certificates.

We can give no assurances that a court would consider the preemption by federal law of the Securitization Act to be a taking of property from the bond issuers, from us as the bondholders or, thus, from the certificateholders under the U.S. Constitution or under the Constitution of the State of Ohio. Moreover, even if this preemption of the Securitization Act by the federal government were considered a taking under the U.S. Constitution or under the Constitution of the State of Ohio for which the federal government had to pay “just compensation,” we can give no assurance that this compensation would be sufficient to pay the full amount of principal of and interest on the bonds, and, thus, distributions on the certificates, or to pay such amounts on a timely basis.

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The PUCO might take actions that could reduce the value of your investment in the certificates.

The Securitization Act provides that a final financing order is irrevocable and that the PUCO may not reduce, impair, postpone, or terminate the phase-in-recovery charges authorized in the final financing order or impair the property or the collection or recovery of phase-in costs. However, the PUCO retains the power to adopt, revise or rescind rules or regulations affecting the Ohio Companies. The PUCO also retains the power to interpret the financing order granted to the Ohio Companies, and in that capacity might be called upon to rule on the meanings of provisions of the order that might need further elaboration. Any new or amended regulations or orders from the PUCO might affect the ability of the servicers to collect the phase-in-recovery charges in full and on a timely basis, the rating of the bonds and the certificates and, accordingly, the amortization of the bonds and certificates and their weighted average lives, which in turn could adversely affect distributions on your certificates.

The financing order provides for a formula-based mechanism relating to adjustments to phase-in-recovery charges. See “Description of the Phase-In-Recovery Property—Adjustments to the Phase-In-Recovery Charges.” Applications of adjustment procedures similar to the ones set forth in the financing order have been challenged in the past in other states and may be challenged in the future. Challenges to or delays in the adjustment process might adversely affect the market perception and valuation of the certificates. Also, any litigation might materially delay phase-in-recovery charge collections due to delayed implementation of adjustments and might result in missing payments or payment delays and lengthened weighted average life of the bonds, and, thus, missing distributions or distribution delays and lengthened average life of the certificates.

Servicing Risks

Inaccurate consumption forecasting might result in phase-in-recovery charges that result in inadequate collections to make scheduled payments on the bonds and, thus, scheduled distributions on the certificates.

The phase-in-recovery charges are imposed based on forecasted customer usage, i.e., kilowatt-hours of electricity consumed by customers. The amount and timeliness of phase-in-recovery charge collections will depend in part on actual electricity usage and the amount of collections and write-offs for each customer class. If the servicers inaccurately forecast electricity consumption when setting or adjusting the phase-in-recovery charges, there could be a shortfall or material delay in phase-in-recovery charge collections, which might result in missed or delayed payments of principal and interest and lengthened weighted average life of the bonds, which in turn could lead to missed or delayed distributions and lengthened weighted average life of the certificates. Please read “Description of the Phase-In-Recovery Property—Financing Order and Issuance Advice Letters” and “—Adjustments to the Phase-In-Recovery Charges” in this prospectus.

Inaccurate forecasting of electricity consumption by the servicers might result from, among other things, the general economic environment in the service territories of the Ohio Companies being worse than expected, causing retail electric customers to migrate from the Ohio Companies’ service territories or reduce their electricity consumption; the impact of weather conditions, resulting in less electricity consumption than forecast; levels of business activity; customers consuming less electricity than anticipated because of increased energy prices, unanticipated increases in conservation efforts or unanticipated increases in electric usage efficiency; the occurrence of a natural or other disaster, or an act of terrorism, cyber attack or other catastrophic event; unanticipated changes in the market structure of the electric industry; or customers switching to alternative sources of energy, including self-generation of electric power.

Your investment in the certificates depends on the actions of the Ohio Companies or their successors or assignees, as servicers of the phase-in-recovery property.

The Ohio Companies, as servicers, will be responsible for, among other things, calculating, billing and collecting the phase-in-recovery charges from customers, submitting requests to the PUCO to adjust these charges, monitoring the collateral for the bonds and taking certain actions in the event of non-payment by a retail electric customer. The bond trustees’ receipt of collections in respect of the phase-in-recovery charges, which

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will be used to make payments on the bonds resulting in distributions on the certificates, will depend in part on the skill and diligence of the servicers in performing these functions. Difficulties or failures in the servicers’ handling of the collateral could result in a shortfall in funds to pay debt service on the bonds and, thus, distributions on the certificates. The systems that the servicers have in place for phase-in-recovery charge billings and collections might, in particular circumstances, cause the servicers to experience difficulty in performing these functions in a timely and completely accurate manner.

If the servicers fail to make collections for any reason, then the servicers’ payments to the bond trustees in respect of the phase-in-recovery charges might be delayed or reduced. In that event, payments on the bonds might be delayed or reduced resulting in delayed or reduced distributions on the certificates.

If the bond issuers have to replace the Ohio Companies as the servicers, they may experience difficulties finding and using replacement servicers.

If the Ohio Companies cease to service the phase-in-recovery properties, it might be difficult to find successor servicers. Also, any successor servicers might have less experience and ability than the Ohio Companies and might experience difficulties in collecting phase-in-recovery charges and determining appropriate adjustments to the phase-in-recovery charges and billing and/or payment arrangements may change, resulting in delays or disruptions in collections. In the event of the commencement of a case by or against any of the servicers under the United States Bankruptcy Code or similar laws, the bond trustees might be prevented from effecting a transfer of servicing due to operation of the bankruptcy code. Any of these factors and others might delay the timing of payments and may reduce the value of your investment in the certificates. Please read “Servicing” in this prospectus.

Changes to billing and collection practices might reduce the value of your investment in the certificates.

The financing order specifies the methodology for determining the amount of the phase-in-recovery charges that may be imposed. The servicers may not change this methodology without approval from the PUCO. Also, the servicers may change billing and collection practices, which might adversely impact the timing and amount of customer payments and might reduce phase-in-recovery charge collections, thereby limiting our ability to make scheduled distributions on the certificates. Separately, the PUCO might require changes to these practices. Any changes in billing and collection practices regulations might make it more difficult for the servicers to collect the phase-in-recovery charges which could adversely affect the value of your investment in the certificates. Please read “The Sponsors, Sellers and Initial Servicers” in this prospectus.

Limits on rights to terminate electric service might make it more difficult to collect the phase-in-recovery charges.

Ohio statutory requirements and the rules and regulations of the PUCO, which may change from time to time, regulate and control the right to disconnect service. For example, retail electric providers in Ohio generally may not terminate service to a customer (1) on a holiday or weekend day or after 12:30 p.m. on the day immediately preceding a holiday or weekend, (2) during the period of November through April 15^th except under certain conditions, (3) if such disconnection would be especially dangerous to the health of a person, (4) if such customer is an energy assistance client under certain circumstances or (5) if the customer is a mastermetered apartment complex unless certain notices are given. To the extent these retail electric customers do not pay for their electric service, retail electric providers will not be able to collect phase-in-recovery charges from these retail electric customers. Although retail electric providers will have to pay the servicers the phase-in-recovery charges on behalf of those customers (subject to any charge-off allowance and reconciliation rights), required service to nonpaying end-use customers could affect the ability of retail electric providers to make such payment.

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Future adjustments to the phase-in-recovery charges by rate schedule might result in insufficient collections.

The customers of each Ohio Company are provided service under one of eight different rate schedules. The phase-in-recovery charges imposed by the related bond issuer will be allocated among these rate schedules and imposed in accordance with the formula required under the Securitization Act and specified in the financing order. A shortfall in collections of the phase-in-recovery charges will be corrected in the next adjustment to the phase-in-recovery charges and allocated to such Ohio Company’s rate schedules in the same fashion. If enough customers receiving service under an individual rate schedule fail to pay the phase-in-recovery charges or cease to be customers, the applicable servicer might have to substantially increase the phase-in-recovery charges for the remaining customers. These increases could lead to further failures by the remaining customers to pay the phase-in-recovery charges, thereby increasing the risk of a shortfall in funds to pay debt service on the bonds of the applicable bond issuer and, thus, distributions on the certificates.

Phase-in-recovery charges will apply to all retail customers of an electric distribution utility for as long as they remain customers of such electric distribution utility. If a customer of the utility subsequently receives retail electric distribution service from another electric distribution utility operating in the same service area, including by succession, assignment, transfer or merger, the phase-in-recovery charges will continue to apply to that customer. However, if a customer switches its retail electric distribution service to a municipal utility, the phase-in-recovery charges will not continue to apply to that customer.

Expenses may be incurred in excess of the cap on certain financing costs provided in the financing order.

Under the financing order, phase-in-recovery charges may not be imposed by the respective bond issuers for certain ongoing financing costs to the extent they exceed the cap for such amounts. In addition, the respective bond issuers’ other assets, substantially all of which are pledged to the trustee under the respective bond indentures, may not be used by the trustee to pay such excess amounts. Examples of the costs subject to the cap include payment of specified fees and expenses to the trustee, the servicer and the administrator. No assurance can be given that expenses will not be incurred for these purposes in excess of the cap level and, if this were to occur, there may not be sufficient funds to make payments for these excess amounts. Creditors which are owed these amounts and not paid may obtain judgment liens against a bond issuer’s assets or seek to place a bond issuer in bankruptcy. The foregoing events could adversely affect the trust, as holder of the bonds, and thus, certificateholders.

The initial servicer of each bond issuer will agree in its servicing agreement to indemnify each applicable trustee (i.e., its bond trustee and its allocable portion as to the certificate trustee and Delaware trustee) for all due and unpaid indemnity and other payments, of the applicable bond issuer under the applicable basic documents, that exceed the cap. Each servicing agreement will provide that this initial servicer obligation will continue as an obligation of such initial servicer in the event a successor servicer is appointed.

Storm-Related Risks

Storm damage to the service territories could impair the payment of distributions on the certificates.

The Ohio Companies’ service territories have been impacted by severe weather, such as tornadoes, hurricanes, such as Hurricane Sandy, ice or snowstorms, droughts and other natural disasters, which disrupt the Ohio Companies’ operations. Future storms could have similar effects. Transmission, distribution and usage of electricity could be interrupted temporarily, reducing the amount of phase-in-recovery charges collected. There could be longer-lasting weather-related adverse effects on residential and commercial development and economic activity in the Ohio Companies’ service territories, which could cause the per-KWh phase-in-recovery charge to be greater than expected after the adjustment process. Legislative action adverse to the certificateholders might be taken in response, and such legislation, if challenged as violative of the State of Ohio’s pledge, might be defended on the basis of public necessity. Please read “The Securitization Act—CEI, OE and TE and Other Utilities May Securitize Phase-In Costs—The State Pledge” and “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions—Legislative Actions” in this prospectus.

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Risks Related to the Phase-In-Recovery Property

Foreclosure of the bond trustees’ lien on the phase-in-recovery property securing the bonds might not be practical, and acceleration of the bonds before maturity might have little practical effect.

Under the Securitization Act and the bond indentures, the bond trustees have the right to foreclose or otherwise enforce the lien on the phase-in-recovery property securing the bonds. However, in the event of foreclosure, there is likely to be a limited market, if any, for the phase-in-recovery property. Therefore, foreclosure might not be a realistic or practical remedy. Moreover, although payments on the bonds will be due and payable upon acceleration of the bonds before maturity, the phase-in-recovery charges likely would not be accelerated. The true-up adjustment mechanism will be used to adjust phase-in-recovery charges to meet scheduled payments but not accelerated maturity. As a result, the nature of the bond issuers’ business will result in payments on the bonds being paid as funds become available. If there is an acceleration of the bonds, all tranches of the bonds will be paid pro rata; therefore, some tranches might be paid earlier than expected and some tranches might be paid later than expected, which could adversely affect distributions on the certificates and affect the value of your investment in the certificates.

Bankruptcy and Creditors’ Rights Issues

The bankruptcy of an Ohio Company could delay or reduce payments on the bonds of its related bond issuer and, thus, an allocable portion of the certificates and adversely affect the ability to resell the phase-in-recovery property of that bond issuer.

If an Ohio Company were to become a debtor in a bankruptcy case, and a creditor or bankruptcy trustee of the Ohio Company or the Ohio Company itself as debtor in possession were to take the position that the phase-in-recovery property constituted property of the Ohio Company’s bankruptcy estate, and a court were to adopt this position, then delays or reductions in payments on bonds of the related bond issuer, and therefore an allocable portion of the certificates, could result. For example, a creditor or bankruptcy trustee of an Ohio Company or the Ohio Company itself as debtor in possession might argue that, contrary to Ohio law as set forth in the Securitization Act, the sale of the phase-in-recovery property to the bond issuers was a loan to the Ohio Company from its respective bond issuer, secured by a pledge of the phase-in-recovery property rather than an absolute transfer and true sale of such phase-in-recovery property. If the bankruptcy court accepted that argument, the phase-in-recovery property would be considered property of the bankruptcy estate of the Ohio Company, the exercise of rights of the bond issuer in respect of the phase-in-recovery property would be subject to the automatic stay that arises upon the commencement of the Ohio Company’s bankruptcy case, and the rights of the related bond issuer as secured creditor would be subject to modification to the extent permitted under the Bankruptcy Code. Such modifications could include, among other things, reductions of the amounts of payment of interest and principal on the bonds, delays in payments and alteration of other terms of the bonds, leading to delays or reductions in payments on the certificates.

Generally, bankruptcy courts look to state law to create and define property interests held by a debtor in a bankruptcy case. The Securitization Act provides, among other things, that, a financing order shall remain in effect and unabated notwithstanding the bankruptcy, reorganization, or insolvency of the electric distribution utility or any affiliate of the electric distribution utility or the commencement of any judicial or nonjudicial proceeding on the financing order. It also provides that any sale, assignment or transfer of phase-in-recovery property under a financing order sale shall be an absolute transfer and true sale of, and not a pledge of or secured transaction relating to, the seller’s right, title, and interest in, to, and under the property, if the documents governing the transaction expressly state that the transaction is a sale or other absolute transfer. Each of the sale agreements contains an explicit statement that this securitization is an absolute transfer and true sale. See “Bankruptcy and Creditors’ Rights Issues—True Sale.”

Nevertheless, by reason of the so-called Supremacy Clause and Article I, Section 8, clause 4 of the United States Constitution, Congress has the right to enact bankruptcy legislation that could overturn or be inconsistent with the Securitization Act. Further, to the extent that a bankruptcy court determined that the provisions of the

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Securitization Act dealing with the creation and definition of the phase-in-recovery property, or the treatment of the sale of the phase-in-recovery property as an absolute transfer, as in a true sale, were in actual conflict with existing provisions of the Bankruptcy Code, the bankruptcy court could ignore those provisions of the Securitization Act and, among other things, determine that the phase-in-recovery property was property of the bankruptcy estate of the Ohio Company.

Under certain circumstances, a court might hold that, notwithstanding the creation and definition of phase-in-recovery property under Ohio law, the bankruptcy estate of an Ohio Company retains some interest in the phase-in-recovery property sufficient to justify the exercise by the Ohio Company’s bankruptcy court of jurisdiction over the phase-in-recovery property. In 2001, in the case of LTV Steel Company, Case No. 00-43866 in the United States Bankruptcy Court for the Northern District of Ohio, the court initially ruled that the debtor retained “some equitable interest” in securitized receivables and inventory sufficient to permit the bankruptcy court to authorize the debtor to use proceeds of such securitized assets as cash collateral for post-petition operations of the debtor. In refusing to modify the interim cash collateral order, the court stated that it could not conclude that the receivables were not property of the debtor’s estate until an evidentiary hearing on such issue was held. While the parties to the LTV Steel Company proceeding ultimately settled their disputes, and the court entered an order affirming the true sale nature of the underlying securitization, the initial ruling was not vacated. There is no assurance that a bankruptcy court in a bankruptcy case of an Ohio Company might not take a similar view, particularly if failure to do so would cause significant harm to the seller’s bankruptcy estate or otherwise to the continued operations of the Ohio Company, its ultimate reorganization under the Bankruptcy Code or other significant public interests, such as the delivery of electricity to consumers.

Because the phase-in-recovery charges are usage-based, if an Ohio Company were to become the debtor in a bankruptcy case, a creditor of, or a bankruptcy trustee for, the Ohio Company, or the Ohio Company itself as debtor in possession could argue that its related bond issuer should pay a portion of the costs of the Ohio Company associated with the generation, transmission or distribution of the electricity the price of which gave rise to the payments arising from the phase-in-recovery charges that are used to make distributions on the bond issuer’s bonds and an allocable portion of the certificates. If a court were to adopt this position, the amounts paid to the bond trustee, and thus to the holders of the certificates, could be reduced.

Regardless of whether an Ohio Company is the debtor in a bankruptcy case, and notwithstanding that the Securitization Act states that the phase-in-recovery property shall constitute an existing, present property right, notwithstanding any requirement that the imposition, charging, and collection of phase-in-recovery charges depend on the electric distribution utility continuing to deliver retail electric distribution service or continuing to perform its servicing functions relating to the collection of phase-in-recovery charges or on the level of future energy consumption, if a court were to accept the arguments of a creditor of the Ohio Company that phase-in-recovery property comes into existence only as customers use electricity, a tax, government lien or other lien on property of the Ohio Company arising before the phase-in-recovery property came into existence may have priority over the related bond issuer’s interest in the phase-in-recovery property, which could result in the bond issuer being treated as an unsecured creditor in the seller’s bankruptcy case and a potential reduction in the amounts distributed to certificateholders. See “Bankruptcy and Creditors’ Rights Issues.”

Regardless of whether the bankruptcy court made any adverse determination in an Ohio Company bankruptcy case, the mere existence of an Ohio Company bankruptcy case could have an adverse effect on the resale market for the certificates and the market value of the certificates.

The bankruptcy of an Ohio Company or any successor entity might limit the remedies available to the bond trustee.

Upon an event of default under a bond indenture, the bond trustee will enforce the security interest in the phase-in-recovery property in accordance with the terms of the bond indenture. Under the Securitization Act, if a utility servicer defaults on any required payment of phase-in-recovery revenues, a court, upon application by the

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bond trustee (or any other interested party) and without limiting any other remedies available to the bond trustee, shall order the sequestration and payment of the revenues for the benefit of bondholders, the applicable bond issuer and any bond trustee or other financing party. The court order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to the electric distribution utility or any affiliate. There can be no assurance, however, that a court would issue this order after an Ohio Company’s bankruptcy in light of the automatic stay provisions of Section 362 of the United States Bankruptcy Code. In that event, the bond trustee would likely seek an order from the bankruptcy court lifting the automatic stay to permit or authorize this action by the court, and an order requiring an accounting and segregation of the revenues arising from the phase-in-recovery property. There can be no assurance that a court would grant either order.

The Ohio Companies and any successor servicers will commingle the phase-in-recovery charges with other revenues they collect, which might obstruct access to the phase-in-recovery charges in case of a servicer’s bankruptcy and reduce the value of the bonds and, thus, your investment in the certificates.

The servicers will be required to remit collections to the bond trustees within two business days after the payments arising from the phase-in-recovery charges are deemed to be collected as described under “Servicing—Remittances to Collection Account.” The servicers will not segregate the phase-in-recovery charges from the other funds they collect from retail electric customers [or retail electric providers] or their general funds. The phase-in-recovery charges will be segregated only when the servicers pay them to the bond trustees.

Despite this requirement, the servicers might fail to pay the full amount of the phase-in-recovery charges to the bond trustees or might fail to do so on a timely basis. This failure, whether voluntary or involuntary, might materially reduce the amount of phase-in-recovery charge collections available to make payments on the bonds and, thus, distributions on the certificates.

The Securitization Act provides that the bond issuers’ rights to the phase-in-recovery property are not affected by the commingling of these funds with any other funds of the servicers. In a bankruptcy of a servicer, however, a bankruptcy court might rule that federal bankruptcy law does not recognize a bond issuer’s right to collections of the phase-in-recovery charges that are commingled with other funds of the servicer as of the date of bankruptcy. If so, the collections of the phase-in-recovery charges held by the servicer as of the date of bankruptcy would not be available to pay amounts owing on the bonds and distributions on the certificates. In this case, the bond issuers’ would have only a general unsecured claim against the servicer for those amounts. This decision could cause material delays in payments of principal or interest, or losses, on the bonds and material delays in payment of distributions, or losses, on the certificates, which could materially reduce the value of your investment in the certificates. Please read “Bankruptcy and Creditors’ Rights Issues” in this prospectus.

Bankruptcy of a servicer could also delay or reduce payments.

The bankruptcy or insolvency of a servicer could result in delays or reductions in distributions on the certificates. Each of the servicers will remit payments arising from the respective phase-in-recovery charges out of its general funds and will not segregate these amounts from its general funds. In the event of a bankruptcy of a servicer, the related bond trustee likely will not have a perfected interest in commingled funds and the inclusion of the commingled funds in the bankruptcy estate of the affected servicer may result in delays and reductions in distributions on the related bond issuer’s bonds and an allocable portion of the certificates. To the extent that a servicer had made payment of phase-in-recovery charges out of commingled funds to the bond issuer during a period of up to one year prior to the commencement of the bankruptcy case of the servicer, a trustee in bankruptcy of the servicer, or the servicer as debtor-in-possession, may contend that some portion or all of such payments are recoverable as preferences from the bond issuer for the benefit of the bankruptcy estate of the servicer. If a bankruptcy court determined that such payments were preferences, and no applicable defenses to the recovery thereof was available, the bond issuer could be required to repay such preferences to the bankruptcy estate of the servicer. In that event, the bond issuer would have an unsecured claim against the bankruptcy estate

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of the servicer for the amounts that it had repaid to the estate of the servicer. Furthermore, if a servicer is in bankruptcy, it may stop performing its functions as servicer and it may be difficult to find a third party to act as successor servicer. See “—Servicing Risks.”

Claims against an Ohio Company or any successor entity might be limited in the event of a bankruptcy of such Ohio Company.

If an Ohio Company were to become a debtor in a bankruptcy case, claims, including indemnity claims, by the bond issuer against the Ohio Company under the sale agreement and the other documents executed in connection with the sale agreement would be unsecured claims and could be modified or eliminated altogether disposed of in the bankruptcy case. In addition, the bankruptcy court might estimate any contingent claims that the bond issuer has against the Ohio Company and, if it determines that the contingency giving rise to these claims is unlikely to occur, estimate the claims at a lower amount. A party in interest in the bankruptcy of the Ohio Company might challenge the enforceability of the indemnity provisions in a sale agreement. If a court were to hold that the indemnity provisions were unenforceable, the bond issuer would be left with a claim for actual damages against the Ohio Company based on breach of contract principles, which would be subject to estimation and/or calculation by the court. We cannot give any assurance as to the result if any of the above-described actions or claims were made. Furthermore, we cannot give any assurance as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving the Ohio Company.

Other Risks Associated with an Investment in the Certificates

The Ohio Companies’ ratings might affect the market value of the certificates.

A downgrading of the credit ratings on the debt of an Ohio Company could have an adverse effect on the market value of the bonds and, thus, the certificates. Credit ratings may change at any time. A rating agency has the authority to revise or withdraw its rating based solely upon its own judgment.

The Ohio Companies’ indemnification obligations under the sale and servicing agreements are limited and might not be sufficient to protect your investment in the certificates.

Each Ohio Company, in its capacity as seller, is obligated under its sale agreement to indemnify its bond issuer and the bond trustee, for itself and on behalf of the bondholders, only in specified circumstances and will not be obligated to repurchase or replace any phase-in-recovery property in the event of a breach of any of its representations, warranties or covenants regarding the phase-in-recovery property. Similarly, each Ohio Company is obligated under its servicing agreement, in its capacity as servicer, to indemnify the bond issuers and the bond trustee, for itself and on behalf of the bondholders, only in specified circumstances. Please read “Sale Agreements—Seller Covenants” and “Servicing Agreements—Servicer Representations and Warranties; Indemnification” in this prospectus.

No bond trustee or the bondholders will have the right to accelerate payments on the applicable bonds as a result of a breach under the applicable sale agreement or servicing agreement, absent an event of default under the applicable bond indenture. See “Description of the Bonds—Events of Default.” Furthermore, the Ohio Companies might not have sufficient funds available to satisfy its indemnification obligations under these agreements, and the amount of any indemnification paid by the Ohio Companies might not be sufficient for you to recover all of your investment in the certificates. In addition, if the Ohio Companies become obligated to indemnify bondholders, the ratings on the certificates may be downgraded as a result of the circumstances causing the breach. Bondholders would be unsecured creditors of the Ohio Companies with respect to any of these indemnification amounts.

The sellers will not be in breach of any representation or warranty as a result of a change in law.

No seller will be in breach of any representation or warranty as a result of a change in the law by means of a legislative enactment, constitutional amendment or voter initiative. Each seller will agree in its sale agreement

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and each servicer will agree in its servicing agreement to institute any action or proceeding as may be reasonably necessary to block or overturn any attempts to cause a repeal, modification or supplement to the Securitization Act that would be adverse to its bond issuer, bond trustee or bondholders (and thus the trust, the certificate trustee and the Delaware trustee). Please read “Sale Agreements—Seller Covenants” and “Servicing Agreements—Servicing Procedures.” However, we cannot assure you that any of the Ohio Companies would be able to take this action or that any such action would be successful.

The credit ratings are no indication of the expected rate of payment of principal on the bonds and, thus, distributions on the certificates.

We expect the bonds and the certificates will receive credit ratings from three NRSROs. A rating is not a recommendation to buy, sell or hold the bonds or the certificates. The ratings merely analyze the probability that the bond issuers and thus the certificate issuer, will repay the total principal amount of the bonds and the certificates, respectively, at the final maturity date (which is later than the scheduled final payment date) and will make timely interest payments. The ratings are not an indication that the rating agencies believe that principal payments are likely to be paid on time according to the expected amortization schedules.

Under Rule 17g-5 of the Exchange Act, NRSROs providing the sponsor with the requisite certification will have access to all information posted on a website by the sponsor for the purpose of determining the initial rating and monitoring the rating after the closing date in respect of the bonds. As a result, an NRSRO other than an NRSRO hired by the sponsor, referred to as a hired NRSRO, may issue ratings on the certificates, or Unsolicited Ratings, which may be lower, and could be significantly lower, than the ratings assigned by a hired NRSROs. The Unsolicited Ratings may be issued prior to, or after, the closing date in respect of the bonds. Issuance of any Unsolicited Rating will not affect the issuance of the bonds. Issuance of an Unsolicited Rating lower than the ratings assigned by a hired NRSRO on the bonds might adversely affect the value of the bonds and, thus, the certificates, and, for regulated entities, could affect the status of the bonds and, thus, the certificates as a legal investment or the capital treatment of the bonds and, thus, the certificates. Investors in the certificates should consult with their legal counsel regarding the effect of the issuance of a rating by a non-hired NRSRO that is lower than the rating of a hired NRSRO. None of the Ohio Companies, the bond issuers, us, the underwriters or any of their affiliates will have any obligation to inform you of any unsolicited ratings assigned after the date of this prospectus. In addition, if we, the bond issuers or the Ohio Companies fail to make available to a non-hired NRSRO any information provided to any hired rating agency for the purpose of assigning or monitoring the ratings on the bonds or certificates, a hired NRSRO could withdraw its ratings on the bonds or certificates, which could adversely affect the market value of your certificates and/or limit your ability to resell your certificates.

Other subsidiaries or affiliates of the Ohio Companies may issue other similar bonds or certificates similar to the certificates in the future without your prior review or approval.

The Ohio Companies may sell property created pursuant to a financing order it may obtain in the future to other subsidiaries or affiliates of the Ohio Companies in connection with the issuance of other similar bonds or certificates in the future without your prior review or approval. In the event a customer who is taking generation service from a retail electric service provider does not pay in full all amounts owed under any bill, including phase-in-recovery charges for the bonds and other similar bonds, pursuant to Ohio administrative rules or PUCO order requirements, the amount remitted shall first be credited to past due charges for such retail electric service, second be credited to past due electric utility distribution and transmission charges, including phase-in-recovery charges for the bonds and other similar bonds, and thereafter to current electric utility distribution and transmission charges, including phase-in-recovery charges for the bonds and other similar bonds. Amounts credited to electric utility distribution and transmission charges will be allocated ratably among the phase-in-recovery charges relating to all such bonds and other distribution and transmission charges and fees and charges. We cannot assure you that the issuance of additional bonds similar to the bonds would not cause reductions or delays in payments on the bonds and, thus, distributions on the certificates.

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Regulatory provisions affecting certain investors could adversely affect the liquidity of the certificates.

Regulatory or legislative provisions applicable to certain investors may (if and to the extent they apply in relation to an investment in the certificates) have the effect of limiting or restricting their ability to hold or acquire the certificates, which in turn may adversely affect the ability of investors in the certificates who are not subject to those provisions to sell their certificates in the secondary market. For example, certain member states of the European Economic Area, or EEA, have implemented, or are expected to implement, Article 122a of Directive 2006/48/EC, as amended, or Article 122a, which may apply to the purchase of the certificates by certain investors. Among other provisions, Article 122a prohibits investments by an EEA regulated credit institution in securitizations that fail to comply with certain requirements concerning retention by the originator, sponsor or original lender of the securitized assets of a portion of the securitization’s credit risk. Under Article 122a the regulator of such an EEA-regulated credit institution may impose a substantial additional capital charge on that institution if it acquires securities in a securitization and that securitization fails to meet the requirements of Article 122a. None of the Ohio Companies, the bond issuers or us have taken, or intend to take, any steps to comply with the requirements of Article 122a, nor to determine if and to what extent Article 122a applies to the certificates. The fact that the certificates have not been structured to comply with Article 122a could limit the ability of an EEA-regulated credit institution to purchase certificates, which in turn may adversely affect the liquidity of the certificates in the secondary market. This could adversely affect the liquidity of the market should you seek to sell your certificates or the price you may receive upon any sale of your certificates.

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REVIEW OF PHASE-IN-RECOVERY PROPERTY

Pursuant to the rules of the SEC, the sponsors have performed, as described below, a review of the phase-in-recovery property underlying the bonds. As required by these rules, the review was designed and effected to provide reasonable assurance that disclosure regarding the phase-in-recovery property is accurate in all material respects. The sponsors did not engage a third party in conducting their review.

The bonds are secured primarily by the phase-in-recovery property of the bond issuers. The phase-in-recovery property is a present property right authorized and created pursuant to the Securitization Act and an irrevocable financing order. The phase-in-recovery property includes the irrevocable right to impose, charge and collect nonbypassable phase-in-recovery charges from each retail customer within the service territory of CEI, OE or TE, as applicable, and to adjust those phase-in-recovery charges, in accordance with the adjustment mechanism set forth in the financing order, in an amount sufficient to pay principal and interest on the bonds and, subject to the cap to the extent applicable, other approved financing costs.

The phase-in-recovery property is not a static pool of receivables or assets. Phase-in-recovery charges authorized in the financing order that relate to the phase-in-recovery property are irrevocable and may not be reduced, impaired or adjusted by the PUCO except for periodic adjustments, in accordance with the adjustment mechanism, to correct overcollections or undercollections to ensure the recovery of amounts sufficient to timely provide all payments of debt service on the bonds and, subject to the cap to the extent applicable, other approved financing costs. While there is no “cap” on the level of phase-in-recovery charges that may be imposed on retail electric customers to pay on a timely basis scheduled principal of and interest on the bonds and replenish capital subaccounts, there is a “cap” on certain approved financing costs. See “Description of the Bonds—Allocations and Payments” in this prospectus. All revenues and collections resulting from the phase-in-recovery charges provided for in the financing order that relate to the bonds are part of the phase-in-recovery property. The phase-in-recovery property relating to the bonds is described in more detail under “Description of the Phase-In-Recovery Property” in this prospectus.

In the financing order, the PUCO, among other things:

• orders that each of CEI, OE and TE, as applicable, as servicer under its respective servicing agreement, shall collect from all customers required to pay or collect phase-in-recovery charges under the financing order, phase-in-recovery charges in an amount sufficient to timely provide all payments of debt service on the bonds and, subject to the cap to the extent applicable, other approved financing costs,

• orders that upon the transfer of the phase-in-recovery property to bond issuers by sellers, the bond issuers shall have all of the rights, title and interest of the sellers with respect to its respective phase-in-recovery property, and

• states that it will act pursuant to the financing order as expressly authorized by the Securitization Act to ensure that expected phase-in-recovery charge revenues are sufficient to pay on a timely basis scheduled principal and interest on the bonds and, subject to the cap to the extent applicable, other approved financing costs.

Please read “The Securitization Act” and “Description of the Phase-In-Recovery Property—Financing Order and Issuance Advice Letters” in this prospectus for more information.

The characteristics of phase-in-recovery property are unlike the characteristics of assets underlying mortgage and other commercial asset securitizations because phase-in-recovery property is a creature of statute and state regulatory commission proceedings. Because the nature and characteristics of the phase-in-recovery property and many elements of the securitization are set forth and constrained by the Securitization Act, the sponsors do not select the assets to be securitized in ways common to many securitizations. Moreover, the bonds do not contain origination or underwriting elements similar to typical mortgage or other loan transactions involved in other forms of asset-backed securities. The Securitization Act and the PUCO require the imposition

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on, and collection of phase-in-recovery charges from, existing and future retail customers located within the sponsors’ respective service territories. Since the phase-in-recovery charges are imposed on all such retail customers and the true-up adjustment mechanism adjusts for the impact of customer defaults, the collectability of the phase-in-recovery charges is not ultimately dependent upon the credit quality of particular customers; as would be the case in the absence of the true-up adjustment mechanism.

The review by the sponsors of the phase-in-recovery property underlying the bonds has involved a number of discrete steps and elements as described in more detail below. First, each sponsor has analyzed and applied the Securitization Act’s requirements for securitization of phase-in costs in seeking approval of the PUCO for the issuance of the financing order and in its proposal with respect to the characteristics of the phase-in-recovery property to be created pursuant to the financing order. In preparing this proposal, the sponsors worked with their counsel and its financial advisor in preparing the application for a financing order. Moreover, the sponsors worked with their counsel, their financial advisor and counsel to the underwriters in preparing the legal agreements that provide for the terms of the bonds and the security for the bonds. Each sponsor has analyzed economic issues and practical issues for the scheduled payment of the bonds and reviewed the prior experience of its affiliates in terms of impacts of economic factors, potentials for disruptions due to weather or catastrophic events and its own forecasts for customer growth as well as the historic accuracy of its prior forecasts.

In light of the unique nature of the phase-in-recovery property, each sponsor has taken (or prior to this offering, will take) the following actions in connection with its review of its respective phase-in-recovery property and the preparation of the disclosure for inclusion in this prospectus and the accompanying prospectus supplement describing the phase-in-recovery property, the bonds and the proposed securitization:

• reviewed the Securitization Act and the rules and regulations of the PUCO as they relate to the phase-in-recovery property in connection with the preparation and filing of the application with the PUCO for the approval of the financing order in order to confirm that the application and proposed financing order satisfied applicable statutory and regulatory requirements;

• actively participated in the proceeding before the PUCO relating to the approval of the requested financing order;

• compared the financing order, as issued by the PUCO, to the Securitization Act and the rules and regulations of the PUCO as they relate to the phase-in-recovery property to confirm that the financing order met such requirements;

• compared the proposed terms of the bonds to the applicable requirements in the Securitization Act, the financing order and the regulations of the PUCO to confirm that they met such requirements;

• prepared and reviewed the agreements to be entered into in connection with the issuance of the bonds and compared such agreements to the applicable requirements in the Securitization Act, the financing order and the regulations of the PUCO to confirm that they met such requirements;

• reviewed the disclosure in this prospectus and the accompanying prospectus supplement regarding the Securitization Act, the financing order and the agreements to be entered into in connection with the issuance of the bonds, and compared such descriptions to the relevant provisions of the Securitization Act, the financing order and such agreements to confirm the accuracy of such descriptions;

• consulted with legal counsel to assess if there is a basis upon which the bondholders (or the bond trustee acting on their behalf) could successfully challenge the constitutionality of any legislative action by the State of Ohio (including the PUCO) that could repeal or amend the securitization provisions of the Securitization Act that could substantially impair the value of the phase-in-recovery property, or substantially reduce, alter or impair the phase-in-recovery charges;

• reviewed the process and procedures in place for it, as servicer, to perform its obligations under the servicing agreement, including without limitation, billing and collecting the phase-in-recovery charges to be provided for under the phase-in-recovery property, forecasting phase-in-recovery charge revenues and preparing and filing applications for true-up adjustments to the phase-in-recovery charges;

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• reviewed the operation of the true-up adjustment mechanism for adjusting phase-in-recovery charge levels to meet the scheduled payments on the bonds; and

• assisted its financial advisor and the underwriters with the preparation of financial models in order to set the initial phase-in-recovery charges to be provided for under the phase-in-recovery property at a level sufficient to pay on a timely basis scheduled principal and interest on the bonds.

In connection with its assistance with the preparation of such models, each sponsor:

• reviewed (i) the historical retail electric usage and customer growth within its service territory and (ii) forecasts of expected energy sales and customer growth;

• reviewed its historical collection of rate charges; and

• analyzed the sensitivity of the weighted average life of the bonds in relation to variances in actual energy consumption levels (retail electric sales) from forecasted levels and in relation to the true-up adjustment mechanism in order to assess the probability that the weighted average life of the bonds may be extended as a result of such variances, and in the context of the operation of the true-up adjustment mechanism for adjustment of phase-in-recovery charges to address under or overcollections in light of scheduled payments on the bonds.

As a result of this review, each sponsor has concluded that:

• the phase-in-recovery property, the financing order and the agreements to be entered into in connection with the issuance of the bonds meet in all material respects the applicable statutory and regulatory requirements;

• the disclosure in this prospectus and the accompanying prospectus supplement regarding the Securitization Act, the financing order and the agreements to be entered into in connection with the issuance of the bonds is, or in the case of the accompanying prospectus supplement, will be, as of its respective date, accurate in all material respects;

• it, as servicer, has adequate processes and procedures in place to perform its obligations under the servicing agreement;

• phase-in-recovery charge revenues, as adjusted from time to time as provided in the Securitization Act and the financing order, are expected to be sufficient to pay on a timely basis scheduled principal and interest on the bonds and, as a result, the distributions on the certificates; and

• the design and scope of its review of the phase-in-recovery property as described above is effective to provide reasonable assurance that the disclosure regarding the phase-in-recovery property in this prospectus and the accompanying prospectus supplement is accurate in all material respects.

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THE SECURITIZATION ACT

Background and Regulatory Overview

On December 21, 2011, the Governor of Ohio signed into law Sections 4928.23 through 4928.2318 of the Ohio Revised Code, referred to herein as the Securitization Act, which amended and enacted certain provisions of Ohio law to establish standards for the securitization of certain costs for electric distribution utilities. The Securitization Act became effective on March 22, 2012. Among other things, the Securitization Act:

• permits an electric distribution utility, such as CEI, OE and TE, to apply to the PUCO for a financing order authorizing the issuance of bonds to recover certain uncollected “phase-in costs” previously authorized by the PUCO and financing costs through securitization;

• permits an electric distribution utility under a financing order to impose, charge and collect phase-in-recovery charges on retail customers as long as they remain customers, or if they receive distribution from another electric distribution utility operating in the same service area, in accordance with a PUCO-approved adjustment mechanism;

• specifies that the phase-in-recovery charges are nonbypassable as long as bonds and financing costs have not been paid in full;

• specifies that financing orders are irrevocable and remain in effect until the bonds and financing costs on the bonds have been paid in full;

• provides for the creation of phase-in-recovery property and contains provisions regarding transferring, conveying and pledging the phase-in-recovery property to facilitate the securitization and secure payment of bonds and financing costs, and the creation, perfection, enforcement and priority of any security interest in the phase-in-recovery property; and

• exempts the imposition, charging, collection and receipt of the phase-in-recovery revenues and the transfer and ownership of phase-in-recovery property from Ohio state taxation and similar charges.

On May 3, 2012, CEI, OE and TE filed a joint application with the PUCO requesting the issuance of an irrevocable financing order to recover through securitization certain uncollected “phase-in costs” previously authorized by the PUCO for recovery and associated financing costs, and to impose, charge and collect the phase-in-recovery charges.

On October 10, 2012, the PUCO issued a financing order authorizing CEI, OE and TE to recover the previously authorized “phase-in costs,” enter into transactions for the issuance of the bonds and to impose, charge and collect the phase-in-recovery charges.

On November 9, 2012, CEI, OE and TE filed a joint application with the PUCO for rehearing of the financing order to clarify and amend certain provisions of the financing order.

On December 19, 2012, the PUCO issued an entry on rehearing, which amended the financing order previously issued by the PUCO.

On January 9, 2013, the PUCO issued an entry nunc pro tunc, which further amended the financing order to provide for certain revisions and corrections to the entry on rehearing.

Recovery of Phase-In Costs

In Case No. 08-935-EL-SSO Order, dated March 25, 2009, the PUCO approved the recovery, by CEI, of certain deferred costs, with carrying charges, associated with purchase power costs incurred that exceeded the purchase power recovery mechanism revenue from January 1, 2009 through May 31, 2009, which, prior to the issuance of the bonds, were recovered through a separate rider mechanism, namely the Deferred Generation Cost Recovery Rider, or Rider DGC.

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In Case No. 08-935-EL-SSO Order, dated March 25, 2009, Case No. 07-1003-EL-ATA Order, dated March 24, 2010, and continued by Case No. 10-388-EL-SSO dated August 25, 2010, the PUCO approved the recovery, by each of CEI, OE and TE, of certain deferred costs, with carrying charges, associated with the actual fuel costs incurred that exceeded the fuel recovery mechanism revenues collected from January 1, 2006 through December 31, 2007, which, prior to the issuance of the bonds, were recovered through a separate rider mechanism, namely the Deferred Fuel Cost Recovery Rider, or Rider DFC.

In Case No. 10-176-EL-ATA Order, dated May 25, 2011, the PUCO approved the recovery of certain deferred costs, with carrying charges, associated with purchase power costs incurred from March 17, 2010 through June 30, 2011 that exceeded the associated purchase power recovery mechanism revenue due to implementation of the Residential Generation Credit Rider, or Rider RGC, which, prior to the issuance of the bonds, were recovered through a separate rider mechanism, namely the Residential Electric Heating Recovery Rider, or Rider RER1.

On February 18, 2013, the financing order, which (among other things) authorizes CEI, OE and TE to recover their respective uncollected balances in Rider DGC, Rider DFC and Rider RER1, as applicable, as phase-in costs became final. See “Description of the Phase-In-Recovery Property—Financing Order and Issuance Advice Letters.”

CEI, OE and TE and Other Utilities May Securitize Phase-In Costs

The Bond Issuers May Issue Bonds to Recover CEI’s, OE’s and TE’s Phase-In Costs. The Securitization Act authorizes the PUCO to issue financing orders approving the issuance of bonds to recover certain phase-in costs of an electric distribution utility. A utility or an assignee of a utility may obtain securitization financing through the issuance of bonds. Under the Securitization Act, proceeds of the issuance of the bonds must be used to recover, finance or refinance phase-in costs and financing costs. Such bonds are secured by, and payable from, phase-in-recovery property, which includes the right to impose, charge and collect phase-in-recovery charges.

The Securitization Act contains a number of provisions designed to facilitate the securitization of phase-in costs, as set out below.

Creation of Phase-In-Recovery Property. Under the Securitization Act, phase-in-recovery property may be created when the rights and interests of an electric distribution utility under a financing order, including the right to impose, charge and collect phase-in-recovery charges authorized in the financing order, are first transferred to an assignee, such as to the bond issuers, and pledged in connection with the issuance of bonds.

A Financing Order is Irrevocable. A financing order, once effective, together with the phase-in-recovery charges authorized in the financing order, is irrevocable and the PUCO may not reduce, impair, postpone or terminate the phase-in-recovery charges authorized in the financing order or impair the property or the collection or recovery of phase-in costs, except for periodic adjustments, in accordance with the adjustment mechanism, to correct overcollections or undercollections to ensure the recovery of amounts sufficient to timely provide all payments of debt service on the bonds and other approved financing costs. Although a financing order is irrevocable, the Securitization Act allows electric utilities to apply for one or more new financing orders to provide for retiring and refunding bonds upon satisfaction of certain requirements set forth in the Securitization Act.

The State Pledge. Under the Securitization Act, the State of Ohio has pledged, for the benefit of the bondholders and the bond issuers, and agreed that it will not take or permit any action that impairs the value of the phase-in-recovery property or, except for adjustments as discussed in “Description of the Phase-In-Recovery Property—Adjustments to the Phase-In-Recovery Charges,” reduce, alter or impair the phase-in-recovery charges that are imposed, charged, collected or remitted for the benefit of bondholders, until the bonds and all other

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approved financing costs are paid in full. For a description of risks related to the enforcement of this pledge, please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions—Legislative Actions” and “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions— The PUCO might take actions that could reduce the value of your investment in the certificates” in this prospectus.

Constitutional Matters. To date, no federal or Ohio cases addressing the repeal or amendment of securitization provisions analogous to those contained in the Securitization Act have been decided. There have been cases in which federal courts have applied the Contract Clause of the United States Constitution and Ohio courts have applied the Contract Clause of the Ohio Constitution, which is interpreted by the Ohio Supreme Court by reference to United States Supreme Court precedent, to strike down legislation regarding similar or analogous matters, such as legislation reducing or eliminating taxes, statutory fees, public charges or other sources of revenues servicing other types of bonds issued by public instrumentalities or private issuers, or otherwise substantially impairing or eliminating the security for bonds or other indebtedness.

Based upon this case law, Akin Gump Strauss Hauer & Feld LLP, federal counsel to the bond issuers and trust, and Calfee, Halter & Griswold LLP, Ohio counsel to the bond issuers, expect to deliver an opinion prior to the closing of the offering of the bonds to the effect that the pledge described above creates a binding contractual obligation for purposes of the Contract Clauses of the United States and Ohio constitutions, respectively, and provides a basis upon which the bondholders (or the bond trustees acting on their behalf) could challenge successfully, under the Contract Clauses of the United States and Ohio Constitutions, the constitutionality of any action by the State of Ohio (including the PUCO) of a legislative character, including the repeal or amendment of the securitization provisions of the Securitization Act, that violates the pledge described above in a way that a court would determine impairs the value of the phase-in-recovery property, or reduces, alters or impairs the phase-in-recovery charges, so as to cause a substantial impairment of the contract, unless such action is a reasonable exercise of the sovereign powers of the State of Ohio and of a character reasonable and appropriate to the public purpose justifying such action.

It may be possible for the Ohio legislature to repeal or amend the Securitization Act, or for the PUCO to amend or revoke the financing order notwithstanding the State’s pledge, if the legislature or the PUCO acts in order to serve a significant and legitimate public purpose, such as protecting the public health and safety or responding to a national or regional catastrophe affecting CEI’s, OE’s or TE’s respective service territories, or if the legislature otherwise acts in the valid exercise of the state’s police power.

In addition, any action of the Ohio legislature adversely affecting the phase-in-recovery property or the ability to impose, charge or collect phase-in-recovery charges may be considered a “taking” under the United States or Ohio Constitutions. Akin Gump Strauss Hauer & Feld LLP and Calfee, Halter & Griswold LLP, respectively, have advised us that they are not aware of any federal or Ohio court cases addressing the applicability of the Takings Clause of the United States or Ohio Constitution, respectively, in a situation analogous to that which could be involved in an amendment or repeal of the Securitization Act. It is possible that a court would decline even to apply a Takings Clause analysis to a claim based on an amendment or repeal of the Securitization Act, since, for example, a court might determine that a Contract Clause analysis rather than a Takings Clause analysis should be applied. Assuming a Takings Clause analysis were applied under the United States or Ohio Constitution, Akin Gump Strauss Hauer & Feld LLP and Calfee, Halter & Griswold LLP, respectively, expect to render opinions prior to the closing of the offering of the certificates to the effect that under existing case law, if a court concludes that the phase-in-recovery property is protected by the Takings Clause of the United States or Ohio Constitution, respectively, it would find a compensable taking if the State of Ohio were to enact a law that, without paying just compensation to the bondholders (i) permanently appropriates the phase-in-recovery property or denies all economically productive use of the phase-in-recovery property; or (ii) destroys the phase-in-recovery property, other than in response to emergency conditions; or (iii) substantially impairs the value of the phase-in-recovery property, if the law inflicts severe economic impact on the bondholders and unduly interferes with such bondholders’ reasonable investment backed expectations. In examining whether action of the Ohio legislature amounts to a regulatory taking, both federal and state courts will consider the character of the governmental action and whether such action substantially advances the State’s

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legitimate governmental interests, the economic impact of the governmental action on the bondholders, and the extent to which the governmental action interferes with distinct investment-backed expectations. There is no assurance, however, that, even if a court were to award just compensation, it would be sufficient for bondholders to recover fully their investment in the bonds or, thus, for you to recover fully your investment in the certificates.

In connection with the foregoing, our legal counsel has advised us that issues relating to the Contract and Takings Clauses of the United States and Ohio constitutions are essentially decided on a case by case basis and that the courts’ determinations, in most cases, appear to be strongly influenced by the facts and circumstances of the particular case. We have been further advised that there are no reported controlling judicial precedents that are directly on point. The opinions described above will be subject to the qualifications included in them. The degree of impairment necessary to meet the standards for relief under a Takings Clause analysis or Contract Clause analysis could be substantially in excess of what a bondholder or you would consider material. Copies of the opinions described above will be filed with the SEC as an exhibit to an amendment to the registration statement of which this prospectus is a part.

For a discussion of risks associated with potential judicial, legislation or regulatory actions, please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions—Legislative Actions” and “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions—Court Decisions” in this prospectus.

The PUCO May Adjust Phase-In-Recovery Charges. Pursuant to the Securitization Act, the PUCO provided a description in the financing order of the adjustment mechanism to be used in the imposition, charging and collection of the phase-in-recovery charges, such phase-in-recovery charges to be reviewed and adjusted at least annually or more frequently as provided in the financing order, based on estimates of consumption for each customer class and other mathematical factors. The PUCO’s review of these requests is limited to determining whether there is any mathematical error in the servicer’s application of the adjustment mechanism to the phase-in-recovery charges, including the calculation of any proportionate charges allocated to governmental aggregation customers as directed in the financing order. Such adjustments will become automatically effective 60 days after the request is submitted unless otherwised ordered by the PUCO.

Phase-In-Recovery Charges are Nonbypassable. The Securitization Act provides that, as long as the bonds are outstanding and the related phase-in costs and approved financing costs have not been recovered in full, the phase-in-recovery charges authorized under the financing order are nonbypassable. Nonbypassable means that phase-in-recovery charges cannot be avoided by any customer or other person obligated to pay such charges. Subject to the adjustment mechanism discussed above, phase-in-recovery charges will apply to all retail customers of an electric distribution utility for as long as they remain customers of such electric distribution utility. If a customer of the electric distribution utility purchases electric generation service from a competitive retail electric service provider, the utility will collect the phase-in-recovery charges directly from that customer. If a customer of the utility subsequently receives retail electric distribution service from another electric distribution utility operating in the same service area, including by succession, assignment, transfer or merger, the phase-in-recovery charges will continue to apply to that customer. If a customer switches its retail electric distribution service to a municipal utility, the phase-in-recovery charges will not continue to apply to that customer.

The Securitization Act Protects the Bond Trustee’s Lien on Phase-In-Recovery Property. The Securitization Act provides that a valid and binding security interest in phase-in-recovery property may be created only by a financing order and the execution and delivery of a security agreement in connection with the issuance of bonds. The security interest attaches without any physical delivery of collateral or other act. Upon filing of a financing statement with the office of the Secretary of State of Ohio, the lien of the security interest is valid, binding and perfected against all parties having claims of any kind in tort, contract or otherwise against the person granting the security interest, regardless of whether the parties have notice of the lien. A security interest in the phase-in-recovery property under a financing order is created, valid and binding on the later of:

• the date on which the security agreement is executed and delivered, or

• the date on which value is received for the bonds.

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The Securitization Act provides that the description of the phase-in-recovery property in a transfer or security agreement and a financing statement is sufficient only if the description refers to the applicable section of the Securitization Act and the financing order creating the phase-in-recovery property.

On perfection through the filing of a financing statement with the Secretary of State of Ohio, the security interest (1) will be a continuously perfected lien and security interest in the phase-in-recovery property and (2) will have a priority over all parties having claims, including judicial or other lien creditors, other than creditors holding a prior security interest, ownership interest or assignment previously perfected in accordance with the statutory provision.

The Securitization Act provides that priority of a security interest in phase-in-recovery property will not be impaired by:

• commingling of phase-in-recovery revenues with other amounts, or

• application of the adjustment mechanism described in “Description of the Phase-In-Recovery Property—Adjustments to the Phase-In-Recovery Charges.”

The Securitization Act Characterizes the Transfer of Phase-In-Recovery Property as a True Sale. The Securitization Act provides (and each sale agreement also provides as required by the Securitization Act) that an electric utility’s or an assignee’s transfer of phase-in-recovery property under a financing order is a “true sale” under Ohio law and is not a pledge or a secured transaction, if the documents governing that transfer expressly state that the transfer is a sale or other absolute transfer. Please read “Bankruptcy and Creditors’ Rights Issues” and “Risk Factors—Bankruptcy and Creditors’ Rights Issues” in this prospectus.

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DESCRIPTION OF THE PHASE-IN-RECOVERY PROPERTY

Overview

The phase-in-recovery property of each bond issuer consists generally of its property, rights and interests under the financing order issued by the PUCO on October 10, 2012, as amended by the entry on rehearing issued by the PUCO on December 19, 2012 upon application for rehearing, and entry nunc pro tunc issued by the PUCO on January 9, 2013, collectively referred to herein as the financing order, including each bond issuer’s right:

• to impose, charge and collect irrevocable, nonbypassable phase-in-recovery charges from each retail customer within the service territory of CEI, OE or TE, as applicable, and

• to adjust those phase-in-recovery charges, in accordance with the adjustment mechanism set forth in the financing order, in an amount sufficient to pay principal and interest on its bonds and, subject to the cap to the extent applicable, other financing costs approved under the financing order.

Portions of the financing order are summarized in this section and elsewhere in this prospectus. We have filed the financing order as an exhibit to the registration statement of which this prospectus is a part.

Each bond issuer will purchase its phase-in-recovery property from its seller. The bonds of each bond issuer are secured primarily by the phase-in-recovery property of the bond issuers. The phase-in-recovery property is not a receivable and, as the primary collateral securing the bonds of the bond issuer, is not a pool of receivables. Collections from the phase-in-recovery charges, as such charges may be adjusted pursuant to the adjustment mechanism, will be used to pay principal and interest on the bonds and, subject to the cap to the extent applicable, other financing costs approved under the financing order. These irrevocable nonbypassable charges will be included in the retail customer bills of CEI, OE or TE, as applicable, and will be collected until the bonds and approved financing costs are paid in full. Phase-in-recovery charges may not be reduced, impaired or adjusted by the PUCO except for periodic adjustments, in accordance with the adjustment mechanism, to correct overcollections or undercollections to ensure the recovery of amounts sufficient to timely provide all payments of debt service on the bonds and, subject to the cap to the extent applicable, other approved financing costs. All revenues and collections from phase-in-recovery charges provided for in the financing order are part of the phase-in-recovery property. Please read “Credit Enhancement” in the accompanying prospectus supplement for more information relating to the phase-in-recovery property.

Financing Order and Issuance Advice Letters

The Securitization Act authorizes the PUCO to issue a financing order, which is a regulatory order that approves the amount of an electric utility’s phase-in costs that it is permitted to finance through the issuance of bonds. On May 3, 2012, CEI, OE and TE filed a joint petition for a financing order with the PUCO. The PUCO issued a financing order dated October 10, 2012, as amended, which authorized the issuance of up to $555 million aggregate principal amount of bonds based upon then current estimates of unrecovered phase-in-cost balances of the Ohio Companies as of December 31, 2012.

The financing order, together with the issuance advice letters, establishes, among other things, the phase-in-recovery charges for each Ohio Company to recover its reimbursable phase-in costs and financing costs as specified in the financing order. The phase-in-recovery charges of each Ohio Company are nonbypassable in that customers must pay it whether or not they purchase energy from CEI, OE and TE, or a third party supplier of energy. The Securitization Act provides that the right to collect payments based on the phase-in-recovery charges is a property right which may be pledged, transferred, assigned or sold in connection with the issuance of the bonds. Under the financing order, the phase-in-recovery property is created simultaneous with its sale to the applicable bond issuer who, as the owner of such phase-in-recovery property, is entitled to impose, bill and collect the phase-in-recovery charges until it has received payments from customers of the applicable Ohio Company sufficient to retire all outstanding bonds and to pay all other approved financing costs, including all upfront and ongoing financing costs approved in the financing order. Phase-in-recovery charges are subject to adjustment semiannually (other than the

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initial adjustment, which will be completed within 12 months after the issuance date of the bonds and the last year each tranche of bonds is outstanding, during which adjustments may be made as frequently as monthly). Such charges will be included in retail customers’ bills, and there will be a separate notation on customers’ bills denoting that the right to impose, charge and collect phase-in-recovery charges is owned by the applicable bond issuer. Please read “—Phase-In-Recovery Charges” and “—Adjustments to the Phase-In-Recovery Charges” below.

The financing order requires each of the sellers to submit an issuance advice letter relating to the bonds to the PUCO no later than the end of the first business day after the pricing date for that tranche of bonds. Each issuance advice letter, in the form set forth in the financing order and attached as an exhibit to this prospectus, will establish final terms and conditions of the applicable bonds. The financing order also requires each of the sellers to file updated tariff sheets to reflect the final initial phase-in-recovery charges based upon actual costs and any other revised assumptions at the time of pricing of the bonds. The initial phase-in-recovery charges and final terms of the bonds as set forth in an issuance advice letter will automatically become effective no later than the fourth business day after pricing unless prior to such time the PUCO issues an order finding that market conditions are such that customers will not realize cost savings from the issuance of the bonds and directing the bond issuers not to proceed with the securitization.

Phase-In-Recovery Property

The phase-in-recovery property is a property right consisting generally of the right to impose, charge and collect phase-in-recovery charges from retail customers, the right to adjust those phase-in-recovery charges and the right to all revenues, collections, claims, payments, money or proceeds of or arising from the phase-in-recovery charges and the property, rights and interests created under the financing order. The bonds of each bond issuer will be secured by the phase-in-recovery property, as well as the other bond collateral described under “Description of the Bonds—Security.”

Phase-In-Recovery Charges

The phase-in-recovery charges of each Ohio Company are designed to recover on a fully reconciling basis all of its respective phase-in costs. The phase-in-recovery charges are the mechanism through which each of CEI, OE and TE is allowed to recover its respective phase-in costs. Recovery of the phase-in costs was previously approved by the PUCO through separate existing riders. See “The Securitization Act—Recovery of Phase-In Costs.”

Each of the servicers will calculate and set their respective initial phase-in-recovery charges at a level estimated to generate sufficient revenues (and taking into account the cap on certain ongoing financing costs):

• to pay fees and expenses related to the servicing and retirement of the bonds of the related bond issuer and of the certificates allocable to the bond issuer, including, without limitation, fees and expenses related to trustee costs, rating agency surveillance fees, legal and accounting fees and other ongoing financing costs, as well as adjustments for dealing with estimated and actual costs;

• to pay interest on the bonds;

• to pay principal of each tranche of such bonds according to the related expected amortization schedule;

• to replenish the capital subaccount to the required capital level; and

• to pay all additional fees, costs and charges and, subject to the cap to the extent applicable, other financing costs approved under the financing order.

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The table below sets forth each Ohio Company’s estimate of its respective initial phase-in-recovery charges as of                     , 2013, compared with the estimate of the charges based on current recovery methods. The amounts shown in the table are dependent on a number of assumptions as described below and based on current estimates and market conditions. Such amounts will also periodically change throughout the recovery period in accordance with the approved adjustment mechanism described below. See “—Adjustments to the Phase-In-Recovery Charges.”

Company	Estimated  Initial Phase-In-Recovery Charges (per kWh)	Estimated Monthly Cost for Typical Residential Bill (per 1,000 kWh)	Average  Total Monthly Charge for 1,000 kWh Residential Customer Under Current Recovery	Estimated Total Monthly Savings for 1,000 kWh Residential Customer
CEI	$	$	$	$
OE	$	$	$	$
TE	$	$	$	$

The estimated initial phase-in-recovery charges are based on a number of assumptions as of                     , 2013 including but not limited to the settlement date of the transaction, the long-term electricity sales forecast, interest rates, average uncollectible percentages, average days sales outstanding and financing costs.

Adjustments to the Phase-In-Recovery Charges

The initial adjustment to the phase-in-recovery charges will be completed within 12 months after the issuance date for the bonds. Thereafter, during the life of the bonds of a bond issuer, the related servicer will calculate and adjust the phase-in-recovery charges semiannually, with the exception of the last year each tranche of bonds is expected to be outstanding, in which case adjustments as frequently as monthly may be necessary. These adjustments to the phase-in-recovery charges will be set at levels estimated to generate revenues sufficient to pay, subject to the cap to the extent applicable, approved fees and expenses of servicing the bonds and an allocable portion of the certificates, to pay interest on, and principal of, the bonds and, thus, an allocable portion of the certificates, to fund and replenish other subaccounts of the bond issuer as required for the upcoming year and other financing costs approved in financing order.

Each servicer will increase or decrease the phase-in-recovery charges for its bond issuer over the life of the bonds issuer’s bonds as a result of several factors, including but not limited to:

• changes in electricity sales forecasts;

• changes in weighted average days outstanding of customer receivables and charge-off experience (including defaults by any third party billers);

• changes in any ongoing fees, costs and expenses or other ongoing financing costs; and

• unpaid interest on or deferred principal of the bonds.

The adjustments to the phase-in-recovery charges will continue until all interest on, and principal of, all tranches of bonds of the related bond issuer, and, thus, an allocable portion of the related tranches of certificates, and, subject to the cap to the extent applicable, other approved financing costs have been paid or distributed in full.

The financing order provides that the servicers will each file adjustment requests as follows:

• No later than November 1 and May 1 of each year (subject to the exceptions described above for the initial adjustment and the last year each tranche of bonds is expected to be outstanding), each servicer will file with the PUCO an adjustment request for approval of such servicers’ adjusted phase-in-recovery charges and corresponding amended tariff sheets.

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• Unless otherwise ordered by the PUCO, these adjusted phase-in-recovery charges and the associated tariff amendments will become automatically effective on a service rendered basis 60 days after the filing of the adjustment request. The PUCO’s review of these requests is limited to determining whether there is any mathematical error in the servicer’s application of the adjustment mechanism to the phase-in-recovery charges.

The adjustment requests will take into account amounts available in a bond issuer’s general subaccount and excess funds subaccount, and amounts necessary to replenish the capital subaccount to its required level, in addition to amounts payable on the bonds and related fees and expenses.

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SALE AGREEMENTS

The following summary describes particular material terms and provisions of the sale agreements pursuant to which each bond issuer will purchase phase-in-recovery property from its seller. We will file the form of the sale agreement as an exhibit to the registration statement of which this prospectus forms a part. This summary does not purport to be complete and is subject and qualified by reference to the provisions of the sale agreements.

The Ohio Companies, as sellers, have agreed in the sale agreements not to sell phase-in-recovery property to secure another issuance of bonds or certificates if it would cause the then existing ratings on the certificates from Standard & Poor’s, Moody’s and Fitch’s to be downgraded.

On the issuance date of the certificates, each seller will sell and assign to the applicable bond issuer, without recourse, its entire interest in its phase-in-recovery property. Each seller’s phase-in-recovery property will include all of such seller’s rights under the financing order related to such phase-in-recovery property to impose, charge and collect phase-in-recovery charges in an amount sufficient to pay the applicable bond issuer’s bonds and approved financing costs. Each bond issuer will apply the net proceeds from the sale of its bonds to the trust to purchase its phase-in-recovery property. Each seller’s financial statements will indicate that it is not the owner of the phase-in-recovery property. However, for financial reporting and tax purposes a seller will treat the bonds as representing debt of such seller.

Seller Representations and Warranties

In the sale agreements, each of the sellers will separately represent and warrant to its bond issuer, as of the closing date, among other things, that:

(a) the information describing such seller in “The Sponsors, Sellers and Initial Servicers” section of this prospectus is correct in all material respects;

(b) the seller has transferred the phase-in-recovery property, free and clear of all security interests, liens, charges and encumbrances (other than any created by Section 4928.2312 of the Securitization Act and any in favor of the bond issuer);

(c) the phase-in-recovery property has been validly transferred and sold to the bond issuer and all filings (including filings with the Secretary of State of the State of Ohio as required under the Securitization Act) necessary in any jurisdiction to give the bond issuer a valid, perfected ownership interest (subject to any lien created by Section 4928.2312 of the Securitization Act) in the phase-in-recovery property have been made;

(d) under the laws of the State of Ohio (including the Securitization Act) and the United States in effect on the closing date:

• the financing order pursuant to which the phase-in-recovery property has been created is in full force and effect;

• the bondholders are entitled to the protections of the Securitization Act and the financing order is not revocable by the PUCO;

• the State of Ohio may not rescind, alter or amend the Securitization Act or take or permit any other action that impairs the value of the phase-in-recovery property or revise the phase-in costs for which recovery is authorized under the financing order or, except for periodic adjustments allowed in accordance with the adjustment mechanism in Section 4928.238 of the Securitization Act, reduce, alter or impair phase-in-recovery charges that are imposed, collected or remitted for the benefit of the bondholders in a manner that would substantially impair the rights of bondholders, absent a demonstration by the State of Ohio that an impairment is a reasonable exercise of its sovereign power and of a character reasonable and appropriate to the public purpose justifying such action until the bonds, together with accrued interest, and, subject to the cap to the extent applicable, all other approved financing costs are fully paid and performed in full;

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• the process by which the financing order was adopted and approved, and the financing order and issuance advice letters themselves, comply with all applicable laws, rules and regulations;

• the issuance advice letters have been filed in accordance with the financing order;

• the PUCO may not, either by rescinding, altering or amending the financing order, in any way reduce, impair, postpone or terminate the phase-in-recovery charges or impair the phase-in-recovery property or the collection or recovery of the phase-in costs absent a demonstration by the State of Ohio that an impairment is a reasonable exercise of its sovereign power and of a character reasonable and appropriate to the public purpose justifying such action until the bonds, together with accrued interest, and, subject to the cap to the extent applicable, all other approved financing costs are fully paid and performed in full; and

• no other approval, order or other action of, or sale or filing with any other governmental body is required in connection with the creation of the phase-in-recovery property, except those that have been obtained or made or will be obtained or made on the closing date;

(e) based on information available to the seller on the closing date, the assumptions used in calculating the initial phase-in-recovery charges are reasonable and are made in good faith;

(f) on the effectiveness of the financing order and the issuance advice letter:

• all of the phase-in-recovery property constitutes an existing property right;

• the phase-in-recovery property consists of the right to impose, charge and collect phase-in-recovery charges, the right to all revenues, collections, claims, payments, money, or proceeds of or arising from the phase-in-recovery charges, as adjusted from time to time pursuant to the financing order, and all rights to obtain adjustments to the phase-in-recovery charges pursuant to the financing order; and

• the owner of the phase-in-recovery property is legally entitled to collect payments arising from the phase-in-recovery charges in the aggregate sufficient to pay the interest on and principal of the bonds of the bond issuer, to pay the fees and expenses of servicing the bonds and an allocable portion of the certificates, to replenish the capital subaccount to the required capital level and pay other approved financing costs until the bonds and, subject to the cap to the extent applicable, all other approved financing costs are paid in full;

(g) the seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio, with the requisite corporate power and authority to own its properties as owned on the closing date and to conduct its business as conducted by it on the closing date and to execute, deliver and perform the terms of the sale agreement;

(h) the execution, delivery and performance of the sale agreement have been duly authorized by all necessary corporate action on the part of the seller;

(i) the sale agreement constitutes a legal, valid and binding obligation of the seller, enforceable against it in accordance with its terms, subject to applicable insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors’ or secured parties’ rights generally from time to time in effect and to general principles of equity, regardless of whether considered in a proceeding in equity or law;

(j) the consummation of the transactions contemplated by the sale agreement do not conflict with the seller’s articles of incorporation or by-laws or any material agreement or instrument to which the seller is a party or bound, result in the creation or imposition of any lien upon the seller’s properties pursuant to the terms of a material agreement or instrument (other than any lien that may be granted under the transaction documents or any lien created by Section 4928.2312 of the Securitization Act) or violate any existing law or any existing order, rule or regulation applicable to the seller or any federal or state court or regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the seller or its properties;

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(k) no governmental approvals, authorizations, consents, orders or other actions or filings are required for the seller to execute, deliver and perform its obligations under the sale agreement except those which have previously been obtained or made or which are required to be obtained or made in the future pursuant to the servicing agreement; and

(l) except as disclosed to the bond issuer, no court or administrative proceeding is pending and, to the seller’s knowledge, no court or administrative proceeding is threatened and no investigation is pending or threatened:

• asserting the invalidity of the sale agreement, the Securitization Act or the financing order, or seeking to prevent the consummation of the transactions contemplated by, the sale agreement or other basic documents;

• seeking a determination that might materially adversely affect the performance by the seller of its obligations under, or the validity or enforceability of, the sale agreement, the Securitization Act or the financing order; or

• adversely affect the federal or state income tax classification of the bonds or the certificates as debt.

Notwithstanding the above, the sellers will not be in breach of a representation or warranty due to a change in law by legislative enactment, constitutional amendment or initiative petition and will not represent or warrant that any amounts actually collected arising from the phase-in-recovery charges will in fact be sufficient to meet payment obligations on the bonds, and thus its bond issuer’s allocable portion of the certificates, or that assumptions made in calculating the phase-in-recovery charges will in fact be realized.

Seller Covenants

In the sale agreements, each of the sellers will separately make the following covenants:

(a) so long as any of the bonds of the applicable bond issuer are outstanding, except as otherwise provided under the sale agreement, such seller (a) will keep in full force and effect its existence, rights and franchises as a corporation under the laws of the jurisdiction of its organization and (b) will obtain and preserve its qualification to do business, in each case to the extent that in each such jurisdiction such existence or qualification is or shall be necessary to protect the validity and enforceability of the sale agreement, the other basic documents to which such seller is a party and each other instrument or agreement necessary or appropriate to the proper administration of the sale agreement and the transactions contemplated thereby;

(b) except for the conveyances under the sale agreement, the lien under the Securitization Act or the back-up security interest, the seller will not sell, pledge, assign or transfer, or grant, create, or incur any lien on, any of the phase-in-recovery property, or any interest therein, and such seller shall defend the right, title and interest of its bond issuer and the bond trustee in, to and under the phase-in-recovery property against all claims of third parties claiming through or under such seller. Such seller, in its capacity as seller, will not at any time assert any lien against, or with respect to, any of the phase-in-recovery property;

(c) if the seller receives any payments in respect of the phase-in-recovery charge or the proceeds thereof when it is not acting as the servicer, such seller will pay to the servicer all payments received by it in respect thereof as soon as practicable after receipt by it;

(d) the seller will notify the applicable bond issuer and bond trustee promptly after becoming aware of any lien on any of the phase-in-recovery property, other than the conveyances under the sale agreement, any lien under the basic documents or the lien under the Securitization Act or for the benefit of the bond issuer;

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(e) the seller will comply with its organizational and governing documents and all laws, treaties, rules, regulations and determinations of any governmental instrumentality applicable to it, except to the extent that failure to so comply would not adversely affect the applicable bond issuer’s or the bond trustee’s interests in the phase-in-recovery property or under any of the other basic documents to which such seller is party or the seller’s performance of its obligations under the sale agreement or under any of the other basic documents to which it is party;

(f) so long as any of the bonds of the applicable bond issuer are outstanding:

• the seller will treat such bonds as debt of the applicable bond issuer and not of such seller, except for financial accounting or tax reporting purposes;

• the seller will indicate in its financial statements that it is not the owner of the phase-in-recovery property and will disclose the effects of all transactions between itself and the applicable bond issuer in accordance with generally accepted accounting principles; and

• the seller will not own or purchase any bonds or certificates;

(g) the seller agrees that, upon the sale by such seller of the phase-in-recovery property to the applicable bond issuer pursuant to the sale agreement:

• to the fullest extent permitted by law, including applicable PUCO regulations, such bond issuer will have all of the rights originally held by the seller with respect to the phase-in-recovery property, including the right (subject to the terms of the servicing agreement) to exercise any and all rights and remedies to collect any amounts payable by any customer in respect of the phase-in-recovery property, notwithstanding any objection or direction to the contrary by the seller; and

• any payment by any customer to such bond issuer will discharge such customer’s obligations in respect of the phase-in-recovery property to the extent of such payment, notwithstanding any objection or direction to the contrary by the seller;

(h) so long as any of the bonds of the applicable bond issuer are outstanding:

• the seller will not make any statement or reference in respect of the phase-in-recovery property that is inconsistent with the ownership thereof by the applicable bond issuer (other than for financial accounting or tax reporting purposes); and

• the seller will not take any action in respect of the phase-in-recovery property except solely in its capacity as the servicer thereof pursuant to the servicing agreement or as otherwise contemplated by the basic documents;

(i) the seller will execute and file such filings, including filings with the PUCO pursuant to the Securitization Act and UCC filings, and cause to be executed and filed such filings, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the ownership interest of the applicable bond issuer, and the security interest of the applicable bond trustee, in the phase-in-recovery property and the back-up security interest, including all filings required under the Securitization Act and the applicable UCC relating to the transfer of the ownership interest in the phase-in-recovery property by such seller to such bond issuer, the granting of a security interest in the phase-in-recovery property by such bond issuer to such bond trustee, and the back-up security interest, and the continued perfection of such ownership interest, security interest and back-up security interest. Such seller shall deliver (or cause to be delivered) to the bond trustee (with copies to the applicable bond issuer) file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. Such seller will institute any action or proceeding necessary to compel performance by the PUCO or the State of Ohio of any of their obligations or duties under the Securitization Act or the financing order, and such seller will take such legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, as may be reasonably necessary (i) to protect the applicable bond

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issuer, bond trustee, bondholders, and any of their respective affiliates, officials, directors, employees, and agents from claims, state actions or other actions or proceedings of third parties which, if successfully pursued, would result in a breach of any representation set forth in the sale agreement or (ii) to block or overturn any attempts to cause a repeal of, modification of or supplement to the Securitization Act, the financing order, the issuance advice letters, any other advice letter (as defined in the applicable servicing agreement), or the rights of applicable bondholders by executive action, legislative enactment or constitutional amendment that would be adverse to the applicable bond issuer, bond trustee or bondholders. If the applicable servicer performs its obligations under the applicable provision of its servicing agreement, such performance will be deemed to constitute performance of such seller’s obligations pursuant to clause (ii) of the preceding sentence. In such event, such seller agrees to assist the servicer as reasonably necessary to perform its obligations under such provisions of its servicing agreement. The costs of any such actions or proceedings shall be payable from phase-in-recovery charge collections as an operating expense in accordance with the priorities set forth in the applicable bond indenture. Such seller’s obligations pursuant to this covenant in the sale agreement will survive and continue notwithstanding the fact that the payment of operating expenses pursuant to the priorities set forth in the applicable bond indenture may be delayed (it being understood that such seller may be required to advance its own funds to satisfy its obligations thereunder);

(j) notwithstanding any prior termination of the applicable sale agreement or bond indenture, but subject to the right of a court of competent jurisdiction to order the sequestration and payment of revenues arising with respect to the phase-in-recovery property notwithstanding any bankruptcy, reorganization or other insolvency proceedings with respect to such seller pursuant to Section 4928.2310 of the Securitization Act, such seller solely in its capacity as a creditor of such bond issuer shall not, prior to the date which is one year and one day after the termination of the bond indenture, petition or otherwise invoke or cause such bond issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining an involuntary case against such bond issuer under any Federal or state bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of such bond issuer or any substantial part of the property of such bond issuer, or, to the fullest extent permitted by law, ordering the winding up or liquidation of the affairs of such bond issuer;

(k) so long as any of the bonds of the applicable bond issuer are outstanding, such seller will, and will cause each of its subsidiaries to, pay all material taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a lien on the phase-in-recovery property; provided that no such tax need be paid if such seller or one of its subsidiaries is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if such seller or such subsidiary has established appropriate reserves as shall be required in conformity with generally accepted accounting principles;

(l) so long as any of the bonds of the applicable bond issuer are outstanding, such seller will not sell any “phase-in-recovery property” (as defined in the Securitization Act) to secure another issuance of “phase-in-recovery bonds” (as defined in the Securitization Act) if it would cause the then existing ratings on the certificates from the rating agencies to be downgraded; and

(m) the seller agrees not to withdraw the filing of the issuance advice letter with the PUCO.

In the event of a seller’s willful misconduct or gross negligence in the performance of its duties or observance of the covenants under the sale agreement or a breach of any representation or warranty in the sale agreement, the seller shall be required to indemnify, defend and hold harmless its bond issuer and the bondholders against any costs, expenses, losses, claims, damages and liabilities incurred as a result of the breach, except to the extent of any costs, expenses, losses, claims, damages and liabilities either resulting from the willful misconduct or gross negligence of such indemnified person or resulting from a breach of a representation and

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warranty made by such indemnified person in any transaction document that gives rise to the seller’s breach; provided, however, that the bondholders may only enforce their rights against the seller through an action brought by the bond trustee. The remedies provided for in the sale agreement are the sole and exclusive remedies of the bond issuer and the bond trustee (for the benefit of the bondholders) against the seller for breach of its representations and warranties in the sale agreement.

In addition, a seller shall indemnify and hold harmless the related bond trustee, the Delaware trustee and the certificate trustee and any of their respective affiliates, officials, officers, directors, employees and agents against any expenses (including legal fees and expenses), losses, claims, taxes, damages and liabilities incurred by any of these persons as a result of the seller’s willful misconduct or gross negligence in the performance of its duties or observance of the covenants under the sale agreement or a breach in any material respect by the seller of its representations and warranties in the sale agreement, except to the extent of amounts either resulting from the willful misconduct or gross negligence of the indemnified person or resulting from a breach of a representation or warranty made by the indemnified person in the transaction documents that gives rise to the seller’s breach.

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BANKRUPTCY AND CREDITORS’ RIGHTS ISSUES

True Sale

Each seller will represent and warrant to its bond issuer in its sale agreement that the transfer of the phase-in-recovery property to its bond issuer is a valid sale and assignment of the phase-in-recovery property from the seller to the bond issuer. Each seller will also represent and warrant that it will take the appropriate actions under the Securitization Act to perfect this sale. The Securitization Act provides that the transactions described in the sale agreement shall constitute an absolute, true sale of the phase-in-recovery property to the bond issuer, and the seller and the bond issuer will treat the transactions as a sale under applicable law, although for financial reporting and federal income tax purposes the transactions will be treated as a secured borrowing of the seller. Please read “Material U.S. Federal Income Tax Consequences” and “Risk Factors—Bankruptcy and Creditors’ Rights Issues.”

In the event of a bankruptcy of a party to a sale agreement, if a party in interest in the bankruptcy were to take the position that the transfer of the phase-in-recovery property to a bond issuer pursuant to that sale agreement was a financing transaction and not a true sale under applicable creditors’ rights principles, there can be no assurance that a court would not adopt this position. Even if a court did not ultimately recharacterize the transaction as a financing transaction, the mere commencement of a bankruptcy of CEI, OE or TE and the attendant possible uncertainty surrounding the treatment of the transaction could result in delays in payments on the bonds and, thus, the certificates.

In that regard, we note that the bankruptcy court in In re: LTV Steel Company, Inc., et al., 274 B.R. 278 (Bankr. N. D. Oh. 2001) issued an interim order that observed that a debtor, LTV Steel Company, which had previously entered into securitization arrangements with respect both to its inventory and its accounts receivable, may have “at least some equitable interest in the inventory and receivables, and that this interest is property of the debtor’s estate…sufficient to support the entry of” an interim order permitting the debtor to use proceeds of the property sold in the securitization. 274 B.R. at 285. The court based its decision in large part on its view of the equities of the case.

LTV and the securitization investors subsequently settled their dispute over the terms of the interim order and the bankruptcy court entered a final order in which the parties admitted and the court found that the pre-petition transactions constituted “true sales.” The court did not otherwise overrule its earlier ruling. The LTV memorandum opinion serves as an example of the pervasive equity powers of bankruptcy courts and the importance that such courts may ascribe to the goal of reorganization, particularly where the assets sold are integral to the ongoing operation of the debtor’s business.

Even if creditors did not challenge the sale of phase-in-recovery property as a true sale, a bankruptcy filing by CEI, OE or TE could trigger a bankruptcy filing by the bond issuers with similar negative consequences for bondholders and ultimately for holders of the certificates. In a recent bankruptcy case, In re General Growth Properties, Inc., General Growth Properties, Inc. filed for bankruptcy together with many of its direct and indirect subsidiaries, including many subsidiaries that were organized as special purpose vehicles. The bankruptcy court upheld the validity of the filings of these special purpose subsidiaries and allowed the subsidiaries, over the objections of their creditors, to use the lenders’ cash collateral to make loans to the parent for general corporate purposes. The creditors received adequate protection in the form of current interest payments and replacement liens to mitigate any diminution in value resulting from the use of the cash collateral, but the opinion serves as a reminder that bankruptcy courts may subordinate legal rights of creditors to the interests of helping debtors reorganize.

We, the bond issuers and the sellers have attempted to mitigate the impact of a possible recharacterization of a sale of phase-in-recovery property as a financing transaction under applicable creditors’ rights principles. Should the transfer of the phase-in-recovery property to a bond issuer be recharacterized, in a bankruptcy case of the seller or otherwise, as a borrowing by the seller, the Securitization Act provides that there is a perfected first

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priority statutory lien on the phase-in-recovery property that secures all obligations to the bondholders. In addition, in the sale agreement, the seller grants to the bond issuer a security interest in the phase-in-recovery property and covenants that it will take appropriate actions to perfect the security interest, although the seller takes the position that it has no rights in the phase-in-recovery property to which a security interest could attach.

A creditor or bankruptcy trustee of a seller or a seller itself as debtor in possession might argue that, contrary to Ohio law as set forth in the Securitization Act, the sale of the phase-in-recovery property to its bond issuer was a loan to the seller from the related bond issuer, secured by a pledge of the phase-in-recovery property. If the bankruptcy court accepted that argument or other arguments that the seller retained an interest of some kind in the phase-in-recovery property, the phase-in-recovery property could be treated as property of the bankruptcy estate of the seller or in which the bankruptcy estate had an interest. In such event, the exercise of rights of the related bond issuer in respect of the phase-in-recovery property would be subject to the automatic stay that arises upon the commencement of the seller’s bankruptcy case, and the rights of the bond issuer as secured creditor would be subject to modification to the extent permitted under the Bankruptcy Code. Such modifications could include, among other things, reductions of the amounts of payment of interest and principal on the bonds, delays in time of payments and alteration of other terms of the bonds, leading to delays or reductions in payments on the certificates.

Under the Securitization Act, on the effective date of the financing order, the phase-in-recovery property identified in the issuance advice letter constitutes a property right that continuously exists as property for all purposes. Nonetheless, if a seller were to become the debtor in a bankruptcy case, a creditor of, or a bankruptcy trustee for, the seller, or the seller itself as debtor in possession, may attempt to take the position that, because the payments based on the phase-in-recovery charges are usage-based charges, phase-in-recovery property comes into existence only as customers use electricity. If a court were to adopt this position, we cannot assure you that either the statutory lien created by the statute or the security interest granted in the sale agreement would be valid as to electricity consumed after the commencement of a bankruptcy case by or against the seller.

If a court were to determine that the phase-in-recovery property has not been sold to a bond issuer, and that the statutory lien created by the Securitization Act and the security interest granted in the sale agreement are invalid against payments arising from the phase-in-recovery charges that become collectible as a result of the consumption of electricity consumed after the commencement of a bankruptcy case of the seller, then the certificate trustee, as bondholder and for the benefit of holders of the certificates, would be an unsecured creditor of the seller, and delays or reductions in distributions on the certificates could result.

Whether or not the court determined that the phase-in-recovery property had been sold to a bond issuer, the court could rule that any payments arising from the phase-in-recovery charges that become collectible as a result of the consumption of electricity after the commencement of the related seller’s bankruptcy cannot be transferred to the bond trustee or the certificate trustee, thus resulting in delays or reductions of distributions on the certificates.

To the extent that claims are made by a bond issuer against the bankruptcy estate of a seller on the basis of contractual indemnity in its related sale agreement or any other documentation, such claims may be subject to significant requirements of proof of actual damage, may be subject to disallowance as contingent to the extent that actual damage has not yet occurred and may hold only the status of unsecured claims against the bankruptcy estate of the seller.

Substantive Consolidation

The sellers and the bond issuers have taken steps to reduce the risk that, in the event a seller or an affiliate of a seller were to become the debtor in a bankruptcy case, a court would order that the assets and liabilities of the bond issuer be substantively consolidated with those of the seller or an affiliate. These steps include the fact that each of the bond issuers is a separate, special purpose limited liability company, the organizational documents of

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which provide, among other things, that it shall not commence a voluntary bankruptcy case without the unanimous affirmative vote of all of its directors, including two directors independent of the seller. Nonetheless, these steps may not be completely effective, and thus if a seller or an affiliate of a seller were to become a debtor in a bankruptcy case, a court may order that the assets and liabilities of the bond issuer be consolidated with those of the seller or an affiliate, thus potentially resulting in delays or reductions in payments on the bonds and, thus, distributions on the certificates. Other factors that may tend to support consolidation include the ownership of a bond issuer by a seller, the designation of officers or employees of a seller as directors, other than independent directors, of the bond issuer and the existence of indemnities by a seller for some liabilities of the bond issuer.

Estimation of Claims; Challenges to Indemnity Claims

If a seller were to become a debtor in a bankruptcy case, claims, including indemnity claims, by the bondholders or the bond trustee against CEI, OE or TE, as the case may be, as a seller under its sale agreement and the other documents executed in connection therewith would be unsecured claims and would be subject to being discharged in the bankruptcy case. In addition, a party in interest in the bankruptcy may request that the bankruptcy court estimate any contingent claims that the bondholders or the bond trustee have against CEI, OE or TE, as the case may be. That party may then take the position that these claims should be estimated at zero or at a low amount because the contingency giving rise to these claims is unlikely to occur. If a court were to hold that the indemnity provisions were unenforceable, such parties would be left with a claim for actual damages against CEI, OE or TE, as the case may be, based on breach of contract principles. The actual amount of these damages would be subject to estimation and/or calculation by the court. No assurances can be given as to the result of any of the above-described actions or claims. Furthermore, no assurance can be given as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving CEI, OE or TE.

Enforcement of Rights by the Bond Trustee

Upon an event of default of the bonds under the applicable bond indenture, the bond trustee will enforce the security interest in the phase-in-recovery property in accordance with the terms of the bond indenture. Under the Securitization Act, if a utility servicer defaults on any required payment of phase-in-recovery revenues, a court, upon application by the bond trustee (or any other interested party) and without limiting any other remedies available to the bond trustee, shall order the sequestration and payment of the revenues for the benefit of bondholders, the applicable bond issuer and other bond trustee or any financing party. The court order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to the electric distribution utility or any affiliate. There can be no assurance, however, that a court would issue this order after an Ohio Company’s bankruptcy in light of the automatic stay provisions of Section 362 of the United States Bankruptcy Code. In that event, the bond trustee would likely seek an order from the bankruptcy court lifting the automatic stay to permit or authorize this action by the court, and an order requiring an accounting and segregation of the revenues arising from the phase-in-recovery property. There can be no assurance that a court would grant either order.

Bankruptcy of a Servicer

Each servicer is entitled to commingle the phase-in-recovery charges that it receives with its own funds until each date on which such servicer is required to remit funds to the bond trustee as specified in its respective servicing agreement. The Securitization Act provides that the bond issuers’ rights to the phase-in-recovery property are not affected by the commingling of these funds with any other funds of the servicers. In a bankruptcy of a servicer, however, a bankruptcy court might rule that federal bankruptcy law does not recognize a bond issuer’s right to collections of the phase-in-recovery charges that are commingled with other funds of the servicer as of the date of bankruptcy. If so, the collections of the phase-in-recovery charges held by the servicer

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as of the date of bankruptcy would not be available to pay amounts owing on the bonds and, thus, distributions on the certificates. In this case, the bond issuers would have only a general unsecured claim against the servicer for those amounts. This decision could cause material delays in payments of principal or interest, or losses, on the bonds and, thus, material delays in distributions, or losses, on the certificates, which could materially reduce the value of your investment in the certificates.

The servicing agreement will provide that in the event of a bankruptcy of a servicer, either the applicable bond trustee or holders of bonds of the applicable bond issuer evidencing not less than 25% in principal amount of then outstanding bonds may terminate all the rights and obligations of the servicer (other than the servicer’s indemnity obligation) under the servicing agreement, whereupon a successor servicer appointed by the bond issuer, with the prior written consent of the bond trustee and the approval of the PUCO, will succeed to all the responsibilities, duties and liabilities of the servicer under the servicing agreement.

If, however, a bankruptcy trustee or similar official has been appointed for a servicer, and no servicer default other than an appointment of a bankruptcy trustee or similar official has occurred, that trustee or official may have the power to prevent the bond trustee or the bondholders from effecting a transfer of servicing. The servicing agreement will also provide that the bond trustee may appoint, or petition a court of competent jurisdiction for the appointment of, a successor servicer which satisfies criteria specified by the nationally recognized statistical rating organizations rating the certificates. However, the automatic stay in effect during a servicer bankruptcy might delay or prevent a successor servicer’s replacement of the servicer. Even if a successor servicer may be appointed and may replace the servicer, a successor may be difficult to obtain and may not be capable of performing all of the duties that CEI, OE or TE, as the case may be, as servicer was capable of performing. Furthermore, should the servicer enter into bankruptcy, it may be permitted to stop acting as servicer.

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THE ISSUING ENTITY

The trust will be formed by the bond issuers specifically for the purpose of acquiring the bonds from the bond issuers and issuing the certificates offered by this prospectus and the accompanying prospectus supplement. The trust will be a Delaware statutory trust. The bond issuers and U.S. Bank Trust National Association, a national banking association, not acting in its individual capacity but acting as the Delaware trustee on behalf of the trust, will enter into a declaration of trust to create the trust. The principal assets of the trust will be the bonds. The declaration of trust will not permit, and may not be amended, modified or supplemented to permit, the trust to engage in any activities other than holding the bonds, issuing the certificates and engaging in other related activities.

Each tranche of certificates will represent fractional pro rata undivided beneficial interests in the corresponding tranches of bonds of each of the bond issuers, including all amounts due and to become due under the corresponding tranches of bonds of the bond issuers, and will represent the right to receive the payments on the corresponding tranches of bonds of the bond issuers. See “Description of the Certificates—Payments and Distributions.”

The bond issuers, the Ohio Companies, the trust, the Delaware trustee and the certificate trustee will enter into a fee and indemnity agreement under which the bond issuers, subject to the cap, will each pay an allocable portion of the Delaware trustee’s and the certificate trustee’s reasonable compensation and reasonable fees and expenses. The fee and indemnity agreement will further provide that the bond issuers, subject to the cap, will indemnify the trust, the Delaware trustee and the certificate trustee for, and hold them harmless against, among other things, any loss, liability or expense incurred by them arising from the failure of any party to perform its obligations under the various transaction documents. Any amounts due and owing to the Delaware trustee or the certificate trustee under the applicable basic documents that exceed the cap will be paid by the applicable initial servicer pursuant to the servicing agreement.

The fiscal year of the trust will be the calendar year.

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THE TRUSTEES

The initial certificate trustee and each initial bond trustee will be U.S. Bank National Association, a national banking association, whose address, principal office and experience are provided in the prospectus supplement.

Certificate Trustee

The certificate trustee may resign under certain circumstances provided in the certificate indenture, including at any time upon 30 days’ prior written notice to us, the bond issuers and the bond trustee. Upon 30 days prior written notice, the holders of a majority in principal amount of the certificates then outstanding may remove the certificate trustee by so notifying the certificate trustee, the bond issuers and the bond trustees. The certificate trustee may also be removed under other circumstances provided in the certificate indenture, including by us upon failure of the certificate trustee to company with Section 310 of the Trust Indenture Act, the certificate trustee ceasing to be eligible pursuant to the eligibility requirements in the certificate indenture or the certificate trustee being adjudged bankrupt or insolvent. If the certificate trustee shall resign or be removed, we are obligated to promptly appoint a successor. No resignation or removal of the certificate trustee and no appointment of a successor certificate trustee will be effective until a successor has been appointed and has accepted such appointment and, in certain cases, receipt of written confirmation from each rating agency that no lowering or withdrawal of the then current ratings will result from such appointment.

The certificate trustee will at all times be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act, have a combined capital and surplus of at least $50 million and a long-term debt rating of at least “A” (or the equivalent thereof) by each of the rating agencies. If the certificate trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation will without any further action be the successor certificate trustee, provided that such entity is otherwise qualified and eligible under the terms of the certificate indenture.

The certificate trustee will not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its discretion, rights or powers under the certificate indenture so long as its conduct does not constitute willful misconduct, negligence or bad faith. Pursuant to the fee and indemnity agreement, the bond issuers have agreed to indemnify the certificate trustee and its affiliates, officers, directors, employees and agents against any and all losses, liabilities and expenses (including liabilities under state and federal securities laws) arising in connection with the certificate indenture and other basic documents and the transactions contemplated by each of the foregoing, provided that no bond issuer will be required to indemnify any loss, liability or expense resulting from the willful misconduct or negligence of any such indemnified person.

For more information about the certificate trustee, see “Description of the Certificates” in this prospectus.

Bond Trustee

Each bond trustee may resign at any time upon written notice to the applicable bond issuer; provided, however, that no such resignation will be effective until either a qualified successor has been designated and accepted such appointment or the collateral has been completely liquidated and the proceeds thereof distributed to bondholders. Bondholders holding a majority in principal amount of bonds outstanding may remove the bond trustee and appoint a successor. A bond issuer must remove a bond trustee if (i) the bond trustee ceases to be eligible to continue in its capacity as bond trustee under the bond indenture, (ii) the bond trustee is adjudged a bankrupt or insolvent, (iii) a receiver or other public officer takes charge of the bond trustee or its property, (iv) the bond trustee otherwise becomes incapable of acting or (v) the bond trustee fails to provide to the bond issuer or the sponsor any information reasonably requested by the bond issuer and necessary for the bond issuer to comply with its reporting obligations under the Exchange Act and Regulation AB and such failure is not resolved to the bond issuer’s and bond trustee’s mutual satisfaction within a reasonable period of time. If a bond

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trustee resigns or is removed or if a vacancy exists in the office of the bond trustee for any reason, the applicable bond issuer will promptly appoint a successor bond trustee meeting the eligibility requirements of the bond indenture. The successor bond trustee will mail notice of such appointment to bondholders and each rating agency.

Each bond trustee must at all times satisfy the requirements of Section 310(a) of the Trust Indenture Act, have a combined capital and surplus of at least $50 million and a long-term debt rating of at least “A” (or the equivalent thereof) by each of the rating agencies. If a bond trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association will without any further act be the successor bond trustee. The successor bond trustee will mail a notice of such merger, conversion, consolidation or transfer to each rating agency.

No bond trustee will be liable for any action it takes or omits to take in good faith in accordance with a direction received by it under the bond indenture or for any error in judgment made in good faith by a responsible officer unless it is proved that the bond trustee was negligent in ascertaining the particular facts. Each bond issuer has agreed to indemnify its bond trustee and such bond trustee’s affiliates, officers, directors, employees and agents against any and all losses, liabilities or expenses (including liabilities under state or federal securities laws) arising in connection with the bond indenture and other basic documents and the transactions contemplated by each of the foregoing, provided no bond issuer will be required to indemnify any loss, liability or expense resulting from the willful misconduct or negligence of any such indemnified person.

None of the bond trustees the Delaware trustee or the certificate trustee will be obligated to supervise the servicers or have any liability for a servicer default or misconduct. In no event shall any of the foregoing trustees be required to act as a successor servicer.

For more information about the bond trustee, see “Description of the Bonds” in this prospectus.

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THE BOND ISSUERS

Each of the bond issuers is a limited liability company organized under the laws of the State of Delaware. CEI is the sole member of CEI Funding, OE is the sole member of OE Funding and TE is the sole member of TE Funding. The principal executive office of each of the bond issuers is located at 76 South Main Street, Akron, Ohio 44308. The telephone number for each of the bond issuers is (800) 736-3402. The sellers organized the bond issuers for the limited purpose of holding the phase-in-recovery properties and issuing bonds secured by the phase-in-recovery properties and the other bond collateral and related activities. The bond issuers’ organizational documents restrict them from engaging in other activities other than those described below. In addition, the bond issuers’ organizational documents require them to operate in a manner intended to reduce the likelihood that they would be consolidated in a seller’s bankruptcy estate if the seller becomes involved in a bankruptcy proceeding. Selected provisions of the bond issuers’ amended and restated limited liability company agreements are summarized below and a form of such agreements has been filed as an exhibit to the registration statement of which this prospectus is a part.

On the date of issuance of the bonds, the capital of each bond issuer will be at least equal to 0.5% of the principal amount of the bonds issued by such bond issuer or such greater amount as may allow the bonds to achieve the desired security rating and treat the bonds as debt of the applicable bond issuer under applicable guidance issued by the Internal Revenue Service.

The assets of each bond issuer will consist of:

• its respective phase-in-recovery property,

• its rights under transaction documents to which it is a party,

• the collection account and all subaccounts established in the bond indentures,

• the cash used to capitalize such bond issuer,

• all other property owned by the bond issuers, including all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, and

• all proceeds of each of the foregoing.

The bond issuers are recently formed entities and, as of the date of this prospectus, have not carried on any business activities and have no operating history.

Restricted Purpose

Each bond issuer has been created for the sole purpose of:

• purchasing, owning, administering and servicing its phase-in-recovery property and the other collateral;

• issuing and registering the bonds of such bond issuer;

• making payments on the bonds of such bond issuer;

• managing, selling, assigning, pledging, collecting amounts due on, or otherwise dealing with the phase-in-recovery property and the other bond collateral and related assets of such bond issuer;

• negotiating, executing, assuming and performing such bond issuers’ obligations under the basic documents;

• pledging its interest in the phase-in-recovery property and other collateral to the bond trustee under its bond indenture in order to secure the bonds; and

• performing other activities that are incidental to, or necessary, suitable or convenient to accomplish these purposes.

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The bond issuers’ organizational documents will not permit them to engage in any activities not directly related to these purposes, including issuing securities (other than the bonds), borrowing money or making loans to other persons. The list of permitted activities set forth in each bond issuer’s limited liability company agreement may not be altered, amended or repealed without the affirmative vote of a majority of our directors, which vote must include the affirmative vote of our independent directors. The bond issuers’ limited liability company agreement and the bond indentures will prohibit the bond issuers from issuing any phase-in-recovery bonds other than the bonds that the bond issuers will offer pursuant to the prospectus supplement.

Management

The business of each bond issuer will be managed by a management committee consisting of at least three and no more than five directors. Each of the bond issuers will at all times have at least two directors who are independent directors. The same people will serve as officers and directors of all three bond issuers. The following is a list of the officers and directors of the bond issuers upon the closing of the offering:

Name Age Title

All of the bond issuers’ officers and directors, including the independent directors, will begin to serve effective immediately prior to the closing of the offering. Pursuant to an agreement between CEI, OE, TE and             , pursuant to which             has agreed to make              and              available to the Ohio Companies as independent directors, the initial aggregate annual compensation for both of the independent directors will be $        . The officers and directors of each bond issuer, other than the independent directors, will not be compensated for their services on behalf of the bond issuers. Any officer of a bond issuer will serve at the discretion of the bond issuer’s directors. [None of the bond issuers’ managers or officers has been involved in any legal proceedings which are specified in Item  401(f) of the SEC’s Regulation S-K.]

Limitation on Liabilities

The bond issuers’ organizational documents provide that, to the extent permitted by law, no director or officer shall be personally liable to a bond issuer for monetary damages for any act taken or omission made in good faith on behalf of such bond issuer and in a manner reasonably believed to be within the scope of authority conferred on such officer or director, without gross negligence or willful misconduct. In addition, the organizational documents of the bond issuers provides that, to the fullest extent permitted by law, they will indemnify their respective officers and directors against liabilities incurred in connection with their services on behalf of the bond issuers for any act or omission performed or omitted by such officer or director in good faith on behalf of such bond issuer and in a manner reasonably believed to be within the scope of authority conferred on such officer or director, without the gross negligence or willful misconduct. The officers and directors will devote as much time as is necessary to the affairs of the bond issuers. The bond issuers will have sufficient officers, directors and employees to carry on their business.

Bond Issuers’ Relationship with the Ohio Companies

On the issue date for the bonds, the Ohio Companies will sell their respective phase-in-recovery property to the related bond issuer pursuant to a sale agreement between such Ohio Company and its related bond issuer. The Ohio Companies will service the phase-in-recovery property pursuant to a servicing agreement between such Ohio Company and its related bond issuer and will provide administrative services to each bond issuer pursuant to an administration agreement between such Ohio Company and its related bond issuer.

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Relationship with PUCO

Pursuant to the financing order:

• the PUCO or its designated representative has a decision-making role co-equal with the sponsors with respect to the structuring and pricing of the certificates and all matters related to the structuring and pricing of the certificates will be determined through a joint decision of the sponsors and the PUCO or its designated representative or financial advisor;

• the PUCO’s financial advisor will participate fully in all plans and decisions related to the pricing, marketing and structuring of the bonds and certificates and will be provided timely information as necessary to fulfill its obligation to advise the PUCO in a timely manner but makes no representations as to any of the information contained herein; and

• the servicers will file periodic adjustments to the phase-in-recovery charges with the PUCO on the bond issuers’ behalf.

The bond issuers have agreed that certain reports concerning phase-in-recovery charge collections will be provided to the PUCO.

Administration Agreement

The bond issuers do not have any employees, but CEI, OE and TE, as the case may be, will provide their respective bond issuer with administrative services, including services relating to the preparation of financial statements, required filings with the SEC, any tax returns we might be required to file under applicable law, qualifications to do business, and minutes of our managers’ meetings, and office space according to the terms of an administration agreement.

Each bond issuer is required to pay its administrator such bond issuer’s pro rata portion (based on bond issuance amount) of $100,000 payable semiannually, for as long as CEI, OE and TE, as the case may be, provide these services, plus the reimbursement for all costs and expenses for services performed by unaffiliated third parties and actually incurred by CEI, OE and TE, as the case may be, in performing such services described above.

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THE SPONSORS, SELLERS AND INITIAL SERVICERS

CEI, OE and TE will be the sellers and initial servicers of the phase-in-recovery properties securing the bonds, and will be the sponsors of the securitization in which the bonds and certificates covered by this prospectus are issued. CEI, OE and TE are all wholly owned, electric distribution utility subsidiaries of FirstEnergy and each company is incorporated in Ohio. FirstEnergy is a diversified energy company with 10 electric distribution companies comprising one of the nation’s largest investor-owned electric systems. FirstEnergy’s diverse generating fleet features non-emitting nuclear, scrubbed baseload coal, natural gas, hydro and pumped-storage hydro and other renewables and has a total generating capacity of approximately 20,000 megawatts.

CEI was organized under the laws of the State of Ohio in 1892 and does business as an electric public utility in that state. CEI provides regulated electric distribution services in an area of 1,600 square miles in northeastern Ohio, serving 747,000 customers. The area it serves has a population of approximately 1.7 million. CEI also procures generation services for those customers electing to retain them as their power supplier. As of December 31, 2012, CEI’s distribution system consisted of 33,252 pole miles of distribution lines; and its substations’ transformer capacity is 8,938,000 kV amperes.

OE was organized under the laws of the State of Ohio in 1930 and owns property and does business as an electric public utility in that state. OE engages in the distribution and sale of electric energy to communities in a 7,000 square mile area of central and northeastern Ohio, serving 1,032,000 customers. OE conducts business in portions of Ohio, providing regulated electric distribution services and procurement of generation services for those franchise customers electing to retain it as their power supplier. The area served by OE has a population of approximately 2.3 million. As of December 31, 2012, OE’s transmission and distribution system consisted of 62,238 pole miles of distribution lines and 461 pole miles of transmission lines; and its substations’ transformer capacity is 7,763,000 kV amperes. OE also engages in the distribution and sale of electric energy through its wholly owned subsidiary, Pennsylvania Power Company, to approximately 161,000 customers in western Pennsylvania; however those customers will not be subject to phase-in-recovery charges and that subsidiary will not be involved in any manner in the transactions described in this prospectus and the accompanying prospectus supplement.

TE was organized under the laws of the State of Ohio in 1901 and does business as an electric public utility in that state. TE provides regulated electric distribution services in an area of 2,300 square miles in northwestern Ohio, serving 309,000 customers. The area it serves has a population of approximately 0.7 million. TE also provides generation services to those customers electing to retain them as their power supplier. As of December 31, 2012, TE’s transmission and distribution system consisted of 17,593 pole miles of distribution lines and 81 pole miles of transmission lines; and its substations’ transformer capacity is 3,040,000 kV amperes.

The retail rates, conditions of service, issuance of securities and other matters regarding CEI, OE and TE are subject to regulation by the PUCO in the State of Ohio — the state in which each company operates as an electric distribution utility. In addition, under Ohio law, municipalities may regulate rates of a public utility, subject to appeal to the PUCO if not acceptable to the utility. On the federal level, each of CEI, OE and TE are subject to regulation by the Federal Energy Regulatory Commission.

Revenues, Customer Base and Energy Consumption

The retail customer bases of CEI, OE and TE consist of four customer classes: residential, commercial, industrial and public street and highway lighting. The customer classes are broad groups that include accounts with a wide range of load characteristics served under a variety of rate designs. Several factors influence the number of retail customers served by CEI, OE and TE and the amount of energy consumed by such customers, including general economic conditions and weather conditions in the respective service territories. General

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economic conditions affect migration of residential, commercial and industrial customers into and out of the service territories and weather conditions affect the amount of electricity consumed, with higher consumption typically occurring in the winter and summer months when heating or cooling demands are highest.

The following tables show the electricity delivered to retail customers, retail electric revenues and number of retail customers for each of the four revenue reporting customer classes for the periods indicated. There can be no assurances that the retail electricity sales, retail electric revenues and number of retail customers or the composition of any of the foregoing will remain at or near the levels reflected in the following tables.

Electricity Delivered to Retail Customers, Electric Delivery Revenues and Retail Customers

CEI

Retail Electric Usage (As Measured by Billed GWh Sales) by Customer Class and Percentage Composition
Customer Class	Year ended December 31,
	2009				2010				2011				2012
Residential		5,429	30.8	%		5,726	30.3	%		5,710	30.2	%		5,678	30.2	%
Commercial		4,646	26.3	%		4,779	25.3	%		6,774	35.8	%		6,665	35.4	%
Industrial		7,410	42.0	%		8,216	43.5	%		6,284	33.2	%		6,324	33.6	%
Public Street and Highway Lighting		155	0.9	%		149	0.8	%		148	0.8	%		138	0.7	%
Total Retail		17,639	100.0	%		18,870	100.0	%		18,916	100.0	%		18,805	100.0	%

Retail Electric Revenue by Customer Class and Percentage Composition (Dollars in thousands)
Customer Class	Year ended December 31,
	2009				2010				2011				2012
Residential		567,111	34.2	%		466,689	38.6	%		366,117	42.2	%		385,200	46.1	%
Commercial		509,576	30.8	%		343,758	28.4	%		379,719	43.8	%		326,006	39.0	%
Industrial		559,517	33.8	%		377,038	31.2	%		100,704	11.6	%		105,444	12.6	%
Public Street and Highway Lighting		20,390	1.2	%		22,676	1.9	%		20,540	2.4	%		19,531	2.3	%
Total Retail		1,656,595	100.0	%		1,210,161	100.0	%		867,080	100.0	%		836,180	100.0	%

Average Number of Metered Retail Electric Customers and Percentage Composition
Customer Class	Year ended December 31,
	2009				2010				2011				2012
Residential		667,171	88.5	%		666,343	88.6	%		664,170	88.7	%		660,818	88.7	%
Commercial		84,152	11.2	%		83,304	11.1	%		83,728	11.2	%		83,432	11.2	%
Industrial		2,243	0.3	%		2,212	0.3	%		650	0.1	%		657	0.1	%
Public Street and Highway Lighting		299	0.0	%		348	0.0	%		387	0.1	%		421	0.1	%
Total Retail		753,865	100.0	%		752,207	100.0	%		748,935	100.0	%		745,328	100.0	%

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OE

Retail Electric Usage (As Measured by Billed GWh Sales) by Customer Class and Percentage Composition
Customer Class	Year ended December 31,
	2009				2010				2011				2012
Residential		8,974	39.3	%		9,493	39.3	%		9,512	38.6	%		9,400	38.5	%
Commercial		6,835	29.9	%		7,006	29.0	%		6,726	27.3	%		6,691	27.4	%
Industrial		6,900	30.2	%		7,510	31.1	%		8,272	33.5	%		8,208	33.6	%
Public Street and Highway Lighting		148	0.6	%		146	0.6	%		146	0.6	%		142	0.6	%
Total Retail		22,857	100.0	%		24,155	100.0	%		24,656	100.0	%		24,441	100.0	%

Retail Electric Revenue by Customer Class and Percentage Composition (Dollars in thousands)
Customer Class	Year ended December 31,
	2009				2010				2011				2012
Residential		956,441	47.1	%		774,436	56.8	%		653,195	55.5	%		690,782	58.3	%
Commercial		654,638	32.3	%		389,146	28.6	%		323,340	27.5	%		301,274	25.4	%
Industrial		404,866	19.9	%		184,852	13.6	%		186,616	15.9	%		179,053	15.1	%
Public Street and Highway Lighting		13,634	0.7	%		13,836	1.0	%		13,944	1.2	%		13,128	1.1	%
Total Retail		2,029,579	100.0	%		1,362,269	100.0	%		1,177,095	100.0	%		1,184,237	100.0	%

Average Number of Metered Retail Electric Customers and Percentage Composition
Customer Class	Year ended December 31,
	2009				2010				2011				2012
Residential		922,861	88.9	%		922,104	88.9	%		921,314	89.1	%		918,450	89.0	%
Commercial		112,265	10.8	%		111,978	10.8	%		109,747	10.6	%		109,836	10.6	%
Industrial		906	0.1	%		900	0.1	%		1,423	0.1	%		1,415	0.1	%
Public Street and Highway Lighting		1,966	0.2	%		1,999	0.2	%		2,050	0.2	%		2,060	0.2	%
Total Retail		1,037,998	100.0	%		1,036,981	100.0	%		1,034,534	100.0	%		1,031,761	100.0	%

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TE

Retail Electric Usage (As Measured by Billed GWh Sales) by Customer Class and Percentage Composition
Customer Class	Year ended December 31,
	2009				2010				2011				2012
Residential		2,405	25.3	%		2,588	25.0	%		2,596	24.9	%		2,569	24.7	%
Commercial		2,584	27.2	%		2,680	25.9	%		2,039	19.5	%		2,018	19.4	%
Industrial		4,466	47.0	%		5,014	48.5	%		5,750	55.1	%		5,743	55.3	%
Public Street and Highway Lighting		48	0.5	%		51	0.5	%		51	0.5	%		51	0.5	%
Total Retail		9,503	100.0	%		10,334	100.0	%		10,437	100.0	%		10,381	100.0	%
Retail Electric Revenue by Customer Class and Percentage Composition (Dollars in thousands)
Customer Class	Year ended December 31,
	2009				2010				2011				2012
Residential		266,912	34.8	%		208,372	47.6	%		191,981	49.6	%		194,611	49.8	%
Commercial		257,319	33.5	%		139,351	31.9	%		111,540	28.8	%		99,318	25.4	%
Industrial		235,460	30.7	%		81,965	18.7	%		74,933	19.4	%		88,903	22.7	%
Public Street and Highway Lighting		7,616	1.0	%		7,811	1.8	%		8,448	2.2	%		8,082	2.1	%
Total Retail		767,307	100.0	%		437,499	100.0	%		386,902	100.0	%		390,914	100.0	%
Average Number of Metered Retail Electric Customers and Percentage Composition
Customer Class	Year ended December 31,
	2009				2010				2011				2012
Residential		272,839	87.8	%		272,283	87.9	%		272,771	88.3	%		272,006	88.3	%
Commercial		37,042	11.9	%		36,427	11.8	%		34,781	11.3	%		34,641	11.2	%
Industrial		213	0.1	%		210	0.1	%		459	0.1	%		479	0.2	%
Public Street and Highway Lighting		631	0.2	%		980	0.3	%		1,009	0.3	%		1,021	0.3	%
Total Retail		310,725	100.0	%		309,900	100.0	%		309,020	100.0	%		308,147	100.0	%

For each of the Ohio Companies, the decrease in retail electric revenue (which includes generation sales as well as transmission and distribution revenues) since 2009 reflected in the tables above results primarily from a decrease in retail generation sales volume primarily due to increased customer shopping in the Ohio Companies’ service territories. This increased customer shopping, which does not impact earnings for the Ohio Companies, is expected to continue. Total generation provided by alternative suppliers as a percentage of total megawatt-hour deliveries increased to 79% in 2012 from 76% in 2011 for the Ohio Companies.

Forecasting Electricity Consumption

CEI, OE and TE prepare kilowatt-hour and revenue forecasts for annual planning purposes. These forecasts are updated periodically throughout the year, typically on a quarterly basis, based on most current available information and known results to date. The Ohio Companies monitor the accuracy of each forecast by conducting variance analysis on a monthly basis taking into account weather impacts on kilowatt-hour sales and deviations from forecast within the customer count. The most current sales forecast will be used for the semiannual updates to the phase-in-recovery charges. In addition to the internal planning process described above, the Ohio Companies also file a long-term sales forecast with the PUCO on an annual basis. This long-term forecast is typically prepared at the beginning of the year and filed in early spring; it includes a forecast for the current calendar year, as well as ten years into the future.

The Ohio Companies’ forecasting process incorporates analyses for each major customer class (residential, commercial, industrial, and public street and highway lighting) and takes into account local and national

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economic conditions, as well as historical usage patterns and energy efficiency reductions, which information is processed by statistical energy forecasting software developed by a third party vendor. Historic data include economic data supplied by a third party service and weather data. Variables are then modeled and evaluated for a best fit. The model is then tested using ordinary least squares regression and modified, if appropriate based on statistical results, for the best fit. The forecast is adjusted for the energy-efficiency impacts associated with achieving the energy savings benchmarks defined in Ohio Senate Bill 221.

A brief description of the forecasting methodology utilized for the most recent long-term sales forecast filed with the PUCO, by customer class, is provided below:

• Residential—The residential class energy forecast is the product of the forecasted number of customers and average use per customer. Information used for this class’ forecast includes the results of a residential appliance saturation survey conducted in 2010 by FirstEnergy, as well as regional information from the U.S. Energy Information Administration on regional appliance saturation

• Commercial & Industrial—Economic and demographic variables considered in regression models for the commercial and industrial sectors include weather variables, disposable income, non-agricultural employment, and local contribution to gross domestic product. In addition, projections of industrial production and manufacturing employment are considered in the development of the forecast for the industrial sector

• Public Street & Highway Lighting—The forecast was estimated using an analytical approach. The forecast for this class is based on the nominal wattages and the standard burning hours of each installed lighting fixture, along with the recent history of traffic lighting use. The street lighting usage was trended downward assuming that, as mercury vapor lights failed, they would be replaced with sodium vapor lights. A 20-year life for mercury vapor lights and a 45% reduction in energy when replaced by sodium vapor lighting was used to establish this downward trend. Other than for the month-to-month fluctuations, traffic lighting use was kept constant throughout the forecast period

In addition, the most recent long-term sales forecast filed with the PUCO reflects the impact of customer self-generation that occurs “behind-the-meter” using analytical and statistical techniques. In order to estimate the impact of customer self-generation, the previous year’s year-end amount of energy resulting from known installed solar and wind customer-owned generation is determined. This amount is then increased at the same annual percentage rate as the increase in the renewable benchmarks for the State of Ohio from Ohio Senate Bill 221 and reflected in the forecasted projections.

The Ohio constitution permits municipalities to form municipal electric utilities and has permitted municipalities to take such action since 1912, but also provides limits on how much utility service may be provided outside of municipal boundaries. Ohio statutory provisions and Ohio Supreme Court opinions further refine parameters of constitutional authority. For forecasting purposes, the Ohio Companies do not make adjustments associated with municipal electric utilities.

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CEI

Annual Forecast Variance for Ultimate Electric Delivery (GWh)

	Year ended December 31,
	2009		2010		2011		2012
Residential
Forecast		5,600		5,622		5,462		5,532
Actual		5,429		5,726		5,710		5,678
Variance (%)		3.2%		-1.8%		-4.3%		-2.6%
Commercial
Forecast		4,879		4,830		6,870		7,060
Actual		4,646		4,779		6,774		6,665
Variance (%)		5.0%		1.1%		1.4%		5.9%
Industrial
Forecast		7,643		7,901		5,721		6,331
Actual		7,410		8,216		6,284		6,324
Variance (%)		3.1%		-3.8%		-9.0%		0.1%
Public Street and Highway Lighting
Forecast		165		164		163		162
Actual		155		149		148		138
Variance (%)		6.6%		10.1%		9.9%		17.3%
Total
Forecast		18,287		18,517		18,215		19,086
Actual		17,639		18,870		18,916		18,805
Variance (%)		3.7%		-1.9%		-3.7%		1.5%

OE

Annual Forecast Variance for Ultimate Electric Delivery (GWh)

	Year ended December 31,
	2009		2010		2011		2012
Residential
Forecast		9,317		9,359		9,079		9,130
Actual		8,974		9,493		9,512		9,400
Variance (%)		3.8%		-1.4%		-4.6%		-2.9%
Commercial
Forecast		7,085		7,116		6,852		6,715
Actual		6,835		7,006		6,726		6,691
Variance (%)		3.7%		1.6%		1.9%		0.4%
Industrial
Forecast		7,499		9,147		7,853		8,269
Actual		6,900		7,510		8,272		8,208
Variance (%)		8.7%		21.8%		-5.1%		0.7%
Public Street and Highway Lighting
Forecast		141		141		141		139
Actual		148		146		146		142
Variance (%)		-4.6%		-3.7%		-3.7%		-1.9%
Total
Forecast		24,042		25,763		23,925		24,253
Actual		22,857		24,155		24,656		24,441
Variance (%)		5.2%		6.7%		-3.0%		-0.8%

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TE

Annual Forecast Variance for Ultimate Electric Delivery (GWh)

	Year ended December 31,
	2009		2010		2011		2012
Residential
Forecast		2,515		2,529		2,449		2,505
Actual		2,405		2,588		2,596		2,569
Variance (%)		4.6%		-2.3%		-5.7%		-2.5%
Commercial
Forecast		2,808		2,745		2,169		2,150
Actual		2,584		2,680		2,039		2,018
Variance (%)		8.7%		2.4%		6.3%		6.6%
Industrial
Forecast		4,393		4,839		5,455		6,164
Actual		4,466		5,014		5,750		5,743
Variance (%)		-1.6%		-3.5%		-5.1%		7.3%
Public Street and Highway Lighting
Forecast		57		55		55		54
Actual		48		51		51		51
Variance (%)		17.3%		7.7%		6.7%		4.7%
Total
Forecast		9,773		10,167		10,127		10,873
Actual		9,503		10,334		10,437		10,381
Variance (%)		2.8%		-1.6%		-3.0%		4.7%

Billing and Collections

Each servicer will bill its retail electric customers for charges arising from the phase-in-recovery property attributable to that customer and will be obligated to remit daily to its respective bond trustee an amount equal to the actual phase-in-recovery charges billed, less an allowance for estimated phase-in-recovery charge charge-offs, within two business days after the day payments arising from the phase-in-recovery charges are deemed to be collected as described under “Servicing—Remittances to Collection Account.” A servicer’s duties will include responding to inquiries from customers and the PUCO regarding the phase-in-recovery property and the phase-in-recovery charges, calculating electricity usage, accounting for collections, furnishing periodic reports and statements to its bond issuer, the bond trustee and the certificate trustee and periodically adjusting the phase-in-recovery charges . See “Servicing Agreements” in this prospectus.

Credit Policy

The credit and collections policies of CEI, OE and TE are regulated by the PUCO. Under PUCO regulations, the Ohio Companies are obligated to provide service to all customers within their respective service territory.

On application for service, the identification and credit standing of all customers is verified through the use of a major credit-reporting bureau. In instances where customers do not meet minimum credit standards, credit must be established. This can be done through providing a security deposit (130% of the average monthly bill), third party guarantor (residential only), furnishing a surety bond and/or a bank letter of credit. The PUCO does not permit the Ohio Companies to obtain security deposits from their residential customers that are enrolled in a low income payment plan.

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According to PUCO regulations, each Ohio Company may refuse to provide service, at any location, to an applicant who is indebted to it for any service previously furnished to the applicant. Each Ohio Company will commence service, however, if a reasonable payment plan for the indebtedness is first made between a residential applicant and the Ohio Company, and it may likewise commence service for an industrial or commercial applicant.

Billing

Each of CEI, OE and TE bill their respective customers about once every 30.9 days, with approximately an equal number of bills being distributed each business day. For the year ending December 31, 2012, CEI produced an average of 35,475 bills, OE produced an average of 49,137 bills, and TE produced an average of 14,661 bills, on each business day to customers in their various customer categories.

Budget billing is limited to residential customers. Approximately 90,407 residential customers, who constitute approximately 13.69% of CEI’s residential customer base, approximately 127,848 residential customers, who constitute approximately 13.92% of OE’s residential customer base and approximately 32,085 residential customers, who constitute approximately 11.8% of TE’s residential customer base, choose to be billed using the Ohio Companies’ budget billing program. For these customers, the Ohio Companies determine and bill a monthly budget amount based on the last 12 months of billing history for each account. The budget amount is recalculated each March and September, if necessary. Overpayments or underpayments for actual usage during the prior year are reconciled on each customer’s August bill.

For accounts with potential billing errors exception reports are generated for manual review. This review examines accounts that have abnormally high or low bills, potential meter-reading errors and possible meter malfunctions.

Collection Process

CEI, OE and TE receive a large percentage of their payments via the U.S. mail; however, other payment options are also available. These options include electronic payments, credit card, check free, pay by phone and automatic check withdraw and electronic fund transfers, as well as direct payment at the Ohio Companies’ payment agency network.

The Ohio Companies consider residential and nonresidential customer bills to be delinquent if they are unpaid 30 days after the billing date. In general, the Ohio Companies’ collection process begins when balances are unpaid for 30 days or more from the billing date. At that time, the Ohio Companies begin collection activities ranging from delinquency notice mailings, to telephone calls, to personal collection and ending with electricity shut-off. The Ohio Companies outsource a portion of their residential and commercial collection activity to two unaffiliated vendors, which handle incoming collection calls. In addition, one of these vendors provides outbound collection calls for the Ohio Companies. The Ohio Companies also sell bad debt and use collection agencies and legal collection experts as needed throughout the collection process.

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Loss Experience

The following tables set forth information relating to the annual net charge-offs for CEI, OE and TE.

CEI

Net Charge-Offs as a Percentage of Billed Transmission & Distribution Revenues

	As of 12/31/09		As of 12/31/10		As of 12/31/11		As of 12/31/12
Billed Electric Revenues ($000)		1,656,594		1,210,160		867,080		836,180
Net Charge-Offs ($000)		9,557		13,133		6,923		8,266
Percentage of Billed Revenue		0.58%		1.09%		0.80%		0.99%

OE

Net Charge-Offs as a Percentage of Billed Transmission & Distribution Revenues

	As of 12/31/09		As of 12/31/10		As of 12/31/11		As of 12/31/12
Billed Electric Revenues ($000)		2,029,578		1,362,268		1,177,095		1,184,237
Net Charge-Offs ($000)		14,365		8,234		6,558		9,691
Percentage of Billed Revenue		0.71%		0.60%		0.56%		0.82%

TE

Net Charge-Offs as a Percentage of Billed Transmission & Distribution Revenues

	As of 12/31/09		As of 12/31/10		As of 12/31/11		As of 12/31/12
Billed Electric Revenues ($000)		767,307		437,498		386,901		390,914
Net Charge-Offs ($000)		7,867		4,243		3,333		4,177
Percentage of Billed Revenue		1.03%		0.97%		0.86%		1.07%

Days Sales Outstanding

The following tables set forth information relating to the average number of days that retail customer bills from CEI, OE and TE remained outstanding during the calendar year (or other period referred to below) ending on each of the dates referred to below.

CEI

Average Days Sales Outstanding

	As of 12/31/09		As of 12/31/10		As of 12/31/11		As of 12/31/12
Average Days Sales Outstanding		22		22		20		24

OE

Average Days Sales Outstanding

	As of 12/31/09		As of 12/31/10		As of 12/31/11		As of 12/31/12
Average Days Sales Outstanding		21		20		18		21

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TE

Average Days Sales Outstanding

	As of 12/31/09		As of 12/31/10		As of 12/31/11		As of 12/31/12
Average Days Sales Outstanding		23		24		21		24

Delinquencies

The following tables set forth information relating to the delinquency experience of CEI, OE and TE as of each of the dates shown below.

CEI

Delinquencies as a Percentage of Total Billed Revenues

	As of 12/31/09			As of 12/31/10			As of 12/31/11			As of 12/31/12
30-59 days		0.34	%		0.39	%		0.41	%		0.44	%
60-89 days		0.16	%		0.19	%		0.24	%		0.30	%
90+ days		0.59	%		0.75	%		0.89	%		1.14	%
Total		1.09	%		1.34	%		1.54	%		1.89	%
OE Delinquencies as a Percentage of Total Billed Revenues
	As of 12/31/09			As of 12/31/10			As of 12/31/11			As of 12/31/12
30-59 days		0.29	%		0.33	%		0.39	%		0.49	%
60-89 days		0.13	%		0.19	%		0.22	%		0.27	%
90+ days		0.44	%		0.58	%		0.56	%		0.73	%
Total		0.87	%		1.10	%		1.17	%		1.50	%
TE Delinquencies as a Percentage of Total Billed Revenues
	As of 12/31/09			As of 12/31/10			As of 12/31/11			As of 12/31/12
30-59 days		0.27	%		0.37	%		0.46	%		0.47	%
60-89 days		0.18	%		0.24	%		0.26	%		0.31	%
90+ days		0.78	%		1.01	%		1.02	%		1.11	%
Total		1.24	%		1.62	%		1.74	%		1.89	%

Where to Find Information about CEI, OE and TE

Although CEI, OE and TE are not currently required to file periodic reports with the SEC, FirstEnergy, the parent company of CEI, OE and TE, does file periodic reports with the SEC as required by the Exchange Act. The periodic reports of FirstEnergy filed with the SEC can be inspected at the SEC’s website at www.sec.gov and are available through FirstEnergy’s website at www.firstenergycorp.com; however, those reports are not intended to be incorporated by reference in this prospectus or the accompanying prospectus supplement. Except as provided in the accompanying prospectus supplement, no other information contained on the SEC’s website or FirstEnergy’s website constitutes a part of this prospectus or the accompanying prospectus supplement related to the bonds or the certificates.

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SERVICING AGREEMENTS

The following summary describes the material terms and provisions of each servicing agreement pursuant to which each servicer is undertaking to service the phase-in-recovery property of a bond issuer. We will file the form of the servicing agreement as an exhibit to the registration statement of which this prospectus forms a part. This summary does not purport to be complete and is subject and qualified by reference to the provisions of the servicing agreements.

Servicing Procedures

A servicer, on behalf of a bond issuer, will manage, service and administer, and bill and collect payments arising from, the phase-in-recovery property according to the terms of the servicing agreement between the servicer and bond issuer. A servicer’s duties will include responding to inquiries of customers and the PUCO regarding the phase-in-recovery property and the phase-in-recovery charges, calculating electricity usage, accounting for collections, furnishing periodic reports and statements to its bond issuer, the rating agencies, the bond trustee and the certificate trustee, making all filings with the PUCO and taking all other actions necessary to perfect the bond issuer’s ownership interest in and the bond trustee’s first priority security interest in the phase-in-recovery property, and periodically adjusting the phase-in-recovery charges.

In addition, the servicers will take legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying in hearings or similar proceedings, as may be reasonably necessary to block or overturn any attempts to cause a repeal of, modification of or supplement to the Securitization Act or the financing order or the rights of holders of phase-in-recovery property by legislative enactment, initiative petition or constitutional amendment that would be adverse to bondholders and, thus, certificateholders. The cost of any action will be payable from payments arising from the phase-in-recovery charges as an expense of the bond issuers.

The servicers will also prepare any reports required to be filed by us with the SEC and will cause to be delivered required opinions of counsel to the effect that all filings with the PUCO necessary to preserve and protect the interests of the trustee in the phase-in-recovery property of the respective bond issuers have been made.

Servicing Standards and Covenants

The servicing agreements will require the servicers, in servicing and administering the phase-in-recovery properties, to employ or cause to be employed procedures and exercise or cause to be exercised the same care they customarily employ and exercise in servicing and administering bill collections for their own accounts and, if applicable, for others.

Consistent with the foregoing, a servicer may in its own discretion waive any late payment charge or any other fee or charge relating to delinquent payments, if any, and may waive, vary or modify any terms of payment of any amounts payable by a customer, in each case, if the waiver or action:

• would comply with the servicer’s policies and practices for comparable assets that it services for itself and for others; and

• would comply in all material respects with applicable law.

In addition, a servicer may write off any amounts that it deems uncollectible according to its customary practices.

In the servicing agreement, a servicer will covenant that, in servicing the phase-in-recovery property, it will:

• manage, service, administer and make collections of payments arising from the phase-in-recovery property with reasonable care and in compliance with applicable law, including all applicable

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regulations and guidelines of the PUCO, using the same degree of care and diligence that the servicer exercises for bill collections for its own account and, if applicable, for others;

• follow customary standards, policies and procedures for the industry in performing its duties as servicer;

• use all reasonable efforts, consistent with its customary servicing procedures, to bill and collect the phase-in-recovery charges;

• comply in all material respects with laws applicable to and binding on it relating to the phase-in-recovery property; and

• submit semiannually a request to the PUCO seeking a true-up adjustment, if any, of the phase-in-recovery charges.

True-Up Adjustment Process

Among other things, the financing order and the servicing agreements both require the servicer to file adjustment requests within 12 months after the issuance of the bonds and then semi-annually (and as frequently as monthly during the last year that the bonds are outstanding) to ensure the expected recovery of amounts sufficient to provide timely payment of principal of and interest on the bonds, together with other approved financing costs.

As part of each true-up adjustment, the servicer will calculate the phase-in-recovery charges which must be billed in order to generate the revenues for the ensuing six-month period necessary to result in:

• all accrued and unpaid interest on the bonds being paid in full,

• the outstanding principal balance of the bonds equaling the amount provided in the expected amortization schedule,

• the amount on deposit in the capital subaccount equaling the required capital level, and

• all other fees, expenses and indemnities of the issuing entity (subject to the cap to the extent applicable) being paid.

In calculating the necessary true-up adjustment, the servicer will use its most recent forecast of electric consumption and its most current estimates of ongoing transaction-related expenses. The true-up adjustment will reflect any defaults or charge-offs and the allowances for charge-offs and payment lags between the billing and collection of phase-in-recovery charges based upon the servicer’s most recent experience regarding collection of phase-in-recovery charges. The true-up adjustment will also take into account any amounts due as a result of the reconciliation of the remittances and collections, and any undercollections due to any reason.

While there is no “cap” on the total amount of phase-in-recovery charges that may be imposed on retail electric customers to pay on a timely basis scheduled principal and interest on the bonds and replenish the capital subaccount, there is a “cap” on certain approved financing costs that may be recovered through phase-in-recovery charges. See “Description of the Bonds—Allocations and Payments.”

In the event any correction to a true-up adjustment due to mathematical errors in the calculation of the adjustment or otherwise is necessary, the corrections will be made in a future true-up adjustment. Unless otherwise ordered by the PUCO, true-up adjustments will become effective on a service rendered basis within 60 days after the filing of the adjustment request.

In calculating any true-up adjustment, each servicer will allocate payment responsibility among customer classes in accordance with the requirements of the financing order.

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In the case any true-up adjustment goes into effect after the last scheduled payment date, the calculation period shall begin on the date the true-up adjustment goes into effect and end on the payment date next following such true-up adjustment date.

Remittances to Collection Account

The servicers will remit to the respective bond trustees on each business day (commencing 45 days after the date of the servicing agreements) an amount equal to the actual phase-in-recovery charges billed, less an allowance for estimated phase-in-recovery charge charge-offs, within two business days after the day payments arising from the phase-in-recovery charges are deemed to be collected. The deemed collection date for payments arising from the phase-in-recovery charge payments will be the weighted average number of days, based on CEI’s, OE’s or TE’s historical collections experience, as the case may be, that a monthly bill for services remains outstanding before payment.

Within 12 months after the issuance of the bonds and then semiannually (or as frequently as monthly during the last year the bonds are outstanding), each servicer will reconcile remittances of estimated payments arising from phase-in-recovery charges with the bond trustee to more accurately reflect the amount of billed phase-in-recovery charges that should have been remitted, based on the actual system-wide charge-off percentage, as reduced for estimates of partially paid bills (which are deemed to have paid the phase-in-recovery charges in full). To the extent the remittances of estimated payments arising from the phase-in-recovery charges for a bond issuer exceeds the actual payments arising from the phase-in-recovery charges collected by the related servicer, the servicer will be entitled to reduce the amount of remittances to be made to the related bond trustee, in an amount equal to such excess amount. To the extent the remittances of estimated payments arising from the phase-in-recovery charges are less than the actual payments arising from the phase-in-recovery charges collected, the servicer will remit the amount of the shortfall to the bond trustee on the next remittance date following the determination. Although the servicer will remit estimated payments arising from the phase-in-recovery charges to the bond trustee, the servicer is not obligated to make any payments on the bonds or the certificates.

Servicing Compensation

Each servicer will be entitled to receive an annual servicing fee in an amount equal to 0.10% of the initial principal balance of the bonds of its bond issuer. If any of the servicers are replaced by a non-utility successor servicer, such non-utility successor servicer may be paid a servicing fee of up to 0.75% per year of the initial principal balance of the bonds.

The bond trustees will pay the servicing fees semiannually (together with any portion of the servicing fees that remains unpaid from prior payment dates) to the extent of available funds prior to the distribution of any interest on and principal of its bonds. See “Description of the Bonds—Allocations and Payments.”

Third Party Billers

Currently, Ohio law and the Securitization Act do not authorize third parties to bill, collect and remit the phase-in-recovery charges, but is not restricted from doing so in the future. When a third party bills, collects and remits billed amounts arising from the phase-in-recovery charges, there is a greater risk that a servicer will receive payments arising from the phase-in-recovery charges later than it otherwise would. The greater the delay in receipt of payment, the larger the amount of payments that bear the risk of non-payment due to default, bankruptcy or insolvency of the third party holding the funds. Third party billing also places increased information requirements on a servicer. The servicers will have the responsibility of accounting for payments arising from the phase-in-recovery charges due to bondholders and, thus, certificateholders, regardless of which entity provides or bills for a customer’s electric power.

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In order to mitigate the risks associated with a third party biller, the financing order provides that if the PUCO subsequently allows third parties to bill and/or collect any phase-in-recovery charges, the PUCO will take steps to ensure the nonbypassability of such phase-in-recovery charges and minimize the likelihood of default by third party billers, such steps to generally include:

• establishing operational standards and minimum credit requirements for any such third party billing servicer, or requiring a cash deposit, letter of credit or other credit mitigant in lieu thereof;

• a finding that, regardless of who is responsible for billing, the customers of that electric distribution utility shall continue to be responsible for phase-in-recovery charges;

• if a third party meters and bills for the phase-in-recovery charges, a finding that the electric distribution utility (as servicer) will have access to information on billing and usage by customers to provide for proper reporting to the bond issuer and to perform its obligations as servicer;

• a finding that, in the case of a third party default, billing responsibilities will be promptly transferred to another party to minimize potential losses; and

• allowing service termination by the electric distribution utility on behalf of its respective bond issuer of any customers failing to pay phase-in-recovery charges in accordance with PUCO-approved service termination rules and orders.

None of CEI, OE or TE nor a successor servicer will pay any shortfalls resulting from the failure of any third party biller to remit payments arising from the phase-in-recovery charges to a servicer. The true-up adjustment mechanism for the phase-in-recovery charges, as well as the amounts deposited in the capital subaccount, are intended to mitigate the risk of shortfalls. Any shortfalls that occur will delay the payment of interest on and principal of the bonds of the affected bond issuer, and, therefore, distributions on the certificates. The financing order further provides that the PUCO will not permit the implementation of any third party billing that would result in a downgrade of the bonds of any bond issuer.

Servicer Representations and Warranties; Indemnification

In the servicing agreements, each of the servicers will represent and warrant to their respective bond issuer, as of the closing of the issuance of the certificates, among other things, that:

• the servicer is a corporation duly organized and in good standing under the laws of the State of Ohio, with the requisite corporate power and authority to own its properties as owned by it on the bond issuance date and to conduct its business as its business is conducted by it on the bond issuance date and to execute, deliver and carry out the terms of the servicing agreement;

• the execution, delivery and carrying out of the terms of the servicing agreement have been duly authorized by all necessary corporate action on the part of the servicer;

• the servicing agreement constitutes a legal, valid and binding obligation of the servicer, enforceable against it in accordance with its terms, subject to insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors’ rights generally from time to time in effect and to general principles of equity, regardless of whether considered in a proceeding in equity or at law;

• the consummation of the transactions contemplated by the servicing agreement does not conflict with the servicer’s articles of incorporation or code of regulations or any material agreement or instrument to which the servicer is a party or bound, result in the creation or imposition of any lien on the servicer’s properties pursuant to a material agreement or instrument or violate any existing law or any existing order, rule or regulation applicable to the servicer or any federal or state court or regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the servicer or its properties;

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• no governmental approvals, authorizations or filings are required for the servicer to execute, deliver and perform its obligations under the servicing agreement except those which have previously been obtained or made or which are required to be obtained or made in the future pursuant to the servicing agreement; and

• except those that have been obtained or made and that the servicer is required to make in the future pursuant to the servicing agreement, no court or administrative proceeding is pending and, to the servicer’s knowledge, no court or administrative proceeding is threatened and no investigation is pending or, to the servicer’s knowledge, threatened, asserting the invalidity of, or seeking to prevent the consummation of the transactions contemplated by, the servicing agreement or seeking a determination that might materially adversely affect the performance by the servicer of its obligations under, or the validity or enforceability of, the servicing agreement.

In the event of willful misconduct or negligence by a servicer under its servicing agreement or in the event of a servicer’s breach in any material respect of any of the representations and warranties in the preceding paragraph, the servicer will indemnify, defend and hold harmless the applicable bond issuer and bondholders, against any costs, expenses, losses, claims, damages and liabilities incurred as a result of these events; provided, however, that such bondholders may only enforce their rights against the servicer through an action brought by the bond trustee; and, provided, further, that the servicer shall not be liable for any costs, expenses, losses, claims, damages or liabilities resulting from the willful misconduct or gross negligence of the indemnified persons; and, provided, further, that the servicer shall not be liable for any costs, expenses, losses, claims, damages or liabilities, regardless of when incurred, after the bonds and all other approved financing costs have been discharged in full, except as provided in the following paragraph.

In the event of willful misconduct or negligence by a servicer under its servicing agreement or in the event of a servicer’s breach in any material respect of any of the representations and warranties above, the servicer will indemnify, defend and hold harmless the related bond trustee (for itself), the certificate trustee (for itself) and the Delaware trustee and any of their respective affiliates, officials, officers, directors, employees and agents against any costs, expenses, losses, claims, damages and liabilities incurred as a result of these events; provided, however, that the servicer shall not be liable for any costs, expenses, losses, claims, damages or liabilities resulting from the willful misconduct or gross negligence of the indemnified person or resulting from a breach of a representation or warranty made by an indemnified person in the transaction document that gives rise to the servicer’s breach.

No servicer is responsible for any ruling, decision, action or determination made or not made, or any delay of the PUCO (except any delay caused by the servicer’s failure to file required applications in a timely and correct manner or other material breach of its duties under the servicing agreement that materially adversely affects the true-up adjustments) in any way related to the phase-in-recovery property, the phase-in-recovery charges or any true-up adjustment. No servicer is liable for the calculation of the phase-in-recovery charges and adjustments, including any inaccuracy in the assumptions made in the calculation, so long as the servicer has not acted in a negligent manner or for any person, including the bondholders or certificateholders, not receiving any payment, amount or return anticipated or expected or in respect of any bond or certificate generally.

Statements by Servicers

On or before [January 1] and [July 1] of each year, each servicer will prepare and furnish annually to the respective bond trustee, the certificate trustee and the respective bond issuer a statement for the previous year setting forth either the amount of any excess payments arising from the phase-in-recovery charges remitted by the servicer to the bond trustee or the amount of any shortfall in remittances.

In addition, each servicer will prepare, and the applicable bond trustee will furnish to the bondholders on each payment date the semiannual servicer’s certificate described under “Description of the Bonds—Reports to

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Bondholders.” Each servicer will also prepare and the certificate trustee will furnish to the certificateholders on each distribution date the reports described under “Description of the Certificates—Reports to Certificateholders.”

Evidence as to Compliance

Each servicing agreement will provide that the respective servicer will furnish annually to the applicable bond issuer and bond trustee, the certificate trustee and the rating agencies, on or before March 31 of each year, beginning March 31, 2014 or, if earlier, on the date on which the annual report relating to the certificates is required to be filed with the SEC, a report on its assessment of compliance with specified servicing criteria as required by Item 1122(a) of Regulation AB, during the preceding 12 months ended December 31(or preceding period since the issuance date of the bonds in the case of the first statement), together with a certificate by an officer of the servicer certifying the statements set forth therein.

Each of the servicing agreements will provide that a firm of independent certified public accountants, at the applicable bond issuer’s expense, will furnish annually to the applicable bond issuer and bond trustee, the certificate trustee and the rating agencies, on or before March 31 of each year, beginning March 31, 2014, or, if earlier, on the date on which the annual report relating to the certificates is required to be filed with the SEC, an annual accountant’s report, which will include any required attestation report that attests to and reports on the servicer’s assessment report described in the immediately preceding paragraph, to the effect that the accounting firm has performed agreed upon procedures in connection with the servicer’s compliance with its obligations under the servicing agreement during the preceding 12 months, identifying the results of the procedures and including any exceptions noted. The report will also indicate that the accounting firm providing the report is independent of the servicer within the meaning of the rules of The Public Company Accounting Oversight Board.

Copies of the above reports will be filed with the SEC. You may also obtain copies of the above statements and certificates by sending a written request addressed to the certificate trustee.

Each servicer will also be required to deliver to the applicable bond issuer and bond trustee, the certificate trustee and the rating agencies monthly reports setting forth certain information relating to collections of phase-in-recovery charges received during the preceding calendar month and, shortly before each payment date, a report setting forth the amount of principal and interest payable to bondholders on such date, the difference between the principal outstanding on the bonds and the amounts specified in the related expected amortization schedule after giving effect to any such payments, and the amounts on deposit in the capital subaccount and excess funds subaccount after giving effect to all transfers and payments to be made on such payment date. Each servicer is required to file copies of these reports with the SEC.

In addition, each servicer is required to send copies of each filing or notice evidencing a true-up adjustment to the applicable bond issuer and bond trustee, the certificate trustee and the rating agencies. Each servicer is also required to prepare and deliver certain notices to customers if, and as, required by applicable PUCO regulations.

Matters Regarding the Servicers

The servicing agreements will provide that the servicer may not resign from its obligations and duties as servicer thereunder, except when such servicer delivers to the bond trustee and PUCO an opinion of independent legal counsel that performance of its duties is no longer permissible under applicable law.

No resignation by CEI, OE or TE as servicer will become effective until a successor servicer has assumed its servicing obligations and duties under the applicable servicing agreement.

Each of the servicing agreements will further provide that neither the servicer nor any of its directors, officers, employees, and agents will be liable to the applicable bond issuer or bond trustee, the trust, the applicable bondholders, the certificate trustee, the Delaware trustee, the certificateholders or any other person or

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entity, except as provided under the servicing agreement, for taking any action or for refraining from taking any action under the servicing agreement or for errors in judgment; provided, however, that neither the servicer nor any director, officer, employee or agent of the servicer will be protected against any liability that would otherwise be imposed by reason of willful misconduct or negligence in the performance of duties under the servicing agreement. The servicer and any officer, director, employee or agent of the servicer may rely in good faith on the advice of counsel reasonably acceptable to the bond trustee or on any document submitted in respect of matters arising under the servicing agreement. In addition, the servicing agreement will provide that the servicer is under no obligation to appear in, prosecute, or defend any legal action, except as provided in the servicing agreement at the bond issuer’s expense.

Subject to the satisfaction of the conditions specified in the servicing agreements, any entity into which a servicer may be merged or consolidated, or any entity resulting from any merger or consolidation to which a servicer is a party, or any entity succeeding to the properties and assets of the servicer substantially as a whole, which entity in any of the foregoing cases assumes the obligations of the servicer under the servicing agreement, will be the successor of the servicer under the servicing agreement.

Servicer Defaults

Servicer defaults under a servicing agreement will include:

• any failure by the servicer to remit payments arising from the phase-in-recovery charges into the collection account as required under the servicing agreement, which failure continues unremedied for five business days after written notice of such failure from the bond issuer or the bond trustee is received by the servicer;

• any failure by the servicer duly to observe or perform in any material respect any other covenant or agreement of the servicer in the servicing agreement, which failure materially adversely affects the rights of bondholders and which continues unremedied for 60 days after the giving of written notice of such failure and requiring the same to be remedied (i) to the servicer by the bond issuer or (ii) to the servicer by the bond trustee by holders of bonds evidencing not less than 25% in principal amount of the outstanding bonds;

• any representation or warranty made by the servicer in the servicing agreement proves to have been incorrect in any material respect when made, which has a material adverse effect on the bondholders and which material adverse effect continues unremedied for a period of 60 days after written notice of such failure is received by the servicer from the bond issuer or the bond trustee; and

• events of bankruptcy, insolvency, receivership or liquidation with respect to the servicer.

Rights When a Servicer Defaults

In the event of a servicer default that remains unremedied, either the applicable bond trustee or holders of bonds of the applicable bond issuer evidencing not less than 25% in principal amount of then outstanding bonds by written notice to the servicer may terminate all the rights and obligations of the servicer (other than the servicer’s indemnity obligation and obligation to continue performing its duties as servicer until a successor servicer is appointed) under the servicing agreement, whereupon a successor servicer appointed by the bond issuer, with the prior written consent of the bond trustee and the approval of the PUCO, will succeed to all the responsibilities, duties and liabilities of the servicer under the servicing agreement. Regarding actions by bondholders, see “Description of the Bonds—Actions by Bondholders,” which discusses certain rights of the certificate trustee on behalf of the trust as the sole bondholder. In addition, when a servicer defaults, each of the following shall be entitled to apply to the PUCO for sequestration and payment of revenues arising from the phase-in-recovery property:

• the bondholders (subject to the provisions of the bond indentures) and the bond trustees as beneficiary of any statutory lien permitted by the Securitization Act;

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• the bond issuer or its assignees; or

• financing parties or other assignees under the Securitization Act.

If, however, a bankruptcy trustee or similar official has been appointed for a servicer, and no servicer default other than an appointment of a bankruptcy trustee or similar official has occurred, that trustee or official may have the power to prevent the bond trustee or the bondholders from effecting a transfer of servicing. The bond trustee may appoint, or petition a court of competent jurisdiction for the appointment of, a successor servicer which satisfies criteria specified by the nationally recognized statistical rating organizations rating the certificates. The bond trustee may make arrangements for compensation to be paid to the successor servicer.

If within 30 days after delivery of a termination notice the bond issuer has not obtained a successor servicer, the bond trustee may petition the PUCO or a court of competent jurisdiction to appoint a successor servicer under the servicing agreement. To qualify as a successor servicer, a person must be permitted under the PUCO regulations to perform the duties of the servicer, the rating agency condition must be satisfied and such person must enter into a servicing agreement with substantially the same provisions with bond issuer.

Waiver of Past Defaults

Holders of bonds of a bond issuer evidencing at least a majority in principal amount of the then outstanding bonds of that bond issuer, on behalf of all such bondholders, may waive in writing any default by the servicer for that bond issuer in the performance of its obligations under the servicing agreement (applicable to such bonds) and its consequences, except a default in making any required remittances to the collection account under the servicing agreement. Regarding actions by bondholders, see “Description of the Bonds—Actions by Bondholders,” which discusses certain rights of the certificate trustee on behalf of the trust as the sole bondholder. The servicing agreements provide that no waiver will impair the bondholders’ rights relating to subsequent defaults.

Successor Servicer

If for any reason a third party assumes the role of a servicer under a servicing agreement, the servicing agreement will require the servicer to cooperate with the bond issuer, the bond trustee and the successor servicer in terminating the servicer’s rights and responsibilities under the servicing agreement, including the transfer to the successor servicer of all cash amounts then held by the servicer for remittance or subsequently acquired. The servicing agreement will provide that the servicer shall be liable for its reasonable costs and expenses incurred in transferring servicing responsibilities to the successor servicer.

Amendment

A servicing agreement may be amended by the parties thereto, without the consent of the holders of the bonds of the bond issuer that is a party to that servicing agreement, but with the consent of the applicable bond trustee (not to be unreasonably withheld) and 10 business days prior written notice to the rating agencies, to cure any ambiguity, correct or supplement any provisions or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the servicing agreement or of modifying in any manner the rights of such bondholders, provided that the action will not, as certified in a certificate of an officer of such servicer delivered to the bond trustee and the bond issuer, adversely affect in any material respect the interests of any bondholder. A servicing agreement may also be amended by the servicer and the bond issuer party thereto with the consent of the applicable bond trustee and 10 business days prior written notice to the rating agencies and, subject to the prior sentence, the holders of bonds evidencing at least a majority in principal amount of the then outstanding bonds of that bond issuer for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the servicing agreement or of modifying in any manner the rights of such bondholders; provided that an amendment of the provisions of the servicing agreement relating to the servicer’s remittance and phase-in-recovery charge adjustment obligations will satisfy the rating agency condition. Regarding actions by bondholders, see “Description of the Bonds—Actions by Bondholders,” which discusses certain rights of the certificate trustee on behalf of the trust as the sole bondholder.

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DESCRIPTION OF THE BONDS

Each of the bond issuers will issue its respective bonds to the trust under the terms of a bond indenture between a bond issuer and U.S. Bank National Association, a national banking association, acting as the bond trustee. Each tranche of bonds of a bond issuer will be in an aggregate principal amount which, taken together with the corresponding tranche of bonds of the other bond issuers, will equal the initial aggregate principal amount of the related tranche of certificates. The following summary describes the material terms and provisions of the bond indentures. The particular terms of the bonds of any tranche will be established in the bond indenture applicable to each bond issuer. This summary is not complete. You should read this summary together with the accompanying prospectus supplement and the terms and provisions of the bond indentures, forms of which are filed as exhibits to the registration statement relating to this prospectus, prior to buying the certificates.

The bond issuers may issue the bonds in one or more tranches. All bonds of a particular tranche will be identical in all respects except for their denominations. The bond issuers may not issue any additional bonds other than in connection with transfers, exchanges or replacements permitted under the bond indentures.

Security

To secure the payment of interest on and principal of the bonds of a bond issuer, such bond issuer will grant to the bond trustee for such bonds a security interest in all of the bond issuer’s right, title and interest in and to:

• the phase-in-recovery property sold to it;

• its phase-in-recovery property sale agreement;

• its phase-in-recovery property servicing agreement;

• its administration agreement;

• its collection account and all amounts or investment property on deposit in the collection account;

• all other property of whatever kind owned from time to time by the bond issuer;

• all security interests with respect to the phase-in-recovery property granted by the seller and by statute;

• all present and future claims, demands, causes and choses in action on account of any or all of the foregoing and all payments on or under the foregoing; and

• all proceeds on account of any and all of the foregoing.

We refer to the assets in which a bond issuer will grant the bond trustee a security interest as the bond collateral in respect of that bond issuer.

The bond collateral for a bond issuer will not include, however, the following:

• amounts in the collection account required to be released to the bond issuer pursuant to the bond indenture; and

• proceeds from the sale of the bonds required to pay the purchase price of the phase-in-recovery property and the costs of issuance of the bonds and an allocable amount of the certificates.

State Pledge

Pursuant to Section 4928.2315 of the Securitization Act, the State of Ohio pledges and agrees with each bond issuer for the benefit of the bondholders as follows:

“The state pledges to and agrees with the bondholders, any assignee, and any financing parties under a final financing order that the state will not take or permit any action that impairs the value of phase-in-recovery property under the final financing order or revises the phase-in costs for which recovery is authorized under the final financing order or, except as allowed under section 4928.238 of the Revised Code, reduce, alter, or impair

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phase-in-recovery charges that are imposed, charged, collected, or remitted for the benefit of the bondholders, any assignee, and any financing parties, until any principal, interest, and redemption premium in respect of phase-in-recovery bonds, all financing costs, and all amounts to be paid to an assignee or financing party under an ancillary agreement are paid or performed in full.”

Collection Account

The bond trustee for each bond issuer will establish, in the name of the bond trustee for the bonds of that bond issuer, a segregated identifiable collection account with an eligible institution (as described below and which may include the bond trustee if it meets the criteria specified in the definition of eligible institution below). The bond trustee for each bond issuer will hold in the collection account of a bond issuer for the benefit of the holders of the bonds of that bond issuer all payments arising from the bond issuer’s phase-in-recovery charges as well as the capital contributions made to that bond issuer. Each collection account will consist of three subaccounts:

• a general subaccount;

• a capital subaccount for capital contributions of the bond issuer; and

• an excess funds subaccount.

All payments arising from phase-in-recovery charges remitted to the collection account will be deposited in the subaccounts. All amounts in the collection account not allocated to any other subaccount will be allocated to the general subaccount. Unless the context indicates otherwise, all references to the collection account include each of the three subaccounts.

An eligible institution means (a) the corporate trust department of a bond trustee so long as any securities of the bond trustee have either a short-term credit rating from Moody’s of at least “P-1” or a long-term unsecured debt rating from Moody’s of at least “A2” and have a credit rating from each other rating agency in one of its generic rating categories which signifies investment grade, or (b) a depository institution organized under the laws of the United States of America or any state or the District of Columbia (or any domestic branch of a foreign bank), which has either a long-term issuer rating of “AA-” or higher by Standard & Poor’s and “A2” or higher by Moody’s, and, if rated by Fitch, the equivalent of the lower of those two ratings by Fitch or a short-term issuer rating of “A-1+” or higher by Standard & Poor’s and “P-1” or higher by Moody’s, and, if Fitch provides a rating thereon, “F1+” by Fitch, or any other long-term, short-term or certificate of deposit rating acceptable to Standard & Poor’s and Moody’s, and whose deposits are insured by the Federal Deposit Insurance Corporation.

Funds in the collection account may be invested only in such instruments and investments denominated in U.S. currency as meet the criteria described below and which mature on or before the business day preceding the next payment date:

(i) direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United States of America;

(ii) demand deposits, time deposits or certificates of deposit and bankers’ acceptances of eligible institutions (including the trustee in its commercial capacity);

(iii) commercial paper (other than commercial paper issued by CEI, OE or TE and their respective affiliates) having, at the time of investment or contractual commitment, a rating of not less than A-1 from Standard & Poor’s and not less than P-1 by Moody’s (including the trustee in its commercial capacity);

(iv) money market funds, which have the highest rating from each rating agency from which a rating is available (if rated by Fitch) (including funds for which the trustee or any respective affiliate is an investment adviser);

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(v) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or certain of its agencies or instrumentalities, entered into with eligible institutions;

(vi) repurchase obligations with respect to any security or whole loan entered into with an eligible institution or a registered broker-dealer, acting as principal and that meets certain ratings criteria; and

(vii) any other investment permitted by each rating agency.

We refer to each of the investments listed above as the eligible investments. The bond trustees will have access to the collection accounts for the purpose of making deposits and withdrawals under the bond indentures.

General Subaccount

The general subaccount will hold all funds held in the collection account that are not held in the other two subaccounts. Each servicer will remit all phase-in-recovery charge payments to the general subaccount. On each payment date, the bond trustee for each bond issuer will draw on amounts in the general subaccount to pay expenses and to pay interest and make scheduled payments on its bonds, and to make other payments and transfers in accordance with the terms of its bond indenture. Funds in the general subaccount will be invested in the eligible investments described above.

Capital Subaccount

Prior to the issuance of the bonds, CEI, OE and TE will each contribute capital to its bond issuer in the amount specified in the accompanying prospectus supplement. The bond trustees will deposit the capital into the capital subaccounts of the respective bond issuers. On each payment date, a bond trustee will draw on amounts, if any, in the capital subaccount of the applicable bond issuer to the extent amounts available in the general subaccount and the excess funds subaccount of that bond issuer are insufficient to make scheduled payments on the bonds of that bond issuer and pay fees and expenses. Deposits to the capital subaccounts will be made as described under “—Allocations and Payments” below. Amounts in the capital subaccounts will be invested in eligible investments.

Excess Funds Subaccount

A bond trustee, at the direction of its applicable servicer, will allocate to the excess funds subaccount of its bond issuer phase-in-recovery charge collections with respect to any payment date in excess of amounts necessary to make the payments or allocations specified on such payment date. The excess funds subaccount of a bond issuer will also hold all investment earnings on the collection account of such bond issuer in excess of such amounts.

Interest and Principal

Interest will accrue on the principal balance of a tranche of bonds from its issuance date at the per annum rate specified in the accompanying prospectus supplement and will be payable on the payment dates specified in such prospectus supplement. Collections arising from the phase-in-recovery charges held by a bond trustee in the general subaccount of a bond issuer and any amounts that are available in the capital subaccount and excess funds subaccount of the related bond issuer will be available to make interest payments to the bondholders of each tranche of bonds of the bond issuer on each payment date.

Principal of each tranche of bonds will be payable in the amounts and on the payment dates specified in the accompanying prospectus supplement to the extent of available cash (except on the final maturity date), and with the other limitations described below. The prospectus supplement will set forth the expected amortization schedule for the various tranches of bonds. On any payment date, a bond issuer will pay principal of a tranche of bonds only until the outstanding principal balance of that tranche has been reduced to the principal balance specified in the expected amortization schedule.

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However, if insufficient collections arising from phase-in-recovery charges are in the collection account of a bond issuer on any payment date, principal of any tranche of bonds of that bond issuer may be paid later than expected. The entire unpaid principal amount of the bonds of a bond issuer will be due and payable on the date on which a bond event of default has occurred and is continuing, if the bond trustee or the holders of at least a majority in principal amount of the outstanding bonds have declared the bonds to be immediately due and payable. See “—Bond Events of Default; Rights Upon Bond Event of Default.”

Optional Redemption

The indentures do not permit an optional redemption of bonds under any circumstances.

Allocations and Payments

On any business day that a bond trustee receives a written request from a bond issuer’s administrator stating that any fees, costs, expenses and indemnities payable by the bond issuer, as described in clauses (1) through (4) below, will become due and payable prior to the next succeeding payment date, and setting forth the amount and nature of the expense, as well as any supporting documentation that the bond trustee may reasonably request, the bond trustee, after receiving the information, will make payment of the expense on or before the date the payment is due from amounts on deposit in the general subaccount, the excess funds subaccount and the capital subaccount of the bond issuer, in that order and only to the extent required to make the payment.

On each semi-annual payment date, or for any amount payable under clauses (1) through (4) below, on any business day, each bond trustee will allocate or, subject to the “cap” (defined below) if applicable, pay all amounts in the collection account of the related bond issuer, including earnings on these amounts, as follows and in the following order of priority:

(1) first, all amounts owed by that bond issuer to the related bond trustee (including indemnity payments) will be paid and second, all amounts owed by that bond issuer to the Delaware trustee, the certificate trustee and the certificate issuer under the applicable basic documents will be paid;

(2) the servicing fee and all unpaid servicing fees from any prior payment dates will be paid to the bond issuer’s servicer;

(3) the administration fee and all unpaid administration fees from any prior payment dates and amounts due independent directors will be paid to the bond issuer’s administrator and the independent directors, respectively;

(4) payment of all other operating expenses, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs under the related servicing agreement, and taxes and indemnities payable by the bond issuer will be paid to the person entitled thereto;

(5) first, any overdue interest on the bonds of the bond issuer after a payment default (together with, to the extent lawful, interest on overdue interest at the applicable bond interest rate) and second, interest currently due and payable on such bonds will be transferred to the certificate trustee, as bondholder, for distribution to the certificateholders;

(6) first, funds necessary to pay any principal on the bonds of the bond issuer payable by the bond issuer as a result of a bond event of default or on the final maturity date of a tranche of bonds of the bond issuer and second, principal based on priorities described in the accompanying prospectus supplement will be transferred to the certificate trustee, as bondholder, for distribution to the applicable certificateholders according to the expected amortization schedule for each tranche of bonds;

(7) unpaid operating expenses and indemnities owed by that bond issuer under the basic documents will be paid to the persons entitled thereto;

(8) the amount, if any, by which that bond issuer’s capital subaccount needs to be funded to equal the required capital level as of a payment date will be allocated to the capital subaccount;

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(9) an amount equal to one-half of 6.85% of the required capital level will be paid to that bond issuer’s seller;

(10) allocation of the remainder, if any, to the excess funds subaccount; and

(11) following, first, the repayment of all bonds and the corresponding portion of the certificates and all approved financing costs and, second, the payment of any unpaid amounts, due the Delaware trustee, the certificate trustee and the applicable bond trustee under clause (1) above, that exceeded the cap, the balance, together with all amounts in the capital subaccount and the excess funds subaccount, will be released to that bond issuer free and clear of the lien of the indenture.

If on any payment date, or for any amounts payable under clauses (1) through (4) above, on any business day, funds on deposit in the general subaccount of the bond issuer are insufficient to make the transfers contemplated by clauses (1) through (6) above, the bond trustee will:

• first, draw from amounts on deposit in the excess funds subaccount of the bond issuer; and

• second, draw from amounts on deposit in the capital subaccount of the bond issuer;

up to the amount of the shortfall, in order to make the transfers described above.

In addition, if on any payment date funds on deposit in the general subaccount of the bond issuer are insufficient to make the transfer described in clause (8) above, the bond trustee will draw from amounts on deposit in the excess funds subaccount of that bond issuer to make the required transfer.

If on any payment date funds on deposit in the collection account of the bond issuer are insufficient to make the transfer contemplated by clause (5) above, the bond trustee will allocate the funds in the collection account among the tranches, as specified in the accompanying prospectus supplement.

Pursuant to the financing order, certain approved ongoing financing costs (including those referenced in clauses (1) through (4) and clauses (7) and (9) above) may not exceed on an annual basis the aggregate amount approved for such ongoing financing costs by more than 5%. The sum of such approved ongoing financing costs ($1,072,732) plus an amount equal to 5% of such costs is equal to $1,126,369, which amount is referred to as the cap. The ongoing financing costs referenced in clauses (1) through (4) and clauses (7) and (9) above, to the extent in excess of the cap for any given annual period, may be recovered in any subsequent annual period (subject to the annual cap in such subsequent period). Unused cap amounts in a given year will not be available for recovery of any ongoing financing costs in a subsequent year. The foregoing amounts do not reflect a servicing fee that would be paid to any non-utility successor servicer, which would result in a higher cap.

The initial servicer of each bond issuer will agree in its servicing agreement to indemnify the trustee for all due and unpaid indemnity payments, of the applicable bond issuer under the applicable basic documents, that exceed the cap. Each servicing agreement will provide that this initial servicer obligation will continue as an obligation of such initial servicer in the event a successor servicer is appointed.

Actions by Bondholders

The certificate trustee, on behalf of the trust as sole holder of the bonds of the bond issuers, has the right to vote and give consents and waivers for modifications to any tranche of bonds of a bond issuer and to the provisions of other agreements under the bond indentures. In general, the certificate trustee may vote all, and, with the written direction of the holders of the certificates representing not less than a majority of the outstanding principal amount of the certificates, shall vote a corresponding majority of the bonds for any such consent or waiver. With some exceptions, the holders of a majority of the outstanding principal amount of the bonds of a bond issuer shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the bond trustee in respect of those bonds, or exercising any trust or power conferred on the bond trustee under a bond indenture, provided that:

• the direction shall not be in conflict with any rule of law or with the bond indenture;

• other than in the case of a default in the payment of any principal or a default in the payment of interest on any bond, any direction to the bond trustee to sell or liquidate the bond collateral shall be by the holders of 100% of the outstanding principal amount of the bonds of the bond issuer;

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• if the bond trustee elects to maintain possession of the bond collateral in compliance with the bond indenture, then any direction to the bond trustee by holders of bonds of the bond issuer representing less than 100% of the outstanding principal amount of the bonds to sell or liquidate the bond collateral shall be of no force and effect; and

• the bond trustee may take any other action deemed proper by the bond trustee that is not inconsistent with the direction. See “Description of the Certificates—Voting of the Certificates.”

Bond Events of Default; Rights on Bond Event of Default

An event of default on the bonds of a bond issuer is defined in the bond indentures as being:

• a default in the payment of interest on any bond of the bond issuer that is not cured within five business days after the payment date;

• a default in the payment of the then unpaid principal of any bond of the bond issuer on the final maturity date;

• a default in the observance or performance in any material respect of any covenant or agreement of the bond issuer made in the bond indenture, and which continues unremedied for 30 days after notice is given to the bond issuer by the bond trustee or to the bond issuer and the bond trustee by the holders of at least 25% in principal amount of the bonds of the bond issuer then outstanding;

• any representation or warranty made by the bond issuer in the bond indenture or in any certificate delivered by the bond issuer in connection with the bond indenture proving to have been incorrect in a material respect when made and which continues unremedied for a period of 30 days after notice is given to the bond issuer by the bond trustee or to the bond issuer and the bond trustee by the holders of at least 25% in principal amount of the bonds of the bond issuer then outstanding; or

• events of bankruptcy, insolvency, receivership or liquidation of the bond issuer.

If a bond event of default should occur and be continuing on the bonds of a bond issuer, the bond trustee or holders of not less than a majority in principal amount of the bond issuer’s bonds then outstanding may declare the bonds of that bond issuer to be immediately due and payable. Under circumstances set forth in the bond indenture, the holders of a majority in principal amount of bonds of the bond issuer then outstanding may rescind the declaration.

If the bonds of a bond issuer have been declared to be due and payable following a bond event of default, the related bond trustee may, in its discretion, either sell the phase-in-recovery property of that bond issuer or elect to maintain possession of the phase-in-recovery property and continue to apply payments arising from the phase-in-recovery charges remitted to the bond trustee as if there had been no declaration of acceleration. We expect that there will be a limited resale market, if any, for the phase-in-recovery property following a foreclosure because of the unique nature of the phase-in-recovery property as an asset and other factors discussed in this prospectus.

In addition, the bond trustee is prohibited from selling the phase-in-recovery property of a bond issuer following a bond event of default of that bond issuer, other than a default in the payment of any principal or a default in the payment of interest on any bond of that bond issuer, unless:

• the holders of all the outstanding bonds of that bond issuer consent to the sale;

• the proceeds of the sale are sufficient to pay in full the accrued interest on and the principal of the outstanding bonds of the bond issuer; or

• the bond trustee determines that the proceeds of the phase-in-recovery property of a bond issuer would not be sufficient on an ongoing basis to make all payments on its bonds as those payments would have become due if the bonds had not been declared due and payable, and the bond trustee obtains the consent of the holders of 66-2/3% of the outstanding amount of the bonds of the bond issuer.

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In case a bond event of default occurs and is continuing with respect to the bonds of a bond issuer, the bond trustee will be under no obligation to exercise any of the rights or powers under the bonds at the request or direction of any of the holders of bonds if the bond trustee reasonably believes it will not be adequately indemnified against the costs, expenses and liabilities that it might incur in complying with the request. The holders of a majority in principal amount of the outstanding bonds of a bond issuer will have the right to direct the time, method and place of conducting any proceeding or any remedy available to the bond trustee and the holders of a majority in principal amount of the outstanding bonds of that bond issuer may, in some cases, waive any default with respect thereto, except a default in the payment of principal or interest or a default arising from a covenant or provision of the bond indenture that cannot be modified without the consent of all of the holders of the outstanding bonds of all tranches affected.

No holder of any bond of a bond issuer will have the right to institute any proceeding on the bonds, unless:

• the holder previously has given to the bond trustee written notice of a continuing event of default;

• the holders of not less than 25% in principal amount of the outstanding bonds of the bond issuer have made written request of the bond trustee to institute the proceeding in its own name as bond trustee;

• the holder or holders have offered the bond trustee reasonable indemnity;

• the bond trustee has failed for 60 days after receipt of notice to institute a proceeding; and

• no direction inconsistent with the written request has been given to the bond trustee during the 60-day period by the holders of a majority in principal amount of the outstanding bonds.

In addition, the servicers will covenant that they will not at any time institute against the bond issuers or the trust any involuntary bankruptcy, reorganization or other proceeding under any federal or state bankruptcy or similar law.

Covenants of the Bond Issuers

A bond issuer may not consolidate with or merge into any other entity, unless:

• the entity formed by or surviving a consolidation or merger of the bond issuer is organized under the laws of the United States, any state or the District of Columbia;

• the entity expressly assumes by an indenture supplemental to the bond indenture the bond issuer’s obligation to make due and punctual payments on the bonds and the performance or observance of every agreement and covenant of the bond issuer under the bond indenture;

• no event of default will have occurred and be continuing immediately after giving effect to the merger or consolidation of the bond issuer;

• the transaction will not result in a reduction or withdrawal of the then current ratings on any tranche of bonds or certificates;

• the bond issuer has received an opinion of counsel to the effect that the consolidation or merger would have no material adverse tax consequence to the bond issuer, the trust, any bondholder or any certificateholder and the consolidation or merger complies with the bond indenture and all conditions precedent relating to the transaction have been complied with; and

• any action as is necessary to maintain the lien and security interest created by the bond indenture will have been taken.

A bond issuer may not convey or transfer any of its properties or assets to any person or entity, unless:

(a) the person or entity acquiring the properties and assets:

• is a United States citizen or an entity organized under the laws of the United States, any state or the District of Columbia;

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• expressly assumes by an indenture supplemental to the bond indenture the bond issuer’s obligation to make due and punctual payments on the bonds and the performance or observance of every agreement and covenant of the bond issuer under the bond indenture;

• expressly agrees by a supplemental indenture that all right, title and interest so conveyed or transferred will be subject and subordinate to the rights of bondholders;

• unless otherwise expressly waived by the bond issuer, expressly agrees to indemnify, defend and hold harmless the bond trustee against and from any loss, liability or expense arising under or related to the bond indenture and the bonds; and

• expressly agrees by means of a supplemental indenture that the person (or if a group of persons, then one specified person) shall make all filings with the SEC (and any other appropriate person) required by the Exchange Act in connection with the bonds;

(b) no event of default under the bond indenture will have occurred and be continuing immediately after the transaction;

(c) the transaction will not result in a reduction or withdrawal of the then current ratings on any tranche of certificates;

(d) the bond issuer has received an opinion of counsel to the effect that the transaction will not have any material adverse tax consequence to the bond issuer, the trust, any bondholder or any certificateholder and the conveyance or transfer complies with the bond indenture and all conditions precedent relating to the transaction have been complied with; and

(e) any action as is necessary to maintain the lien and security interest created by its bond indenture shall have been taken.

A bond issuer will not, among other things:

• except as expressly permitted by its bond indenture, sell, transfer, exchange or otherwise dispose of any of the assets of the bond issuer, unless directed to do so by the bond trustee;

• claim any credit on, or make any deduction from the principal or interest payable on, its bonds (other than amounts properly withheld under the Internal Revenue Code of 1986) or assert any claim against any present or former bondholder because of the payment of taxes levied or assessed on any part of the bond collateral;

• terminate its existence, dissolve or liquidate in whole or in part;

• permit the validity or effectiveness of the bond indenture to be impaired;

• permit the lien of its bond indenture to be amended, hypothecated, subordinated, terminated or discharged or permit any person to be released from any covenants or obligations with respect to its bonds except as may be expressly permitted by the bond indenture;

• permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance, other than the lien and security interest created by the bond indenture or the statutory lien under the Securitization Act, to be created on or extend to or otherwise arise on or burden the bond collateral or any part of it or any interest in it or the proceeds from it; or

• except for the statutory lien under the Securitization Act, permit the lien of the bond indenture not to constitute a valid first priority security interest in the bond collateral.

A bond issuer may not engage in any business other than financing, purchasing, owning and managing the phase-in-recovery property in the manner contemplated by its bond indenture and the other financing documents relating to the issuance of the bonds and certificates and related activities. A bond issuer will not issue, incur, assume, guarantee or otherwise become liable for any indebtedness except for the bonds.

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A bond issuer will not, except for any eligible investments as contemplated by its bond indenture and the other financing documents relating to the issuance of the bonds and the certificates, make any loan or advance or credit to, or guarantee, endorse or otherwise become contingently liable in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other person. A bond issuer will not, other than expenditures (i) in connection with the purchase of the phase-in-recovery property from the seller and (ii) in an annual amount not to exceed $25,000, make any expenditure (by long-term or operating lease or otherwise) for capital assets (either real or personal property). A bond issuer will not, directly or indirectly, make payments to or distributions from its collection account except in compliance with the bond indenture and the other financing documents relating to the issuance of its bonds and the certificates.

A bond issuer will not make any payments, distributions or dividends to any owner of beneficial interests in the bond issuer arising from the beneficial interests in the bond issuer if any bond event of default has occurred and is continuing or if distributions cause the book value of the remaining equity in the bond issuer to decline below 0.50% of the initial principal amount of its bonds outstanding under the bond indenture.

A bond issuer will deliver to, among others, the bond trustee and the certificate trustee the annual accountant’s certificates, compliance certificates, reports regarding distributions and statements to bondholders and the certificateholders required by the servicing agreement.

Reports to Bondholders

On or prior to each payment date, each servicer will prepare and provide to its bond issuer, the bond trustee for that bond issuer and the certificate trustee a statement to be delivered to the bondholders of that bond issuer on the payment date and the bond trustee and certificate trustee will make available on its website (currently located at http://www.usbank.com/abs). Each statement will include (to the extent applicable) the following information with respect to a bond issuer for a payment date or the period since the previous payment date, as applicable

• the amount of the payment to bondholders allocable to interest;

• the amount of the payment to bondholders allocable to principal;

• the outstanding principal balance of the bonds, after giving effect to payments allocated to principal reported above;

• the difference, if any, between the outstanding principal balance of the bonds of the particular bond issuer and the principal amount scheduled to be outstanding on a payment date according to the expected amortization schedule;

• the amount on deposit in the capital subaccount as of the payment date;

• the amount, if any, on deposit in the excess funds subaccount as of the payment date;

• the amount paid to the related bond trustee, the Delaware trustee and the certificate trustee since the previous payment date;

• the amount paid to the related servicer since the previous payment date;

• the amount paid to the related administrator since the previous payment date; and

• any other transfers and payments to be made pursuant to the related bond indenture since the previous payment date.

The bond trustee will deliver to each holder of the bonds information in the bond trustee’s possession that may be required to enable the holder to prepare its federal and state income tax returns. See “Material U.S. Federal Income Tax Consequences” and “Ohio State Taxation.”

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Website Disclosure

Each bond issuer will, or will cause its sponsor to, post on a collective website for all bond issuers, currently located at http://www.            .com, periodic reports containing to the extent such information is reasonably available to us:

• the final prospectus for the certificates;

• a statement of phase-in-recovery charge remittances made to the trustee for the respective bond issuers;

• a statement reporting the balances in the respective collection accounts and in each subaccount of such collection accounts as of the end of each quarter or the most recent date available,

• a statement showing the balance of outstanding bonds of each bond issuer that reflects the actual periodic payments made on the bonds of each bond issuer during the applicable period;

• the semiannual servicer’s certificate delivered for the bonds of each bond issuer pursuant to the applicable servicing agreement;

• the text (or a link to the website where a reader can find the text) of each periodic adjustment filing in respect of the outstanding bonds of each bond issuer and the results of each such periodic adjustment filing;

• any change in the long-term or short-term credit ratings of the servicer for each bond issuer assigned by the rating agencies;

• material legislative or regulatory developments directly relevant to the transition bonds; and

• any reports and other information required to be filed with the SEC under the Exchange Act.

Annual Compliance Statement

Each of the bond issuers will file annually with the bond trustee for its bonds, the certificate trustee, the PUCO and the rating agencies a written statement as to whether it has fulfilled its obligations under the bond indenture applicable to it.

Bond Trustee Report to Bondholders

If required by the Trust Indenture Act, the trustee for each of the bond issuers will be required to mail each year to all applicable bondholders a brief report. The report must state, among other things:

• the trustee’s eligibility and qualification to continue as the bond trustee under the applicable bond indenture;

• any amounts advanced by it under the applicable bond indenture;

• the amount, interest rate and maturity date of specific indebtedness owing by us to the bond trustee in the bond trustee’s individual capacity;

• the property and funds physically held by the bond trustee;

• any additional issue of the bonds not previously reported; and

• any action taken by it that materially affects the bonds and that has not been previously reported.

Legal Defeasance and Covenant Defeasance Options

A bond issuer may, at any time, terminate:

• all of its obligations under the indenture with respect to the bonds, a legal defeasance; or

• its obligations to comply with some of the covenants in the indenture, a covenant defeasance.

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The legal defeasance option is a bond issuer’s right to terminate at any time all of its obligations under the indenture with respect to the bonds. The covenant defeasance option is the bond issuer’s right at any time to terminate its obligations to comply with the covenants in the indenture. If a bond issuer exercises the legal defeasance option, the bonds may not be accelerated because of an event of default. If a bond issuer exercises the covenant defeasance option, the bonds may not be accelerated because of an event of default due to breach of covenants.

A bond issuer may exercise the legal defeasance option or the covenant defeasance option with respect to any series of the bonds only if:

• the bond issuer irrevocably deposits or causes to be deposited in trust with the trustee cash or U.S. government obligations specified in the bond indenture for the payment of principal and interest on the bond issuer’s bonds to the scheduled maturity date therefor, as applicable;

• the bond issuer delivers to the trustee a certificate from a nationally recognized firm of independent accountants expressing its opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. government obligations plus any deposited cash without investment will provide cash at times and in sufficient amounts to pay in respect of the bonds:

^¡   principal in accordance with the expected amortization schedule therefor, and

^¡   interest when due;

• in the case of the legal defeasance option, 91 days pass after the deposit is made and during the 91-day period no default relating to events of bankruptcy, insolvency, receivership or liquidation of the bond issuer occurs and is continuing at the end of the period;

• no default has occurred and is continuing on the day of the deposit and after giving effect thereto;

• in the case of the legal defeasance option, the bond issuer delivers to the bond trustee an opinion of counsel stating that:

^¡   the bond issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or

^¡   since the date of execution of the bond indenture, there has been a change in the applicable federal income tax law, and

• in either case confirming that the holders of the bonds will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of the legal defeasance option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the legal defeasance had not occurred;

• in the case of the covenant defeasance option, the bond issuer delivers to the trustee an opinion of counsel to the effect that the holders of the bonds will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of the covenant defeasance option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the covenant defeasance had not occurred; and

• the bond issuer delivers to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent to the legal defeasance option or the covenant defeasance option, as applicable, have been complied with as required by the bond indenture.

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DESCRIPTION OF THE CERTIFICATES

The trust will issue the certificates under the certificate indenture between the trust and U.S. Bank National Association, a national banking association, acting as the certificate trustee. The following summary describes the material terms and provisions of the certificate indenture. The particular terms of the certificates of any tranche will be established in the certificate indenture. This summary is not complete. You should read this summary together with the accompanying prospectus supplement and the terms and provisions of the certificate indenture, a form of which will be filed as an exhibit to the registration statement of which this prospectus forms a part, before buying the certificates.

Each tranche of certificates will represent fractional undivided beneficial interest in the corresponding tranches of bonds of each bond issuer and the proceeds thereof. Each certificate will be issued in the minimum denominations specified in the accompanying prospectus supplement. The trust may not issue additional certificates other than in connection with transfers, exchanges or replacements permitted under the certificate indenture. The trust will grant to the certificate trustee, for the benefit of the certificateholders, a lien on the bonds, all proceeds thereof and other property constituting the trust property relating to each tranche of bonds issued by each of the bond issuers, all as provided in the certificate indenture.

Each tranche of certificates will have the same interest rate, scheduled final distribution date and final maturity date as the corresponding tranches of bonds of the bond issuers and, taken together, the corresponding tranches of bonds will have the same aggregate principal amount and expected amortization schedule as the related tranche of certificates. See “Description of the Bonds—Interest and Principal.” Payments of interest and principal made on any tranche of bonds of a bond issuer are required to be passed through to holders of the related tranche of certificates at the times and in the manner described below. See “—Payments and Distributions” below and “Description of the Bonds—Interest and Principal.”

Payments and Distributions

The certificate trustee is scheduled to receive payments of interest on and principal of the bonds of each of the bond issuers on each payment date. The bond trustees will make payments on the bonds of the bond issuers on any payment date as described under “Description of the Bonds—Allocations and Payments.”

The certificate trustee will distribute on each distribution date to the holders of each tranche of certificates all payments of interest on and principal of the corresponding tranche of bonds of each bond issuer, other than payments received following a payment default on a tranche of bonds of a bond issuer, the receipt of which is confirmed by the certificate trustee by 1:00 p.m. New York City time on a distribution date or, if receipt is confirmed after 1:00 p.m. New York City time on a distribution date, then on the following business day. Each distribution, other than the final distribution for any certificate, will be made by the certificate trustee to the holders of record of the certificates of the applicable tranche on the record date for a distribution date. If a payment of principal or interest on any tranche of the bonds of a bond issuer, other than a payment received following a payment default on a tranche of bonds of that bond issuer, is not received by the certificate trustee on a distribution date but is received within five days thereafter, it will be distributed to the holders of record on the date receipt is confirmed by the certificate trustee, if receipt is confirmed by the certificate trustee by 1:00 p.m. New York City time or, if receipt is confirmed after 1:00 p.m. New York City time, then on the following business day. If payment is received by the certificate trustee after the five day period, it will be treated as a payment received following a payment default on a tranche of bonds of that bond issuer and distributed as described below.

Any payment received by the certificate trustee following a payment default on any tranche of bonds of a bond issuer, referred to as Special Payments, will be distributed on the later of the date receipt is confirmed by the certificate trustee and the date on which any Special Payment is scheduled to be distributed by the certificate trustee, or referred to as a Special Distribution Date. However, in the case of any Special Payment receipt of which is confirmed after 1:00 p.m. New York City time, a Special Payment will be distributed on the following

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business day. The certificate trustee will mail notice to the holders of record of certificates of the applicable tranche as of the most recent record date not less than 20 days prior to the Special Distribution Date on which any Special Payment is scheduled to be distributed for certificates of a tranche stating the anticipated Special Distribution Date. Each distribution of any Special Payment will be made by the certificate trustee on the Special Distribution Date to the holders of record of the certificates of a tranche as of the most recent record date. See “—Events of Default” below.

The certificate indenture requires the certificate trustee to establish and maintain for each tranche of certificates, for the trust, and on behalf of the certificateholders, one or more non-interest bearing certificate accounts for the deposit of payments on the related tranche of bonds of each of the bond issuers. The certificate trustee is required to deposit any payments received by it arising from the bonds in the appropriate certificate account. The certificate trustee will distribute all amounts so deposited to holders of the certificates on a distribution date or a Special Distribution Date, as appropriate, unless a different date for distribution of the amount is specified in the certificate indenture.

At any time, if any, that the certificates are issued in registered form and not to the Depository Trust Company, or DTC, or its nominee, distributions by the certificate trustee from the certificate accounts on a distribution date or a Special Distribution Date will be made by check mailed to each holder of record of a certificate on the applicable record date at its address appearing on the register maintained for the certificates, or, on application by a holder of any certificates in the principal amount of $1,000,000 or more to the certificate trustee not later than the applicable record date, by wire transfer to an account maintained by the payee in New York, New York. The final distribution for the certificates, however, will be made only on presentation and surrender of the certificates at the office or agency of the certificate trustee specified in the notice given by the certificate trustee of the final distribution. The certificate trustee will mail notice of the final distribution to the certificateholders, specifying the date set for the final distribution and the amount of the final distribution.

If any Special Distribution Date or other date specified in this prospectus for distribution of any distributions to certificateholders is not a business day, distributions scheduled to be made on a Special Distribution Date or other date may be made on the following business day and no interest shall accrue on the distribution during the intervening period.

Voting of the Certificates

The nominee for DTC as sole initial holder of the certificates, has the right to vote and give consents and waivers relating to any modifications to any tranche of certificates. With some exceptions, the holders of at least a majority of the outstanding principal amount of the certificates shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the certificate trustee, or exercising any trust or power conferred on the certificate trustee under the certificate indenture, including any right of the certificate trustee as holder of the bonds, in each case unless a different percentage is specified in the certificate indenture; provided, however, that, among other things:

• the direction shall not be in conflict with any rule of law or with the certificate indenture and would not involve the certificate trustee in personal liability or expense;

• the certificate trustee shall not have determined that the action so directed would be unjustly prejudicial to the certificateholders not taking part in the direction; and

• the certificate trustee may take any other action deemed proper by the certificate trustee that is not inconsistent with the direction.

If the certificate trustee is required to seek instructions from the holders of the certificates regarding any action or vote, the certificate trustee will take the action or vote for or against any proposal in proportion to the principal amount of the certificates taking the corresponding position.

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Events of Default

An event of default on the certificates is defined as the occurrence and continuance of a bond event of default with respect to the bonds of a bond issuer. An event of default in respect of the bonds of a bond issuer will not constitute an event of default with respect to the bonds of any other bond issuers.

The certificate indenture provides that, if a bond event of default occurs and is continuing with respect to the bonds of a bond issuer, the certificate trustee may vote all and, with the written direction of holders representing not less than a majority of the outstanding principal amount of the certificates shall vote a corresponding majority of the bonds of that bond issuer in favor of declaring the unpaid principal amount of the bonds of that bond issuer and accrued interest to be due and payable. In addition, the certificate indenture provides that, if a bond event of default occurs and is continuing, the certificate trustee may vote all and, with the written direction of holders representing not less than a majority of the outstanding principal amount of the certificates, shall vote a corresponding majority of the bonds of the defaulting bond issuer in favor of directing the bond trustee as to the time, method and place of conducting any proceeding for any remedy available to the bond trustee, including the sale of any or all of the collateral for the bonds of the defaulting bond issuer, without recourse to or warranty by the certificate trustee or any certificateholder, to any person or entity, or of exercising any trust or power conferred on the bond trustee under the bond indenture. For a description of the bond events of default, see “Description of the Bonds—Bond Events of Default; Rights On Bond Event of Default.”

If, under the terms of the certificate indenture, the certificate trustee decides, or is required, to sell the bonds of a defaulting bond issuer, the certificate trustee may, and if directed by the holders of not less than a majority of the certificates shall, take action to complete the sale of that bond issuer’s bonds upon such terms and conditions and at such prices as it, or if directed by the certificateholders, upon such terms and conditions as the certificateholders, may deem advisable, so as to provide for the full payment of all amounts due on the certificates in respect of such bonds.

In any event, the certificate trustee is prohibited from selling any bonds following bond events of default, other than payment defaults, unless (x) the certificate trustee determines that the amounts receivable from the bond collateral are not sufficient to pay in full the principal of and accrued interest on the bonds of the defaulting bond issuer and to pay all sums due to the certificate trustee by such bond issuer and other administrative expenses specified in the certificate indenture allocable to that bond issuer and the certificate trustee obtains the written consent of holders of certificates representing 66 2/3% of the outstanding principal amount of certificates or (y) the certificate trustee obtains the written consent of holders of 100% of the outstanding principal amount of certificates. Any proceeds received by the certificate trustee on any sale will be deposited in the certificate account and will be distributed to the certificateholders on a Special Distribution Date.

If a breach by the State of Ohio of its pledge under the Securitization Act has occurred, then the certificate trustee, in its own name and as trustee of an express trust, as holder of the bonds, shall be, to the extent permitted by state and federal law, entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, to enforce the pledge and to collect any monetary damages as a result of a breach, and may prosecute any of these suits, actions or proceedings to final judgment or decree.

Any funds (a) representing payments received arising from bonds in default, or (b) representing the proceeds from the sale by the certificate trustee of any bonds held by the certificate trustee in the certificate account shall, to the extent practicable, be invested and reinvested by the certificate trustee in eligible investments permitted under the certificate indenture maturing in not more than 60 days or a lesser time as is required for the distribution of any funds on a Special Distribution Date, pending the distribution of the funds to certificateholders as described in this prospectus.

The certificate indenture provides that, for the certificates of any tranche, within 30 days after the occurrence of any event that is, or after notice or lapse of time or both would become, a certificate event of default for a tranche of certificates in respect of a tranche of bonds of a bond issuer, the certificate trustee will

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give notice, transmitted by mail, to the trust, the applicable bond trustee and the certificateholders of all uncured or unwaived defaults known to it. Except in the case of a default relating to the payment of principal of or interest on any of the bonds, however, the certificate trustee will be protected in withholding notice if in good faith it determines that the withholding of notice is in the interests of the certificateholders.

The certificate indenture contains a provision entitling the certificate trustee to be indemnified by the certificateholders before proceeding to exercise any right or power under the certificate indenture at the request or direction of certificateholders.

In some cases, the holders of certificates representing not less than a majority of the outstanding principal amount of the certificates may waive any certificate event of default in respect of the bonds of a bond issuer and thereby annul any previous direction given by the certificate trustee with respect thereto, except a default:

• in the deposit or distribution of any payment on the bonds or Special Payment required to be made on any tranche of certificates;

• in the payment of principal of or interest on any of the bonds; or

• arising from any covenant or provision of the certificate indenture that cannot be modified or amended without the consent of the holders of each certificate affected by a default.

With respect to any such waiver or annulment the certificate trustee shall vote a corresponding percentage of the bonds of a defaulting bond issuer in favor of the waiver. The bonds provide that, with some exceptions, the holders of not less than a majority of the outstanding principal amount of the bonds of the defaulting bond issuer may waive any bond event of default or any event that is, or after notice or passage of time, or both, would be, a bond event of default.

The trust may hold two or more tranches of bonds of a bond issuer, each of which may have a different interest rate, a different or potentially different schedule for the repayment of principal and different rights in the security for the bonds. Accordingly, the certificateholders of one tranche may have divergent or conflicting interests from the certificateholders of other tranches in respect of the bonds of the corresponding tranches of the defaulting bond issuer. As a result, the bond trustee for that bond issuer and the certificate trustee may be required to seek the appointment of additional trustee(s) to represent the interests of one or more tranches with divergent or conflicting interests.

Reports to Certificateholders

On each distribution date, Special Distribution Date or any other date specified in the certificate indenture for distribution of any payments on any tranche of certificates, the certificate trustee will include with each distribution and make available on its website (currently https://www.usbank.com/abs) a statement setting forth the following information, in each case, to the extent received by the certificate trustee from the bond trustees, no later than two business days prior to a distribution date, Special Distribution Date or other date specified herein for distribution:

• the amount of the distribution to certificateholders allocable to principal and interest in respect of the bonds of each bond issuer, in each case per $100,000 original principal amount of each tranche of certificates;

• the aggregate outstanding principal balance of the certificates and of the bonds of each bond issuer, after giving effect to distributions allocated to principal reported above;

• the difference, if any, between the aggregate outstanding principal balance of the certificates scheduled to be outstanding on a distribution date according to the expected amortization schedule, and the same information for each bond issuer;

• for each bond issuer, the amount on deposit in the capital subaccount;

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• for each bond issuer, the amount, if any, on deposit in the excess funds subaccount as of the payment date;

• for each bond issuer, the amount paid to the related bond trustee, the Delaware trustee and the certificate trustee since the previous payment date;

• for each bond issuer, the amount paid to the related servicer since the previous payment date;

• for each bond issuer, the amount paid to the related administrator since the previous payment date; and

• any other transfers and payments to be made pursuant to the related bond indenture since the previous payment date.

So long as the bond trustees and the certificate trustee are the same, the bond trustees will agree to prepare and provide the statements to the certificate trustee.

Within the prescribed period of time for tax reporting purposes after the end of each calendar year during the term of the bonds, the certificate trustee will mail to each person or entity who at any time during a calendar year has been a certificateholder and received any distribution on the certificates, a statement containing information for the purposes of a certificateholder’s preparation of federal and state income tax returns. See “Material U.S. Federal Income Tax Consequences” and “Ohio State Taxation.”

Website Disclosure

The certificate trustee will make available on its website (currently https://www.usbank.com/abs) all periodic reports and related information (identified under “Description of the Bonds—Website Disclosure”) posted on the websites of the respective bond issuers (or their respective sponsors) and their bond trustees.

Annual Compliance Statement

The bond issuers, on behalf of the trust, will file, or will cause the servicers to file, annually with the certificate trustee, the PUCO and the rating agencies a written statement as to whether it has fulfilled its obligations under the certificate indenture.

Certificate Trustee Report to Certificateholders

If required by the Trust Indenture Act, the certificate trustee will be required to mail each year to all certificateholders a brief report. The report must state, among other things:

• the certificate trustee’s eligibility and qualification to continue as the certificate trustee under the certificate indenture;

• any amounts advanced by it under the certificate indenture;

• the amount, interest rate and maturity date of specific indebtedness owing by us to the certificate trustee in the certificate trustee’s individual capacity;

• the property and funds physically held by the certificate trustee;

• any additional issue of the certificates not previously reported; and

• any action taken by it that materially affects the certificates and that has not been previously reported.

Supplemental Certificate Indentures

The certificate trustee and the Delaware trustee, on behalf of the trust, will, from time to time, and without the consent of the certificateholders, enter into one or more agreements supplemental to the certificate indenture to:

• add to the covenants of the trust for the benefit of the certificateholders, or to surrender any right or power in the certificate indenture conferred on the trust;

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• correct or supplement any provision in the certificate indenture or in any supplemental certificate indenture that may be defective or inconsistent with any other provision in the certificate indenture or in any supplemental agreement or to make any other provisions regarding matters or questions arising under the certificate indenture; provided that none of these actions shall adversely affect in any material respect the interests of the certificateholders;

• cure any ambiguity or correct any mistake; or

• qualify, if necessary, the certificate indenture, including any supplemental certificate indenture, under the Trust Indenture Act.

In addition, the certificate trustee and the Delaware trustee, acting on behalf of the trust, will, with the consent of certificateholders holding not less than a majority of the outstanding principal amount of the certificates of each affected tranche of certificates, enter into one or more certificate indentures supplemental to the certificate indenture for the purpose of, among other things, adding any provisions to or changing in any manner or eliminating any of the provisions of the certificate indenture. However, no supplemental certificate indenture may, among other things, without the consent of each certificateholder affected thereby:

• reduce the amount of any payment, change any date of payment on any certificate or bond, or change the place of payment where, or the currency in which, any certificate or bond is payable, or impair the right to sue for the enforcement of any payment or distribution on or after the distribution date, Special Distribution Date or other date specified in the prospectus;

• permit the disposition of any bond held by the trust except as permitted by the certificate indenture, or otherwise deprive any certificateholder of the benefit of the ownership of the related bonds held by the trust;

• reduce the percentage of the aggregate outstanding amount of the certificates of any tranche that is required for any such supplemental indenture, or reduce such percentage required for any waiver or consent (of compliance with certain provisions of the certificate indenture or certain defaults under the certificate indenture and their consequences) provided for in the certificate indenture;

• modify the provisions in the certificate indenture relating to amendments with the consent of certificateholders, except to increase the percentage vote necessary to approve amendments or to add further provisions which cannot be modified or waived without the consent of all certificateholders; or

• adversely affect the status of the trust as a grantor trust not taxable as a corporation for federal income tax purposes.

Promptly following the execution of any amendment to the certificate indenture (other than an amendment described in the preceding paragraph), the certificate trustee will furnish written notice of the substance of an amendment to the certificateholders to which such amendment relates.

List of Certificateholders

With the written request of any certificateholder or group of certificateholders of record holding certificates evidencing not less than ten percent of the outstanding principal amount of the certificates, the certificate trustee will give such certificateholders access during business hours to the current list of certificateholders for purposes of communicating with other certificateholders about their rights under the certificate indenture.

Neither the declaration of trust nor the certificate indenture provides for any annual or other meetings of certificateholders.

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Registration and Transfer of the Certificates

If so specified in the accompanying prospectus supplement, the certificates will be issued in definitive form and will be transferable and exchangeable at the office of the registrar identified in such prospectus supplement. No service charge will be made for any registration or transfer of the certificates, but the owner may be required to pay a sum sufficient to cover any tax or other governmental charge.

Book-Entry Registration and Definitive Certificates

One or more tranches of the certificates will be issued as book-entry certificates, and these tranches will be represented by one or more certificates registered in the name of a nominee for the depository, DTC.

DTC is a limited-purpose trust company organized under the laws of the New York Banking Law, “a banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the Uniform Commercial Code and a “clearing agency” registered under the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participating organizations, or Participants, and facilitate the clearance and settlement of securities transactions between Participants through electronic book-entry changes in their accounts, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include other organizations. Indirect access to the DTC system also is available to others such as banks, brokers, dealers and trust companies, or Indirect Participants, that clear through or maintain a custodial relationship with a Participant, either directly or indirectly.

Investors that are not Participants or Indirect Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, book-entry certificates may do so only through Participants and Indirect Participants. In addition, these beneficial owners will receive all distributions on the book-entry certificates through DTC and its Participants. Under a book-entry format, beneficial owners will receive payments after a distribution date because, while payments are required to be forwarded to Cede & Co., as nominee for DTC, on a distribution date, DTC will forward the payments to its Participants which thereafter will be required to forward them to Indirect Participants or beneficial owners. The only registered certificateholder will be Cede & Co., as nominee of DTC, and the beneficial owners will not be recognized by the certificate trustee as certificateholders under the certificate indenture. Beneficial owners will be permitted to exercise the rights of certificateholders under the certificate indenture, only indirectly through the Participants who in turn will exercise their rights through DTC.

Under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers among participants on whose behalf it acts regarding the book-entry certificates and is required to receive and transmit distributions of interest on and principal of the book-entry certificates. Participants and Indirect Participants with which beneficial owners have accounts for book-entry certificates similarly are required to make book-entry transfers and receive and transmit the payments on behalf of their respective beneficial owners.

Because DTC can act only on behalf of Participants, who in turn act on behalf of Indirect Participants and banks, the ability of a beneficial owner to pledge its interest in the book-entry certificates to persons or entities that do not participate in the DTC system, or otherwise take actions arising from its interest in the book-entry certificates, may be limited due to the lack of a physical certificate evidencing its interest.

DTC has advised the certificate trustee that it will take any action permitted to be taken by a certificateholder under the certificate indenture only at the direction of one or more Participants to whose account with DTC interests in the book-entry certificates are credited.

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Clearstream Banking, Luxembourg, S.A., referred to as Clearstream, holds securities for its customers and facilitates the clearance and settlement of securities transactions between Clearstream customers through electronic book-entry changes in accounts of Clearstream customers, thereby eliminating the need for physical movement of certificates. Transactions may be settled by Clearstream in any of various currencies, including United States dollars.

Clearstream provides to its Clearstream customers, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. Clearstream is registered as a bank in Luxembourg, subject to regulations by the Commission de Surveillance de Secteur Financier, which supervises Luxembourg banks. Clearstream customers are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and other organizations and may include the underwriters. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream customers, either directly or indirectly.

The Euroclear System was created in 1968 in Brussels to hold securities for Euroclear Participants and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Transactions may now be settled in Euroclear in any of various currencies, including United States dollars. The Euroclear System includes various other services, including securities lending and borrowing, and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC. The Euroclear System is operated by Euroclear Bank SA/NV. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the underwriters. Indirect access to the Euroclear System is also available to other firms that clear through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly.

Securities clearance accounts and cash accounts with Euroclear are governed by the Terms and Conditions, referred to as the Terms and Conditions, governing use of Euroclear and the related Operating Procedures of the Euroclear System, and applicable Belgian Law. These Terms and Conditions govern transfers of securities and cash within the Euroclear System, withdrawal of securities and cash from the Euroclear System, and receipt of payments for securities in the Euroclear System. All securities in the Euroclear System are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear acts under the Terms and Conditions only on behalf of Euroclear Participants and has no record of or relationship with persons holding through Euroclear Participants.

Distributions for certificates held through Clearstream or Euroclear will be credited to the cash accounts of Clearstream customers or Euroclear Participants in compliance with the relevant system’s rules and procedures. These distributions will be subject to tax reporting in compliance with relevant United States tax laws and regulations. See “Material U.S. Federal Income Tax Consequences.” Clearstream customers will take any other action permitted to be taken by a certificateholder under the certificate indenture on behalf of a Clearstream customer and the Euroclear will take any other action permitted to be taken by a certificateholder under the certificate indenture on behalf of a Euroclear Participant only under its relevant rules and procedures and limited by its depositary’s ability to effect these actions on its behalf through DTC.

Cede & Co., as nominee for DTC, will hold the certificates. Clearstream will hold omnibus positions in the certificates on behalf of the Clearstream customers and Euroclear will hold omnibus positions in the certificates on behalf of the Euroclear Participants, in each case through customers’ securities accounts in their names on the books of their respective depositaries, which in turn will hold positions in customers’ securities accounts in the depositaries’ names on the books of DTC. Transfers between the Participants will comply with DTC rules. Transfers between Clearstream customers and Euroclear Participants will comply with their applicable rules and operating procedures.

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Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream customers or Euroclear Participants, on the other, will be effected in DTC under DTC rules on behalf of the relevant European international clearing system by its depositary; however, these cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in the system according to its rules and procedures and within its established deadlines. The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its depositary to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment under normal procedures for same-day funds settlement applicable to DTC. Clearstream customers and Euroclear Participants may not deliver instructions directly to their depositaries.

Because of time zone differences, credits of securities in Clearstream or Euroclear as a result of a transaction with a Participant will be made during the subsequent securities settlement processing, dated the business day following the DTC settlement date, and the credit or any transactions in the securities settled during the processing will be reported to the relevant Clearstream customers or Euroclear Participants on that business day. Cash received in Clearstream or Euroclear as a result of sales of securities by or through a Clearstream customer or a Euroclear Participant to a Participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in DTC.

Although DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of securities among participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or continue to perform these procedures and these procedures may be discontinued at any time.

If any of DTC, Clearstream or Euroclear should discontinue its services, the certificate trustee would seek an alternative depository, if available, or cause the issuance of definitive certificates to the owners of certificates or their nominees in the manner described below.

Definitive certificates initially issued in book-entry form will be issued to beneficial owners or their nominees, rather than to DTC or its nominee only if:

• the DTC advises the certificate trustee in writing that DTC is no longer willing or able to properly discharge its responsibilities as depository for the certificates and the certificate trustee is unable to locate a qualified successor; or

• after the occurrence of an event of default under the certificate indenture, holders of certificates representing not less than 50% of the outstanding principal amount of certificates advise DTC in writing that the continuation of a book-entry system through DTC is no longer in the best interests of certificateholders.

If either of the events described in the immediately preceding paragraph occurs, DTC is required to notify all Participants of the availability through DTC of definitive certificates for the beneficial owners. With the surrender by DTC of the certificate or certificates representing the book-entry certificates, together with instructions for registration, the certificate trustee will issue (or cause to be issued) to the beneficial owners identified in the instructions the definitive certificates to which they are entitled, and thereafter the certificate trustee will recognize the holders of the Definitive Certificates as certificateholders under the certificate indenture.

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WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE CERTIFICATES

The rate of principal payments, the amount of each interest payment and the final maturity date for each tranche of bonds, and, thus, a related portion of the certificates, will be dependent on the rate and timing of receipt of phase-in-recovery charge collections supporting the payment of such bonds. Higher than estimated receipts of phase-in-recovery charge collections will not, however, result in payment of principal on such bonds, and, thus, a related portion of the certificates, earlier than as reflected in the expected amortization schedule for such bonds. This is because receipts in excess of the amounts necessary to amortize the bonds in accordance with the applicable expected amortization schedules, to pay interest and premium, if any, on the bonds and to pay other approved financing costs, such as to fund or replenish the capital subaccount, will be allocated to the excess funds subaccounts under the related bond indentures. However, delayed receipts of phase-in-recovery charge collections may result in principal payments on the bonds, and, thus, a related portion of the certificates, occurring more slowly than as reflected in the expected amortization schedule or later than the related scheduled maturity dates.

The actual payments on each payment date for each tranche of bonds, and, thus, a related portion of the certificates, and the weighted average life thereof will be affected primarily by the rate and the timing of receipt of phase-in-recovery charge collections supporting the payment of such bonds. Amounts available in the excess funds subaccount and the capital subaccount for the bonds of a bond issuer will also affect the weighted average life of the bonds of that bond issuer, and, thus, a related portion of the certificates. The aggregate amount of phase-in-recovery charge collections and the rate of principal amortization on the bonds will depend, in part, on actual energy usage by customers of CEI, OE or TE, as applicable, and their respective rates of delinquencies and charge-offs. This is because the phase-in-recovery charges will be calculated based on estimates of usage and collections revenue. The phase-in-recovery charges for the customers of each Ohio Company will be adjusted from time to time based in part on the actual rate of phase-in-recovery charge collections. However, there can be no assurance that the servicers will be able to forecast accurately actual electricity usage and the rate of delinquencies, and charge-offs or implement adjustments to the phase-in-recovery charges that will cause phase-in-recovery charge collections to be received at any particular rate. See “Risk Factors—Servicing Risks—Inaccurate consumption forecasting might result in phase-in-recovery charges that result in inadequate collections to make scheduled payments on the bonds and, thus, scheduled distributions on the certificates.”

A payment on a date that is later than the expected final payment date might result in a longer weighted average life of the bonds, and, thus, a related portion of the certificates. In addition, if scheduled payments on the bonds are received later than the applicable scheduled payment dates, this might result in a longer weighted average life of the bonds, and, thus, a related portion of the certificates.

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

General

The following is a summary of the material U.S. federal income tax consequences to certificateholders, and is based on the opinion of Akin Gump Strauss Hauer & Feld LLP. Akin Gump Strauss Hauer & Feld LLP has advised the trust that the description of the material U.S. federal income tax consequences in this summary is accurate in all material respects. The opinion of Akin Gump Strauss Hauer & Feld LLP is based on some assumptions and is limited by some qualifications stated in this discussion or in that opinion. This discussion is based on current provisions of the Internal Revenue Code of 1986 as amended, or the Internal Revenue Code, currently applicable Treasury regulations, and judicial and administrative rulings and decisions. Legislative, judicial or administrative changes could alter or modify the statements and conclusions in this discussion. Any legislative, judicial or administrative changes or new interpretations may be retroactive and could affect tax consequences to certificateholders.

This discussion applies to certificateholders who acquire the certificates at original issue for cash equal to the issue price of those certificates and hold the certificates as capital assets. This discussion does not address all of the tax consequences relevant to a particular certificateholder in light of that certificateholder’s circumstances, and some certificateholders may be subject to special tax rules and limitations not discussed below (for example, life insurance companies, tax-exempt organizations, financial institutions, dealers in securities, S corporations, taxpayers subject to the alternative minimum tax provisions of the code, broker-dealers, persons who hold the certificates as part of a hedge, straddle, “synthetic security,” or other integrated investment, risk reduction or constructive sale transaction and persons that have a “functional currency” other than the U.S. dollar). This discussion also does not address the tax consequences to nonresident aliens, foreign corporations, foreign partnerships or foreign trusts that are subject to U.S. federal income tax on a net basis on income with respect to a certificate because that income is effectively connected with the conduct of a U.S. trade or business. Those holders generally are taxed in a manner similar to U.S. certificateholders; however, special rules not applicable to U.S. certificateholders may apply. In addition, except as described below, this discussion does not address any tax consequences under state, local or foreign tax laws.

YOU SHOULD CONSULT YOUR TAX ADVISER TO DETERMINE THE U.S. FEDERAL, STATE AND LOCAL AND FOREIGN INCOME AND ANY OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE CERTIFICATES.

As used in this summary, the term U.S. certificateholder means a beneficial owner of a certificate that is any of the following, for U.S. federal income tax purposes:

• a citizen or resident of the United States;

• a corporation (or other entity taxable as a corporation) created or organized in or under the laws of the U.S. or any political subdivision of the U.S.;

• an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

• a trust if (i) its administration is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) it has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

The term non-U.S. certificateholder means a beneficial owner of a certificate that is not a U.S. certificateholder.

If an entity classified as a partnership for U.S. federal income tax purposes holds certificates, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding certificates, you should consult your tax advisers.

The sellers have not and will not seek any rulings from the Internal Revenue Service, or IRS, with respect to the matters discussed below. There can be no assurance that the IRS will not take a different position concerning

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the tax consequences of the purchase, ownership or disposition of the certificates or that any such position would not be sustained.

Treatment of the Certificates

Akin Gump Strauss Hauer & Feld LLP will opine that (i) the underlying bonds of each bond issuer will be treated as obligations of CEI, OE or TE, as the case may be, within the meaning of Revenue Procedure 2005-62, 2005-2 C.B. 507, (ii) the bond issuers will not be subject to U.S. federal income tax as entities separate from the sellers and (iii) the trust will not be a business entity classified as a corporation or a publicly traded partnership treated as a corporation, but will be treated as a grantor trust.

Based on the assumptions and subject to the qualifications stated herein, it is the opinion of Akin Gump Strauss Hauer  & Feld LLP that the material U.S. federal income tax consequences to certificateholders are as follows:

Taxation of U.S. Certificateholders

In General

A U.S. certificateholder must allocate the purchase price for a certificate between the different underlying bonds represented by the certificate in proportion to the respective fair market values of the different underlying bonds on the purchase date. The amount allocated to any particular underlying bond will represent the initial adjusted basis of the U.S. certificateholder’s interest in that underlying bond. Thereafter, a U.S. certificateholder should calculate separately the items of income, gain, loss, deduction and credit with respect to the U.S. certificateholder’s interest in the different underlying bonds.

This discussion assumes that each certificate is issued in registered form. Moreover, this discussion assumes that any original issue discount on any underlying bond (that is, any excess of the stated redemption price at maturity of an underlying bond over its issue price) is less than a statutory minimum amount (equal to 0.25 percent of its stated redemption price at maturity multiplied by the underlying bond’s weighted average maturity), all as provided in the United States Treasury’s original issue discount regulations.

Payments of Interest

Stated interest on the underlying bonds will be taxable as ordinary interest income when received or accrued by U.S. certificateholders under their method of accounting. Generally, interest payable on the underlying bonds will constitute “investment income” for purposes of limitations under the Internal Revenue Code on the deductibility of investment interest expense.

Original Issue Discount

As noted above, this discussion assumes that any original issue discount on the underlying bonds is less than the statutory minimum amount. In that case, unless a special election is made to treat all interest on the underlying bonds as original issue discount, any such de minimis original issue discount generally will be taken into income by a U.S. certificateholder as gain from the retirement of an underlying bond (as described below under “—Sale or Other Taxable Disposition of Certificates”) ratably as principal payments are made on the underlying bond.

Sale or Other Taxable Disposition of the Certificates

If there is a sale, exchange, redemption, retirement or other taxable disposition of a certificate, a U.S. certificateholder generally will recognize gain or loss equal to the difference, if any, between (a) the amount of cash and the fair market value of any other property treated as received for the interest represented by the certificate in each underlying bond (other than amounts attributable to, and taxable as, accrued stated interest on the underlying bond) and (b) the U.S. certificateholder’s adjusted tax basis in the underlying bond. The amount

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of cash and property treated as received for each underlying bond will be the amount of cash and property received for the certificate allocated between the different underlying bonds based on their proportionate fair market values at the time the certificate is sold or otherwise disposed of. The U.S. certificateholder’s adjusted tax basis in each underlying bond generally will equal the amount of the purchase price allocated to the underlying bond upon purchase of the certificate, increased by any original issue discount included in income with respect to the underlying bond prior to its disposition and reduced by any payments reflecting principal or original issue discount previously received with respect to the underlying bond and any amortized premium with respect to the underlying bond. Gain or loss generally will be capital gain or loss if a certificate was held as a capital asset.

Medicare Tax on Unearned Income

A 3.8% tax is imposed on the “net investment income” of certain U.S. citizens and resident aliens, and on the undistributed “net investment income” of certain estates and trusts, in both cases to the extent that net investment income exceeds a certain threshold. Among other items, “net investment income” generally includes interest and certain net gains from the disposition of property, less certain deductions.

Prospective holders should consult their own tax advisors with respect to such tax.

Non-U.S. Certificateholders

In general, a non-U.S. certificateholder will not be subject to U.S. withholding tax on interest (including original issue discount) on an underlying bond unless:

• the non-U.S. certificateholder is a controlled foreign corporation that is related, directly or indirectly, to the issuer of the underlying bond through stock ownership;

• the non-U.S. certificateholder is a bank which receives interest on the underlying bond as described in Code Section 881(3)(A); or

• the non-U.S. certificateholder actually or constructively owns 10% or more of the total combined voting power of all classes of stock of the issuer of the underlying bond entitled to vote.

In order for interest payments to qualify for the exemption from U.S. taxation described above (i) non-U.S. certificateholders must certify to the withholding agent on IRS Form W-8BEN (or appropriate substitute form), under penalties of perjury, that such non-U.S. certificateholder is not a U.S. person or (ii) if non-U.S. certificateholders hold the certificates through a financial institution or other agent acting on their behalf, such non-U.S. certificateholder must provide appropriate documentation to the agent and the agent then must provide certification to the withholding agent, either directly or through other intermediaries.

A non-U.S. certificateholder may also be exempt from U.S. withholding tax on interest if the non-U.S. certificateholder is entitled to the benefits of a U.S. treaty providing an exemption from such withholding and the non-U.S. certificateholder or its agent provides the withholding agent a properly executed W-8BEN (or an appropriate substitute form) evidencing eligibility for the exemption.

Generally, any gain or income realized by a non-U.S. certificateholder from the sale, exchange, redemption, retirement or other disposition of a certificate (other than gain attributable to accrued interest or original issue discount, which is addressed above) will not incur U.S. federal income tax liability, provided, in the case of a non-U.S. certificateholder who is an individual, that such non-U.S. certificateholder is not present in the United States for 183 or more days during the taxable year in which a disposition of a certificate occurs. Exceptions may be applicable, and non-U.S. certificateholders should consult a tax adviser regarding the tax consequences of a disposition of a certificate.

Information Reporting and Backup Withholding

Some certificateholders may be subject to backup withholding, currently at the rate of 28%, on amounts payable to the certificateholder on the certificate, including principal payments. Generally, backup withholding

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will apply if the certificateholder fails to provide identifying information (such as the payee’s taxpayer identification number) in the manner required, or if the payee has failed to report properly the receipt of reportable interest or dividend payments and the IRS has notified the payor that backup withholding is required. Some certificateholders (including, among others, corporations and some tax-exempt organizations) generally are not subject to backup withholding.

Backup withholding and information reporting generally will not apply to a certificate issued in registered form that is beneficially owned by a non-U.S. certificateholder if the certification described above in “—Non-U.S. Certificateholders,” is provided to the withholding agent as long as the payor does not have actual knowledge that the non-U.S. certificateholder should be subject to such backup withholding and information reporting rules. Non-U.S. certificateholders should consult their tax advisers regarding the application of information reporting and backup withholding to their particular situations, the availability of an exemption therefrom and the procedure for obtaining such an exemption, if available. The withholding agent may be required to report annually to the IRS and to each non-U.S. certificateholder the amount of interest paid to, and the tax withheld, if any, for each non-U.S. certificateholder, even if a certification is provided and U.S. federal income tax and backup withholding tax does not apply.

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OHIO STATE TAXATION

In the opinion of Calfee, Halter & Griswold LLP, it is more likely than not that the following material Ohio tax consequences apply to holders of the certificates who receive or accrue interest or who sell, exchange, or otherwise dispose of certificates (referred to herein as Ohio certificate income):

1. Ohio certificate income is subject to the Ohio Individual Income Tax. Ohio certificate income is sitused to the state of domicile of the recipient. Accordingly, a non-Ohio resident not otherwise subject to the Ohio Individual Income Tax would not incur liability under such taxes due to having realized Ohio certificate income.

2. Ohio certificate income realized by most individuals and businesses is not subject to income taxes levied by municipal corporations in Ohio.

3. Ohio School District Income Taxes for individuals may be assessed under two alternate methods. Ohio certificate income is subject to such tax under one alternate method of computing taxable income, but not under the other method.

4. Ohio certificate income is subject to the Ohio Corporation Franchise Tax, to the extent computed on the net income basis. Other than certain financial institutions and their holding companies and other affiliates, few corporations remain subject to the Ohio Corporation Franchise Tax.

5. Ohio certificate income is not subject to the Ohio Commercial Activity Tax if the certificates are capital assets of a holder, regardless of the length of time the certificates are held by the holder.

6. Ohio no longer levies an ad valorem tax on intangible personal property held by individuals or most business entities, other than a limited class of financial institutions.

This discussion does not address the taxation of the trust or the tax consequences of the purchase, ownership or disposition of the certificates under any state or local tax law other than that of the State of Ohio. You should consult your tax adviser regarding state and local tax consequences.

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CERTAIN ERISA AND OTHER CONSIDERATIONS

The following is a summary of certain considerations associated with the purchase and holding of our certificates by (i) an “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, or ERISA) that is subject to Part 4 of Subtitle B of Title I of ERISA, (ii) a plan, individual retirement account or other arrangement that is subject to Section 4975 of the U.S. Internal Revenue Code or provisions under Similar Law (which we define as certain governmental plans, church plans and non-U.S. plans, which while not subject to Title I of ERISA or Section 4975 of the U.S. Internal Revenue Code, may nevertheless be subject to other state, local, non-U.S. or other laws or regulations that would have the same effect as U.S. Department of Labor Regulations Section 2510.3-101, as modified by Section 3(42) of ERISA, or the Plan Asset Regulations, so as to cause our underlying assets to be treated as assets of an investing entity by virtue of its investment (or any beneficial interest) in us and thereby subject us to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the U.S. Internal Revenue Code), and (iii) entities whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each of (i), (ii) and (iii), a Benefit Plan Investor).

This summary is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing or holding our certificates on behalf of, or with the assets of, any employee benefit plan, consult with their counsel to determine whether such employee benefit plan is subject to Part 4 of Subtitle B of Title I of ERISA, Section 4975 of the U.S. Internal Revenue Code or any Similar Laws.

Section 3(42) of ERISA and the Plan Asset Regulations generally provide that when a Benefit Plan Investor subject to Part 4 of Subtitle B of Title I of ERISA or Section 4975 of the U.S. Internal Revenue Code, or a Covered Plan, acquires an equity interest in an entity that is neither a “publicly offered security” (as defined in the Plan Asset Regulations) nor a security issued by an investment company registered under the U.S. Investment Company Act, the Covered Plan’s assets include both the equity interest and an undivided interest in each of the underlying assets of the entity unless it is established either that equity participation in the entity by the Covered Plan is not significant or that the entity is an “operating company,” in each case as defined in Section 3(42) of ERISA and the Plan Asset Regulations.

For purposes of ERISA, equity participation in an entity by Covered Plans will not be “significant” if they hold, in the aggregate, less than 25% (or such higher percentage as may be specified by regulations of the Department of Labor) of the value of each class of equity interests of such entity, excluding equity interests held by any person (other than an Covered Plan) who has discretionary authority or control with respect to the assets of the entity or who provides investment advice for a fee (direct or indirect) with respect to such assets, and any affiliates of such person.

The Plan Asset Regulations generally define an “operating company” to mean an entity that is primarily engaged, directly or through majority owned subsidiaries, in the production of a product or service other than the investment of capital.

The certificates are likely to be treated as “equity interests” in the trust under the Plan Asset Regulations which provides that beneficial interests in a trust are equity interests.

It is anticipated (i) that the certificates will not constitute “publicly offered securities” for purposes of the Plan Asset Regulations, (ii) that the trust will not be an investment company registered under the U.S. Investment Company Act and (iii) the trust will not qualify as an operating company within the meaning of the Plan Asset Regulations. In addition, neither CEI, OE, TE, the certificate trustee, the underwriters nor any of their affiliates is required and does not intend to monitor whether investment in the certificates by Benefit Plan Investors will equal or exceed the 25% (or higher) threshold for purposes of ERISA. Therefore, if the certificates are purchased

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with plan assets, the assets of the trust may be deemed plan assets of the investing Benefit Plan Investors which, in turn, would subject the trust and its assets to the fiduciary responsibility provisions of ERISA and the prohibited transaction provisions of ERISA and Section 4975 of the Code if Benefit Plan Investor participation is significant. Even though only minimal administrative activity is expected at the trust level, it is likely that the trust will interact with CEI, OE, TE, the certificate trustee, the underwriters and their affiliates. If CEI, OE, TE, the certificate trustee, the underwriters or any of their affiliates is a party in interest as defined in ERISA or a disqualified person as defined in the Code to a Benefit Plan Investor that purchases certificates, violations of the prohibited transaction rules could occur at the trust level, unless a statutory or administrative exemption applies or an exception applies under the Plan Asset Regulations.

Whether or not the assets of the trust are deemed to include “plan assets”, the acquisition and/or holding of certificates by a Benefit Plan Investor with respect to which the trust, CEI, OE, TE, the certificate trustee, the underwriters or any of their affiliates are considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions, or PTCEs, that may apply to the acquisition and holding of the certificates. These class exemptions include, without limitation, PTCE 75-1, which exempts certain transactions between a plan and certain broker dealers, reporting dealers and banks, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds, PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers, although there can be no assurance that all of the conditions of any such exemptions will be satisfied. In addition, the statutory service provider exemption provided by Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code, which exempts certain transactions between plans and parties in interests that are not fiduciaries with respect to the transaction could apply.

We cannot provide any assurance that any of these class exemptions or statutory exemptions will apply with respect to any particular investment in the certificates by, or on behalf of, a plan or, even if it were deemed to apply, that any exemption would apply to all transactions that may occur in connection with the investment. Even if one of these class exemptions or statutory exemptions were deemed to apply, certificates may not be purchased with assets of any plan if the trust, CEI, OE, TE, the certificate trustee, any underwriter or any of their affiliates:

• has investment discretion over the assets of the plan used to purchase the certificate;

• has authority or responsibility to give, or regularly gives, investment advice regarding the assets of the plan used to purchase the certificate for a fee and under an agreement or understanding that the advice will serve as a primary basis for investment decisions for the assets of the plan, and will be based on the particular investment needs of the plan; or

• unless PTCE 90-1 or 91-38 applied to the purchase and holding of the certificate, is an employer maintaining or contributing to the plan.

Because of the foregoing, the certificates may not be purchased or held by any person investing “plan assets” of any Benefit Plan Investor, unless such purchase and holding will not constitute a non-exempt prohibited transaction under ERISA and the Code or similar violation of any applicable Similar Laws.

Without limiting the foregoing, each purchaser of certificates is deemed to represent, warrant and agree, that either (x) no part of the assets to be used to purchase or hold the certificates constitutes or will constitute the assets of any “employee benefit plan” (as defined in Section 3(3) of ERISA) subject to the fiduciary requirements of Title I of ERISA, a plan that is subject to the prohibited transaction provisions of Section 4975 of the Code, an entity whose underlying assets include “plan assets” by reason of a plan investment in such entity (including but not limited to an insurance company general account), or any entity that otherwise constitutes a benefit plan investor within the meaning of the Plan Asset Regulations; or (y) that such purchaser’s purchase and holding of

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the certificates will not constitute or result in a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code or a violation of any applicable Similar Laws.

In addition, fiduciaries and other plan investors should also consider the fiduciary standards under ERISA or other Similar Law in the context of the plan’s particular circumstances before authorizing an investment of plan assets in the certificates. Among other factors, fiduciaries and other plan investors should consider whether the investment:

• satisfies the diversifications requirement of ERISA or other Similar Law;

• complies with the plan’s governing instruments; and

• is prudent in light of the “Risk Factors” and other factors discussed in this prospectus.

The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing the certificates on behalf of, or with the assets of, any Benefit Plan Investor, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to such investment and whether an exemption would be applicable to the purchase and holding of the certificates.

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USE OF PROCEEDS

The trust will use the net proceeds received from the sale of the certificates to purchase the bonds from the bond issuers. The bond issuers will use the net proceeds from the sale of the bonds to purchase the phase-in-recovery properties from the sellers and to pay the costs of issuing the bonds and the certificates and other upfront financing costs. The sellers will use the net proceeds from the sale of the phase-in-recovery properties primarily to repay outstanding debt of the sellers. Net proceeds may also be used by any seller for other general corporate purposes to the extent set forth in the financing order.

PLAN OF DISTRIBUTION

The trust may sell the certificates to or through the underwriters named in the accompanying prospectus supplement by a negotiated firm commitment underwriting and public reoffering by the underwriters or another underwriting arrangement that may be specified in such prospectus supplement or the trust may offer or place the certificates either directly or through agents. The bond issuers and the trust intend that certificates will be offered through these various methods from time to time and that offerings may be made concurrently through more than one of these methods or that an offering of the certificates may be made through a combination of these methods.

The distribution of certificates may be effected in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to prevailing market prices or in negotiated transactions or otherwise at varying prices to be determined at the time of sale.

In connection with the sale of the certificates, underwriters or agents may receive compensation in the form of discounts, concessions or commissions. Underwriters may sell certificates to dealers at prices less a concession. Underwriters may allow, and the dealers may reallow, a concession to other dealers. Underwriters, dealers and agents that participate in the distribution of the certificates may be deemed to be underwriters and any discounts or commissions received by them from the trust and any profit on the resale of the certificates by them may be deemed to be underwriting discounts and commissions under the Securities Act. We will identify any of these underwriters or agents, and describe any compensation we give them, in the accompanying prospectus supplement.

RATINGS

We expect that the certificates will receive credit ratings from NRSROs.

A security rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn at any time by the assigning NRSRO. Each rating should be evaluated independently of any other rating. No person is obligated to maintain its rating on the certificates, and accordingly, we cannot assure you that a rating assigned to any tranche of the certificates upon initial issuance will not be revised or withdrawn by an NRSRO at any time thereafter. If a rating of any tranche of the certificates is revised or withdrawn, the liquidity of that tranche may be adversely affected. In general, ratings address credit risk and do not represent any assessment of the likelihood of any particular level of principal payments on the certificates other than payment in full of each tranche of the certificates by the applicable final maturity date, as well as the timely payment of interest.

Under Rule 17g-5 of the Exchange Act, NRSROs providing the sponsors with the requisite certification will have access to all information posted on a website by the sponsors for the purpose of determining the initial rating and monitoring the rating after the closing date in respect of the certificates. As a result, an NRSRO other than a hired NRSRO may issue Unsolicited Ratings which may be lower, and could be significantly lower, than the ratings assigned by a hired NRSRO. The Unsolicited Ratings may be issued prior to, or after, the closing date in respect of the certificates. Issuance of any Unsolicited Rating will not affect the issuance of the certificates. Issuance of an Unsolicited Rating lower than the ratings assigned by a hired NRSRO on the certificates might adversely affect the value of the certificates and, for regulated entities, could affect the status of the certificates as

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a legal investment or the capital treatment of the certificates. Investors in the certificates should consult with their legal counsel regarding the effect of the issuance of a rating by a non-hired NRSRO that is lower than the rating of a hired NRSRO.

A portion of the fees paid by the sponsors to an NRSRO that is hired to assign a rating on the certificates is contingent upon the issuance of the certificates. In addition to the fees paid by the Ohio Companies to a hired NRSRO at closing, the sponsors may pay a fee to the NRSRO for ongoing surveillance for so long as the certificates are outstanding. However, no NRSRO is under any obligation to continue to monitor or provide a rating on the certificates. There can be no assurance that the credit ratings will be maintained.

WHERE YOU CAN FIND MORE INFORMATION

This prospectus is part of a registration statement we, the bond issuers and the sponsors have filed with the SEC relating to the certificates. This prospectus and the accompanying prospectus supplement describe the material terms of some of the documents that have been filed as exhibits to the registration statement. However, this prospectus and the accompanying prospectus supplement do not contain all of the information contained in the registration statement and the exhibits. Any statements contained in this prospectus or the accompanying prospectus supplement concerning the provisions of any document filed as an exhibit to the registration statement or otherwise filed with the SEC are not necessarily complete. Each statement concerning those provisions is qualified in its entirety by reference to the respective exhibit. Information filed with the SEC can be inspected at the SEC’s Internet site located at http://www.sec.gov. You may also read and copy the registration statement, the exhibits and any other documents we file with the SEC at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. You may obtain further information regarding the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also obtain a copy of the filings or any information that has been incorporated by reference with the SEC at no cost, by writing to or telephoning us at the following address:

c/o FirstEnergy Corp.

76 South Main Street

Akron, Ohio 44308

(800) 736-3402

Our SEC Securities Act file number is             .

We, the bond issuers or CE, OE and TE, solely in their capacity as sponsors, will also file with the SEC all of the periodic reports we, the bond issuers or the sponsors are required to file under the Exchange Act and the rules, regulations or orders of the SEC thereunder. None of us, the bond issuers or the sponsors intend to file any such reports relating to the certificates and bonds following completion of the reporting period required by Rule 15d-1 of Regulation 15D under the Exchange Act, unless required by law. Unless specifically stated in any such report, the reports and any information included in any such report will neither be examined nor reported on by an independent public accountant. For a more detailed description of the information to be included in these periodic reports, please read “Description of the Bonds—Sellers Website Disclosure.”

The SEC allows us to “incorporate by reference” into this prospectus information that we, the bond issuers or the sponsors file with the SEC. This means we can disclose important information to you by referring you to the documents containing the information. The information we incorporate by reference is considered to be part of this prospectus, unless we update or supersede that information by the information contained in a prospectus supplement or information that we, the bond issuers or the sponsors file subsequently that is incorporated by reference into this prospectus. We are incorporating into this prospectus any future filings which we, the bond issuers or the sponsors, solely in their capacity as sponsors, make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering of the certificates, excluding any information that is furnished to, and not filed with, the SEC. These reports will be filed under our name as issuing entity. Any statement contained in this

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prospectus, in the accompanying prospectus supplement or in a document incorporated or deemed to be incorporated by reference in this prospectus or the accompanying prospectus supplement will be deemed to be modified or superseded for purposes of this prospectus and the accompanying prospectus supplement to the extent that a statement contained in this prospectus, the accompanying prospectus supplement or in any separately filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute part of this prospectus or the accompanying prospectus supplement.

REPORTS TO HOLDERS

During any period when the trust issues the certificates in book-entry form, CEI, OE and TE, acting as the servicers of the property securing the bonds, or a successor servicer to either, will provide periodic reports concerning the certificates. You may obtain copies of the periodic reports by requesting them from your broker or dealer. If you are the registered holder of the certificates, you will receive the reports from the certificate trustee. See “Description of the Bonds—Reports to Bondholders” and “Description of the Certificates—Reports to Certificateholders.”

LEGAL MATTERS

Certain legal matters relating to the issuing entity, bond issuers, the bonds and the certificates, including certain U.S. federal income tax matters, will be passed on by Akin Gump Strauss Hauer & Feld LLP, New York, New York, counsel to the issuing entity, the sellers and the bond issuers. Certain legal matters relating to the bonds and Ohio law will be passed upon by Calfee, Halter & Griswold LLP, Cleveland, Ohio, special local counsel to the sellers and the bond issuers. Certain legal matters relating to the issuing entity, the bond issuers and the certificates will be passed upon by Richards, Layton & Finger, P.A., Wilmington, Delaware, Delaware counsel to the issuing entity and the bond issuers. Morgan, Lewis & Bockius LLP, New York, New York, is counsel to the underwriters. Morgan, Lewis & Bockius LLP has in the past represented, and continues to represent, the Ohio Companies and certain of their affiliates on other matters.

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GLOSSARY OF DEFINED TERMS

Set forth below is a list of the defined terms used in this prospectus which, except as otherwise noted in a prospectus supplement, are also used in the accompanying prospectus supplement:

Bankruptcy Code means Title 11 of the United States Code, as amended.

Basic Documents means for a bond issuer, collectively, its bond indenture, the certificate indenture, the declaration of trust, its sale agreement, its servicing agreement, its administration agreement, its bond purchase agreement, the fee and indemnity agreement, the cross-indemnity agreement and the underwriting agreement.

Bond indentures means the indentures to be entered into between the bond issuers and the bond trustee, providing for the issuance of bonds, as the same may be amended and supplemented from time to time.

Bond issuers means, collectively, CEI Funding, OE Funding and TE Funding.

Business day means any day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York, Columbus, Ohio or Wilmington, Delaware are authorized or obligated by law, regulation or executive order to remain closed.

CEI means The Cleveland Electric Illuminating Company.

CEI Funding means CEI Funding LLC.

Clearstream means Clearstream Banking, Luxembourg, S.A.

Collection account means the segregated trust account relating to the bonds designated the collection account and held by the bond trustee under the indentures.

DTC means the Depository Trust Company, New York, New York, and its nominee holder, Cede & Co.

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

Euroclear means the Euroclear System.

Exchange Act means the Securities Exchange Act of 1934, as amended.

Financing costs has the meaning specified in Section 4928.23(E) of the Securitization Act and the financing order.

Financing order means, unless the context indicates otherwise, the financing order issued by the PUCO to the Ohio Companies on October 10, 2012, Case No. 12-1465-EL-ATS, as amended by the entry on rehearing issued by the PUCO on December 19, 2012 upon application for rehearing, and as further amended by the entry nunc pro tunc issued by the PUCO on January 9, 2013.

FirstEnergy means FirstEnergy Corp.

Fitch means Fitch Ratings, or its successor.

GWh means gigawatt hour.

Independent Director means an individual who (1) has prior experience as an independent director, independent manager or independent member, (2) is employed by a nationally-recognized company that provides

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professional independent directors and other corporate services in the ordinary course of its business, (3) is duly appointed as an independent director and (4) is not and has not been for at least five years from the date of his, her or its appointment, and will not while serving as independent director, be any of the following:

(i) a member, partner, equityholder, manager, director, officer or employee of a bond issuer or any of its equityholders or affiliates (other than as an independent director, independent manager or special member of a bond issuer or an affiliate of a bond issuer that is not in the direct chain of ownership of the bond issuer and that is required by a creditor to be a single purpose bankruptcy remote entity); provided, that the indirect or beneficial ownership of stock of a member or its affiliates through a mutual fund or similar diversified investment vehicle with respect to which the owner does not have discretion or control over the investments held by such diversified investment vehicle shall not preclude such owner from being an independent director;

(ii) a creditor, supplier or service provider (including provider of professional services) to a bond issuer, a member or any of their respective equityholders or affiliates (other than a nationally-recognized company that routinely provides professional independent directors and other corporate services to a bond issuer, a member or any of its affiliates in the ordinary course of its business);

(iii) a family member of any such member, partner, equityholder, manager, director, officer, employee, creditor, supplier or service provider; or

(iv) a person that controls (whether directly, indirectly or otherwise) any of (i), (ii) or (iii) above.

A natural person who otherwise satisfies the foregoing definition and satisfies subparagraph (i) by reason of being the independent manager or independent director of a “special purpose entity” affiliated with a bond issuer shall be qualified to serve as an independent director of a bond issuer, provided that the fees that such individual earns from serving as an independent manager or independent director of affiliates of a bond issuer in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year. For purposes of this paragraph, a “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities and impose requirements intended to preserve such entity’s separateness that are substantially similar to the “special purpose provisions” in the limited liability company agreements of the bond issuers.

Internal Revenue Code means the Internal Revenue Code of 1986, as amended.

Issuing entity means FirstEnergy Ohio PIRB Special Purpose Trust 2013.

kW means kilowatt.

kWh means kilowatt-hour.

Moody’s means Moody’s Investors Service, Inc., or its successor.

Nonbypassable means that phase-in-recovery charges cannot be avoided by any customer or other person obligated to pay such charges. Subject to the adjustment mechanism described in this prospectus, phase-in-recovery charges will apply to all customers of an electric distribution utility for as long as they remain customers of such electric distribution utility. If a customer of the electric distribution utility purchases electric generation service from a competitive retail electric service provider, the utility will collect the phase-in-recovery charges directly from that customer. If a customer of the utility subsequently receives retail electric distribution service from another electric distribution utility operating in the same service area, including by succession, assignment, transfer or merger, the phase-in-recovery charges will continue to apply to that customer.

NRSRO means a nationally recognized statistical rating organization.

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OE means Ohio Edison Company.

OE Funding means OE Funding LLC.

Ohio Companies means, collectively, CEI, OE and TE.

Payment date means the date or dates on which interest and principal are to be payable on the certificates.

PUCO means the Public Utilities Commission of Ohio and any successor thereto.

Phase-in costs means the costs of an electric distribution utility recoverable through the issuance of bonds.

Phase-in-recovery charges means a seller’s phase-in-recovery charge designated pursuant to the financing order, as the same may be adjusted from time to time as provided in the financing order.

Phase-in-recovery property means the phase-in-recovery property that is created simultaneous with the sale of such property by a seller to the applicable bond issuer and continues to exist pursuant to and in accordance with paragraph VI.A(6) of the financing order and sections 4928.232, 4928.234 and 4928.2312 of the Securitization Act and is sold by a seller to the applicable bond issuer under a sale agreement.

Rating agencies means Moody’s, Standard & Poor’s and Fitch.

Regulation AB means the rules of the SEC promulgated under Subpart 229.1100 – Asset-Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time.

Required capital level means the amount required to be funded in the capital subaccount of each bond issuer, which will equal 0.50% of the principal amount of bonds issued by each bond issuer.

Retail customer means a retail end user of electricity and related services provided by a retail electric service provider via the transmission and distribution system of a utility such as CEI, OE and TE.

Retail electric customer means a retail customer within CEI’s, OE’s and TE’s service territory, as the case may be.

SEC means the U.S. Securities and Exchange Commission (and any successor thereto).

Standard & Poor’s means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies Inc., or its successor.

Securitization Act means the Ohio House Bill 364, as passed by the Ohio legislature in December 2012 and effective on March 22, 2012, which enacted Ohio Revised Code §§ 4928.23 through 4928.2318.

TE means The Toledo Edison Company.

TE Funding means TE Funding LLC.

Treasury Regulations means proposed or issued regulations promulgated from time to time under the Internal Revenue Code.

Trust Indenture Act means the Trust Indenture Act of 1939, as amended.

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Trust property means, with respect to any tranche of certificates, the tranche of bonds of each of the bond issuers corresponding to such tranche of certificates held as the property of the certificate issuer and all monies at any time paid thereon and all monies due and to become due thereunder, all rights of the certificate trustee or the certificate issuer, as holder of such tranche of bonds, in and to the collateral of such bond issuer and any proceeds thereof, all funds and investment property from time to time deposited in the certificate account for such tranche of certificates, the certificate account for such tranche of certificates, all proceeds from the sale by the certificate trustee pursuant to Article V of the certificate indenture of bonds of each bond issuer of such tranche, and all proceeds of each of the foregoing.

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$        

FirstEnergy Ohio PIRB Special Purpose Trust 2013

Issuing Entity

CEI Funding LLC

OE Funding LLC

TE Funding LLC

Issuers of the Bonds

The Cleveland Electric Illuminating Company

Ohio Edison Company

The Toledo Edison Company

Sponsors, Sellers and Initial Servicers

Pass-Through Trust Certificates

PROSPECTUS SUPPLEMENT

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the certificates offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution*

The following is an itemized list of the estimated expenses to be incurred in connection with the offering of the securities being offered hereunder other than underwriting discounts and commissions.

SEC registration fee	$	68,882
Legal fees and expenses	$	*
Blue sky fees and expenses	$	*
Accounting fees and expenses	$	*
Rating agencies’ fees and expenses	$	*
Printing fees and expenses	$	*
Trustees’ fees and expenses	$	*
Miscellaneous	$	*
Total	$	*

* To be filed by amendment.

Item 15. Indemnification of Directors and Officers

Bond Issuers

Section 18-108 of the Delaware Limited Liability Company Act provides that subject to such standards and restrictions, if any, as are set forth in its limited liability company agreement, a limited liability company may and has the power to indemnify and hold harmless any member or other person from and against any and all claims and demands whatsoever.

Section 18 of the Limited Liability Company Agreement of each of the bond issuers provides as follows:

“The Company is hereby authorized to, and shall, indemnify such persons and entities, including Directors and officers, as determined by the Board of Directors from time to time. In addition, each person who at any time shall be, or shall have been, a Member or Director, or any person who, while a Member, Director or agent of the Company, is or was serving at the request of the Company as a director, member, manager, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another entity, shall be entitled to indemnification by the Company as and to the fullest extent permitted by the provisions of Delaware law or any successor statutory provisions, as from time to time amended.”

Section 10.1(b) of the Amended and Restated Limited Liability Company Agreement (the “Agreement”) of each of the bond issuers is expected to provide that each bond issuer shall indemnify its member, special member, and any officer, director, employee or agent of such bond issuer and any employee, representative, agent or affiliate of the member or special member, to the fullest extent permitted by law, against any loss, damage or claim incurred by such person by reason of any act or omission performed or omitted by such person in good faith on behalf of the bond issuer and in a manner reasonably believed to be within the scope of the authority conferred on such person by the Agreement, except that no person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such person by reason of his or her gross negligence or willful misconduct with respect to such acts or omissions. To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by an indemnified person defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the bond issuer prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the bond issuer of an undertaking by or on behalf of the indemnified person to repay such amount if it shall be determined that such person is not entitled to be indemnified as described in the Agreement.

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The Ohio Companies

Section 1701.13(E) of the Ohio General Corporation Law provides that an Ohio corporation may indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director, officer, employee or agent of that corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, member, manager, or agent of another entity against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal matter, if the person had no reasonable cause to believe his conduct was unlawful. In addition, no indemnification shall be made in respect of a claim against such person by or in the right of the corporation, if the person is adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation except to the extent provided in the court order. Indemnification may be made if ordered by a court or authorized in each specific case by the directors of the indemnifying corporation acting at a meeting at which, for the purpose, any director who is a party to or threatened with any such action, suit or proceeding may not be counted in determining the existence of a quorum and may not vote. If, because of the foregoing limitations, the directors are unable to act in this regard, such determination may be made by written opinion of independent legal counsel other than an attorney, or a firm having associated with it an attorney, who has been retained by or who has performed services for the corporation or any person to be indemnified during the five years preceding the date of determination. Alternatively, such determination may be made by the corporation’s shareholders.

Section 1701.13(E) of the Ohio General Corporation Law provides that the indemnification thereby permitted shall not be exclusive of any other rights that directors, officers or employees may have, including rights under insurance purchased by the corporation. Further, a right to indemnification or to advancement of expenses arising under a provision of the articles or the regulations of a corporation may not be eliminated or impaired by an amendment to that provision after the occurrence of the act or omission that becomes the subject of the civil, criminal, administrative, or investigative action, suit, or proceeding for which the indemnification or advancement of expenses is sought, unless the provision in effect at the time of that act or omission explicitly authorizes that elimination or impairment after the act or omission has occurred.

Section 38 of CEI’s Amended and Restated Code of Regulations provides as follows:

“The Corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee, member, manager, or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by him or her in connection with such action, suit, or proceeding, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if he or she had no reasonable cause to believe his or her conduct was unlawful, to the full extent and according to the procedures and requirements set forth in the Ohio General Corporation Law as now in effect or as amended from time to time. The Corporation shall pay, to the full extent then permitted by law, expenses, including attorney’s fees, incurred by a member of the Board of Directors in defending any such action, suit or proceeding as they are incurred, in advance of the final disposition thereof, and may pay, in the same manner and to the full extent then permitted by law, such expenses incurred by any other person.

The indemnification and payment of expenses provided hereby shall not be exclusive of, and shall be in addition to, any other rights granted to those seeking indemnification under any law, the Articles of Incorporation, any agreement, vote of shareholders or disinterested members of the Board of Directors, or otherwise, both as to action in official capacities and as to action in another capacity while he or she is a member

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of the Board of Directors, or an officer, employee or agent of the Corporation, and shall continue as to a person who has ceased to be a member of the Board of Directors, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.”

Section 39 of CEI’s Amended and Restated Code of Regulations provides as follows:

“The Corporation may, to the full extent then permitted by law and authorized by the Board of Directors, purchase and maintain insurance or furnish similar protection, including but not limited to trust funds, letters of credit or self-insurance, on behalf of or for any persons described in Section 38 against any liability asserted against and incurred by any such person in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such liability. Insurance may be purchased from or maintained with a person in which the Corporation has a financial interest.”

Section 38 of OE’s Amended and Restated Code of Regulations provides as follows:

“The Corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee, member, manager, or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by him or her in connection with such action, suit, or proceeding, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, if he or she had no reasonable cause to believe his or her conduct was unlawful, to the full extent and according to the procedures and requirements set forth in the Ohio General Corporation Law as now in effect or as amended from time to time. The Corporation shall pay, to the full extent then permitted by law, expenses, including attorney’s fees, incurred by a member of the Board of Directors in defending any such action, suit or proceeding as they are incurred, in advance of the final disposition thereof, and may pay, in the same manner and to the full extent then permitted by law, such expenses incurred by any other person.

The indemnification and payment of expenses provided hereby shall not be exclusive of, and shall be in addition to, any other rights granted to those seeking indemnification under any law, the Articles of Incorporation, any agreement, vote of shareholders or disinterested members of the Board of Directors, or otherwise, both as to action in official capacities and as to action in another capacity while he or she is a member of the Board of Directors, or an officer, employee or agent of the Corporation, and shall continue as to a person who has ceased to be a member of the Board of Directors, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.”

Section 39 of OE’s Amended and Restated Code of Regulations provides as follows:

“The Corporation may, to the full extent then permitted by law and authorized by the Board of Directors, purchase and maintain insurance or furnish similar protection, including but not limited to trust funds, letters of credit or self-insurance, on behalf of or for any persons described in Section 38 against any liability asserted against and incurred by any such person in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such liability. Insurance may be purchased from or maintained with a person in which the Corporation has a financial interest.”

Section 38 of TE’s Amended and Restated Code of Regulations provides as follows:

“The Corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee,

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member, manager, or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by him or her in connection with such action, suit, or proceeding, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, if he or she had no reasonable cause to believe his or her conduct was unlawful, to the full extent and according to the procedures and requirements set forth in the Ohio General Corporation Law as now in effect or as amended from time to time. The Corporation shall pay, to the full extent then permitted by law, expenses, including attorney’s fees, incurred by a member of the Board of Directors in defending any such action, suit or proceeding as they are incurred, in advance of the final disposition thereof, and may pay, in the same manner and to the full extent then permitted by law, such expenses incurred by any other person.

The indemnification and payment of expenses provided hereby shall not be exclusive of, and shall be in addition to, any other rights granted to those seeking indemnification under any law, the Articles of Incorporation, any agreement, vote of shareholders or disinterested members of the Board of Directors, or otherwise, both as to action in official capacities and as to action in another capacity while he or she is a member of the Board of Directors, or an officer, employee or agent of the Corporation, and shall continue as to a person who has ceased to be a member of the Board of Directors, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.”

Section 39 of TE’s Amended and Restated Code of Regulations provides as follows:

“The Corporation may, to the full extent then permitted by law and authorized by the Board of Directors, purchase and maintain insurance or furnish similar protection, including but not limited to trust funds, letters of credit or self-insurance, on behalf of or for any persons described in Section 38 against any liability asserted against and incurred by any such person in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such liability. Insurance may be purchased from or maintained with a person in which the Corporation has a financial interest.”

The bond issuers believe that the officers and the non-independent directors of the bond issuers are serving at the request of the Ohio Companies and are therefore entitled to such indemnity from the Ohio Companies.

Directors and Officers Liability Insurance. Each Ohio Company maintains and pays the premium on contracts insuring it (with certain exclusions) against any liability to directors and officers it may incur under the above indemnity provisions and insuring its directors and officers (with certain exclusions) against liability and expense, including legal fees, which he or she may incur by reason of his or her relationship to such companies.

Indemnification Agreements. Each Ohio Company has entered into indemnification agreements with its respective directors. Each indemnification agreement provides, among other things, that the applicable Ohio Company will, subject to the agreement terms, indemnify a director if, by reason of the individual’s status as a director, the person incurs losses, liabilities, judgments, fines, penalties, or amounts paid in settlement in connection with any threatened, pending, or completed proceeding, whether of a civil, criminal, administrative, or investigative nature. In addition, each indemnification agreement provides for the advancement of expenses incurred by a director, subject to certain exceptions, in connection with proceedings covered by the indemnification agreement.

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Item 16. Exhibits

Exhibit Number	Description
1.1	Form of Underwriting Agreement.*
3.1	Certificate of Formation of CEI Funding LLC.
3.2	Amended & Restated Limited Liability Company Agreement of CEI Funding LLC.*
3.3	Certificate of Formation of OE Funding LLC.
3.4	Amended & Restated Limited Liability Company Agreement of OE Funding LLC.*
3.5	Certificate of Formation of TE Funding LLC.
3.6	Amended & Restated Limited Liability Company Agreement of TE Funding LLC.*
4.1	Form of Bond Indenture.*
4.2	Form of Certificate Indenture.*
4.3	Form of Declaration of Trust.*
4.4	Form of Bond.*
4.5	Form of Certificate.*
5.1	Opinion of Calfee, Halter & Griswold LLP, with respect to the legality of the Bonds.*
5.2	Opinion of Richards, Layton & Finger, P.A., with respect to the legality of the Certificates.*
5.3	Opinion of Richards, Layton & Finger, P.A., with respect to the due authorization of the Bonds.*
8.1	Opinion of Akin Gump Strauss Hauer & Feld LLP, with respect to federal tax matters.*
8.2	Opinion of Calfee, Halter & Griswold LLP, with respect to Ohio tax matters.*
10.1	Form of Phase-In-Recovery Property Purchase and Sale Agreement.*
10.2	Form of Phase-In-Recovery Property Servicing Agreement.*
10.3	Form of Bond Purchase Agreement.*
10.4	Form of Administration Agreement.*
10.5	Form of Fee and Indemnity Agreement.*
10.6	Form of Cross-Indemnity Agreement.*
23.1	Consent of Calfee, Halter & Griswold LLP (contained in its opinion to be filed as Exhibits 5.1 and 8.2).*
23.2	Consent of Richards, Layton & Finger, P.A. (contained in its opinions to be filed as Exhibits 5.2 and 5.3).*
23.3	Consent of Akin Gump Strauss Hauer & Feld LLP (contained in its opinions to be filed as Exhibits 8.1 and 99.3).*
24.1	Powers of Attorney (included as part of signature pages filed herewith).
25.1	Statement of Eligibility and Qualification of Bond Trustee on Form T-1.*
25.2	Statement of Eligibility and Qualification of Bond Trustee on Form T-1.*
25.3	Statement of Eligibility and Qualification of Bond Trustee on Form T-1.*
25.4	Statement of Eligibility and Qualification of Certificate Trustee on Form T-1.*
99.1	Application for Financing Order
99.2	Financing Order
99.3	Opinion of Akin Gump Strauss Hauer & Feld LLP, with respect to certain federal constitutional law matters*

* To be filed by amendment.

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Item 17. Undertakings

(A)  (a)   As to Rule 415:

Each undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);

(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission (the “Commission”) pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however, that the undertakings set forth in clauses (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those clauses is contained in reports filed with or furnished to the Commission by the Registrants pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are incorporated by reference in this registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) of the Securities Act that is part of this registration statement; and provided further, however, that the undertakings set forth in clauses (i) and (ii) above do not apply if the information required to be included in a post-effective amendment by those clauses is provided pursuant to Item 1100(c) of Regulation AB.

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability under the Securities Act to any purchaser, if the Registrants are relying on Rule 430B:

(i) each prospectus filed by the Registrants pursuant to Rule 424(b)(3) shall be deemed to be part of this registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(ii) each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of an issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which the prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided,

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however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

(5) That, for the purpose of determining liability of such registrant under the Securities Act to any purchaser in the initial distribution of the securities, each Registrant undertakes that in a primary offering of securities of such Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the Registrants will be sellers to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) any preliminary prospectus or prospectus of an undersigned Registrants relating to the offering required to be filed pursuant to Rule 424;

(ii) any free writing prospectus relating to the offering prepared by or on behalf of an undersigned registrant or used or referred to by the Registrants;

(iii) the portion of any other free writing prospectus relating to the offering containing material information about the Registrant or its securities provided by or on behalf of the Registrants; and

(iv) any other communication that is an offer in the offering made by the Registrant to the purchaser.

(6) As to qualification of trust indentures:

The Registrants hereby undertake to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”) in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act.

(7) As to documents subsequently filed that are incorporated by reference:

The Registrants hereby undertake that, for purposes of determining any liability under the Securities Act each filing of the Registrants’ annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(8) As to indemnification:

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of each Registrant pursuant to the provisions described in Item 15 above, or otherwise, each Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by a Registrant of expenses incurred or paid by a director, officer or controlling person of a registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, that registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(8) As to indemnification:

The Registrants hereby undertake that, for purposes of determining any liability under the Securities Act each filing of an annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act of a

third party that is incorporated by reference in this registration statement in accordance with Item 1100(c)(1) of Regulation AB shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Akron and State of Ohio, on the 2nd day of April, 2013:

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

/s/ Charles E. Jones, Jr.

By: Charles E. Jones, Jr.

Title: President

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints C. E. Jones, Jr., L. L. Vespoli, R. S. Ferguson and L. F. Torres, and each of them severally, his or her true and lawful attorney or attorneys-in-fact and agents, with full power to act with or without the others and with full power of substitution and resubstitution, to execute for him or her and in his or her name, place and stead, in any and all capacities, any and all amendments (including pre-effective and post-effective amendments) to this registration statement and any registration statement for the same offering filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them full power and authority to do and perform in the name and on his or her behalf, and in any and all capacities, each and every act and thing whatsoever required or necessary to be done in and about the premises, as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying, approving and confirming all the acts of said attorneys-in-fact and agents and each of them.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated:

Signature	Title	Date
/s/ Charles E. Jones, Jr.	President and Director (Principal Executive Officer)	April 2, 2013
Charles E. Jones, Jr.
/s/ James F. Pearson	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	April 2, 2013
James F. Pearson
/s/ Harvey L. Wagner	Vice President and Controller (Principal Accounting Officer)	April 2, 2013
Harvey L. Wagner
/s/ Anthony J. Alexander	Director	April 2, 2013
Anthony J. Alexander
/s/ Mark T. Clark	Director	April 2, 2013
Mark T. Clark

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Akron and State of Ohio, on the 2nd day of April, 2013:

OHIO EDISON COMPANY

/s/ Charles E. Jones, Jr.

By: Charles E. Jones, Jr.

Title: President

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints C. E. Jones, Jr., L. L. Vespoli, R. S. Ferguson and L. F. Torres, and each of them severally, his or her true and lawful attorney or attorneys-in-fact and agents, with full power to act with or without the others and with full power of substitution and resubstitution, to execute for him or her and in his or her name, place and stead, in any and all capacities, any and all amendments (including pre-effective and post-effective amendments) to this registration statement and any registration statement for the same offering filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them full power and authority to do and perform in the name and on his or her behalf, and in any and all capacities, each and every act and thing whatsoever required or necessary to be done in and about the premises, as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying, approving and confirming all the acts of said attorneys-in-fact and agents and each of them.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated:

Signature	Title	Date
/s/ Charles E. Jones, Jr.	President and Director (Principal Executive Officer)	April 2, 2013
Charles E. Jones, Jr.
/s/ James F. Pearson	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	April 2, 2013
James F. Pearson
/s/ Harvey L. Wagner	Vice President and Controller (Principal Accounting Officer)	April 2, 2013
Harvey L. Wagner
/s/ Anthony J. Alexander	Director	April 2, 2013
Anthony J. Alexander
/s/ Mark T. Clark	Director	April 2, 2013
Mark T. Clark

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Akron and State of Ohio, on the 2nd day of April, 2013:

THE TOLEDO EDISON COMPANY

/s/ Charles E. Jones, Jr.

By: Charles E. Jones, Jr.

Title: President

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints C. E. Jones, Jr., L. L. Vespoli, R. S. Ferguson and L. F. Torres, and each of them severally, his or her true and lawful attorney or attorneys-in-fact and agents, with full power to act with or without the others and with full power of substitution and resubstitution, to execute for him or her and in his or her name, place and stead, in any and all capacities, any and all amendments (including pre-effective and post-effective amendments) to this registration statement and any registration statement for the same offering filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them full power and authority to do and perform in the name and on his or her behalf, and in any and all capacities, each and every act and thing whatsoever required or necessary to be done in and about the premises, as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying, approving and confirming all the acts of said attorneys-in-fact and agents and each of them.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated:

Signature	Title	Date
/s/ Charles E. Jones, Jr.	President and Director (Principal Executive Officer)	April 2, 2013
Charles E. Jones, Jr.
/s/ James F. Pearson	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	April 2, 2013
James F. Pearson
/s/ Harvey L. Wagner	Vice President and Controller (Principal Accounting Officer)	April 2, 2013
Harvey L. Wagner
/s/ Anthony J. Alexander	Director	April 2, 2013
Anthony J. Alexander
/s/ Mark T. Clark	Director	April 2, 2013
Mark T. Clark

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Akron and State of Ohio, on the 2nd day of April, 2013:

CEI FUNDING LLC

/s/ Charles E. Jones, Jr.

By: Charles E. Jones, Jr.

Title: President

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints C. E. Jones, Jr., L. L. Vespoli, R. S. Ferguson and L. F. Torres, and each of them severally, his or her true and lawful attorney or attorneys-in-fact and agents, with full power to act with or without the others and with full power of substitution and resubstitution, to execute for him or her and in his or her name, place and stead, in any and all capacities, any and all amendments (including pre-effective and post-effective amendments) to this registration statement and any registration statement for the same offering filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them full power and authority to do and perform in the name and on his or her behalf, and in any and all capacities, each and every act and thing whatsoever required or necessary to be done in and about the premises, as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying, approving and confirming all the acts of said attorneys-in-fact and agents and each of them.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated:

Signature	Title	Date
/s/ Charles E. Jones, Jr.	President and Director (Principal Executive Officer)	April 2, 2013
Charles E. Jones, Jr.
/s/ James F. Pearson	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	April 2, 2013
James F. Pearson
/s/ Harvey L. Wagner	Vice President and Controller (Principal Accounting Officer)	April 2, 2013
Harvey L. Wagner
/s/ Anthony J. Alexander	Director	April 2, 2013
Anthony J. Alexander
/s/ Mark T. Clark	Director	April 2, 2013
Mark T. Clark

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Akron and State of Ohio, on the 2nd day of April, 2013:

OE FUNDING LLC

/s/ Charles E. Jones, Jr.

By: Charles E. Jones, Jr.

Title: President

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints C. E. Jones, Jr., L. L. Vespoli, R. S. Ferguson and L. F. Torres, and each of them severally, his or her true and lawful attorney or attorneys-in-fact and agents, with full power to act with or without the others and with full power of substitution and resubstitution, to execute for him or her and in his or her name, place and stead, in any and all capacities, any and all amendments (including pre-effective and post-effective amendments) to this registration statement and any registration statement for the same offering filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them full power and authority to do and perform in the name and on his or her behalf, and in any and all capacities, each and every act and thing whatsoever required or necessary to be done in and about the premises, as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying, approving and confirming all the acts of said attorneys-in-fact and agents and each of them.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated:

Signature	Title	Date
/s/ Charles E. Jones, Jr.	President and Director (Principal Executive Officer)	April 2, 2013
Charles E. Jones, Jr.
/s/ James F. Pearson	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	April 2, 2013
James F. Pearson
/s/ Harvey L. Wagner	Vice President and Controller (Principal Accounting Officer)	April 2, 2013
Harvey L. Wagner
/s/ Anthony J. Alexander	Director	April 2, 2013
Anthony J. Alexander
/s/ Mark T. Clark	Director	April 2, 2013
Mark T. Clark

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Akron and State of Ohio, on the 2nd day of April, 2013:

TE FUNDING LLC

/s/ Charles E. Jones, Jr.

By: Charles E. Jones, Jr.

Title: President

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints C. E. Jones, Jr., L. L. Vespoli, R. S. Ferguson and L. F. Torres, and each of them severally, his or her true and lawful attorney or attorneys-in-fact and agents, with full power to act with or without the others and with full power of substitution and resubstitution, to execute for him or her and in his or her name, place and stead, in any and all capacities, any and all amendments (including pre-effective and post-effective amendments) to this registration statement and any registration statement for the same offering filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them full power and authority to do and perform in the name and on his or her behalf, and in any and all capacities, each and every act and thing whatsoever required or necessary to be done in and about the premises, as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying, approving and confirming all the acts of said attorneys-in-fact and agents and each of them.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated:

Signature	Title	Date
/s/ Charles E. Jones, Jr.	President and Director (Principal Executive Officer)	April 2, 2013
Charles E. Jones, Jr.
/s/ James F. Pearson	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	April 2, 2013
James F. Pearson
/s/ Harvey L. Wagner	Vice President and Controller (Principal Accounting Officer)	April 2, 2013
Harvey L. Wagner
/s/ Anthony J. Alexander	Director	April 2, 2013
Anthony J. Alexander
/s/ Mark T. Clark	Director	April 2, 2013
Mark T. Clark

EXHIBIT INDEX

Exhibit Number	Description
1.1	Form of Underwriting Agreement.*
3.1	Certificate of Formation of CEI Funding LLC.
3.2	Amended & Restated Limited Liability Company Agreement of CEI Funding LLC.*
3.3	Certificate of Formation of OE Funding LLC.
3.4	Amended & Restated Limited Liability Company Agreement of OE Funding LLC.*
3.5	Certificate of Formation of TE Funding LLC.
3.6	Amended & Restated Limited Liability Company Agreement of TE Funding LLC.*
4.1	Form of Bond Indenture.*
4.2	Form of Certificate Indenture.*
4.3	Form of Amended & Restated Declaration of Trust.*
4.4	Form of Bond.*
4.5	Form of Certificate.*
5.1	Opinion of Calfee, Halter & Griswold LLP, with respect to the legality of the Bonds.*
5.2	Opinion of Richards, Layton & Finger, P.A., with respect to the legality of the Certificates.*
5.3	Opinion of Richards, Layton & Finger, P.A., with respect to the due authorization of the Bonds.*
8.1	Opinion of Akin Gump Strauss Hauer & Feld LLP, with respect to federal tax matters.*
8.2	Opinion of Calfee, Halter & Griswold LLP, with respect to Ohio tax matters.*
10.1	Form of Phase-In-Recovery Property Purchase and Sale Agreement.*
10.2	Form of Phase-In-Recovery Property Servicing Agreement.*
10.3	Form of Bond Purchase Agreement.*
10.4	Form of Administration Agreement.*
10.5	Form of Fee and Indemnity Agreement.*
10.6	Form of Cross-Indemnity Agreement.*
23.1	Consent of Calfee, Halter & Griswold LLP (contained in its opinion to be filed as Exhibits 5.1 and 8.2).*
23.2	Consent of Richards, Layton & Finger, P.A. (contained in its opinions to be filed as Exhibits 5.2 and 5.3).*
23.3	Consent of Akin Gump Strauss Hauer & Feld LLP (contained in its opinions to be filed as Exhibits 8.1 and 99.3).*
24.1	Powers of Attorney (included as part of signature pages filed herewith).
25.1	Statement of Eligibility and Qualification of Bond Trustee on Form T-1.*
25.2	Statement of Eligibility and Qualification of Bond Trustee on Form T-1.*
25.3	Statement of Eligibility and Qualification of Bond Trustee on Form T-1.*
25.4	Statement of Eligibility and Qualification of Certificate Trustee on Form T-1.*
99.1	Application for Financing Order
99.2	Financing Order
99.3	Opinion of Akin Gump Strauss Hauer & Feld LLP, with respect to certain federal constitutional law matters*

* To be filed by amendment.

EX-3.1

EXHIBIT 3.1

STATE OF DELAWARE

LIMITED LIABILITY COMPANY

CERTIFICATE of FORMATION

OF

CEI FUNDING LLC

FIRST: The name of the limited liability company is:

CEI FUNDING LLC

SECOND: The address of its registered office in the State of Delaware is:

Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, New Castle County, Delaware 19801

THIRD: The name and address of the Registered Agent in the State of Delaware is:

The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation this 31st day of October, 2012.

By:	/s/ Edward J. Udovich
	Edward J. Udovich, Authorized Person

EX-3.3

EXHIBIT 3.3

STATE OF DELAWARE

LIMITED LIABILITY COMPANY

CERTIFICATE of FORMATION

OF

OE FUNDING LLC

FIRST: The name of the limited liability company is:

OE FUNDING LLC

SECOND: The address of its registered office in the State of Delaware is:

Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, New Castle County, Delaware 19801

THIRD: The name and address of the Registered Agent in the State of Delaware is:

The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation this 31st day of October, 2012.

By:	/s/ Edward J. Udovich
	Edward J. Udovich, Authorized Person

EX-3.5

EXHIBIT 3.5

STATE OF DELAWARE

LIMITED LIABILITY COMPANY

CERTIFICATE of FORMATION

OF

TE FUNDING LLC

FIRST: The name of the limited liability company is:

TE FUNDING LLC

SECOND: The address of its registered office in the State of Delaware is:

Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, New Castle County, Delaware 19801

THIRD: The name and address of the Registered Agent in the State of Delaware is:

The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation this 31st day of October, 2012.

By:	/s/ Edward J. Udovich
	Edward J. Udovich, Authorized Person

EX-99.1

Exhibit 99.1

Application for Rehearing

Submitted to The Public Utilities Commission of Ohio

on November 9, 2012

BEFORE

THE PUBLIC UTILITIES COMMISSION OF OHIO

In the Matter of the Joint Application	)
of Ohio Edison Company, The	)
Cleveland Electric Illuminating Company,	)
and The Toledo Edison Company for	)
Authority to Issue Phase-In-Recovery	)            Case No. 12–1465–EL–ATS
Bonds and Impose, Charge and Collect	)
Phase-In-Recovery Charges and	)
For Tariff and Bill Format Approvals	)

APPLICATION FOR REHEARING

OF OHIO EDISON COMPANY, THE CLEVELAND ELECTRIC ILLUMINATING

COMPANY, AND THE TOLEDO EDISON COMPANY

Pursuant to R.C. § 4903.10 and Rule 4901-1-35, Ohio Administrative Code, Ohio Edison Company (“OE”), The Cleveland Electric Illuminating Company (“CEI”), and The Toledo Edison Company (“TE” and together with OE and CEI, the “Applicants” or the “Companies”), hereby apply for rehearing of the Financing Order issued in the above-captioned case on October 10, 2012 (“Order”). As explained in more detail in the attached Memorandum in Support, the Order in this case is unreasonable and unlawful on the following grounds¹:

1. The Order unreasonably and unlawfully caps all financing costs at five percent of the Companies’ estimated costs, instead of one hundred five percent for financing costs, excluding debt retirement costs, and one hundred fifteen percent for debt retirement costs.

2. The Order unreasonably and unlawfully fails to include minimum standards for third party billing and collection service in order to protect the nonbypassibility of Phase-In-Recovery Charges and bankruptcy remote nature of the transaction, and to support the credit quality of the Phase-In-Recovery (“PIR”) Bonds.

3. The Order unreasonably and unlawfully imposes a cap on the weighted average yield of the PIR Bonds.

¹  Capitalized terms used herein and in the attached Memorandum in Support but not otherwise defined have the meanings set forth in the Order.

1

4. The Order unreasonably and unlawfully fails to recognize when a financing order becomes final and instead permits the Commission to issue a supplemental financing order that could unlawfully modify the final financing order.

5. The Order provides for a fee for the Commission’s financial advisor that is unreasonable.

6. The Order unreasonably and unlawfully fails to provide a reasonable fee to a non-EDU servicer in the event that there is no EDU successor willing or able to assume such servicing duties in order to ensure the collection and true up adjustment, from time to time, of Phase-In-Recovery Charges.

7. The Order includes multiple errors and inconsistencies that need to be corrected to properly implement a Final Financing Order in a manner that will benefit customers:

• Both the Order and the form of Issuance Advice Letter attached thereto contain typographic errors, inconsistencies, and errors that must be corrected so that the description of the Phase-In Costs, Phase-In-Recovery Charges, Phase-In-Recovery Property, financing costs and PIR Bonds is reasonable and the use of those terms is consistent with corresponding statutory terms.

• The Order references riders that are inapplicable to TE and OE.

• The Order unreasonably sets the capitalization of the SPEs.

• The Order states that each PIR Bond issuance cannot exceed the aggregate amount of deferral balances and associated costs, resulting in an unreasonable failure to account for actual upfront financing costs.

• The Order is unclear as to the types of costs that may be recovered as financing costs, and must clearly and consistently refer to statutory “financing costs” and do so without limitation or qualification.

As demonstrated in the Memorandum in Support of this Application, which is attached hereto, the Commission should grant this Application for Rehearing as requested herein.

Respectfully submitted,

/s/ James W. Burk

James W. Burk (Attorney No. 0043808)

FIRSTENERGY SERVICE COMPANY

76 South Main Street

Akron, OH 44308

(330) 384-5861 (telephone)

(330) 384-3875 (fax)

burkj@firstenergycorp.com

2

ATTORNEY FOR THE CLEVELAND ELECTRIC ILLUMINATING COMPANY,

OHIO EDISON COMPANY, AND

THE TOLEDO EDISON COMPANY

3

BEFORE

THE PUBLIC UTILITIES COMMISSION OF OHIO

In the Matter of the Joint Application	)
of Ohio Edison Company, The	)
Cleveland Electric Illuminating Company,	)
and The Toledo Edison Company for	)
Authority to Issue Phase-In-Recovery	)             Case No. 12–1465–EL–ATS
Bonds and Impose, Charge and Collect	)
Phase-In-Recovery Charges and	)
For Tariff and Bill Format Approvals	)

MEMORANDUM IN SUPPORT OF APPLICATION FOR REHEARING

OF OHIO EDISON COMPANY, THE CLEVELAND ELECTRIC ILLUMINATING

COMPANY, AND THE TOLEDO EDISON COMPANY

TABLE OF CONTENTS

TABLE OF CONTENTS			i
I.	INTRODUCTION		1
II.	COMMISSION ORDERS MUST BE LAWFUL AND REASONABLE.		4
III.	THE COMMISSION MUST CORRECT THE ERRORS AND INCONSISTENCIES IN THE FINANCING ORDER SO THAT CUSTOMERS ARE NOT DEPRIVED OF THE ESTIMATED TENS OF MILLIONS OF DOLLARS IN SAVINGS.		4
	A.	The Commission Must Modify Its Cap On Debt Retirement Costs And Correct The Errors In Paragraph VI.D.10. Of The Order (Page 40).	4
	B.	The Commission Must Provide Minimum Standards For Third Party Billing.	7
	C.	The Commission Should Not Impose an Interest Rate Cap On The PIR Bonds.	13
	D.	The Commission Must Clarify When The Financing Order Becomes Final and That Any “Supplemental Financing Order” Will Not Modify The Final Financing Order.	16
	E.	The Commission’s Authorized Fee For Its Financial Advisor Is Inappropriate And Unnecessarily High.	17
	F.	The Commission Should Clarify The Amount Of The Fee Available For A Non-EDU Servicer To Ensure Customers Receive The Benefits Of Securitization.	19
	G.	The Commission’s Order Includes Other Errors and Inconsistencies That Must Be Remedied On Rehearing.	20
	H.	The Issuance Advice Letter attached to the Commission’s Order Includes Other Errors and Inconsistencies That Must Be Remedied On Rehearing.	22
IV.	CONCLUSION		25

i

I. INTRODUCTION

The securitization transaction proposed by the Companies cannot go forward without attaining a AAA rating from the rating agencies, such as Fitch, S&P, and Moody’s. The AAA rating allows the interest rate on the PIR Bonds to be substantially lower than the interest rate on the Companies’ other long term debt. This difference in interest rates gives rise to the savings that customers will enjoy from this securitization. The Commission erred in issuing an Order with terms and conditions that prevent, for all practical purposes, the Companies from obtaining a AAA rating for the PIR Bonds, thereby making it impossible for the Companies to complete the proposed securitization, which in turn would deprive customers of millions of dollars of savings in the aggregate.

For complex financial transactions of this type, rating agencies require that certain terms be included in utility financing orders, including, among other things, terms that ensure credit quality of the PIR Bonds such as the nonbypassibility of statutorily-imposed charges like the Phase-In-Recovery Charges and the bankruptcy remoteness and financial stability of the special purpose entities (“SPEs”) that issue the applicable PIR Bonds and hold the Phase-In-Recovery Property, which is the collateral for the PIR Bonds. Indeed, given that transactions of this type have been approved by utility commissions in multiple other states across the country for more than a decade, the rating agencies expect financing order terms that do not vary materially from what consistently have been approved elsewhere.

The language of any financing order must be carefully crafted to address the requirements and expectations of rating agencies in order to attain the AAA rating and also to take into account the variability associated with the marketing of these financial instruments. Unfortunately, the Commission’s Order lacked the necessary precision in several ways. Unless corrected as provided herein, the Companies will be unable to proceed with the securitization

1

and the Companies’ customers will be forced to forego the estimated nominal savings of approximately $100 million in the aggregate as compared to existing recovery mechanisms.² Additionally, with the continued amortization of the existing riders and in a period of historically low interest rates, every day of additional delay further erodes the savings for customers expected to arise from the issuance of the PIR Bonds.

Among the many shortcomings of the Order is the Commission’s imposition of unworkable caps on financing costs (including debt retirement costs) and interest rates. The Commission’s decision to limit financing costs to only 5% of estimated total costs is an obvious error, as evidenced by the inconsistency with the Commission’s own discussion and conclusions in the Order, which if left uncorrected may cause uncertainty in the financial markets about Ohio’s commitment to securitizing utility assets. Likewise, the inconsistencies in the Commission’s decision to limit any increase in debt retirement costs to no more than 5% above the costs estimated in the original Application (assuming that is what the Commission intended) may well, given current market conditions, prevent the securitization from moving forward and, again, is internally inconsistent with other provisions in the Order.

Equally troubling is the Commission’s decision to cap the weighted average yield of the PIR Bonds at less than 3%, which was based on market rates at the time the Application was filed over six months ago, which also may prevent the securitization from being completed thereby depriving customers of tens of millions of dollars in savings as compared to existing recovery mechanisms. As stated above, the longer the delay in receiving a corrected Order from the Commission that will support a AAA rating for the PIR Bonds, the greater the risk the

²  This amount is an estimate based on market conditions and interest rates that were in place at the time the Companies filed the Application in May 2012. Actual savings levels may vary.

2

securitization will no longer be feasible and the smaller the customers’ savings will be. Given that the Companies cannot complete the securitization under the statute unless customers will realize cost savings,³ and given that the Commission and its independent financial advisor will be reviewing pricing terms following the Companies’ submission of the Issuance Advice Letter, these caps are unnecessary and unreasonable.

Importantly, the Commission’s willingness to correct the shortcomings in the Order will benefit not only the Companies’ customers, but potentially the customers of other electric distribution utilities currently seeking or contemplating securitizations in Ohio. If the Commission’s willingness and ability to carry out the securitization provisions in Ohio law are cast into question, the markets may add a risk premium to future applications, and the rating agencies’ justifiable skepticism may endanger AAA ratings for such future transactions. If the Companies’ Application fails to go forward because the Commission is unwilling or unable to provide rating agencies and investors with the risk mitigation features they expect and require, future securitization applications will be in doubt, the statutory goals embodied in the Act will go unrealized, and customers will be harmed. Therefore, the Companies respectfully request that the Commission grant rehearing as set forth below.

The Companies have attached a corrected form of Financing Order and Issuance Advice Letter to this Application for Rehearing as Attachment A and Attachment B, respectively, to aid the Commission in its consideration of the issues raised herein. Both Attachment A and Attachment B are the original documents issued by the Commission that have been changed to reflect the modifications discussed below.

³  See R.C. § 4928.235(C)(2).

3

II. COMMISSION ORDERS MUST BE LAWFUL AND REASONABLE.

R.C. § 4903.10 provides that any party may file an application for rehearing setting forth the grounds on which an order of the Commission is unreasonable or unlawful. “Where such application for rehearing has been filed, the commission may grant and hold such rehearing on the matter specified in such application, if in its judgment sufficient reason therefor is made to appear.” R.C. § 4903.10. If the Commission grants rehearing and determines that any part of the original order is unjust or unwarranted, it may abrogate or modify the order. Id. R.C. § 4903.13 further provides that a Commission order “shall be reversed, vacated, or modified by the supreme court on appeal, if, upon consideration of the record, such court is of the opinion that such order was unlawful or unreasonable.” Determining whether the Commission applied the correct legal standard is a question of law, which the Ohio Supreme Court considers on a de novo basis. Time Warner AxS v. Pub. Util. Comm., 75 Ohio St. 3d 229, 234, 661 N.E.2d 1097, 1101 (1996).

III. THE COMMISSION MUST CORRECT THE ERRORS AND INCONSISTENCIES IN THE FINANCING ORDER SO THAT CUSTOMERS ARE NOT DEPRIVED OF THE ESTIMATED TENS OF MILLIONS OF DOLLARS IN SAVINGS.

A. The Commission Must Modify Its Cap On Debt Retirement Costs And Correct The Errors In Paragraph VI.D.10. Of The Order (Page 40).⁴

Caps on financing costs are not needed and can, in fact, only work to the detriment of customers who could be denied tens of millions of dollars of savings in the aggregate by the workings of an arbitrary cap. Indeed, the General Assembly understood that flexibility is required in financing orders and authorized a cap only on total phase-in costs, not on financing

⁴  Page number references are to the Commission’s originally issued Financing Order.

4

costs.⁵ The General Assembly understood that financing costs necessarily will fluctuate with market conditions, which is why the statutory standard for issuance of a financing order is dependent upon market conditions⁶ and why the Companies cannot complete a securitization transaction unless customers will realize cost savings.⁷ Because the securitization structure created by the General Assembly ensures that customers will benefit from a securitization, arbitrary caps on costs are unnecessary and counterproductive.

Based on certain assumptions set forth in the Application, the Companies estimated at the time the Application was filed that up-front financing costs for a combined issuance, exclusive of debt retirement costs, would be approximately $8.4 million. These are estimates based on actual market experience. The Companies further estimated that ongoing financing costs for a combined issuance, rather than a separate bond issuance for each Company, would be approximately $1.1 million annually and result in savings of almost $300,000 annually. As noted in the Application, debt retirement costs “may vary significantly in response to market conditions and as a result of the terms of the various debt securities to be retired”.⁸ Thus, the Commission noted on page 20 of the Order that debt retirement costs “should be afforded more flexibility” and should not exceed the debt retirement costs estimated in the Application by more than fifteen percent. The Commission further noted on page 20 of the Order that financing costs other than debt retirement costs should not exceed by more than 5% the estimated costs provided in the Application.

⁵  See R.C. § 4928.232(F) (affording flexibility in terms and conditions to accommodate changes in market conditions, including interest rates and financing costs). Compare R.C. § 4928.232(E)(1) (financing order shall include a “determination of the maximum amount and a description of the phase-in costs”) with R.C. § 4928.232(E)(3) ( financing order shall include a “description of the financing costs that may be recovered”).

⁶  R.C. § 4928.232(D)(2).

⁷  R.C. § 4928.235(C)(2).

⁸  Application, p. 9.

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Yet, in Section VI.D.10. of the Order on page 40, the Commission established limits on financing costs that both conflict with its own findings and are unworkable. First, the Commission’s Order mistakenly caps all financing costs at only five percent of estimated costs: “upfront and ongoing financing costs for the issuance of the PIR Bonds, under the single combined issuance, and the debt retirement costs should not exceed 5 percent of the amounts reflected in columns B-D on Exhibit C of the application, Pages 1, 2 and the financial advisor expenses discussed infra.” The Commission likely intended to establish a cap at 105% of estimated costs, not at 5% thereof. Or the Commission may have intended to say, as it did on page 20 of the Order, that financing costs, excluding debt retirement costs, may not exceed the estimated costs by more than 5%. Regardless, authorization to collect up-front financing costs, including all debt retirement costs, of no more than $2,498,255⁹ when the original estimate for such costs exceeded $48 million would economically prevent the Companies from completing this securitization.

Second, even if the provision on page 40 could be construed as a 105% cap on debt retirement costs, it nevertheless would directly conflict with the Commission’s findings on page 20 and, based upon current market conditions, will prevent the Companies from completing the securitization transaction as contemplated, thereby depriving customers of substantial savings. As stated by the Commission on page 20, the Order should authorize the Companies to incur actual debt retirement costs that do not exceed estimated debt retirement costs in the Application by more than fifteen percent.

⁹  ($48,465,099 + $1,500,000) x 0.05. This is the estimated upfront costs, including debt retirement costs + the excessive amount approved for the Commission’s financial advisor. Approval of only $53,637 annually in ongoing financing costs also prevents this transaction from going forward.

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Third, the Commission’s reference to “actual” ongoing financing costs in paragraph VI.D.10. of the Order is misplaced given that ongoing financing costs will be incurred, as the title suggests, over the term of the PIR Bonds. At the time of closing and the filing of the Issuance Advice Letter, certain of the ongoing financing costs will continue to be estimates. The Companies cannot know all “actual” ongoing costs until they have been incurred.

Based on the foregoing, the Commission must correct the three errors and inconsistencies described above by modifying paragraph VI.D.10. of the Order as follows:

Applicants represent that their current estimate of upfront financing costs is approximately $8.4 million in the aggregate, exclusive of debt retirement costs. Through the filing of their Issuance Advice Letter, Applicants are required to provide the Commission with their actual upfront and estimated ongoing financing costs. The aggregate upfront and estimated ongoing financing costs for the issuance of the PIR Bonds exclusive of debt retirement costs, under the single combined issuance, and the debt retirement costsshould not exceed, by more than 5 percent, of the total amounts reflected in columns B-D on Exhibit C of the application, Pages 1, 2 and the financial advisor expenses discussed infra. The debt retirement costs should not exceed, by more than 15 percent, the total of the amounts reflected in columns B-D on Exhibit C of the application, Page 1.

Without these changes, the PIR Bonds will not be issued, and customers will not receive the anticipated multi-million dollar benefit of the securitization.

B. The Commission Must Provide Minimum Standards For Third Party Billing.

The Application recognizes that third parties currently cannot bill and/or collect Phase-In-Recovery Charges, either separately or as one billing component that may be levied upon the Companies’ customers.¹⁰ However, the Commission is authorizing the billing and collection of Phase-In-Recovery Charges expected through 2034¹¹ and, to secure a AAA rating for the PIR

¹⁰  Application, pp. 24-25.

¹¹  See Application, Exh. E.

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Bonds, the billing and collection of Phase-In-Recovery Charges throughout the entire collection period cannot be left in doubt. As discussed at length in the Application, the Commission necessarily must address and minimize in the Order the risk third-party billing and collection presents to future billing and collection of the Phase-In-Recovery Charges. Because of this risk, rating agencies require that financing orders authorizing utility securitizations include minimum standards for billing and collection agents in order for those transactions to receive a AAA rating. Because of this risk, other state commissions have included minimum standards for third-party billing in their financing orders.¹² These minimum standards were set forth in the Application. Unless the Commission corrects the Order’s failure to acknowledge and mitigate this risk, the Companies may well be unable to complete the securitization and customers will be harmed by having to forego millions of dollars of savings in the aggregate.

¹²  See, e.g., In re AEP Texas Cent. Co., Financing Order, Docket No. 39931, 2012 WL 189652 (Pub. Util. Co. of Tex. Jan. 12, 2012); In re Boston Edison Co. and Commonwealth Elec. Co., Financing Order, D.T.E. 04-70, 2005 WL 389206 (Mass. Dep’t of Telecomm. and Energy Jan. 21, 2005).

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The risk that third-party billing and/or collection could be implemented during the time period when the PIR Bonds are outstanding represents a risk to investors that is considered by the rating agencies in determining the appropriate rating for the PIR Bonds. This affects the ultimate interest rate borne by the PIR Bonds and, in turn, the amount of required Phase-In-Recovery Charges. Thus, the Application asked the Commission to “take the necessary steps to ensure nonbypassability, both to preserve the high credit quality of the PIR Bonds and to minimize the likelihood that any defaults by any such third party result in an increase in charges thereafter billed to all customers.”¹³ The Application then sets out the minimum standards that the Companies believe are necessary to satisfy rating agency concerns and to minimize the risk presented by the possibility of having third-party billing and collection service approved in Ohio prior to the year 2035. As stated in the Application:

Such steps should generally require that (i) the Commission establish operational standards and minimum credit requirements for any such third party billing intermediary, or require a cash deposit, letter of credit or other credit mitigant in lieu thereof, (ii) the Commission find that regardless of who is responsible for billing, the customers of that electric distribution utility shall continue to be responsible for Phase-In-Recovery Charges, (iii) if a third party meters and bills for the Phase-In-Recovery Charges, that the electric distribution utility (as servicer) must have access to information on billing and usage by customers to provide for proper reporting to the SPE and to perform its obligations as servicer, (iv) in the case of a third party default, billing responsibilities must be promptly transferred to another party to minimize potential losses; and (v) the failure of customers to pay Phase-In-Recovery Charges shall allow service termination by the electric distribution utility on behalf of the SPE of the customers failing to pay Phase-In-Recovery Charges in accordance with Commission-approved service termination rules and orders.¹⁴

The Applicants believe that it is critical to the securitization for the Commission to grant rehearing and issue a revised financing order that includes these minimum standards so that the PIR Bonds may be considered the highest credit quality instruments and deliver the expected savings to customers.

The rating agencies have cited standards for third parties that may be permitted to bill and/or collect securitized charges as a factor in their assessment of the creditworthiness of securitization bonds of this type. For example, Fitch indicates in its ratings criteria:

In jurisdictions where third-party energy providers are allowed to perform consolidated billing, the ‘AAAsf’ stress model incorporates a test of the transaction’s maximum exposure to third-party collections. To test the effect of a potential third-party default, the stress case assumes third parties take over billing for a large percentage of the customer base and default each year for the

¹³  Application, p. 24.

¹⁴  Id.

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entire term of the bonds. The length of the assumed default and percentage of the customer base affected vary based on the third party’s commingling restrictions contained in the statute or order.¹⁵

For rating agencies to stress test the Companies’ proposed securitization using an assumption that third-party billing and/or collections could occur during the term of the PIR Bonds, they must have guidance from this Commission as to the standards that may be applicable (such as the commingling restrictions referenced by Fitch). Otherwise, the rating agencies would view the risk of third-party billing and collections as an “open-ended” risk.

The Commission’s statement in the Order that “Applicants should be allowed to implement such features subject to the terms and conditions of competitive third-party billing set forth by the Commission at that time” does nothing to mitigate this risk.¹⁶ It is not a question of the Companies implementing the features set forth by the Commission, but of whether the Commission has established in the Order sufficient risk mitigation features in the event third-party billing is allowed in the future. Third-party billing and collection service can only become a reality in the future if authorized by the Commission. The Commission will have the responsibility to minimize the potential risk to customers of any defaults by third parties that may in the future bill and/or collect the Phase-In-Recovery Charges. But the Commission must clearly signal today that it will exercise that obligation in the future guided by the minimum standards set out above; if it fails to do so, rating agencies and potential bondholders will view the Commission’s lack of commitment as itself an increased risk of the securitization.

Moreover, the Commission further compounded the risk presented by third-party billing and collection when it created a new problem by directing in the Order that, if the Commission

¹⁵  Fitch Ratings, Rating Criteria for U.S. Utility Tariff Bonds, January 6, 2012, available with login at http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662317.

¹⁶  Order, p. 21.

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authorizes future third-party billing and/or collection of Phase-In-Recovery Charges, “such billing and/or collection costs should not be included as part of the recoverable, ongoing Phase-In Costs or other rates or charges.”¹⁷ This mandate inappropriately suggests that the Companies would be precluded from recovering prudently-incurred costs of providing electric service to customers, and therefore must be modified on rehearing. Under a third party billing scenario, a third party would presumably provide billing and collection service at a competitive rate. The third party would be compensated, directly or indirectly, by all customers for this service, including those customers paying the Phase-In-Recovery Charge. Therefore, the incremental costs of billing and collection service from a third party will likely not result in incremental Phase-In-Recovery Charges, since billing and collection services are included in the Servicing Agreement. However, in the unlikely event any incremental costs are incurred by the Companies in connection with third party billing and collection services, they must be appropriately allocated to both the Companies’ distribution service and as a Phase-In-Recovery Charge in order to avoid a compromise of the bankruptcy remote nature of the transaction. In addition, it would be unreasonable and unlawful for the Commission to prohibit the Companies from recovering costs incurred, directly or indirectly, related to the provision of billing and collection service to customers, and to relieve customers from paying for that billing and collection service as part of the Companies’ rates and charges.

¹⁷  Order, p. 47.

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Consequently, by prohibiting the cost of billing and collection service from being included “as part of the recoverable, ongoing Phase-In Costs or other rates or charges,” the Commission has again created sua sponte a new unknown risk for the rating agencies to incorporate into their review of the PIR Bonds. The rating agencies will likely raise questions, such as:

• If customers paying the Phase-In-Recovery Charges are exempt from paying for billing and collection service, then who pays for this service?

• Is the Commission suggesting, improperly and unreasonably, that the Companies or the SPE should pay for this service instead of the customer?

If so, the SPE will incur a charge for which it has no off-setting revenue or the Companies will be forced to subsidize the SPE while also unlawfully subsidizing a competitive service. The outcome under either scenario would be that the bankruptcy remote nature of the SPE would be compromised, which would in turn threaten the AAA rating. Neither option is reasonable nor lawful. The uncertainty created by this unfortunate phrasing must be clarified on rehearing.

The Commission should grant rehearing to revise the first full paragraph on page 21 of the Order to read as follows:

The Commission notes that there is no dispute that competitive third-party billing/collection is not currently permitted by the Commission’s rules. However, if the Commission, in the future, establishes rules relating to competitive third-party billing/collection, Applicants should be allowed to implement such features subject to the terms and conditions of competitive third-party billing set forth by the Commission at that time.the Commission will take the necessary steps to ensure nonbypassability, both to preserve the high credit quality of the PIR Bonds and to minimize the likelihood that any defaults by any such third party result in an increase in charges thereafter billed to all customers. Further, any sSuch billing/collection must not result in additional financial burden on Applicants, or the SPEs on a going-forward-basis. In other words, such third-party billing/collection costs shall be included as part of the recoverable, ongoing costs as contemplated by the application and the Act, or as part of any other rates and charges, as appropriate.

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In addition, the Commission should grant rehearing to revise paragraph VI.F.11. of the Order on page 47 as follows:

If and to the extent that the Commission subsequently allows third parties to bill and/or collect any Phase-In-Recovery Charges, the Commission will take steps to ensure nonbypassability and minimize the likelihood of default by third-party servicers, which generally would include (i) operational standards and minimum credit requirements for any such third party billing servicer, or require a cash deposit, letter of credit or other credit mitigant in lieu thereof, (ii) a finding that, regardless of who is responsible for billing, customers shall continue to be responsible for Phase-In-Recovery Charges, (iii) if a third party meters and bills for the Phase-In-Recovery Charges, that the electric distribution utility (as servicer) must have access to information on billing and usage by customers to provide for proper reporting to the SPE and to perform its obligations as servicer, (iv) in the case of a third party default, billing responsibilities must be promptly transferred to another party to minimize potential losses; and (v) the failure of customers to pay Phase-In-Recovery Charges shall allow service termination by the electric distribution utility on behalf of the SPE of the customers failing to pay Phase-In-Recovery Charges in accordance with Commission-approved service termination rules and orders. Any costs associated with such third-party billing and/or collection shall billing and/or collection costs should not be included as part of the recoverable, ongoing Phase-In Costs or any other rates or charges, as appropriate. Further, the Commission shall not permit implementation of any third-party billing/collection that would result in a downgrade of the PIR Bonds.

C. The Commission Should Not Impose an Interest Rate Cap On The PIR Bonds.

The Commission erred by imposing a cap on the interest rate for the PIR Bonds equivalent to the interest rates originally included with the Application filed in May. On page 34 of the Order (Section VI.B.8.), the Commission provides that “the PIR Bonds shall be issued only with fixed interest rates that are at or below those referenced in the application (i.e. a weighted average yield, exclusive of upfront and ongoing costs, of less than 3 percent) . . . .” While the Companies believe that fixed interest rates are appropriate, the Commission’s interest

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rate cap is an unreasonable limitation that jeopardizes the entire securitization and the benefits it is expected to bring to customers. The interest rates included in the Application were included solely for purposes of illustration based on then-current market rates, but interest rates most likely will be different at the time the Companies price the PIR Bonds. The Commission’s Order precludes the Companies from completing the securitization even if interest rates increase by only a single basis point (1/100 of one percent), and even if such an increase would cause customer savings to be only very slightly less than the $104 million that was estimated in May when the Application was filed. Such an outcome is not reasonable and such an ordering provision is not consistent with the statute.

As explained in the Application, the effective interest rate will not be known until the PIR Bonds are priced at the time they are sold.¹⁸ Based upon market conditions at the time the Application was filed, typical structural features, and assuming an SEC-registered offering of Phase-In Recovery Certificates rated in the highest category by the rating agencies most actively involved in the rating of securitizations of this type, the Companies estimated that the weighted average yield of the PIR Bonds (exclusive of upfront and ongoing financing costs) would be less than three percent on the date the Application was filed.¹⁹ The Companies further estimated that significant cost savings and mitigation of rate impacts through the proposed Phase-In-Recovery Bond issuance were expected to result as long as the weighted average yield on the various tranches of the PIR Bonds was below five percent.²⁰

Further, the impact on customers of any increase in market rates will be ameliorated to some extent by a corresponding reduction in debt retirement costs. The debt retirement costs

¹⁸  Application, p. 32.

¹⁹  Id.

²⁰  Id., p. 33.

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incurred by the Companies to redeem or repurchase existing debt securities with the proceeds of the sale of the PIR Bonds are a function of the spread between the current yield on the existing debt securities and the interest rate for such debt securities together with the date of maturity.²¹ The smaller the spread between these two interest rates and the shorter the maturity period remaining, the lower the debt retirement cost. The debt retirement costs included in the Application were estimated at the time the Application was filed at the beginning of May 2012. The actual debt retirement costs incurred will reflect market conditions and interest rate levels at the time the debt is retired. However, as stated in the Application and consistent with law,²² the Companies will not go forward with the securitization transaction unless savings can be achieved for customers. Therefore, no cap on interest rates is appropriate beyond that provided by this statutory requirement.

Notwithstanding the foregoing and despite the statutory protections, if the Commission insists on an interest rate cap, it should be no less than 200 basis points above the estimated weighted average yield provided in the Application (i.e. a weighted average yield, exclusive of upfront and ongoing financing costs, of less than five percent) to be more equivalent to the 5% interest rate level discussed in the Application at which customer savings can still be achieved, which is the applicable statutory standard.²³ Such a threshold provides flexibility related to market conditions over which the Companies have no control while preserving an opportunity for customer savings, especially in light of the expected delay in the issuance of the PIR Bonds.

²¹  The calculation of the debt retirement costs is fairly straightforward. The make-whole calculation is a mathematical calculation that uses three primary inputs: (a) current interest rates on U.S. Treasury securities with a similar remaining maturity as the debt to be redeemed; (b) interest rates on existing debt to be redeemed; and (c) the maturity period remaining on the existing debt to be redeemed.

²²  R.C. 4928.235(C)(2).

²³  Id.

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It would be unfortunate, however, if while interest rates increased, debt retirement costs decreased whereby customers could still have saved tens of millions of dollars in the aggregate, but the Companies were prevented from securitizing due to such an artificial cap on interest rates. The Order should be modified to remove the Commission’s unreasonable cap on interest rates.

D. The Commission Must Clarify When The Financing Order Becomes Final and That Any “Supplemental Financing Order” Will Not Modify The Final Financing Order.

In paragraph VI.F.5. of the Order on page 45, the Commission states that it will have four complete business days following receipt of the Issuance Advice Letter to complete its review of the transaction and, that, if the Commission does not act during this time period, the Order “shall be considered as the Final Financing Order.” At page 23 of the Order, the Commission further describes a process under which it may issue a “Supplemental Financing Order” within the four-day period in order to stop the issuance of the PIR Bonds. Because these provisions can be interpreted as being contrary to R.C. §§ 4928.233 and 4928.235, the Commission should grant rehearing to clarify that it will adhere to Ohio law.

The date on which a financing order becomes final is determined by R.C. § 4928.233, not following the pricing of the Phase-In Recovery Bonds. The Companies cannot move forward with pricing the Phase-In Recovery Bonds until there is a Final Financing Order. The Commission Order in this respect must be corrected.

Once the Companies have a Final Financing Order, they may elect to proceed with the securitization transaction as provided in division (C) of R.C. § 4928.235. The Companies are prohibited from proceeding with the securitization pursuant to the terms of a Final Financing Order if, “before phase-in-recovery bonds have been issued, . . . market conditions are such that

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customers will not realize cost savings from the issuance of the phase-in-recovery bonds.”²⁴ The Issuance Advice Letter process allows the Commission sufficient time to confirm that market conditions are such that customers will realize cost savings. In fact, if the Issuance Advice Letter shows that customers will not realize cost savings from the securitization, the Companies are prohibited by R.C. § 4928.235(C)(2) from issuing the PIR Bonds. Commission action would be necessary only if the Companies and the Commission disagreed over whether customers will realize cost savings. Regardless, if the Commission does determine, based on the Issuance Advice Letter, that customers will not realize cost savings from the securitization, it may issue an order prohibiting the Companies from proceeding with the securitization. Any such order is not a “Supplemental Financing Order” and would not further modify the Final Financing Order.

The Commission should clarify in its Entry on Rehearing that the Financing Order approved in that Entry will become a Final Financing Order as provided in R.C. § 4928.233(E), and not following the issuance of the Issuance Advice Letter. The Commission also should clarify that it will not modify or amend a Final Financing Order, but may act pursuant to R.C. § 4928.235(C)(2) to stop the issuance of PIR Bonds within four business days after receipt from the Companies of the Issuance Advice Letter.

E. The Commission’s Authorized Fee For Its Financial Advisor Is Inappropriate And Unnecessarily High.

On page 44 of the Order, the Commission provides that its financial advisor shall be entitled to a fee not to exceed $1,500,000, “$500,000 of which will be funded out of the underwriter’s spread and $1,000,000 of which will be included as part of the upfront financing costs.” The level of this fee, and the requirement to reduce the underwriter’s fee in order to pay it, is unsupported, excessive, and inconsistent with market precedent.

²⁴  R.C. § 4928.235(C)(2).

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Under the Commission’s structure, the financial advisor’s fee would reduce the fee paid to the financial institutions (underwriters) that actually conduct the transaction. Further, the Commission’s financial advisor could earn a fee greater than any of the individual underwriters. Indeed, if the issuance level was less than $400 million, the Commission’s financial advisor would earn a fee greater than the Companies’ estimate for all of the underwriters combined. The financial advisor fee authorized by the Commission is simply inappropriate. The underwriter-financial institutions and the structuring advisor are an integral part of the securitization process, and the process should not be jeopardized by such an uncertain fee structure that could reward the Commission’s financial advisor more than the underwriters themselves.

The Commission’s inappropriately high level of compensation for its advisor, and its resulting establishment of an excessive fee cap for the advisor, is likely to result in RFP responses that include fee structures well above market. Indeed, by signaling to potential applicants that any fee up to $1.5 million may be acceptable, the Commission has created a market at that exorbitant level. Given that the Companies’ customers will have to pay this fee as one component of the upfront financing costs, the Commission’s Order is not in the best interest of customers.

Paragraph IV.F.3. of the Order should be modified to set a fee for the Commission’s financial advisor that is no greater than $500,000, and that fee will be included solely as part of the upfront financing costs and shall not be funded out of the underwriter’s spread.

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F. The Commission Should Clarify The Amount Of The Fee Available For A Non-EDU Servicer To Ensure Customers Receive The Benefits Of Securitization.

This proceeding is the first in Ohio to securitize EDU assets. However, the electric utility customer backed securitization process has been implemented in a number of other states across the country. As a result of these previous processes, the rating agencies have expectations for utility commission financing orders, which expectations provide greater security for the rating agencies. In turn, as the rating agencies gain comfort with the financing orders, the likelihood that such securitizations will attain a AAA rating and the transactions completed – and that electric utility customers would be assured of getting the benefits of securitization – also increases. Such is part of the formulation for electric utility customer backed securitization bonds attaining a AAA rating.

On page 36 of the Commission’s Order, the Commission addresses the fee available for the Companies or any successor EDU as servicer, but does not address the fee available for a non-EDU servicer should that situation arise. By omitting the amount of the fee available for a non-EDU servicer the Order fails to recognize this important issue that threatens the confidence of rating agencies and, in turn, jeopardizes the securitization process and its benefits. The Commission should clarify the amount of the fee available for a non-EDU servicer and that the fee shall be increased, if necessary, to ensure the collection and true up, from time to time, of the Phase-In-Recovery Charges and the attainment of a AAA rating from the rating agencies on the PIR Bonds. Therefore, The Commission should grant rehearing and amend paragraph VI.B.14. of the Order (page 36) as follows:

Each Applicant (or any successor EDU) is authorized to receive a periodic servicing fee, which will be recovered through Phase-In-Recovery Charges as a financing cost. Based upon both estimated costs of performing the servicing function and market precedent for such fees, the annual servicing fee to be paid to the respective

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Applicant or its successor EDU shall be 0.10 percent of the initial principal amounts of the PIR Bonds issued by the SPE of such Applicant. In the event that there is no EDU successor willing or able to perform such servicing functions, a non-utility servicer shall be engaged, and given the incremental costs to perform the servicing function shall be entitled to an increased annual servicing fee to preserve the PIR Bond ratings. However, the annual servicing fee for such non-utility successor shall not exceed 0.75 percent of the initial principal amount of the PIR Bonds.

G. The Commission’s Order Includes Other Errors and Inconsistencies That Must Be Remedied On Rehearing.

The Companies submit that the Commission’s Order includes a number of errors and inconsistencies that warrant correction to ensure accuracy and consistency with the Act, other applicable statutes and the Commission’s own Order (and to eliminate doubt and ambiguity for securitization documentation, securities disclosure and legal opinion purposes). Specifically, the following errors and inconsistencies must be corrected:

• Order – global comment: The Order should be corrected to replace terms such as “finance costs,” “financial costs,” “costs,” “costs related to the PIR Bonds,” etc. with “financing costs” to correctly reflect the term used in the Act.

• Order, Section III – pg. 8, paragraph (3): The reference to Rider RER1 should be deleted because Toledo Edison customers would only see an impact to Rider DFC.

• Order, Section III – pg. 8, paragraph beginning “Specifically,”: In the description of the process to request approval of an adjustment to the Phase-In-Recovery Charges, the Commission should clarify that the Companies’ proposal is as follows: “Review of the adjustments is limited to whether mathematical errors occurred in the application of the formula-based mechanism relating to the appropriate amount of any over- or under-collection of Phase-In-Recovery Ccharges (Id. at 35). This change conforms the Order language to the statute. R.C. § 4928.38(B).

• Order, Section VI – pg. 27: The paragraph beginning with “Additionally,” which lists the necessary statutory requirements should be revised to affirmatively state that these statutory requirements are incorporated into the Order. The second sentence should be revised as follows: “In order to accomplish this objective and satisfy specific statutory requirements, there are a number of expressed regulatory authorizations that must beare incorporated in the Financing Order, including those

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related to (a) Irrevocability; (b) State pledge; (c) True sale; (d) Successor utility; (e) Security interest; (f) Bankruptcy of the electric distribution utility; (g) Non-bypassability; and (i) Validity of the Financing Order; and (j) Treatment of Phase-In-Recovery Charges.”

• Order, Section VI.A.4. – pg. 29: The first sentence should be revised as follows to clarify terms of capitalization of the SPEs: “Each Applicant will capitalize its respective SPE in an amount anticipated to be approximatelyof not less than 0.50 percent of its initial principal balance of the PIR Bonds, as may be adjusted upward at the time of issuance based on rating agency requirements and the return of and on such capitalization as shall be maintained as an ongoing financing cost.”

• Order, Section VI.B.1 – pg. 31: The Commission should state that the actual amount of CEI’s bond issuance cannot exceed the aggregate amount of the deferral balances and associated costs for Riders DFC, DGC and RER1 at the time of issuance, plus CEI’s portion of actual upfront financing costs.

• Order, Section VI.B.2 – pg. 32: The reference to Rider DGC for Ohio Edison should be removed because Ohio Edison does not have a Rider DGC. The Commission should also state that the actual amount of Ohio Edison’s bond issuance cannot exceed the aggregate amount of the deferral balances and associated costs for the Riders DFC and RER1 at the time of issuance, plus Ohio Edison’s portion of actual upfront financing costs.

• Order, Section VI.B.3 – pg. 33: The Commission should state that the actual amount of Toledo Edison’s bond issuance cannot exceed the aggregate amount of the deferral balances and associated costs for Rider DFC at the time of issuance, plus Toledo Edison’s portion of actual upfront financing costs.

• Order, Section VI.B.4 – pg. 33: The Order should include a specific reference to the Servicing Agreement, as a material agreement, in connection with the breach of representations, warranties, or covenants made by an Applicant.

• Order, Section VI.C – pg. 37: The Order should include express authorization that the costs associated with the PIR Trust be included as upfront financing costs. Therefore, a new Section VI.C.7 should be included as follows: “The costs of setting up and maintaining the PIR Trust, including fees and expenses of the trustee and its counsel, shall be included in and constitute upfront and ongoing financing costs.”

• Order, Section VI.D.1 – pg. 37: This provision should make clear that Phase-In-Recovery Charges together with the adjustment mechanism will provide full and timely recovery as follows to be consistent with the Act: “Phase-In-Recovery Charges consist, together with the adjustment mechanism, will provide for the full and timely recovery of all costs associated with the issuance of or use of proceeds from the Phase-In-RecoveryPIR Bonds approved in this proceeding. These charges include, including all Phase-In Costs and Financing Costsfinancing costs as described in this Financing Order.”

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• Order, Section VI.D.2 – pp. 37-38: This provision should make clear that Phase-In-Recovery Charges pay both the PIR Bonds and Financing Charges: “Consistent with Section 4928.239(B)(1), Revised Code, all of the Applicants’ customers will be responsible for the repayment of PIR Bonds and financing costs through the imposition of separate, nonbypassable Phase-In- Recovery Charges.”

• Order, Section VI.D.4 – pg. 38: The word “insets” should be replaced with “inserts.”

• Order, Section VI.D.13 – pg. 41: The list of costs included as ongoing financing costs must be clarified as follows so that rating agencies do not see a risk of non-collection: “The estimated ongoing financing costs include, without limitation, servicing fees, other administrative fees, the cost of any overcollateralizationreserves or other reservescredit enhancement (if required) for the PIR Bonds, the periodic costs for servicing the PIR Bonds and the Phase-In-Recovery Charges, SPEtrustee and other administrative costs, return on capital account and applicable taxes, and, if the PIR Bonds (or PIR Trusts, as the case may be) are issued in a registered public offering, ongoing Securities and Exchange Commission (SEC) compliance costs.”

• Order, Section VI.F.3 – pg. 44: The references to “transition” in the second, third and fourth sentences should be replaced with “PIR” to correctly identify the relevant bonds.

A corrected Financing Order reflecting the above changes along with additional corrections to other inconsistencies and typographic errors is attached hereto as Attachment A.

H. The Issuance Advice Letter attached to the Commission’s Order Includes Other Errors and Inconsistencies That Must Be Remedied On Rehearing.

The Companies submit that the Issuance Advice Letter attached to the Commission’s Order includes a number of errors and inconsistencies that warrant correction to ensure accuracy and consistency with the Act, other applicable statutes and the Commission’s own Order (and to eliminate doubt and ambiguity for securitization documentation, securities disclosure and legal opinion purposes). Specifically, the following errors and inconsistencies must be corrected:

• Issuance Advice Letter – pg. 1 of 12: The reference to “fourth” in the first paragraph should be replaced with “first” to be consistent with the Order’s provision on page 23 that “for each series of PIR Bonds, each Applicant shall [file] the attached Issuance Advice Letter no later than the first business day following the pricing date for that series of PIR Bonds.”

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• Issuance Advice Letter – pg. 1 of 12: The references to the “Advice Letter” and “letter” in the first paragraph should be replaced with “Issuance Advice Letter” for consistency.

• Issuance Advice Letter – pg. 1 of 12: The references to the “Phase-in-Recovery Charges” must be replaced with “Phase-In Costs” to conform to the term in the Act. Additionally, the references to the “total amount” being securitized must include “financing costs” as well.

• Issuance Advice Letter – pg. 2 of 12, paragraph (1): The reference to “revenues” should be replaced with “Phase-in-Recovery Revenues” to conform to the term in the Act.

• Issuance Advice Letter – pg. 2 of 12, paragraph (2): This paragraph must be deleted as this standard is not consistent with any standard provided in the Act. Additionally, no securitization transaction that is modeled consistent with the Companies’ Application could meet this standard unless financing costs were zero.

• Issuance Advice Letter – pg. 2 of 12, paragraph (3): The reference to “PIR Bond charges” should be replaced with “Phase-in-Recovery Charges” to conform to the standard in the Act.

• Issuance Advice Letter – pg. 3 of 12: The reference to “PIR Bond Issuance Costs” in the seventh line should include the parenthetical “(upfront financing costs)” immediately thereafter to avoid any ambiguity as to what amounts the Applicants will provide.

• Issuance Advice Letter – pg. 3 of 12: The reference to “PIR Bond Support and Serving” in the eighth line must be restated in its entirety to read “PIR Bond Support and Servicing (ongoing financing costs)” to correct a typographical error and avoid any ambiguity as to what amounts the Applicants will provide.

• Issuance Advice Letter – pg. 4 of 12: The reference to “each of the variables” in the first sentence must be revised to simply “variables” as Table I does not seek all of the information necessary to calculate the initial Phase-In-Recovery Charge.

• Issuance Advice Letter – pg. 4 of 12, Table I: The reference to “kWh/kW” in the third and seventh lines should be replaced with “kWh” as the Applicants only calculate such amount on usage basis and not a demand basis.

• Issuance Advice Letter – pg. 5 of 12, Attachment-1, Schedule-A: The table is inaccurately titled “Calculation of Securitized Phase-In-Recovery Charges” and should be titled “Total Amount Securitized.” New second and third rows titled

23

“Phase-in Costs” and “Upfront financing costs,” respectively, should be added so that the total amount securitized can be properly calculated for the comparison to the amount permitted to be securitized by the Financing Order. Finally, the title of the last row “Total Securitized Phase-In-Recovery Charges” should be replaced with “Total Amount Securitized.”

• Issuance Advice Letter – pg. 6 of 12, Attachment-1, Schedule-B: The Order included fees and expenses of the Financial Advisor as an upfront financing cost; therefore, a line item for “Fees & Expenses for Commission’s Financial Advisor” must be added and the lines re-numbered accordingly.

• Issuance Advice Letter – pg. 7 of 12, Attachment-2, Schedule-A: While the table is titled “Phase-In-Recovery Revenue Requirement Information” the required information would only provide the amortization schedule of the bonds not all of the necessary information to determine such revenue requirement. Therefore, the more appropriate title would be “PIR Bond Repayment Schedule.”

• Issuance Advice Letter – pg. 8 of 12, Attachment-2, Schedule-B: The references to “transition bonds” in the paragraph immediately following the table must be replaced with “PIR Bonds” to conform to the term in the Act and the Order. There is a spelling error to the term “rateably” in footnote 1; the correct spelling is “ratably.”

• Issuance Advice Letter – pg. 9 of 12, Attachment-2, Schedule-C: While the table is titled “Calculation of Phase-In-Recovery Charges” the required information does not provide sufficient information to perform such a calculation. Therefore, the more appropriate title would be “Summary of Phase-In-Recovery Charges.” The Rider PIR Revenue Requirement includes applicable taxes, uncollectibles and billing lags in addition to the bond payments and ongoing costs. In column D of this schedule, the reference to “(b)+(c)” should be deleted and footnote 3 should be modified as follows: “Sum of PIR Bond payments and ongoing financing costs, adjusted for applicable taxes, uncollectibles and billing lags.”

• Issuance Advice Letter – pg. 10 of 12, Attachment-2, Schedule-D: The title of the second column must be corrected from “Conventional Financing Through²” to “Existing Ratemaking²” to correctly calculate the present value savings reflected in the Application. As previously noted, the standard described in paragraph 2 on page 2 of 12 of the Issuance Advice Letter, is not consistent with any standard provided in the Act. Footnote 1 should be modified as follows: “Calculated in accordance with the methodology used in the Joint Application, using the discount rate referenced in footnote 4 on Attachment-2 Schedule-C.”

A revised Issuance Advice Letter reflecting the above changes along with additional corrections to other inconsistencies and typographic errors is attached hereto as Attachment B.

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IV. CONCLUSION

For the foregoing reasons, the Commission should grant rehearing and issue an Entry on Rehearing approving a Financing Order modified as set forth herein.

Respectfully submitted,

/s/ James W. Burk

James W. Burk (Attorney No. 0043808)

FIRSTENERGY SERVICE COMPANY

76 South Main Street

Akron, OH 44308

(330) 384-5861 (telephone)

(330) 384-3875 (fax)

burkj@firstenergycorp.com

ATTORNEY FOR THE CLEVELAND

ELECTRIC ILLUMINATING COMPANY,

OHIO EDISON COMPANY, AND

THE TOLEDO EDISON COMPANY

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CERTIFICATE OF SERVICE

I hereby certify that the foregoing Application for Rehearing of Ohio Edison Company, The Cleveland Electric Illuminating Company and The Toledo Edison Company was served this 9^th day of November, 2012 by electronic mail on the persons listed below.

James W. Burk

William L. Wright

Section Chief

Thomas McNamee

Asst. Attorneys General

180 East Broad Street, 6th Floor

Columbus, Ohio 43215

William.wright@puc.state.oh.us

Thomas.mcnamee@puc.state.oh.us

Kyle L. Kern

Assistant Consumers’ Counsel

Office of the Ohio Consumers’ Counsel

10 West Broad Street, 18th Floor

Columbus, Ohio 43215

kern@occ.state.oh.us

26

Exhibit 99.1

Amendment to Application for Financing Order

Submitted to The Public Utilities Commission of Ohio

on August 16, 2012

August 16, 2012

Mrs. Barcy McNeal

Commission Secretary

The Public Utilities Commission of Ohio

180 East Broad Street

Columbus, OH 43215

SUBJECT: Case No. 12-1465-EL-ATS

Dear Mrs. McNeal:

Please file the following errata in Case No. 12-1465-EL-ATS, the Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Recover Phase-in Costs and Financing Costs, Issue Phase-in Recovery Bonds and Impose and Collect Phase-in Recovery Charges, and for Tariff and Bill Format Approvals and for Commission Action on an Expedited Basis.

In the Application, Exhibit A, page 1 of 1, at Line 2 column F contains an incorrect date. The date “1/6/10” that currently appears should be deleted and it should be replaced with the date “3/24/10”. Thank You.

Sincerely,

Eileen M. Mikkelsen

Director, Rates & Regulatory Affairs

This foregoing document was electronically filed with the Public Utilities

Commission of Ohio Docketing Information System on

8/16/2012 4:50:59 PM

in

Case No(s). 12-1465-EL-ATS

Summary: Application Errata in the Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Recover Phase-in Costs and Financing Costs, Issue Phase-in Recovery Bonds and Impose and Collect Phase-in Recovery Charges, and for Tariff and Bill Format Approvals and for Commission Action on an Expedited Basis electronically filed by Karen A Sweeney on behalf of Ohio Edison Company and The Cleveland Electric Illuminating Company and The Toledo Edison Company and Mrs. Eileen M Mikkelsen

Exhibit 99.1

Application for Financing Order

Submitted to The Public Utilities Commission of Ohio

on May 3, 2012

BEFORE

THE PUBLIC UTILITIES COMMISSION OF OHIO

In the Matter of the Joint Application	)
of Ohio Edison Company, The	)
Cleveland Electric Illuminating Company,	)
and The Toledo Edison Company for	)
Authority to Issue Phase-In-Recovery	)	Case No. 12–1465–EL–ATS
Bonds and Impose, Charge and Collect	)
Phase-In-Recovery Charges and	)
For Tariff and Bill Format Approvals	)
Change	)

Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Recover Phase-In Costs and Financing Costs, Issue Phase-In-Recovery Bonds and Impose and Collect Phase-In-Recovery Charges, and for Tariff and Bill Format Approvals and for Commission Action on an Expedited Basis

Applicants, Ohio Edison Company (“OE”), The Cleveland Electric Illuminating Company (“CEI”), and The Toledo Edison Company (“TE” and together with OE and CEI, the “Applicants”) hereby submit this joint application (the “Application”) pursuant to O.R.C. § 4928.231 seeking authority to recover certain specified Phase-In Costs and Financing Costs through the issuance of Bonds payable from the collection of Phase-In-Recovery Charges (herein referred to as “Phase-In-Recovery Bonds”) and to impose and collect such Phase-In-Recovery Charges, all in accordance with O.R.C. §§ 4928.23 through 4928.2318 (referred to herein as the “Act”).

I. Introduction

The Commission previously authorized the Applicants to defer and recover as regulatory assets certain costs, with carrying charges, related to fuel costs in 2006 - 2007 (all Applicants), power purchases in 2009 (CEI only), and the transition of all-electric customers toward market

pricing beginning in 2011 (OE and CEI only). The proposed securitization will benefit customers by providing both cost savings and rate mitigation through reducing the overall cost of these regulatory assets and by reducing the rates customers currently are paying toward their recovery. Exhibit A hereto provides the estimated existing deferral balances and citations to the Commission orders associated with the previously-authorized recovery of these regulatory assets or, as they are referred to under the Act, Phase-In Costs. The securitization transaction also is expected to significantly reduce the carrying charges over the recovery period for these Phase-In Costs resulting in customer savings through the issuance of the Phase-In Recovery Bonds (even after including applicable Financing Costs as discussed below), which recovery period will not exceed the overall recovery period under the existing cost recovery methodologies approved by the Commission for such regulatory assets, resulting in estimated nominal costs savings to customers of approximately $104 million in the aggregate as shown on Exhibit B hereto. In addition, the proposed securitization is expected to mitigate rate impacts to customers by flowing the cost savings through to customers annually in a manner that yields lower associated rates compared to the traditional cost recovery mechanisms previously approved by the Commission. This expectation for rate mitigation is based on current interest rates, market conditions and rates currently approved by the Commission. The proceeds from the issuance of the Phase-In-Recovery Bonds will, after the payment of upfront Financing Costs, be primarily applied to the reduction of existing long-term debt of the respective Applicants, which may confer additional long term benefits for both customers and the Applicants through a potential improvement to the Applicants credit metrics resulting from the anticipated use of proceeds from the proposed securitization.

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II. Securitization Transaction

1. Each Applicant is an Ohio corporation engaged in the distribution of electricity for sale to retail customers in Ohio under rates and tariffs approved by this Commission and electric distribution utilities pursuant to O.R.C. § 4928.01(A)(6).

2. The Act provides for electric distribution utilities to securitize certain previously-approved costs through the issuance of Phase-In-Recovery Bonds pursuant to a Financing Order issued by the Commission. Securitization is authorized if the Commission finds, consistent with market conditions, it measurably enhances cost savings to customers and mitigates rate impacts to customers as compared with the Commission’s previously-approved recovery methods for the Applicants, and is consistent with Ohio policy as set forth in O.R.C. § 4928.02.

3. The Applicants request that the Commission issue a Financing Order pursuant to the provisions of O.R.C. § 4928.232(C) and (D)(2) authorizing the issuance of up to an aggregate amount of $555 million of Phase-In-Recovery Bonds, in one or more series and one or more classes/tranches. The proceeds from the issuance of the Phase-In-Recovery Bonds will: (i) allow full collection of the associated Financing Costs described in paragraph 10 below and on Exhibit C] hereto; and (ii) compensate the Applicants for Phase-In Costs described in paragraphs 6, 7 and 8 below and on Exhibit A hereto, at an effective interest rate (after taking into account upfront and ongoing Financing Costs) lower than each Applicant’s Commission-authorized rate of return for such regulatory assets. The benefits to customers of the lower effective interest rate versus the current authorized rate of return are reflected in a reduction in the expected amount payable by customers on both a nominal and a net present value basis as compared with existing recovery mechanisms.

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4. All customers of the Applicants will be responsible for repayment of the Phase-In-Recovery Bonds through the imposition of separate, nonbypassable charges called Phase-In-Recovery Charges. O.R.C. § 4928.239(B)(1). For purposes of this proceeding, “Phase-In Recovery Charges” are those charges to be set forth in a rider to be approved by the Commission in this proceeding, which, together with an adjustment mechanism to be authorized by the Commission pursuant to O.R.C. § 4928.238, will provide for the full and timely recovery of all costs associated with the issuance of or use of proceeds from the proposed Phase-In Recovery Bonds including without limitation all Phase-In Costs and Financing Costs.

5. Each Applicant intends to use its portion of the proceeds from the issuance and sale of Phase-In-Recovery Bonds to primarily repay existing long-term debt. Proceeds will also be used to pay Financing Costs, including all required credit enhancement, and may also be used for other corporate purposes. Exhibit D hereto provides current and pro forma capitalization for the Applicants in connection with the proposed issuance of Phase-In-Recovery Bonds.

a) The repayment of existing long-term debt by the Applicants may result in improved credit metrics for each of the Applicants as the Phase-In Recovery Bonds are not expected to be classified as debt of the Applicants by the rating agencies because they will not be supported by the Applicants’ general revenue streams or collateralized by the assets of any Applicant (assumes the customary securitization transaction such as that proposed is approved).

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b) The Phase-In-Recovery Bonds will not be included in the regulatory capital structure of the Applicants going forward. The Phase-In-Recovery Bonds are expected to be recorded in accordance with GAAP primarily as long term debt on the balance sheet of each Applicant’s special purpose entity to which Phase-In-Recovery Property is sold in connection with the securitization (each, an “SPE”) for financial reporting purposes. Such SPE’s Phase-In-Recovery Bonds will also appear on the consolidated balance sheet of the respective Applicant, as the parent company, in its GAAP financial statements.

6. CEI requests that the Commission approve the issuance of Phase-In-Recovery Bonds in an amount up to $280 million in the aggregate, the proceeds of which will be used to recover, finance or refinance CEI’s portion of the estimated Financing Costs and the following Phase-In Costs: (i) the remaining uncollected balances of its deferred costs, with carrying charges, associated with the actual fuel costs incurred that exceeded the fuel recovery mechanism revenues collected from January 1, 2006 through December 31, 2007, which currently are being recovered through a separate rider mechanism, namely the Deferred Fuel Cost Recovery Rider (Rider DFC); (ii) the remaining uncollected balances of its

5

deferred costs, with carrying charges, associated with purchase power costs incurred that exceeded the purchase power recovery mechanism revenue from January 1, 2009 through May 31, 2009, which currently are being recovered through a separate rider mechanism, namely the Deferred Generation Cost Recovery Rider (Rider DGC); and (iii) the remaining uncollected balances of its deferred costs, with carrying charges, associated with purchase power costs incurred from March 17, 2010 through June 30, 2011 that exceeded the associated purchase power recovery mechanism revenue due to implementation of the Residential Generation Credit Rider (Rider RGC), which currently are being recovered through a separate rider mechanism, namely the Residential Electric Heating Recovery Rider (Rider RER1). Exhibit A provides the estimated deferral balances as of December 31, 2012.

7. OE requests that the Commission approve the issuance of Phase-In-Recovery Bonds in an amount up to $220 million in the aggregate, the proceeds of which will be used to recover, finance or refinance OE’s portion of the estimated Financing Costs and the following Phase-In Costs: (i) the remaining uncollected balances of its deferred costs, with carrying charges, associated with the actual fuel costs incurred that exceeded the fuel recovery mechanism revenues collected from January 1, 2006 through December 31, 2007, which currently are being recovered through a separate rider mechanism, namely Deferred Fuel Cost Recovery Rider (Rider DFC); and (ii) the remaining uncollected balances of its deferred costs, with carrying charges, associated with purchase power costs incurred from March 17, 2010 through June 30, 2011 that exceeded the associated purchase power recovery mechanism revenue due to implementation of the Residential Generation Credit Rider (Rider RGC), which currently are being recovered through a separate rider mechanism, namely Residential Electric Heating Recovery Rider (Rider RER1). Exhibit A provides the estimated deferral balances as of December 31, 2012.

6

8. TE requests that the Commission approve the issuance of Phase-In-Recovery Bonds in an amount up to $55 million in the aggregate, the proceeds of which will be used to recover, finance or refinance TE’s portion of the estimated Financing Costs and the following Phase-In Costs: the remaining uncollected balances of its deferred costs, with carrying charges, associated with the actual fuel costs incurred that exceeded the fuel recovery mechanism revenues collected from January 1, 2006 through December 31, 2007, which currently are being recovered through a separate rider mechanism, namely Deferred Fuel Cost Recovery Rider (Rider DFC). Exhibit A provides the estimated deferral balance as of December 31, 2012.

All of the riders referred to in paragraphs 6, 7 and 8 for which uncollected balances constitute Phase-In Costs to be financed through the proposed securitization are hereinafter referred to as the “Existing Riders.”

9. Notwithstanding that the Phase-In-Recovery Bonds’ scheduled recovery period (and potential tranching resulting in multiple tranches of Phase-In Recovery Bonds with different maturity dates) will be determined by reference to rating agency considerations and market conditions, Applicants intend that the Phase-In-Recovery Bonds overall scheduled recovery period will not exceed the longest remaining recovery period under the Existing Riders. In an attempt to reduce the average interest cost, and as is customary for transactions of this type, the Phase-In-Recovery Bonds will likely be issued in several classes, referred to in this Application as tranches, each with a different expected maturity date. Each tranche will also have a later final legal maturity date (expected to be up to 2

7

years after the expected maturity date) by which the Phase-In-Recovery Bonds must be paid in full in the event collections of the Phase-In-Recovery Charges are lower than projected prior to the expected maturity date. Based upon the market conditions as of the date of filing this Application, the recommended tranches with initial principal amounts, first scheduled principal payment dates, expected maturity dates, final legal maturity dates and average lives are shown in Exhibit E hereto. The expected issuance date for the Phase-In-Recovery Bonds, assuming no material changes in market conditions, would be within one hundred twenty (120) days of the Financing Order becoming a Final Financing Order, and for illustrative purposes, we have assumed an issuance date of December 31, 2012. Notwithstanding the foregoing, the final number of tranches, payment and maturity dates and average lives may differ from those set forth on Exhibit E hereto due to market conditions on the date of pricing of the Phase-In-Recovery Bonds.

10. An estimate of the upfront and ongoing Financing Costs related to each Applicant’s request as provided in this Application is set forth in Exhibit C hereto. At the time of issuance of the Phase-In-Recovery Bonds, certain of these Financing Costs are likely to vary from such estimate as a result of changes in market conditions and other factors (e.g., the actual costs of redeeming or otherwise retiring existing long-term debt), none of which can be known at this time. The Applicants propose that a statement setting forth final upfront Financing Costs be provided to the Commission promptly upon final determination; provided, however, that the Applicants propose that the Financing

8

Order state that the upfront Financing Costs recoverable through Phase-In-Recovery Charges, exclusive of debt retirement costs, shall not exceed the aggregate limit set forth in the Financing Order. As shown in Exhibit C, the Applicants’ current estimate of such upfront Financing Costs is approximately $8.4 million in the aggregate, exclusive of debt retirement costs.

a) In the case of debt retirement costs, these costs may vary significantly in response to market conditions and as a result of the terms of the various debt securities to be retired (e.g. whether the Applicants have to tender for such debt securities or repurchase such debt securities on the open market or otherwise have the right to optionally redeem such debt securities). Further, if the Applicants specify the debt securities to be retired or the timing of such retirements then the prices at which such debt securities could be retired, redeemed or repurchased could increase and ultimately result in increased Financing Costs.

b) The cost of debt retirement may be impacted by changes in market interest rates. The lower prevailing interest rates are at the time of retirement, the higher the cost to effect such retirement may be. All else being equal, the impact of any increase in debt retirement costs caused by lower market interest rates should be somewhat offset by a lower cost of debt on the Phase-In-Recovery Bonds. Therefore, the Applicants request that the Commission authorize each Applicant to retire its debt with the Proceeds from the Phase-In-Recovery Bonds in any manner, consistent with market conditions, that does not impede the securitization transaction from achieving measurably enhanced cost savings and mitigating rate impacts for customers.

9

III. Retail Rate Impact and Phase-In-Recovery Charges

11. As previously stated, the securitization proposed to be implemented pursuant to the Act would provide customers with the benefit of lower cost long-term financing compared to the previously-approved recovery mechanisms (i.e. the Existing Riders). Exhibit B hereto shows the expected debt service associated with the Phase-In-Recovery Bonds based upon market conditions as of the date of this Application and compares those amounts to the current expected costs of recovery for the uncollected Phase-In Costs to be securitized under the Existing Riders, ultimately supporting projected savings to customers on both a nominal and a net present value basis. As demonstrated on Exhibit B hereto, from the point of view of the Applicants’ customers, issuance of Phase-In-Recovery Bonds as proposed in this Application, consistent with the market conditions as of the date of filing this Application, both measurably enhances cost savings to customers and mitigates rate impacts to customers as compared with recovery of such uncollected Phase-In Costs under the Existing Riders. In comparing the estimated Phase-In-Recovery Charges to the rates under the Existing Riders, it is important to acknowledge that such rates are not directly comparable (e.g., current rates do not reflect customer uncollectibles which are recovered separately, while Phase-In-Recovery Charges must reflect uncollectibles as such charges are the sole source of payment for Phase-In-Recovery Bonds). While all amounts shown below: (i) are dependent upon a number of assumptions; and (ii) are based on

10

current estimates and market conditions; and (iii) will periodically change throughout the recovery period in accordance with the approved adjustment mechanisms described in Exhibit F hereto, upon issuance of the proposed Phase-In-Recovery Bonds:

a) CEI customers would have an estimated initial Phase-In-Recovery Charge of 0.3851 cents/kWh resulting in a monthly cost of $3.85 for the typical residential bill (1,000 kWh). If the Existing Riders continued as approved, a 1,000 kWh residential customer would pay on average for Riders DGC, DFC, and RER1, a total monthly charge of 0.4303 cents/kWh resulting in a monthly cost of $4.30. See Exhibit G hereto for impacts for other customer classes and usage levels.

b) OE customers would have an estimated initial Phase-In-Recovery Charge of 0.3198 cents/kWh resulting in a monthly cost of $3.20 for the typical residential bill (1,000 kWh). If the Existing Riders continued as approved, a 1,000 kWh residential customer would pay on average for Riders DFC, and RER1, a total monthly charge of 0.3476 cents/kWh resulting in a monthly cost of $3.48. See Exhibit G hereto for impacts for other customer classes and usage levels.

c) TE customers would have an estimated initial Phase-In-Recovery Charge of 0.0250 cents/kWh resulting in a monthly cost of $0.25 for the typical residential bill (1,000 kWh). If the Existing Riders continued as approved, a 1,000 kWh residential customer would pay on average for Rider DFC, a total monthly charge of 0.0257 cents/kWh resulting in a monthly cost of $0.26. See Exhibit G hereto for impacts for other customer classes and usage levels.

11

12. Applicants have attached as Exhibit H hereto proposed tariff sheets reflecting Phase-In-Recovery Charges that are expected to approximate the final tariff charges, based upon currently available information related to the terms of the proposed issuance of Phase-In-Recovery Bonds (the “Proposed Tariff Sheets”). Following issuance of the Financing Order and upon pricing of the Phase-In-Recovery Bonds, the Proposed Tariff Sheets will be updated in accordance with the Commission-approved adjustment mechanism contained in the Financing Order as described in paragraph 16 below to reflect actual costs and any other revised assumptions (e.g., electricity consumption) and filed with the Commission pursuant to O.R.C. § 4928.232(H) (as so updated, the “Final Initial Tariff Sheets”). The Existing Riders will be reduced to zero on the effective date of the Final Initial Tariff Sheets subject to final reconciliation of the remaining deferral balances, if any, which will be maintained on the Applicants books subject to carrying charges until full cost recovery occurs. Any final reconciliation that reduces deferral balances below zero shall similarly produce a customer credit and will not affect the Phase-In-Recovery Charges, which are irrevocable.

13. As reflected in the description on the reconciliation mechanism shown in Exhibit F, the determination of the Phase-In-Recovery Charges for each Applicant will take into account (a) the timing and amounts of principal, interest and other ongoing costs of the Phase-in-Recovery Bonds, and (b) the expected monthly electricity consumption by customers of the Applicant. The Phase-In-Recovery

12

Charges shall also take into account factors such as (i) expected delays between the billing and collection of Phase-In-Recovery Charges, and (ii) expected Phase-In-Recovery Charge uncollectibles, which factors will impact the amount and/or timing of collections received in respect of the Phase-In-Recovery Charges, and will therefore impact the rate at which the Phase-In-Recovery Bonds are repaid and interest accrues thereon. The methodology proposed for allocating the amounts to be collected under the Phase-In Recovery Charges among customer classes for each Applicant is generally consistent with the allocations in place under the Existing Riders. Each Applicant will estimate the amount of revenue otherwise collected from each rate schedule under the Existing Riders for the Phase-In Costs. These estimated revenues, by rate schedule, will then be used to determine allocation ratios representing the proportion of the total revenue collected from each rate schedule under the existing recovery methodology on a monthly basis. These allocation ratios will then be applied to the estimated amounts to be recovered under the Phase-In Recovery Charges so that in effect, each rate schedule will be paying approximately the same proportion of the Phase-In Recovery Charges as they otherwise would for Rider DFC, Rider DGC (CEI only) and Rider RER1 (OE and CEI only) under the existing recovery methodology. In the event that any Phase-In Recovery Charges cannot be allocated to a given customer class(es) (e.g., no customers remain in such class(es)), such charges shall be allocated to the remaining customer classes, using the same ratable allocation to the customer classes excluding the class(es) where allocation is infeasible.

13

14. Since the Phase-In Recovery Charges are recovered on a nonbypassable basis, the methodology proposed for allocating the Phase-In Recovery Charges for each Applicant to governmental aggregation customers is the same as all other customers. The nonbypassability of the Phase-In Recovery Charges, along with the rate design methodology described in paragraph 13 above, ensure that all customers, including governmental aggregation customers, receive a proportion of the benefits generally consistent with the proportion of the charges they are paying under the existing recovery methodology. Additionally, consistent with 4928.231(B)(5), Exhibit B provides each Applicant’s initial estimate of the amount of Phase-In-Recovery Charges necessary to recover all Phase-In-Costs and Financing Costs.

15. The Phase-In-Recovery Bonds would be structured in the manner provided for in the Financing Order consistent with the Act, thus enabling the Phase-In-Recovery Bonds to achieve the highest credit rating and a lower cost than Applicants’ existing, Commission-approved carrying charges, thereby both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with the current Commission-approved mechanisms. Thus, issuing Phase-In-Recovery Bonds as proposed, pursuant to the Act, would lower the costs to customers while still permitting Phase-In-Recovery Property to be fully collected over a period that is not expected to exceed the longest remaining recovery period under the Existing Riders.

16. The Applicants request that the Financing Order establish the nonbypassable Phase-In-Recovery Charges in accordance with the Proposed Tariff Sheets,

14

described in paragraph 12 above, that will be applied and billed to all customers of each Applicant as a result of the issuance of the proposed Phase-In-Recovery Bonds pursuant to O.R.C. § 4928.239(B)(1), as updated through the Final Initial Tariff Sheets. The final initial Phase-In-Recovery Charges to be included in the Final Initial Tariff Sheets will reflect the terms and conditions of the Final Financing Order including all Phase-In Costs and Financing Costs. As required by O.R.C. § 4928.232(H), after the final terms of the respective tranches of Phase-In-Recovery Bonds have been established and prior to the issuance of those Bonds, the Applicants will determine the resulting final initial Phase-In-Recovery Charges in accordance with the adjustment mechanism approved in the Final Financing Order and make a compliance filing of the Final Initial Tariff Sheets in this docket, which Phase-In-Recovery Charges and Final Initial Tariff Sheets shall be final and effective upon the issuance of the Phase-In-Recovery Bonds without further Commission action.

17. The property, rights and interests of each Applicant or its SPE Assignee (further discussed below) under the Financing Order, including the right to impose, charge and collect the Phase-In-Recovery Charges that shall be used to pay and secure the payment of the Phase-In-Recovery Bonds and Financing Costs, and the right to obtain adjustments to those charges, together with the revenues, receipts, collections, rights to payment, payments, moneys, claims or other proceeds arising from the rights and interests created under the Financing Order, shall constitute, until fully collected, Phase-In-Recovery Property as defined under O.R.C. § 4928.23(K). For avoidance of doubt, “Phase-In-Recovery Revenues”

15

constitute “Phase-In-Recovery Property.” The Phase-In-Recovery Charges will be included in customers’ bills of each Applicant, and there will be notation on customers’ bills denoting that the right to impose, charge and collect Phase-In-Recovery Charges is owned by the SPE formed by such Applicant as discussed below.

18. As reflected in Exhibit I Proposed Bill Format, the Applicants seek approval of a modified bill format that includes the following language in the notes section of the bill: “Cost Recovery Charges – Recovers previously incurred costs, including PUCO-approved Phase-In Recovery Charges [Applicant Name] collects from all customers on behalf of a subsidiary, [SPE Name], which owns the right to impose and collect such charges.” The Applicants may also include similar language in billing inserts or other communication to customers. Such notation is important to preserve the “bankruptcy remote” nature of the securitization by respecting the legal ownership of the Phase-In Recovery Property.

IV. Securitization Structure and Documentation.

19. Each Applicant will form a separate, wholly-owned limited liability company, which is expected to be organized in Delaware, as a SPE for purposes of the securitization transaction. Each Applicant will then transfer, sell or assign its Phase-In-Recovery Property to its SPE. See Exhibit J hereto for a structure/transaction flow chart. Applicants request that the Financing Order confirm the formation of each SPE, the sale of Phase-In-Recovery Property to each SPE, and the issuance by each SPE of Phase-In-Recovery Bonds secured by the Phase-In-Recovery Property and other assets and property (subject to possible limited exceptions consistent with paragraph 21(e) below) owned by such SPE.

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a) Each SPE will be a bankruptcy-remote, special purpose limited liability company, in that its activities generally will be limited to (i) purchasing, owning, administering and servicing the Phase-In-Recovery Property transferred, sold or assigned to it, (ii) issuing and, if applicable, registering the Phase-in-Recovery Bonds, (iii) making payments on the Phase-In-Recovery Bonds, (iv) managing, selling, assigning, pledging, collecting amounts due on, and otherwise dealing with the Phase-In-Recovery Property and (v) granting a statutory first priority security interest in the Phase-In-Recovery Property to secure such Phase-In-Recovery Bonds. Restrictions will be imposed on each SPE’s ability to commence a bankruptcy case or other insolvency proceeding. Each SPE will have no employees, and it will engage with other parties to undertake the activities necessary to issue the Phase-In-Recovery Bonds and perform other functions in connection with each issuance.

b) Each of the Applicants will capitalize its respective SPE in an amount anticipated to be approximately 0.50 percent of its initial principal balance of Phase-In-Recovery Bonds, as may be adjusted at the time of issuance based on rating agency requirements. Each Applicant intends to finance its respective SPE’s capitalization amount with cash from working capital, and such amounts will not constitute Financing Costs or be subject to recovery through Phase-In-Recovery Charges. The purpose of this capitalization

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amount is to cover unexpected ongoing Financing Costs or unexpected short-falls in collections until a true-up adjustment can be effected and the additional revenues can be collected. However, each Applicant will be authorized to recover its average long term debt rate without reduction for accumulated deferred income taxes on its respective SPE’s capitalization amount as an ongoing Financing Cost. Upon the full repayment of the Phase-In-Recovery Bonds, the capitalization amount will be returned to each of the Applicants to the extent of available funds.

c) Upon the sale of the Phase-In-Recovery Property by each Applicant to its SPE subsidiary as authorized under the Financing Order, there will arise and constitute an existing, present property right and interest in such Phase-In-Recovery Property, which shall continue to exist until the Phase-In-Recovery Bonds and all applicable Financing Costs are paid in full. Consistent with O.R.C. § 4928.232(G), each Applicant requests that the Financing Order confirm the creation of its Phase-In-Recovery Property and that such creation shall be simultaneous with the sale of that property to its SPE, and the grant of a security interest in its Phase-In-Recovery Property, among other SPE assets and property, to secure the repayment of Phase-In-Recovery Bonds and Financing Costs. Additionally, consistent with O.R.C. §4928.234(D), the Financing Order should confirm that all such Phase-In-Recovery Property shall continue to exist regardless of whether Phase-In-Recovery Charges have been billed, have accrued or have been collected and notwithstanding any requirement that value or amount of the property is dependent on the future

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provision of service to customers by the Applicants, and shall continue to exist until the Phase-In-Recovery Bonds and all Financing Costs are paid in full.

d) Each SPE will acquire the Phase-In-Recovery Property from the appropriate Applicant with the proceeds of Phase-In-Recovery Bonds, the repayment of which will be secured by a first priority pledge and security interest in all right, title, and interest of the SPE in (i) the Phase-In-Recovery Property, (ii) the transaction documents, (iii) the collection account and all subaccounts established in the Indenture (discussed below) under which the Phase-In-Recovery Bonds will be issued, (iv) the cash used to capitalize the SPE, (v) all other property owned by the SPE (with limited exceptions as may be appropriate) and (vi) all proceeds of each of the foregoing. Each SPE’s Phase-In-Recovery Bonds will be non-recourse to the related Applicant and its assets (i.e., the Applicants will have no obligation to pay any of the principal, interest or other amounts payable on the Phase-In-Recovery Bonds or any Financing Costs); provided, however, that each Applicant could be liable to holders of Phase-In-Recovery Bonds in the event that it breached representations, warranties or covenants made by it in connection with its Sale Agreement (discussed below) or otherwise to such holders in connection with the securitization.

e) Each SPE will be an “Assignee” of Phase-In-Recovery Property as defined in O.R.C. § 4928.23(B) and as provided for in O.R.C. § 4928.234(A).

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f) Each SPE shall, pursuant to its Indenture or organizational documents, have a “priority of payments” that shall establish how collections of Phase-In-Recovery Charges and any other amounts are applied to pay principal, interest on, and other costs related to the Phase-In Recovery Bonds. The right to impose, charge and collect Phase-In-Recovery Charges, although owned by the applicable SPE, will be considered electric distribution utility charges for purposes of priority of customer payments and termination/reconnection of service will be considered charges of the Applicants and will be accorded similar treatment with the Applicants’ own charges under applicable statutes, the Commission’s rules, and Applicants’ tariffs and Electric Service Regulations.

20. The Phase-In-Recovery Bonds contemplated by the transactions described in this Application will be “asset-backed securities.” A key feature of any such securities is that the SPE owning the asset or group of assets underlying the asset-backed securities be “bankruptcy remote” from the entity originating such asset or group of assets, which in this case will be an Applicant. More specifically, an asset-backed security must be secured by, and payable from, a cash flow stream associated with an identifiable asset, the collections from which are sufficient to pay debt service and related costs, and the ownership of that asset is normally vested in a limited purpose entity, such as a special-purpose corporation, trust or limited liability company, which is insulated from the credit risks, including the possible bankruptcy, of the originating entity. As a result, the securities issued by such entity shall be secured by, and payable out of, the related cash flow stream.

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This structure means the Phase-In-Recovery Bonds should have less credit risk than debt securities issued by an Applicant, and investors should therefore be willing to accept a lower rate of return for the asset-backed security than for such other debt securities. If such criteria are satisfied in the proposed securitization, the Phase-In-Recovery Bonds secured by the Phase-In-Recovery Property should receive a triple-A (or equivalent) credit rating from applicable rating agencies.

21. In order for the Phase-In-Recovery Bonds to have relatively little credit risk, and therefore, for investors to be willing to accept a relatively lower interest rate for the Phase-In-Recovery Bonds, there are a number of other structural elements and express regulatory authorizations and confirmations customarily required to be included in a Financing Order for ratings and marketing purposes even if already included in the underlying statutory provisions, which are included in this Application including those in paragraphs 21(a) through (j) below.

(a) Irrevocability: Consistent with O.R.C. § 4928.235(B), the Financing Order should provide that it is irrevocable when final and the Commission may not reduce, impair, postpone, or terminate the Phase-In-Recovery Charges authorized in the Financing Order or impair the Phase-In-Recovery Property or the collection of Phase-In-Recovery Charges or the recovery of Phase-In-Costs and Financing Costs. The Financing Order should further confirm, consistent with the Act, that no adjustment (described in O.R.C. §4928.238) approved by the Commission shall affect the irrevocability of the Financing Order.

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(b) State Pledge: Consistent with O.R.C. § 4928.2315, the Financing Order should confirm that the State of Ohio pledges to and agrees with the bondholders, any assignee, and any financing parties under the Financing Order that the State of Ohio will not take or permit any action that impairs the value of Phase-In-Recovery Property under the Financing Order or revises the Phase-In-Costs for which recovery is authorized under the Financing Order or, except as allowed under O.R.C. § 4928.238, relating to the approved adjustment mechanism, reduce, alter or impair Phase-In-Recovery Charges until the Phase-In-Recovery Bonds, all Financing Costs, and all amounts to be paid under any ancillary agreement are paid or performed in full.

(c) True Sale: Consistent with O.R.C. § 4928.2313, the Financing Order should confirm that any sale, assignment, or transfer of Phase-In-Recovery Property under a Financing Order shall be an absolute transfer and true sale of, and not a pledge of or secured transaction relating to, the seller’s right, title and interest in, to, and under the Phase-In-Recovery Property.

(d) Successor utility: Consistent with O.R.C. § 4928.2311, the Financing Order should confirm that any successor to an electric distribution utility subject to a Financing Order shall perform and satisfy all obligations of the electric distribution utility under the Financing Order.

(e) Security interest: Consistent with O.R.C. § 4928.2312, the Financing Order should confirm that a valid and binding security interest in the Phase-In-Recovery Property, among other SPE assets and property, will be created, perfected and enforced to secure the repayment of the principal of and interest

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on Phase-In-Recovery Bonds, amounts payable under any ancillary agreement, and other Financing Costs; such security interest to be a continuously perfected security interest with priority over any other lien that may subsequently attach to the Phase-In-Recovery Property unless the holder of such lien otherwise agrees in writing. The Financing Order should further confirm that no application of the adjustment mechanism (described in O.R.C. §4928.238) shall effect the validity, perfection, or priority of a security interest in or the transfer of Phase-In-Recovery Property under the Financing Order.

(f) Bankruptcy of the electric distribution utility: Consistent with O.R.C. § 4928.2310, the Financing Order should confirm that (i) if an electric distribution utility subject to a Financing Order defaults on any required payment of Phase-In-Recovery Revenues to any SPE, a court, upon application by an interested party and without limiting any other remedies available to the applicant, shall order the sequestration and payment of the Phase-In-Recovery Revenues to the applicable SPE for the benefit of bondholders, any assignee and any financing parties, and (ii) customers of an electric distribution utility and each SPE shall be held harmless for the electric distribution utility’s failure to remit any required payment of Phase-In-Recovery Revenues, and such failure shall in no way affect the Phase-In-Recovery Property or the rights to impose, collect and adjust the Phase-In-Recovery Charges.

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(g) Nonbypassability: Consistent with O.R.C. § 4928.239, the Financing Order should confirm that the Phase-In-Recovery Charges cannot be avoided by any customer or other person obligated to pay the charges and that, if a customer subsequently receives retail electric distribution service from another electric distribution utility operating in the same service area, the Phase-In-Recovery Charges shall continue to apply to that customer.

(h) Third Party Billing Agents. Consistent with the nonbypassable nature of the Phase-In-Recovery Charges, the Financing Order should further provide that, while current law requires the electric distribution utility to bill and collect the Phase-In-Recovery Charges directly from customers, if and to the extent that the Commission subsequently allows any third parties to bill and/or collect any Phase-In-Recovery Charges (separately, or as one billing component that may be levied upon the customer), the Commission shall take the necessary steps to ensure nonbypassability, both to preserve the high credit quality of the Phase-In-Recovery Bonds and to minimize the likelihood that any defaults by any such third party result in an increase in charges thereafter billed to all customers. Such steps should generally require that (i) the Commission establish operational standards and minimum credit requirements for any such third party billing intermediary, or require a cash deposit, letter of credit or other credit mitigant in lieu thereof, (ii) the Commission find that regardless of who is responsible for billing, the customers of that electric distribution utility shall continue to be responsible for Phase-In-Recovery Charges, (iii) if a third party meters and bills for the Phase-In-Recovery Charges, that the

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electric distribution utility (as servicer) must have access to information on billing and usage by customers to provide for proper reporting to the SPE and to perform its obligations as servicer, (iv) in the case of a third party default, billing responsibilities must be promptly transferred to another party to minimize potential losses; and (v) the failure of customers to pay Phase-In-Recovery Charges shall allow service termination by the electric distribution utility on behalf of the SPE of the customers failing to pay Phase-In-Recovery Charges in accordance with Commission-approved service termination rules and orders.

(i) Validity of the Financing Order: Consistent with O.R.C. § 4928.235, the Financing Order should confirm that it shall remain in effect until the Phase-In-Recovery Bonds issued under the Financing Order are paid in full and all Financing Costs relating to the Phase-In-Recovery Bonds have been paid in full, and the Financing Order shall remain in effect and unabated notwithstanding the bankruptcy, reorganization, or insolvency of the electric distribution utility or any affiliate of the electric distribution utility or the commencement of any judicial or nonjudicial proceeding on the Financing Order.

(j) Treatment of Phase-In-Recovery Charges: Consistent with O.R.C. § 4928.232(E)(7), to ensure the full and timely collection of Phase-In-Recovery Charges, including to minimize the likelihood that customer defaults in the payment of Phase-In-Recovery Charges result in additional charges being borne by other non-defaulting customers, the Financing Order should provide

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that the electric distribution utility or other servicer, on behalf of the SPE, shall terminate service of any customer who defaults in the payment of Phase-In-Recovery Charges in accordance with applicable statutes, Commission rules and orders and the Applicants’ rules, tariffs, and practices applicable to other charges owed directly to the electric distribution utility.

22. In order to accomplish the securitization, each Applicant will enter into several agreements with its respective SPE subsidiary. Such agreements will be substantially similar among each Applicant and its respective SPE subsidiary. In the case of a registered public offering: (i) material agreements will generally be filed as exhibits to a registration statement filed with the U.S. Securities and Exchange Commission (“SEC”); and (ii) the material terms of each agreement will also be summarized in the related prospectus included in any such registration statement and used in the offer and sale of the Phase-In Recovery Bonds. In the case of an unregistered offering, the material terms of each agreement will typically be summarized in an offering memorandum (or private placement memorandum) used in connection with the marketing of the securities, and are generally made available to current or prospective security holders.

a) The LLC Agreement for each SPE is the key organizational and governing document for the SPE and contains customary SPE provisions related to its restricted purposes described in paragraph 19(a). The LLC Agreement for each SPE will not permit it to engage in any activity not related to its restricted purposes and will contain provisions regarding separateness, independent managers and restrictions on commencing bankruptcy and

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insolvency proceedings. It is expected that each SPE will be managed by five managers, at least two of which will be independent managers, in each case appointed by the owner Applicant. Only independent managers are expected to be paid compensation.

b) Each Administration Agreement will provide for the administrative functions that each Applicant will provide to its SPE subsidiary, including services relating to the preparation of financial statements, required filings with the SEC (if any), any tax returns required to be filed under applicable law, qualifications to do business and minutes of managers’ meetings. Each Applicant (or any successor administrator thereof) will receive a periodic administration fee, expected to be $50,000 annually, for performing these services, which, together with costs and expenses incurred by the administrator, will be recovered through Phase-In-Recovery Charges–as Financing Costs.

c) Each Sale Agreement will provide for the terms and conditions of the absolute transfer and true sale of the appropriate Applicant’s right, title and interest in, to, and under its Phase-In-Recovery Property to its SPE subsidiary that will issue Phase-In-Recovery Bonds, consistent with the provisions of O.R.C. §4928.2313. Each SPE’s obligation to purchase, and the appropriate Applicant’s obligation to sell, the Phase-In-Recovery Property is subject to numerous conditions in the Sale Agreement, including (among other things): (i) delivery by the appropriate Applicant of a duly executed bill of sale identifying the Phase-In-Recovery Property, (ii) receipt of a Financing Order

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from the Commission creating the Phase-In-Recovery Property, (iii) certain conditions related to the solvency of the appropriate Applicant, and (iv) delivery by the appropriate Applicant of appropriate opinions of counsel and officers’ certificates. Each Sale Agreement will further provide that the appropriate Applicant has taken all actions required to transfer ownership of the Phase-In-Recovery Property to its SPE, free and clear of all liens, and to perfect such transfer, and that the Phase-In-Recovery Bonds have received a rating or ratings as required by the Financing Order. Customary representations, warranties and covenants by the appropriate Applicant and its SPE will be included in each Sale Agreement.

d) Each Servicing Agreement details the services that each Applicant, as servicer, will provide to its SPE principally with respect to calculating, billing and collecting the Phase-In-Recovery Charges. Each servicer under the applicable Servicing Agreement will be responsible for (among other things): (i) posting all collections, (ii) responding to inquiries by customers, competitive retail electric suppliers (if any), third party billing agents (if any), the Commission or others regarding Phase-In-Recovery Charges, (iii) calculating historical electricity usage and customer payment information (e.g., uncollectibles, typical lags between billing and collection of charges), (iv) projecting future electricity usage and customer payment information, (v) accounting for collections, (vi) furnishing periodic reports and statements, (vii) making certain filings as necessary to perfect the trustee’s lien on the Phase-In-Recovery Property and (viii) taking all necessary action in

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connection with true-up adjustments. Each of the Applicants (or any successor servicer thereof) will receive a periodic servicing fee, which will be recovered through Phase-In-Recovery Charges as a Financing Cost. Based upon both the estimated costs of performing the servicing function and market precedent for such fees, the annual servicing fee shall be 0.10% of the initial principal amounts of the Phase-In-Recovery Bonds issued by the SPE of such Applicant, which fee will be paid to the Applicant or a successor electric distribution utility company. Customary for transactions of this type, in the unlikely event that there is no electric distribution utility successor willing or able to assume such servicing duties, a non-utility servicer may need to be engaged, and given the incremental costs for such an entity to perform the servicing function (i.e., an entity not already billing and collecting the same customer base for other charges), the annual servicing fee for such non-utility successor shall not exceed 0.75% of the initial principal amount of the Phase-In-Recovery Bonds issued by the SPE of such electric distribution utility, unless otherwise approved by the Commission.

e) The Phase-In-Recovery Bonds issued by each SPE will be issued pursuant to an Indenture (and indenture supplement) between such SPE and a third party trustee, which will describe the particular terms of the Phase-In-Recovery Bonds, including the principal amount, interest rate, payment dates, issuance date, collateral, authorized denominations, principal repayment schedule and other material terms of the Phase-In-Recovery Bonds. The Indenture will provide for certain covenants on the part of the applicable SPE, including

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covenants (among others) restricting each SPE’s ability to (i) merge or consolidate with any other entity, (ii) sell, convey, transfer or otherwise dispose of its assets or property, (iii) terminate its existence or dissolve or liquidate, (iv) permit any lien, charge, security interest or other encumbrance (other than the lien and security interest granted under the Indenture) to be created, (v) engage in any business other than financing, purchasing, owning and managing the Phase-In-Recovery Property, (vi) make any payments, distributions or dividends, and (vii) issue, incur, assume, guarantee or otherwise become liable for any indebtedness except for the Phase-In-Recovery Bonds and any other secured obligations arising under the transaction documents. Each Indenture will further provide for specific events of default, the occurrence and continuation of which may result in the acceleration of the indebtedness evidenced by the Phase-In-Recovery Bonds or the exercise of other remedies by the trustee or bondholders.

23. The Applicants seek approval to issue and sell the Phase-In-Recovery Bonds either through (i) a registered public offering under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or (ii) an unregistered offering exempt from registration pursuant to Section 4(2) of the Securities Act (A) with subsequent resales to institutional purchasers and/or purchasers outside the United States pursuant to Rule 144A and Regulation S, respectively, under the Securities Act or (B) as a negotiated private placement. The decision as to which method may be preferable is dependent on factors such as issue size, complexity of issue, current market conditions, and ongoing administrative costs, some of which are

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not known with certainty at this time. The upfront Financing Cost estimates provided by the Applicants in Exhibit C hereto include an estimate for underwriting and/or placement fees for each approach. The Applicants will determine the appropriate format based upon the expected lowest cost alternative at the time the Phase-In-Recovery Bonds are marketed, considering both the expected interest cost and the estimated upfront and ongoing Financing Costs associated with the Phase-In-Recovery Bonds.

24. Each SPE may, as an alternative to directly issuing and marketing the Phase-In-Recovery Bonds to unaffiliated investors through either a registered public offering or unregistered exempt offering as described in paragraph 23 above, issue the Phase-In-Recovery Bonds to a single special purpose trust established jointly by the Applicants (the “PIR Trust”).

a) Notes or other pass-through certificates or similar instruments (the “PIR Certificates”) would be issued by the PIR Trust to investors representing undivided beneficial interests in the SPEs’ Phase-In-Recovery Bonds held by the PIR Trust. The PIR Trust would engage in no activities other than the holding of the Phase-In-Recovery Bonds, issuing the PIR Certificates and engaging in other related activities.

b) The PIR Certificates may be sold either through a registered public offering or unregistered exempt offering as described in paragraph 23 above. The decision as to which method may be preferable is dependent on the same factors discussed in paragraph 23 above.

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c) The PIR Certificates would be expected to receive a triple-A (or equivalent) credit rating from applicable rating agencies based upon the underlying structure of the PIR Trust-owned Phase-In-Recovery Bonds secured by Phase-In-Recovery Property and supported by the adjustment mechanism.

d) Combining the issuance of the Phase-In-Recovery Bonds by each of the Applicants in one transaction through the use of the PIR Trust could, as detailed in Exhibit C hereto, result in lower issuance costs and other efficiencies, thereby lowering costs for the Applicant’s customers. None of the SPEs would be obligated, however, with respect to any other SPE’s Phase-In-Recovery Bonds; therefore, the customers of the respective Applicants would not be affected by the actions of any other Applicant or the adequacy of the Phase-In-Recovery Property of such other Applicant.

e) The PIR Trust would transfer an allocable portion of net proceeds from the sale of the PIR Certificates to each SPE and each such SPE would in turn transfer those proceeds to the applicable Applicant in consideration for the Phase-In-Recovery Property sold to such SPE by such Applicant.

25. As is the case with most debt issuances, the cost of the debt, i.e., the effective interest rate, will not be known until the Phase-In-Recovery Bonds are priced at the time they are sold. Based upon current market conditions, typical structural features, and assuming an SEC-registered offering of PIR Certificates rated in the highest category by the rating agencies most actively involved in the rating of securitizations of this type, the weighted average yield of the Phase-In-Recovery Bonds (exclusive of upfront and ongoing costs) is estimated to be less than 3%.

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In the absence of an extraordinary change in market conditions between the date of this Application and the issuance date of the Phase-In-Recovery Bonds, significant cost savings and mitigation of rate impacts through the proposed Phase-In-Recovery Bond issuance are expected to result (based on the Phase-In-Recovery Bond expected principal repayment schedule reflected in Exhibit E); as such, only a weighted average yield on the various tranches of the Phase-In-Recovery Bonds in excess of 5% would overcome the benefits associated with the Applicants’ proposal. Consistent with O.R.C. § 4928.232(F), the Applicants request that the Commission, in the Financing Order, afford the Applicants the flexibility in establishing the terms and conditions for the Phase-In-Recovery Bonds to accommodate changes in market conditions, including repayment schedules, interest rates, Financing Costs, collateral requirements, required debt service and other reserves, and the ability of each of the Applicants, at its option, to effect a series of issuances of Phase-In-Recovery Bonds and correlated assignments, sales, pledges, or other transfers of Phase-In-Recovery Property.

26. It is expected that the Phase-In-Recovery Bonds or if applicable, the PIR Notes, would be sold pursuant to a negotiated sale to investors, coordinated through one or more underwriters, initial purchasers or placement agents. It is customary for securities of this type to be offered pursuant to a negotiated sale. Furthermore, and consistent with most other transactions of this type, the Applicants have engaged an investment banking firm, frequently involved in the underwriting of this type of securities to assist in the process of structuring the transaction.

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27. Certain of the Financing Costs to be recovered from the proceeds of the Phase-In-Recovery Bonds and included in the Phase-In-Recovery Charges will constitute costs of issuing the Phase-In-Recovery Bonds. These Financing Costs, which are referred to as “Estimated Upfront Financing Costs” in Exhibit C, include, without limitation, estimated costs associated with the retiring or refunding of existing long-term debt of the Applicants, counsel fees, structural advisory fees, underwriting fees, rating agency fees, independent auditors fees and filing, printing and marketing expenses. Other Financing Costs will constitute costs necessary to support, repay and service the Phase-In-Recovery Bonds. These Financing Costs, which are referred to as “Estimated Ongoing Financing Costs” in Exhibit C hereto, include servicing fees and other administrative fees. In addition to debt service, these Ongoing Costs include the cost of any overcollateralization or other reserves (if required) for the Phase-In-Recovery Bonds, the periodic costs of servicing the Phase-In-Recovery Bonds and the Phase-In-Recovery Charges, SPE administrative costs and, if the Phase-In-Recovery Bonds are issued in a registered public offering, ongoing SEC compliance costs. While these costs are expected to be relatively stable over time, they may increase or decrease based upon market conditions or factors beyond the Applicants’ control. Debt service, as well as these Ongoing Costs, will be recovered through the imposition and collection and adjustment (or true up), from time to time, of the Phase-In-Recovery Charges. Finally, Financing Costs include the recovery of all tax liabilities associated with the collection of the Phase-In-Recovery Charges or otherwise arising due to the securitization.

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V. Adjustment Mechanism.

28. The Applicants have also included in Exhibit F hereto a proposed formula-based mechanism for making expeditious periodic adjustments in the Phase-In-Recovery Charges that each Applicant’s customers would be required to pay under the Financing Order. Specifically, the initial update to each Applicant’s Rider PIR will be up to 12 months after the issuance date for the Phase-In-Recovery Bonds. Thereafter, each Applicant’s Rider PIR shall be updated semiannually with the exception of the last year each series of Phase-In-Recovery Bonds is expected to be outstanding in which case updates, as frequently as monthly may be necessary. Otherwise, no later than November 1^st and May 1^st of each year, the Applicants will file with the Commission a request for approval of these adjusted Phase-In-Recovery Charges which, unless otherwise ordered by the Commission, shall become effective on a service rendered basis on the succeeding January 1^st and July 1^st, respectively. Consistent with O.R.C. § 4928.238(B), the review of such a request would be limited to determining whether there is any mathematical error in the application of the formula-based mechanism relating to the appropriate amount of any overcollection or undercollection of Phase-In-Recovery Charges and the amount of an adjustment. These adjustments will also cover increases or decreases in trustee and servicing costs, rating agency surveillance fees, legal and accounting fees and other ongoing Financing Costs as well as adjustments for dealing with differences between estimated and actual costs. These adjustments will ensure the recovery of adequate revenues sufficient to provide for the payment of Phase-In Costs, principal, interest, and redemption

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premiums on the Phase-In-Recovery Bonds, any payments under an ancillary agreement, any amounts required to fund or replenish a reserve account or other account established under any indenture, ancillary agreement or other financing document relating to the Phase-In-Recovery Bonds, any costs of retiring or refunding any existing long-term debt of the Applicants with the proceeds from the Phase-In-Recovery Bonds, and any other Financing Costs and other fees, costs, and charges in respect of Phase-In-Recovery Bonds approved under the proposed Financing Order. The adjustments will also take into account revised projections of electricity consumption and customer payment information (e.g., uncollectibles, lags between customer billing and collection). Finally, the adjustment mechanism will provide for any changes or updates to the Proposed Tariff Sheets compared with the Final Initial Tariff Sheets necessary to reflect the terms of the Financing Order pursuant to O.R.C. § 4928.232(H).

29. Issuance of a Financing Order as proposed herein is consistent with O.R.C. § 4928.02. Customers will benefit from the provision of reasonably-priced retail electric service. O.R.C. § 4928.02(A). Because securitization will reduce the overall cost of the nonbypassable riders being replaced by the Phase-In-Recovery Charges and will result in cost savings and rate mitigation, securitization promotes customer choice and the diversity of electric supplies and suppliers. O.R.C. § 4928.02(B) and (C). Securitization also recognizes the continuing emergence of competitive electricity markets through the development and implementation of flexible regulatory treatment and also facilitates the state’s effectiveness in the global economy. O.R.C. § 4928.02(G) and (N).

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VI. Timing of Commission Action.

30. Applicants request that the Commission consider and approve the securitization and all related matters requested in this Application on an expedited basis by August 1, 2012, in order that Phase-In-Recovery Bonds may be issued in a timely fashion to take advantage of historically low interest rates and the currently-functioning credit markets, and that the savings for customers expected to arise from the implementation of this Application may start being realized as soon as possible, which is within the 135-day timeline set forth in O.R.C. § 4928.232(C)(1).

WHEREFORE, for the reasons set forth above the Applicants respectfully request that the Commission:

(1) Approve the Applicants’ proposed securitization and, pursuant to the Act, issue a Financing Order granting any and all authorizations that may be required under Ohio law, including, without limitation, approval and authorization in the Financing Order for the consummation of the transactions contemplated by the issuance of Phase-In-Recovery Bonds and related matters (all as described in this Application), including, without limitation, (a) the securitization transaction providing for the recovery of Phase-In-Recovery Costs and Financing Costs, through the issuance of up to an aggregate amount of $555 million of Phase-In-Recovery Bonds payable from collections from Phase-In-Recovery Charges, and the execution, delivery and performance of all documentation necessary to consummate the securitization transaction, (b) the recovery of certain deferred

37

Phase-In-Costs and Financing Costs, (c) the imposition, charging, and collection of Phase-In-Recovery Charges, (d) the creation of the Phase-In-Recovery Property (such creation to be simultaneous with the sale of such Phase-In-Recovery Property to each SPE), the establishment and adjustment from time to time of Phase-In-Recovery Charges from which Phase-In-Recovery Bonds and ongoing Financing Costs will be paid and the adjustment mechanism to be used, (e) the allocation of Phase-In-Recovery Charges among customer classes, (f) the maximum term of the Phase-In-Recovery Bonds, (g) the organization and capitalization of each SPE to which Phase-In-Recovery Property will be sold, (h) the servicing of Phase-In-Recovery Charges by Applicants as initial servicers or any successor servicer under the servicing agreements, (i) implementation of the trust structure contemplated by paragraph 24 of this Application, (j) flexibility in establishing the terms and conditions for the Phase-In-Recovery Bonds to accommodate changes in market conditions, (k) the ability to issue Phase-In-Recovery Bonds in one or more series and to effect correlated assignments, sales, pledges, or other transfers of Phase-in-Recovery Property, (l) approval of the Final Initial Tariff Sheets and associated adjustment mechanism, (m) approval of the change reflected in the proposed Bill Format, and (n) all of the determinations and descriptions required by §4928.232;

(2) Confirm, provide and include in the Financing Order each provision requested in this Application to be confirmed in the Financing Order including, without limitation, each provision set forth in paragraph 21 of this Application;

38

(3) Find that the proposed securitization, consistent with market conditions, measurably enhances cost savings to customers and mitigates rate impacts to customers as compared to the existing cost recovery methods of each of the Applicants;

(4) Make such other findings and issue such other orders as requested by the Applicants in this Application; and

(5) Grant such other and further orders and approvals as it may deem necessary or proper under the circumstances.

[Remainder of Page Intentionally Left Blank]

39

Respectfully submitted,

OHIO EDISON COMPANY,

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, and

THE TOLEDO EDISON COMPANY

By:	/s/ James F. Pearson	By:	/s/ Steven R. Staub
	James F. Pearson		Steven R. Staub
	Vice President and Treasurer, as to each		Assistant Treasurer, as to each

STATE OF OHIO             )

                                           ) ss.:

SUMMIT COUNTY         )

James F. Pearson and Steven R. Staub, depose and say that they are Vice President and Treasurer and Assistant Treasurer, respectively, of each of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company, Applicants in the above matter, and that they have read and are fully acquainted and familiar with the contents of the foregoing Application and that the statements therein are true as they verily believe.

/s/ James F. Pearson	/s/ Steven R. Staub
James F. Pearson	Steven R. Staub
Subscribed and sworn to before me this 3rd day of May, 2012
	Attorneys for Applicant
/s/ Michele A. Buchtel	/s/ James W. Burk
Michele A. Buchtel	James W. Burk, Counsel of Record (0043808)
Notary Public, State of Ohio Resident of Summit County My Commission Expires August 28, 2016	FirstEnergy Service Company 76 South Main Street Akron, Ohio 44308 (330) 384-5861 Fax: (330) 384-3875 Email : burkj@firstenergycorp.com
	James F, Lang Laura C. McBride CALFEE, HALTER & GRISWOLD LLP 1405 East Sixth Street Cleveland, OH 44114

40

Exhibit list for Securitization Application

Exhibit A – Estimated Deferral Balances Subject to Securitization

Exhibit B - Estimated Comparison of Existing Rate Making and Securitization

Exhibit C – Estimated Up-front and Ongoing Financing Costs

Exhibit D – Expected Use of Proceeds and Capitalization

Exhibit E – Indicative Transaction Structure and Expected Principal Repayment Schedule

Exhibit F – Rider PIR Reconciliation Mechanism and Rate Design Process

Exhibit G – Estimated Monthly Typical Bill Impacts

Exhibit H - Proposed Tariffs Sheets for Rider PIR - Phase-In Recovery Rider

Exhibit I – Proposed Bill Format

Exhibit J - Structure/ Transaction Flow Chart

EXHIBIT A

ESTIMATED DEFERRAL BALANCES SUBJECT TO SECURITIZATION

Estimated December 31, 2012 Balances

		(A)		(B)		(C)		(D)		(E)	(F)
	Category and Current Recovery Mechanism	CEI		OE		TE		Total		Existing Recovery Period & Interest Rate	Recovery Authorization
1	Deferred Generation Costs - Rider DGC		127,049,987		0		0		$127,049,987	June 2011 - May 2021 Annual Interest Rate 6.85%	PUCO Case No. 08-935-EL-SSO Order dated March 25, 2009
2	2006-2007 Deferred Fuel Costs - Rider DFC		86,041,909		125,727,952		36,410,202		$248,180,063	January 2011 - December 2035 Annual Interest Rate 6.85%	PUCO Case No. 08-935-EL-SSO Order dated 3/25/09, Case No. 07-1003-EL-ATA Order dated 1/6/10, and continued by 10-388-EL-SSO dated 8/25/10
3	Residential All Electric Credits - Rider RER1 *		21,565,629		39,536,661		0		$61,102,290	September 2011 - June 2014 Annual Interest Rate 6.85%	PUCO Case No. 10-176-EL-ATA Order dated May 25, 2011
4	Total		$234,657,526		$165,264,613		$36,410,202		$436,332,340

* The deferred balance collected under Rider RER1 for TE is expected to be fully recovered by the effective date of the securitization.

Page 1 of 1

EXHIBIT B

CEI

ESTIMATED COMPARISON OF EXISTING RATE MAKING AND SECURITIZATION

		Estimated Recovery Under Existing Rate Making										Estimated Recovery Under Securitization												Savings
	(A)	(B)		(C)		(D)		(E)		(F)		(G)		(H)		(I)		(J)		(K)		(L)		(M)
	Period	Ending Balance		Return of Asset		Return on Asset @ 6.85%		CAT Tax  (a)		Total Amounts Billed		Ending Balance		Principal Payments		Interest Payments		Other Ongoing Financing Costs (b)		Total Payments		Total Amounts Billed (c)		Nominal Savings
1	Dec-12		234,657,526										250,680,890
2	Jun-13		222,194,399		12,463,127		7,787,537		52,789		20,303,453		237,804,995		12,875,895		2,446,322		451,515		15,773,732		18,171,590		2,131,863
3	Dec-13		208,639,682		13,554,717		7,352,046		54,499		20,961,262		222,288,856		15,516,139		2,406,252		457,158		18,379,550		18,760,329		2,200,932
4	Jun-14		195,192,852		13,446,830		6,881,966		52,993		20,381,789		206,760,936		15,527,920		2,357,966		452,187		18,338,073		18,241,701		2,140,088
5	Dec-14		187,241,557		7,951,295		6,512,594		37,704		14,501,593		195,867,010		10,893,925		2,309,643		401,745		13,605,314		12,978,926		1,522,667
6	Jun-15		180,315,736		6,925,822		6,270,732		34,400		13,230,954		186,711,934		9,155,076		2,275,741		390,845		11,821,662		11,841,704		1,389,250
7	Dec-15		172,904,508		7,411,228		6,027,521		35,032		13,473,781		177,446,971		9,264,963		2,247,250		392,928		11,905,142		12,059,034		1,414,747
8	Jun-16		165,774,407		7,130,101		5,777,713		33,648		12,941,462		168,457,507		8,989,464		2,213,620		388,362		11,591,447		11,582,608		1,358,853
9	Dec-16		158,158,013		7,616,394		5,527,546		34,263		13,178,204		159,355,569		9,101,938		2,150,694		390,393		11,643,025		11,794,492		1,383,711
10	Jun-17		150,711,317		7,446,696		5,268,733		33,146		12,748,575		150,420,503		8,935,066		2,086,980		386,707		11,408,754		11,409,974		1,338,600
11	Dec-17		142,770,256		7,941,061		5,007,705		33,755		12,982,520		141,365,331		9,055,171		2,024,435		388,714		11,468,320		11,619,355		1,363,165
12	Jun-18		135,028,261		7,741,995		4,738,236		32,533		12,512,764		132,506,087		8,859,244		1,961,049		384,684		11,204,978		11,198,924		1,313,840
13	Dec-18		126,785,862		8,242,400		4,467,100		33,131		12,742,630		123,537,086		8,969,000		1,899,034		386,656		11,254,691		11,404,654		1,337,976
14	Jun-19		118,652,739		8,133,123		4,185,717		32,112		12,350,953		114,702,980		8,834,107		1,836,251		383,296		11,053,654		11,054,103		1,296,850
15	Dec-19		110,008,493		8,644,246		3,901,088		32,703		12,578,037		105,754,472		8,948,507		1,774,412		385,244		11,108,164		11,257,343		1,320,694
16	Jun-20		101,549,363		8,459,130		3,607,271		31,454		12,097,855		96,999,625		8,754,848		1,703,336		381,125		10,839,309		10,827,580		1,270,275
17	Dec-20		92,571,173		8,978,190		3,311,403		32,036		12,321,630		88,064,524		8,935,101		1,562,326		383,045		10,880,471		11,027,858		1,293,771
18	Jun-21		83,760,729		8,810,444		3,005,869		30,803		11,847,116		79,245,628		8,818,896		1,418,413		378,974		10,616,283		10,603,169		1,243,947
19	Dec-21		79,392,337		4,368,392		2,754,916		18,569		7,141,877		73,712,097		5,533,531		1,276,371		338,611		7,148,514		6,391,980		749,897
20	Jun-22		77,707,313		1,685,024		2,680,806		11,381		4,377,211		71,297,464		2,414,633		1,187,245		314,895		3,916,773		3,917,604		459,607
21	Dec-22		75,888,920		1,818,393		2,621,493		11,574		4,451,460		68,826,957		2,470,507		1,148,354		315,532		3,934,393		3,984,057		467,403
22	Jun-23		74,082,179		1,806,741		2,559,089		11,381		4,377,211		66,342,410		2,484,547		1,108,563		314,895		3,908,005		3,917,604		459,607
23	Dec-23		72,137,839		1,944,339		2,495,547		11,574		4,451,460		63,792,094		2,550,316		1,068,545		315,532		3,934,393		3,984,057		467,403
24	Jun-24		70,200,776		1,937,063		2,428,767		11,381		4,377,211		61,226,453		2,565,641		1,027,468		314,895		3,908,005		3,917,604		459,607
25	Dec-24		68,121,587		2,079,189		2,360,697		11,574		4,451,460		58,593,737		2,632,716		986,145		315,532		3,934,393		3,984,057		467,403
26	Jun-25		66,044,990		2,076,598		2,289,232		11,381		4,377,211		55,944,369		2,649,369		943,741		314,895		3,908,005		3,917,604		459,607
27	Dec-25		63,821,418		2,223,572		2,216,315		11,574		4,451,460		53,226,577		2,717,792		901,069		315,532		3,934,393		3,984,057		467,403
28	Jun-26		61,595,422		2,225,996		2,139,834		11,381		4,377,211		50,490,762		2,735,815		857,295		314,895		3,908,005		3,917,604		459,607
29	Dec-26		59,217,261		2,378,161		2,061,726		11,574		4,451,460		47,685,131		2,805,630		813,230		315,532		3,934,393		3,984,057		467,403
30	Jun-27		56,831,305		2,385,956		1,979,874		11,381		4,377,211		44,860,063		2,825,068		768,041		314,895		3,908,005		3,917,604		459,607
31	Dec-27		54,287,626		2,543,678		1,896,208		11,574		4,451,460		41,963,742		2,896,321		722,539		315,532		3,934,393		3,984,057		467,403
32	Jun-28		51,730,402		2,557,224		1,808,606		11,381		4,377,211		39,046,522		2,917,220		675,890		314,895		3,908,005		3,917,604		459,607
33	Dec-28		49,009,506		2,720,896		1,718,990		11,574		4,451,460		36,056,564		2,989,957		628,903		315,532		3,934,393		3,984,057		467,403
34	Jun-29		46,268,907		2,740,599		1,625,231		11,381		4,377,211		33,044,200		3,012,364		580,746		314,895		3,908,005		3,917,604		459,607
35	Dec-29		43,358,264		2,910,642		1,529,244		11,574		4,451,460		29,957,567		3,086,634		532,227		315,532		3,934,393		3,984,057		467,403
36	Jun-30		40,421,326		2,936,938		1,428,892		11,381		4,377,211		26,846,969		3,110,598		482,512		314,895		3,908,005		3,917,604		459,607
37	Dec-30		37,307,524		3,113,802		1,326,084		11,574		4,451,460		23,660,519		3,186,450		432,411		315,532		3,934,393		3,984,057		467,403
38	Jun-31		34,160,369		3,147,156		1,218,674		11,381		4,377,211		20,448,498		3,212,021		381,089		314,895		3,908,005		3,917,604		459,607
39	Dec-31		30,829,045		3,331,323		1,108,563		11,574		4,451,460		17,158,992		3,289,507		329,354		315,532		3,934,393		3,984,057		467,403
40	Jun-32		27,456,811		3,372,234		993,596		11,381		4,377,211		13,842,253		3,316,738		276,372		314,895		3,908,005		3,917,604		459,607
41	Dec-32		23,892,589		3,564,222		875,665		11,574		4,451,460		10,446,343		3,395,910		222,950		315,532		3,934,393		3,984,057		467,403
42	Jun-33		20,279,365		3,613,224		752,606		11,381		4,377,211		7,021,488		3,424,855		168,254		314,895		3,908,005		3,917,604		459,607
43	Dec-33		16,465,781		3,813,584		626,302		11,574		4,451,460		3,515,719		3,505,769		113,092		315,532		3,934,393		3,984,057		467,403
44	Jun-34		12,594,531		3,871,250		494,580		11,381		4,377,211		0		3,515,719		56,626		0		3,572,345		3,086,709		1,290,502
45	Dec-34		8,513,956		4,080,575		359,312		11,574		4,451,460		0		0		0		0		0		0		4,451,460
46	Jun-35		4,366,439		4,147,517		218,313		11,381		4,377,211		0		0		0		0		0		0		4,377,211
47	Dec-35		0		4,366,439		73,447		11,574		4,451,460		0		0		0		0		0		0		4,451,460
48	Jun-36		0		0		0		0		0		0		0		0		0		0		0		0
Total					234,657,525		136,273,385		966,934		371,897,845				250,680,890		52,362,756		14,687,324		317,730,969		320,131,959		51,765,886
NPV of Total @ 6.85%					143,124,484		88,707,352		604,334		232,436,170				160,809,586		33,935,585		8,089,452		202,834,624		205,222,685		27,213,485

Notes:

Line 1, Column B - see Exhibit A, Line 4, Column A

Line 1, Column G - see Exhibit D, Line 1, Column B

Column F = Sum (Columns C-E)

Column K = Sum (Columns H-J)

Column M = Column F -Column L

^(a)  Equal to 0.26% of total billings.

^(b)  Includes servicing fee, estimated securitization costs and applicable taxes.

^(c)  Billed amounts exceed payments to allow for lags between billing and collections and to account for uncollectibles.

Page 1 of 3

EXHIBIT B

OE

ESTIMATED COMPARISON OF EXISTING RATE MAKING AND SECURITIZATION

		Estimated Recovery Under Existing Rate Making										Estimated Recovery Under Securitization												Savings
	(A)	(B)		(C)		(D)		(E)		(F)		(G)		(H)		(I)		(J)		(K)		(L)		(M)
	Period	Ending Balance		Return of Asset		Return on Asset @ 6.85%		CAT Tax  (a)		Total Amounts Billed		Ending Balance		Principal Payments		Interest Payments		Other Ongoing Financing Costs (b)		Total Payments		Total Amounts Billed (c)		Nominal Savings
1	Dec-12		165,264,613										188,353,837
2	Jun-13		152,622,997		12,641,616		5,414,214		47,068		18,102,897		176,614,045		11,739,792		2,301,988		383,363		14,425,143		16,654,665		1,448,232
3	Dec-13		139,063,788		13,559,209		4,979,949		48,327		18,587,485		162,603,438		14,010,607		2,265,454		388,047		16,664,108		17,100,486		1,486,999
4	Jun-14		125,391,933		13,671,855		4,501,874		47,375		18,221,104		148,206,071		14,397,367		2,221,853		384,505		17,003,725		16,763,416		1,457,688
5	Dec-14		125,111,128		280,805		4,276,488		11,880		4,569,173		144,852,453		3,353,618		2,177,048		252,553		5,783,219		4,203,639		365,534
6	Jun-15		124,853,554		257,575		4,267,724		11,796		4,537,094		143,123,398		1,729,055		2,166,612		252,243		4,147,909		4,174,127		362,968
7	Dec-15		124,477,353		376,201		4,256,366		12,076		4,644,643		141,292,425		1,830,973		2,161,231		253,282		4,245,486		4,273,071		371,571
8	Jun-16		124,294,384		182,969		4,247,354		11,549		4,441,872		139,617,471		1,674,953		2,153,350		251,322		4,079,626		4,086,522		355,350
9	Dec-16		123,997,869		296,515		4,238,653		11,822		4,546,990		137,855,393		1,762,079		2,141,625		252,338		4,156,042		4,183,231		363,759
10	Jun-17		123,783,200		214,668		4,230,446		11,587		4,456,702		136,156,206		1,699,187		2,129,291		251,466		4,079,944		4,100,166		356,536
11	Dec-17		123,453,593		329,607		4,220,628		11,861		4,562,096		134,356,028		1,800,177		2,117,396		252,484		4,170,058		4,197,129		364,968
12	Jun-18		123,250,568		203,026		4,212,045		11,509		4,426,580		132,654,335		1,701,693		2,104,795		251,174		4,057,662		4,072,454		354,126
13	Dec-18		122,933,938		316,630		4,202,673		11,781		4,531,084		130,858,092		1,796,244		2,092,883		252,185		4,141,311		4,168,597		362,487
14	Jun-19		122,736,550		197,388		4,194,380		11,448		4,403,217		129,153,469		1,704,623		2,080,310		250,949		4,035,881		4,050,959		352,257
15	Dec-19		122,426,475		310,076		4,185,242		11,718		4,507,036		127,354,914		1,798,555		2,068,377		251,952		4,118,884		4,146,473		360,563
16	Jun-20		122,266,166		160,309		4,177,677		11,308		4,349,294		125,665,926		1,688,988		2,051,244		250,427		3,990,659		4,001,351		347,944
17	Dec-20		121,995,740		270,425		4,169,870		11,575		4,451,870		123,873,226		1,792,700		2,024,040		251,419		4,068,160		4,095,721		356,150
18	Jun-21		121,873,936		121,804		4,163,622		11,171		4,296,598		122,175,770		1,697,456		1,995,166		249,918		3,942,540		3,952,870		343,728
19	Dec-21		120,069,993		1,803,943		4,139,608		15,494		5,959,045		119,252,638		2,923,132		1,967,826		265,986		5,156,944		5,482,321		476,724
20	Jun-22		117,543,899		2,526,093		4,056,595		17,160		6,599,848		115,390,222		3,862,416		1,920,745		272,180		6,055,340		6,071,860		527,988
21	Dec-22		114,771,557		2,772,343		3,965,476		17,564		6,755,382		111,350,033		4,040,189		1,858,535		273,683		6,172,407		6,214,952		540,431
22	Jun-23		112,061,382		2,710,174		3,872,514		17,160		6,599,848		107,368,847		3,981,186		1,793,461		272,180		6,046,827		6,071,860		527,988
23	Dec-23		109,098,563		2,962,819		3,774,999		17,564		6,755,382		103,199,462		4,169,385		1,729,338		273,683		6,172,407		6,214,952		540,431
24	Jun-24		106,191,295		2,907,268		3,675,420		17,160		6,599,848		99,086,999		4,112,463		1,662,184		272,180		6,046,827		6,071,860		527,988
25	Dec-24		103,024,534		3,166,761		3,571,058		17,564		6,755,382		94,784,222		4,302,777		1,595,946		273,683		6,172,407		6,214,952		540,431
26	Jun-25		99,906,239		3,118,295		3,464,393		17,160		6,599,848		90,536,218		4,248,003		1,526,644		272,180		6,046,827		6,071,860		527,988
27	Dec-25		96,521,119		3,385,119		3,352,699		17,564		6,755,382		86,095,718		4,440,500		1,458,223		273,683		6,172,407		6,214,952		540,431
28	Jun-26		93,176,879		3,344,240		3,238,448		17,160		6,599,848		81,707,773		4,387,945		1,386,702		272,180		6,046,827		6,071,860		527,988
29	Dec-26		89,557,965		3,618,914		3,118,904		17,564		6,755,382		77,125,077		4,582,696		1,316,028		273,683		6,172,407		6,214,952		540,431
30	Jun-27		85,971,807		3,586,158		2,996,530		17,160		6,599,848		72,592,647		4,532,431		1,242,216		272,180		6,046,827		6,071,860		527,988
31	Dec-27		82,102,570		3,869,237		2,868,582		17,564		6,755,382		67,863,138		4,729,509		1,169,215		273,683		6,172,407		6,214,952		540,431
32	Jun-28		78,257,394		3,845,177		2,737,511		17,160		6,599,848		63,181,529		4,681,608		1,093,039		272,180		6,046,827		6,071,860		527,988
33	Dec-28		74,120,139		4,137,255		2,600,564		17,564		6,755,382		58,300,440		4,881,089		1,017,634		273,683		6,172,407		6,214,952		540,431
34	Jun-29		69,997,632		4,122,507		2,460,181		17,160		6,599,848		53,464,810		4,835,630		939,017		272,180		6,046,827		6,071,860		527,988
35	Dec-29		65,573,413		4,424,220		2,313,599		17,564		6,755,382		48,427,219		5,037,592		861,132		273,683		6,172,407		6,214,952		540,431
36	Jun-30		61,153,971		4,419,441		2,163,247		17,160		6,599,848		43,432,565		4,994,653		779,994		272,180		6,046,827		6,071,860		527,988
37	Dec-30		56,422,501		4,731,471		2,006,348		17,564		6,755,382		38,233,389		5,199,176		699,547		273,683		6,172,407		6,214,952		540,431
38	Jun-31		51,685,134		4,737,367		1,845,321		17,160		6,599,848		33,074,549		5,158,840		615,807		272,180		6,046,827		6,071,860		527,988
39	Dec-31		46,624,692		5,060,442		1,677,377		17,564		6,755,382		27,708,541		5,366,008		532,716		273,683		6,172,407		6,214,952		540,431
40	Jun-32		41,546,925		5,077,768		1,504,920		17,160		6,599,848		22,380,182		5,328,359		446,288		272,180		6,046,827		6,071,860		527,988
41	Dec-32		36,134,256		5,412,669		1,325,150		17,564		6,755,382		16,841,926		5,538,257		360,467		273,683		6,172,407		6,214,952		540,431
42	Jun-33		30,692,024		5,442,232		1,140,456		17,160		6,599,848		11,338,543		5,503,382		271,265		272,180		6,046,827		6,071,860		527,988
43	Dec-33		24,902,229		5,789,795		948,023		17,564		6,755,382		5,622,444		5,716,099		182,624		273,683		6,172,407		6,214,952		540,431
44	Jun-34		19,069,769		5,832,460		750,227		17,160		6,599,848		0		5,622,444		90,558		0		5,713,002		4,934,149		1,665,698
45	Dec-34		12,876,187		6,193,581		544,237		17,564		6,755,382		0		0		0		0		0		0		6,755,382
46	Jun-35		6,625,912		6,250,275		332,413		17,160		6,599,848		0		0		0		0		0		0		6,599,848
47	Dec-35		0		6,625,912		111,906		17,564		6,755,382		0		0		0		0		0		0		6,755,382
48	Jun-36		0		0		0		0		0		0		0		0		0		0		0		0
Total					165,264,613		144,495,909		807,477		310,567,998				188,353,837		64,769,814		11,495,977		264,619,628		266,083,085		44,484,914
NPV of Total @ 6.85%					79,458,862		84,160,822		426,520		164,046,204				99,827,398		39,186,070		6,133,320		145,146,788		146,588,541		17,457,663

Notes:

Line 1, Column B - see Exhibit A, Line 4, Column B

Line 1, Column G - see Exhibit D, Line 1, Column E

Column F = Sum (Columns C-E)

Column K = Sum (Columns H-J)

Column M = Column F - Column L

^(a)  Equal to 0.26% of total billings.

^(b)  Includes servicing fee, estimated securitization costs and applicable taxes.

^(c)  Billed amounts exceed payments to allow for lags between billing and collections and to account for uncollectibles.

Page 2 of 3

EXHIBIT B

TE

ESTIMATED COMPARISON OF EXISTING RATE MAKING AND SECURITIZATION

		Estimated Recovery Under Existing Rate Making										Estimated Recovery Under Securitization												Savings
	(A)	(B)		(C)		(D)		(E)		(F)		(G)		(H)		(I)		(J)		(K)		(L)		(M)
	Period	Ending Balance		Return of Asset		Return on Asset @ 6.85%		CAT Tax  (a)		Total Amounts Billed		Ending Balance		Principal Payments		Interest Payments		Other Ongoing Financing Costs (b)		Total Payments		Total Amounts Billed (c)		Nominal Savings
1	Dec-12		36,410,202										45,762,713
2	Jun-13		36,269,801		140,400		1,240,926		3,601		1,384,927		45,300,846		461,867		633,315		64,434		1,159,617		1,344,764		40,163
3	Dec-13		36,033,730		236,072		1,234,080		3,832		1,473,984		44,584,226		716,620		631,878		65,322		1,413,820		1,431,239		42,746
4	Jun-14		35,837,685		196,045		1,227,096		3,710		1,426,851		43,901,687		682,538		629,648		64,852		1,377,039		1,385,472		41,379
5	Dec-14		35,555,847		281,838		1,218,493		3,911		1,504,242		43,150,110		751,577		627,524		65,624		1,444,725		1,460,619		43,623
6	Jun-15		35,322,162		233,685		1,210,115		3,764		1,447,563		42,442,625		707,485		625,185		65,059		1,397,729		1,405,584		41,979
7	Dec-15		35,005,880		316,282		1,200,282		3,953		1,520,517		41,670,415		772,210		622,983		65,786		1,460,979		1,476,422		44,095
8	Jun-16		34,777,098		228,782		1,191,411		3,702		1,423,896		40,973,892		696,523		618,277		64,823		1,379,623		1,382,603		41,293
9	Dec-16		34,466,691		310,407		1,181,778		3,890		1,496,075		40,215,593		758,298		613,402		65,542		1,437,242		1,452,689		43,386
10	Jun-17		34,214,994		251,697		1,172,608		3,713		1,428,018		39,508,322		707,271		608,094		64,864		1,380,228		1,386,605		41,413
11	Dec-17		33,880,700		334,294		1,162,173		3,901		1,500,368		38,735,645		772,677		603,143		65,585		1,441,405		1,456,858		43,511
12	Jun-18		33,604,694		276,006		1,152,184		3,723		1,431,913		38,014,297		721,348		597,734		64,903		1,383,985		1,390,388		41,525
13	Dec-18		33,245,206		359,487		1,140,900		3,911		1,504,299		37,227,342		786,956		592,684		65,624		1,445,264		1,460,674		43,625
14	Jun-19		32,940,273		304,933		1,129,991		3,741		1,438,664		36,489,428		737,914		587,176		64,970		1,390,060		1,396,943		41,721
15	Dec-19		32,550,729		389,544		1,117,694		3,929		1,511,168		35,685,165		804,263		582,010		65,693		1,451,966		1,467,344		43,824
16	Jun-20		32,228,318		322,411		1,105,980		3,723		1,432,114		34,939,500		745,665		574,764		64,905		1,385,333		1,390,583		41,531
17	Dec-20		31,821,186		407,133		1,093,084		3,911		1,504,127		34,122,576		816,924		562,754		65,623		1,445,301		1,460,507		43,620
18	Jun-21		31,479,957		341,229		1,080,749		3,707		1,425,684		33,358,011		764,566		549,596		64,841		1,379,002		1,384,339		41,345
19	Dec-21		30,880,859		599,098		1,065,257		4,339		1,668,693		32,391,501		966,509		537,281		67,263		1,571,053		1,620,301		48,392
20	Jun-22		30,253,174		627,685		1,043,733		4,357		1,675,775		31,359,954		1,031,547		521,714		67,333		1,620,595		1,627,178		48,597
21	Dec-22		29,518,152		735,022		1,019,943		4,575		1,759,539		30,242,232		1,117,723		505,100		68,168		1,690,991		1,708,513		51,027
22	Jun-23		28,843,123		675,029		996,389		4,357		1,675,775		29,176,980		1,065,252		487,097		67,333		1,619,682		1,627,178		48,597
23	Dec-23		28,059,112		784,011		970,954		4,575		1,759,539		28,024,097		1,152,883		469,939		68,168		1,690,991		1,708,513		51,027
24	Jun-24		27,333,392		725,720		945,698		4,357		1,675,775		26,923,119		1,100,978		451,371		67,333		1,619,682		1,627,178		48,597
25	Dec-24		26,496,930		836,463		918,502		4,575		1,759,539		25,733,934		1,189,185		433,638		68,168		1,690,991		1,708,513		51,027
26	Jun-25		25,716,936		779,994		891,424		4,357		1,675,775		24,596,069		1,137,865		414,484		67,333		1,619,682		1,627,178		48,597
27	Dec-25		24,824,313		892,622		862,342		4,575		1,759,539		23,369,404		1,226,665		396,157		68,168		1,690,991		1,708,513		51,027
28	Jun-26		23,986,208		838,105		833,313		4,357		1,675,775		22,193,454		1,175,949		376,400		67,333		1,619,682		1,627,178		48,597
29	Dec-26		23,033,456		952,752		802,213		4,575		1,759,539		20,928,091		1,265,363		357,459		68,168		1,690,991		1,708,513		51,027
30	Jun-27		22,133,132		900,324		771,094		4,357		1,675,775		19,712,821		1,215,270		337,079		67,333		1,619,682		1,627,178		48,597
31	Dec-27		21,116,000		1,017,133		737,832		4,575		1,759,539		18,407,503		1,305,318		317,505		68,168		1,690,991		1,708,513		51,027
32	Jun-28		20,149,059		966,941		704,477		4,357		1,675,775		17,151,635		1,255,868		296,481		67,333		1,619,682		1,627,178		48,597
33	Dec-28		19,062,994		1,086,064		668,900		4,575		1,759,539		15,805,066		1,346,569		276,253		68,168		1,690,991		1,708,513		51,027
34	Jun-29		18,024,727		1,038,268		633,151		4,357		1,675,775		14,507,282		1,297,784		254,565		67,333		1,619,682		1,627,178		48,597
35	Dec-29		16,864,858		1,159,869		595,096		4,575		1,759,539		13,118,121		1,389,161		233,662		68,168		1,690,991		1,708,513		51,027
36	Jun-30		15,750,221		1,114,636		556,782		4,357		1,675,775		11,777,060		1,341,062		211,287		67,333		1,619,682		1,627,178		48,597
37	Dec-30		14,511,330		1,238,891		516,074		4,575		1,759,539		10,343,925		1,433,135		189,687		68,168		1,690,991		1,708,513		51,027
38	Jun-31		13,314,926		1,196,404		475,014		4,357		1,675,775		8,958,180		1,385,744		166,605		67,333		1,619,682		1,627,178		48,597
39	Dec-31		11,991,427		1,323,499		431,465		4,575		1,759,539		7,479,643		1,478,537		144,285		68,168		1,690,991		1,708,513		51,027
40	Jun-32		10,707,476		1,283,952		387,467		4,357		1,675,775		6,047,765		1,431,878		120,471		67,333		1,619,682		1,627,178		48,597
41	Dec-32		9,293,387		1,414,089		340,876		4,575		1,759,539		4,522,351		1,525,414		97,408		68,168		1,690,991		1,708,513		51,027
42	Jun-33		7,915,698		1,377,688		293,730		4,357		1,675,775		3,042,842		1,479,510		72,839		67,333		1,619,682		1,627,178		48,597
43	Dec-33		6,404,616		1,511,082		243,883		4,575		1,759,539		1,469,029		1,573,813		49,010		68,168		1,690,991		1,708,513		51,027
44	Jun-34		4,926,565		1,478,051		193,367		4,357		1,675,775		0		1,469,029		23,661		0		1,492,690		1,286,845		388,930
45	Dec-34		3,311,633		1,614,932		140,033		4,575		1,759,539		0		0		0		0		0		0		1,759,539
46	Jun-35		1,726,123		1,585,510		85,909		4,357		1,675,775		0		0		0		0		0		0		1,675,775
47	Dec-35		0		1,726,123		28,841		4,575		1,759,539		0		0		0		0		0		0		1,759,539
48	Jun-36		0		0		0		0		0		0		0		0		0		0		0		0
Total					36,410,202		38,013,304		194,006		74,617,511				45,762,713		18,001,603		2,801,733		66,566,049		67,069,067		7,548,444
NPV of Total @ 6.85%					13,846,376		22,253,965		94,106		36,194,446				21,136,050		10,958,232		1,464,398		33,558,680		33,956,132		2,238,315

Notes:

Line 1, Column B - see Exhibit A, Line 4, Column C

Line 1, Column G - see Exhibit D, Line 1, Column H

Column F = Sum (Columns C-E)

Column K = Sum (Columns H-J)

Column M = Column F - Column L

^(a)  Equal to 0.26% of total billings.

^(b)  Includes servicing fee, estimated securitization costs and applicable taxes.

^(c)  Billed amounts exceed payments to allow for lags between billing and collections and to account for uncollectibles.

Page 3 of 3

EXHIBIT C

ESTIMATED UP-FRONT FINANCING COSTS

		(A)		(B)		(C)		(D)		(E)		(F)
		MULTIPLE UTILITY LEVEL ISSUANCES		SINGLE COMBINED ISSUANCE (a)
		Total		CEI		OE		TE		Total		Savings
1	Accountant’s/Auditor’s Fees		300,000		107,559		75,752		16,689		200,000		100,000
2	Fee for Applicant’s Structuring Advisor		900,000		161,339		113,628		25,034		300,000		600,000
3	Legal Fees and Expenses for Applicant’s/Issuer’s Counsel		2,500,000		1,075,591		757,517		166,892		2,000,000		500,000
4	Legal Fees and Expenses for Trustee’s Counsel		60,000		13,445		9,469		2,086		25,000		35,000
5	Legal Fees and Expenses for Underwriter’s Counsel		2,150,000		994,921		700,703		154,375		1,850,000		300,000
6	Printing and Filing Costs		300,000		53,780		37,876		8,345		100,000		200,000
7	Rating Agency Fees (b)		1,305,000		332,152		249,569		60,636		642,357		662,643
8	SEC Registration Fees (c)		19,147		9,852		7,402		1,798		19,052		95
9	Servicer Set-up Costs (d)		300,000		100,000		100,000		100,000		300,000		0
10	Trustee Payments		30,000		13,445		9,469		2,086		25,000		5,000
11	Underwriting Costs (e)		2,436,061		1,253,404		941,769		228,814		2,423,987		12,074
12	Miscellaneous (f)		525,000		175,000		175,000		175,000		525,000		0
13	Subtotal Issuance Expenses (Sum Lines 1-12)		10,825,209		4,290,488		3,178,154		941,755		8,410,396		2,414,812
14	Debt Retirement Costs (g)		40,054,703		11,732,876		19,911,070		8,410,757		40,054,703		0
15	Total Estimated Upfront Financing Costs (Line 13 + Line 14)		50,879,912		16,023,364		23,089,224		9,352,511		48,465,099		2,414,812

^(a) Upfront financing costs expected to be allocated rateably based upon Phase-In Costs amounts assuming an SEC-registered offering, unless otherwise noted.

^(b) Based upon current fee schedules applied to issuance amounts which change from time to time. For multiple utility level issuances each applicant will likely be required to pay the minimum Rating Agency fee amount for each issuance.

^(c) Based upon current fee level of $0.0000393 applied to issuance amounts.

^(d) Assumes $100,000 per utility.

^(e) Based upon fee level of 0.50% applied to issuance amounts.

^(f) Unforeseen expenses, if any, will be described in the Final Financing Order following the issuance of the Phase-In Recovery Bonds.

^(g) Will vary depending upon market conditions and timing / method of debt retirement.

Page 1 of 2

EXHIBIT C

ESTIMATED ONGOING FINANCING COSTS (ANNUAL AMOUNT)

		(A)		(B)		(C)		(D)		(E)		(F)
		MULTIPLE UTILITY LEVEL ISSUANCES		SINGLE COMBINED ISSUANCE
		Total		CEI		OE		TE		Total (a)		Savings
1	Servicing Fee (b)		487,212		250,681		188,354		45,763		484,797		2,415
2	Administration Fees and Expenses		150,000		51,708		38,852		9,440		100,000		50,000
3	Trustee Fees and Expenses		60,000		25,854		19,426		4,720		50,000		10,000
4	Legal Fees		60,000		25,854		19,426		4,720		50,000		10,000
5	Accounting Fees		150,000		51,708		38,852		9,440		100,000		50,000
6	SPE Independent Manager’s Fees		30,000		10,342		7,770		1,888		20,000		10,000
7	Rating Agency Fees (c)		225,000		38,781		29,139		7,080		75,000		150,000
8	Reporting and SEC Filing Fees		7,500		1,293		971		236		2,500		5,000
9	Miscellaneous		6,000		2,585		1,943		472		5,000		1,000
10	Return on Capital Account (d)		166,870		85,858		64,511		15,674		166,043		827
11	Dealers In Intangible Tax (e)		19,488		10,027		7,534		1,831		19,392		97
12	Total Estimated Ongoing Financing Costs (f) (Sum Lines 1-11)		1,362,071		554,693		416,779		101,261		1,072,732		289,338

^(a)  Ongoing financing costs expected to be allocated rateably based upon issuance amount assuming a SEC-registered single combined offering.

^(b)  Assumes each Applicant acts as servicer and earns an annual servicing fee equal to 0.10% of issuance amount.

^(c)  Based upon current scheduled fee levels.

^(d)  Assumes each Applicant funds reserve account equal to 0.50% of issuance amount and earns an annual rate of return of 6.85% thereon.

^(e)  Assumes each securitization SPE required to pay a 0.8% annual tax on amounts funded in capital account.

^(f)  Estimated, subject to change.

Page 2 of 2

EXHIBIT D

EXPECTED USE OF PROCEEDS AND CAPITALIZATION

		(A)			(B)			(C)			(D)			(E)			(F)			(G)			(H)			(I)			(J)
	I. Sources and Uses of Proceeds
		The Cleveland Electric Illuminating Company									Ohio Edison Company									Toledo Edison Company									Notes
1	PIR Bonds Issued				$	250,680,890								$	188,353,837								$	45,762,713					Exhibit A, Line 4 + Exhibit C, Page 1, Line 15
2	Total Sources:				$	250,680,890								$	188,353,837								$	45,762,713					Line 1
3	Issuance Expenses				$	4,290,488								$	3,178,154								$	941,755					Exhibit C, Page 1, Line 13
4	Debt Retirement Costs				$	11,732,876								$	19,911,070								$	8,410,757					Exhibit C, Page 1, Line 14
5	Debt Retired				$	234,657,526								$	165,264,613								$	25,487,141					Estimated Debt Retired
6	Corporate Purposes				$	0								$	0								$	10,923,061					Estimated Other Use of funds
7	Total Uses:				$	250,680,890								$	188,353,837								$	45,762,713					Sum Lines 3-6
	II. Current and Pro Forma Capitalization
		The Cleveland Electric Illuminating Company									Ohio Edison Company									Toledo Edison Company									Notes
	At 3/31/2012	Current			Changes			Pro Forma			Current			Changes			Pro Forma			Current			Changes			Pro Forma
8	Long-term Debt	$	1,811,425,851		($	234,657,526	)	$	1,576,768,325		$	1,159,025,334		($	165,264,613	)	$	993,760,721		$	599,084,921		($	25,487,141	)	$	573,597,780		Applicant Financial Statements
9	PIR Bonds	$	0		$	250,680,890		$	250,680,890		$	0		$	188,353,837		$	188,353,837		$	0		$	45,762,713		$	45,762,713		Line 2
10	Total Debt	$	1,811,425,851					$	1,827,449,215		$	1,159,025,334					$	1,182,114,558		$	599,084,921					$	619,360,493		Line 8 + Line 9
11	Total Equity	$	1,187,753,094		$	0		$	1,187,753,094		$	742,329,238		$	0		$	742,329,238		$	362,900,686		$	0		$	362,900,686		Applicant Financial Statements
12	Total Capitalization	$	2,999,178,945					$	3,015,202,309		$	1,901,354,572					$	1,924,443,796		$	961,985,607					$	982,261,179		Line 10 + Line 11
13	Capitalization Ratios (including PIR Bonds)
14	Debt / Capitalization		60.4	%					60.6	%		61.0	%					61.4	%		62.3	%					63.1	%	Line 10 / Line 12
15	Equity / Capitalization		39.6	%					39.4	%		39.0	%					38.6	%		37.7	%					36.9	%	Line 11 / Line 12
16	Capitalization Ratios (excluding PIR Bonds)
17	Debt / Capitalization		60.4	%					57.0	%		61.0	%					57.2	%		62.3	%					61.2	%	Line 8 / (Line 12 - Line 9)
18	Equity / Capitalization		39.6	%					43.0	%		39.0	%					42.8	%		37.7	%					38.8	%	Line 11 / (Line 12 - Line 9)

Page 1 of 1

EXHIBIT E

INDICATIVE TRANSACTION STRUCTURE ^(a)

(A)

(B)

(C)

(D)

(E)

(F)

Tranche

Initial Principal Balance (b)

Expected WAL (c)

Expected Maturity

Legal Final Maturity

Interest Rate

A-1

$

122,000,000

1.4 yrs

Dec-2015

3.0 yrs

Dec-2017

5.0 yrs

0.62

%

A-2

$

92,400,000

5.2 yrs

Dec-2019

7.0 yrs

Dec-2021

9.0 yrs

1.40

%

A-3

$

270,397,439

14.6 yrs

Jun-2034

21.5 yrs

Jun-2036

23.5 yrs

3.22

%

$

484,797,439

^(a)  Estimated, for discussion purposes only. Final structure will depend upon several factors including then-current market conditions. Assumes all three offerings combined into one single pooled offering.

^(b)  Sum of Columns B, E & H on Exhibit D, Line 2.

^(c)  Weighted average life represents time-weighted receipt of principal repayment. Principal repayment schedule based upon a percentage of current recoveries on assets securitized.

Page 1 of 2

EXHIBIT E

EXPECTED PRINCIPAL REPAYMENT SCHEDULE ^(a)

	Tranche A-1		Tranche A-2		Tranche A-3		Total
Tranche Size	$	122,000,000	$	92,400,000	$	270,397,439	$	484,797,439
Date
Jun-13	$	25,077,554	$	0	$	0	$	25,077,554
Dec-13	$	30,243,366	$	0	$	0	$	30,243,366
Jun-14	$	30,607,825	$	0	$	0	$	30,607,825
Dec-14	$	14,999,121	$	0	$	0	$	14,999,121
Jun-15	$	11,591,616	$	0	$	0	$	11,591,616
Dec-15	$	9,480,518	$	2,387,629	$	0	$	11,868,146
Jun-16	$	0	$	11,360,941	$	0	$	11,360,941
Dec-16	$	0	$	11,622,315	$	0	$	11,622,315
Jun-17	$	0	$	11,341,524	$	0	$	11,341,524
Dec-17	$	0	$	11,628,026	$	0	$	11,628,026
Jun-18	$	0	$	11,282,285	$	0	$	11,282,285
Dec-18	$	0	$	11,552,199	$	0	$	11,552,199
Jun-19	$	0	$	11,276,643	$	0	$	11,276,643
Dec-19	$	0	$	9,948,437	$	1,602,888	$	11,551,325
Jun-20	$	0	$	0	$	11,189,500	$	11,189,500
Dec-20	$	0	$	0	$	11,544,725	$	11,544,725
Jun-21	$	0	$	0	$	11,280,917	$	11,280,917
Dec-21	$	0	$	0	$	9,423,172	$	9,423,172
Jun-22	$	0	$	0	$	7,308,595	$	7,308,595
Dec-22	$	0	$	0	$	7,628,419	$	7,628,419
Jun-23	$	0	$	0	$	7,530,985	$	7,530,985
Dec-23	$	0	$	0	$	7,872,584	$	7,872,584
Jun-24	$	0	$	0	$	7,779,083	$	7,779,083
Dec-24	$	0	$	0	$	8,124,678	$	8,124,678
Jun-25	$	0	$	0	$	8,035,237	$	8,035,237
Dec-25	$	0	$	0	$	8,384,958	$	8,384,958
Jun-26	$	0	$	0	$	8,299,709	$	8,299,709
Dec-26	$	0	$	0	$	8,653,690	$	8,653,690
Jun-27	$	0	$	0	$	8,572,769	$	8,572,769
Dec-27	$	0	$	0	$	8,931,148	$	8,931,148
Jun-28	$	0	$	0	$	8,854,696	$	8,854,696
Dec-28	$	0	$	0	$	9,217,616	$	9,217,616
Jun-29	$	0	$	0	$	9,145,778	$	9,145,778
Dec-29	$	0	$	0	$	9,513,386	$	9,513,386
Jun-30	$	0	$	0	$	9,446,312	$	9,446,312
Dec-30	$	0	$	0	$	9,818,761	$	9,818,761
Jun-31	$	0	$	0	$	9,756,606	$	9,756,606
Dec-31	$	0	$	0	$	10,134,052	$	10,134,052
Jun-32	$	0	$	0	$	10,076,975	$	10,076,975
Dec-32	$	0	$	0	$	10,459,581	$	10,459,581
Jun-33	$	0	$	0	$	10,407,747	$	10,407,747
Dec-33	$	0	$	0	$	10,795,681	$	10,795,681
Jun-34	$	0	$	0	$	10,607,192	$	10,607,192
Dec-34	$	0	$	0	$	0	$	0
Jun-35	$	0	$	0	$	0	$	0
Dec-35	$	0	$	0	$	0	$	0

^(a)  Estimated, for discussion purposes only. Assumes an issuance date of January 1, 2013. Final structure will depend upon several factors including then-current market conditions. Assumes all three offerings combined into one single combined offering.

Page 2 of 2

EXHIBIT F - Rider PIR Reconciliation Mechanism and Rate Design Process

Rider PIR Reconciliation Calculation

On or about November 1^st and May 1^st each year, each Applicant will file an adjustment to the Rider PIR charge to be effective the following January 1^st or July 1^st, respectively.¹ In order to facilitate the semi-annual adjustment, each Applicant will track, on a monthly basis, the amount of phase-in recovery revenue collected under Rider PIR and the associated costs of the Phase-In Recovery Bonds issued by its subsidiary SPE (i.e., debt service and ongoing Financing Costs), so that any difference (whether an over collection or an under collection) can be reflected in the next semi-annual adjustment of the Rider PIR charge.

The Rider PIR charges will be adjusted at least semi-annually to ensure that the expected collections of the Rider PIR charges are adequate to pay principal and interest on the associated Phase-In Recovery Bonds when due pursuant to the expected amortization schedule, pay when due all other ongoing Financing Costs, and to fund the reserve account to the required level. All adjustments will be designed to cause (i) the outstanding principal balance of the Phase-In Recovery Bonds to be equal to the scheduled balance on the expected amortization schedule; (ii) the amount in the reserve subaccount to be equal to the required reserve level; and (iii) any residual subaccount to be zero by the payment date immediately preceding the next adjustment or by the final payment date, if the next payment date is the final payment date.

The methodology for the reconciliation mechanism for a generic month j is provided below.

Let

COLj	=	Phase-In Recovery Charge collections under Rider PIR and interest earned on the associated securitization subaccounts in month j
INTj	=	Interest on the associated Phase-In Recovery Bonds paid and / or accrued in month j
PRNj	=	Principal of the associated Phase-In Recovery Bonds paid and / or accrued in month j
EXPj	=	Ongoing Financing Costs allocated to the associated Phase-In Recovery Bonds paid and / or accrued in month j
RECj	=	Reconciliation amount in month j

¹  The initial Rider PIR charge will go into effect as soon as practicable following the issuance of the associated Phase-In Recovery Bonds. The initial update to each Applicant’s Rider PIR will be up to 12 months after the issuance date for the Phase-In Recovery Bonds.

1

EXHIBIT F - Rider PIR Reconciliation Mechanism and Rate Design Process

Then

RECj	=	(INTj + PRNj + EXPj) - COL, where
	RECj > 0 g under collection of Rider PIR in month j
	RECj < 0 g over collection of Rider PIR in month j

The reconciliation will be tracked monthly and on a cumulative basis, including any interest earned on the securitization subaccounts.

Due to the timing of the semi-annual reconciliations, there will be a three month lag between the time the reconciliation is prepared and the time the resulting proposed Rider PIR charges will go into effect.

Therefore, for purposes of Rider PIR the following terms shall apply (other than for the initial Rider PIR charge):

PIR Computational Period	=	the 6 month period from January 1 through June 30 or July 1 through December 31 of each year over which the new Rider PIR charge will be in effect
PIR Reconciliation Period	=	the 6 month period from April 1 through September 30 or October 1 through March 31 immediately preceding the PIR Computational Period

For example, when preparing the reconciliation to be filed on November 1^st, only actual results through the end of September will be known, thus leaving a gap of three months – October, November, and December – between the end of the immediately preceding PIR Reconciliation Period and the beginning of the PIR Computational Period. In order to bridge this gap, the Applicants will estimate the monthly reconciliation activity for the three months following the immediately preceding PIR Reconciliation Period. The estimated monthly reconciliation activity will follow the same formula described above, though each of the components in the formula will be estimates as opposed to actual results

The estimated reconciliation amount over these three estimated months will be added to the cumulative actual reconciliation balance through the immediately preceding PIR Reconciliation Period to derive the estimated cumulative reconciliation balance as of the beginning of the upcoming PIR Computational Period. So for a generic PIR Computational Period p,

REC BAL_p = Cumulative reconciliation balance as of the beginning of PIR Computational Period p (includes estimated activity for the three months following the immediately preceding PIR Reconciliation Period)

REC BAL_p will then be included in the revenue requirement calculation for the upcoming PIR Computational Period p.

2

EXHIBIT F - Rider PIR Reconciliation Mechanism and Rate Design Process

Rider PIR Revenue Requirement Calculation

At the time of each semi-annual adjustment, each Applicant will calculate the amount of revenue to be billed under its Rider PIR over the upcoming PIR Computational Period.² These Rider PIR revenue estimates will take into account any differences between Rider PIR billed revenues and Rider PIR collections, (e.g., applicable taxes, write-offs, and billing lags) such that the estimated Rider PIR billed revenues will be converted to the estimated amount of cash needed to make payments associated with the Phase-In Recovery Bonds over the same six month period. This estimated Rider PIR billed revenue includes the cumulative reconciliation balance (REC BAL_p) as of the end of the month immediately preceding PIR Computational Period, as described above.

A summary formula for the semi-annual adjustment and associated revenue requirement calculation for a generic PIR Computational Period p is provided below.

Let

REV REQp	=	Rider PIR revenue requirement for PIR Computational Period p
REC BALp	=	Cumulative reconciliation balance as of the beginning of PIR Computational Period p (includes estimated activity for the three months following the immediately preceding PIR Reconciliation Period)
INTp	=	Estimated interest on the associated Phase-In Recovery Bonds to be paid and / or accrued in PIR Computational Period p
PRNp	=	Estimated principal of the associated Phase-In Recovery Bonds to be paid and / or accrued in PIR Computational Period p
EXPp	=	Estimated ongoing Financing Costs allocated to the associated Phase-In Recovery Bonds to be paid and / or accrued in PIR Computational Period p
TAX Ratep	=	Composite tax rate applicable to Rider PIR revenues during PIR Computational Period p (includes Commercial Activity Tax and non-Ohio state income taxes)
UNC Ratep	=	Estimated uncollectible rate during PIR Computational Period p
LAG Factorp	=	Estimated factor to convert from cash to revenue accounting for expected lags between Rider PIR billed revenue and Rider PIR collections during PIR Computational Period p

²  As noted above, the initial PIR Computational Period may be different than six months.

3

EXHIBIT F - Rider PIR Reconciliation Mechanism and Rate Design Process

Then

REV REQ	=	REC BALp + INTp + PRNp + EXPp	x LAG Factorp
		(1 – TAX Ratep – UNC Ratep)

This revenue requirement calculation will be performed for each PIR Computational Period by each of the Applicants to establish the amount of revenue to be billed by each Applicant over the upcoming six month period effective January 1^st or July 1^st. Each Applicant’s calculations will only include the principal, interest, and collections associated with and ongoing Financing Costs allocated to the Phase-In Recovery Bonds issued by its subsidiary SPE. The initial charge for Rider PIR will follow this same methodology, though the initial reconciliation balance will have a value of zero.

4

EXHIBIT F - Rider PIR Reconciliation Mechanism and Rate Design Process

Rider PIR Revenue Requirement Allocation and Rate Design

Once the Rider PIR revenue requirement is calculated pursuant to the formula above, it will be allocated to each Applicant’s rate schedules based on allocation ratios designed to mirror the relationships that exist today under the existing recovery mechanisms for the Phase-In Costs (i.e., Riders RER1, DGC, and DFC, where applicable). These allocation factors will be calculated for each PIR Computational Period. A description of the methodology for calculating the allocation ratios is provided below.

The estimated tariff rates that would otherwise be in effect under the existing recovery mechanisms and that are to be used for purposes of calculating the allocation factors for Rider PIR are summarized in the tables below. All prices are shown in terms of ¢/kWh.

Current through June 2014 (¢/kWh)

	Rider RER1					Rider DGC				Rider DFC
Rate Schedule	CEI		OE		TE	CEI		OE	TE	CEI		OE		TE
RS		0.2787		0.3114			0.1171				0.0345		0.0362		0.0257
GS							0.1171				0.0345		0.0362		0.0257
GP							0.1130				0.0345		0.0362		0.0257
GSU							0.1099				0.0345		0.0362		0.0257
GT							0.1097				0.0345		0.0362		0.0257
STL							0.1171				0.0345		0.0362		0.0257
TRF							0.1171				0.0345		0.0362		0.0257
POL							0.1171				0.0345		0.0362		0.0257

July 2014 through May 2021 (¢/kWh)

	Rider RER1			Rider DGC				Rider DFC
Rate Schedule	CEI	OE	TE	CEI		OE	TE	CEI		OE		TE
RS					0.1171				0.0345		0.0362		0.0257
GS					0.1171				0.0345		0.0362		0.0257
GP					0.1130				0.0345		0.0362		0.0257
GSU					0.1099				0.0345		0.0362		0.0257
GT					0.1097				0.0345		0.0362		0.0257
STL					0.1171				0.0345		0.0362		0.0257
TRF					0.1171				0.0345		0.0362		0.0257
POL					0.1171				0.0345		0.0362		0.0257

June 2021 through December 2035 (¢/kWh)

	Rider RER1			Rider DGC			Rider DFC
Rate Schedule	CEI	OE	TE	CEI	OE	TE	CEI		OE		TE
RS								0.0345		0.0362		0.0257
GS								0.0345		0.0362		0.0257
GP								0.0345		0.0362		0.0257
GSU								0.0345		0.0362		0.0257
GT								0.0345		0.0362		0.0257
STL								0.0345		0.0362		0.0257
TRF								0.0345		0.0362		0.0257
POL								0.0345		0.0362		0.0257

5

EXHIBIT F - Rider PIR Reconciliation Mechanism and Rate Design Process

For each PIR Computational Period, each Applicant will apply the applicable rates from the table above to its most recent sales forecast in order to determine the amount of revenue that otherwise would have been collected from each rate schedule under the existing recovery mechanisms. These estimated revenues will then be used to determine allocation factors by which to allocate its Rider PIR revenue requirement for the upcoming PIR Computational Period.³

For each rate schedule i and each month j, let

Salesij	=	Estimated sales for rate schedule i in month j
RER1 Rateij	=	Estimated Rider RER1 rate otherwise applicable to rate schedule i in month j
DGC Rateij	=	Estimated Rider DGC rate otherwise applicable to rate schedule i in month j
DFC Rateij	=	Estimated Rider DFC rate otherwise applicable to rate schedule i in month j

Then

	=	Estimated revenue billed to rate schedule i in month j under the otherwise applicable existing recovery mechanisms
	=	Salesij x [ RER1 Rateij + DGC Rateij + DFC Rateij]

Let p be a generic PIR Computational Period comprised of months j = k, k+1, …, k+5. Then the estimated revenue to be billed to rate schedule i during PIR Computational Period p under the otherwise applicable existing recovery mechanisms is calculated by

(1)            

Similarly, the estimated revenue billed to all rate schedules under this same PIR Computational Period p is

(2)            

³  In the event that the final legal maturity date of the PIR securitization bonds extends past December 2035, (the month in which recovery of the Phase-In Costs would otherwise be fully recovered under the existing recovery methodology), the estimated tariff prices in effect as of December 2035 from the table will be used for purposes of calculating the allocation factors for Rider PIR.

6

EXHIBIT F - Rider PIR Reconciliation Mechanism and Rate Design Process

For each Applicant, the resulting ratios of (1) estimated revenue billed to each rate schedule i during PIR Computational Period p under the otherwise applicable existing recovery mechanisms to (2) estimated revenue billed to all rate schedules during PIR Computational Period p under the otherwise applicable recovery mechanisms, will be used to allocate REV REQ_p to the different rate schedules for PIR Computational Period p.

Let

REV REQip	=	Revenue requirement for PIR Computational Period p allocated to rate schedule i, where
and
Allocation Factorip	=	Allocation factor applied to rate schedule i for purposes of allocating the estimated Rider PIR revenue to be billed during PIR Computational Period p
	=

Then for each rate schedule i,

REV REQip	=	Allocation Factorip x REV REQp.
	=	Amount of Rider PIR revenue requirement allocated to rate schedule i in PIR Computational Period p

Under this methodology, any changes in electric consumption behavior across the rate schedules will be accounted for as part of the calculation of the allocation ratios. For example, if a particular rate schedule experiences a significant change in its electric consumption, this change will be reflected in the sales forecast used to determine the level of revenue otherwise billed under the existing recovery mechanisms, and the resulting allocation ratios will be updated accordingly. In other words, if a particular rate schedule would have otherwise been billed more or less (as a percentage of the total) under the existing recovery mechanisms due to significant changes in its electric consumption, the same relationship among all rate schedules will generally be maintained when allocating the estimated Rider PIR billed revenues under this methodology.

An illustrative example is included as Exhibit F – Attachment 1, which shows, for illustrative purposes, the revenue requirement calculation and associated rate design for the initial Rider PIR charge.

7

Rider PIR - Semi-annual Revenue Requirement Calculation	Exhibit F - Attachment 1
Illustrative Example - Initial Rider PIR Charge	Page 1 of 3

Line	Line Item Description	CEI			OE			TE			TOTAL
1	Estimated Debt Service
2	Principal
3	Class A	$	12,875,895		$	11,739,792		$	461,867		$	25,077,554
4	Class B	$	0		$	0		$	0		$	0
5	Class C	$	0		$	0		$	0		$	0
6	Total Principal	$	12,875,895		$	11,739,792		$	461,867		$	25,077,554
7
8	Interest
9	Class A	$	224,065		$	144,708		$	10,892		$	379,665
10	Class B	$	504,000		$	98,000		$	44,800		$	646,800
11	Class C	$	1,718,257		$	2,059,280		$	577,623		$	4,355,161
12	Total Interest	$	2,446,322		$	2,301,988		$	633,315		$	5,381,626
13
14	Principal & Interest
15	Class A	$	13,099,960		$	11,884,501		$	472,759		$	25,457,219
16	Class B	$	504,000		$	98,000		$	44,800		$	646,800
17	Class C	$	1,718,257		$	2,059,280		$	577,623		$	4,355,161
18	Total Principal & Interest	$	15,322,217		$	14,041,780		$	1,095,183		$	30,459,180
19
20	Estimated Ongoing Financing Costs
21	Servicing Fee	$	125,340		$	94,177		$	22,881		$	242,399
22	Administration Fees and Expenses	$	25,854		$	19,426		$	4,720		$	50,000
23	Trustee Fees and Expenses	$	12,927		$	9,713		$	2,360		$	25,000
24	Legal Fees	$	12,927		$	9,713		$	2,360		$	25,000
25	Accounting Fees	$	25,854		$	19,426		$	4,720		$	50,000
26	Independent Manager’s Fees	$	5,171		$	3,885		$	944		$	10,000
27	Rating Agency Fees	$	19,391		$	14,570		$	3,540		$	37,500
28	Printing and Filing Fees	$	646		$	486		$	118		$	1,250
29	Miscellaneous	$	1,293		$	971		$	236		$	2,500
30	Return on Capital Account	$	42,929		$	32,256		$	7,837		$	83,022
31	Dealers In Intangible Tax	$	5,014		$	3,767		$	915		$	9,696
32	Total Ongoing Financing Costs	$	277,346		$	208,389		$	50,631		$	536,366
33
34	Estimated Debt Service & Ongoing Financing Costs	$	15,599,563		$	14,250,170		$	1,145,813		$	30,995,547
35
36	Cumulative Under (Over) Collection										$	0
37
38	Total to be Recovered Before Gross-ups	$	15,599,563		$	14,250,170		$	1,145,813		$	30,995,547
39
40	Estimated Uncollectible Ratio		0.75	%		0.55	%		0.75	%
41	CAT Tax & Non-Ohio State Income Tax		0.96	%		1.05	%		1.03	%
42	Gross-up Factor - Tax & Uncollectible		1.71	%		1.60	%		1.78	%
43
44	Total Amount to be Collected with Gross-ups	$	15,870,710		$	14,481,968		$	1,166,537		$	31,519,214
45
46	Billing Lag Conversion Factor		114.5	%		115.0	%		115.3	%
47
48	Total Rider PIR Revenue Requirement	$	18,171,590		$	16,654,665		$	1,344,764		$	36,171,020

NOTES
1-18	Estimated debt service for PIR Bonds to be paid and / or accrued over the upcoming 6 months
20-32	Estimated ongoing financing costs to be paid and / or accrued over the upcoming 6 months
34	Calculation: Line 18 + Line 32
36	Cumulative under (over) collection of debt service and ongoing expenses as of upcoming 6 month period
38	Calculation: Line 34 + Line 36
40	Estimated Uncollectible Expense ratio for upcoming 6 months
41	Composite tax rate for taxes aplicable to Rider PIR revenues (includes CAT Tax and non-Ohio state income taxes)
42	Gross-up factor applied to amount to be recovered. Calculation: Line 40 + Line 41
44	Calculation: Line 38 / (1 - Line 42)
46	Factor to convert from cash to revenue based on estimated lag between billings and cash received
48	Calculation: Line 44 x Line 46

Rider PIR - Allocation Factors	Exhibit F - Attachment 1
Illustrative Example - Initial Rider PIR Charge *	Page 2 of 3

(A)	(B)	(C)	(D)		(E)		(F)		(G)		(H)		(I)		(J)		(K)		(L)		(M)
Line	Company	Rate Schedule	Forecasted kWh Sales		Otherwise Applicable Tariff Rates (¢/kWh)								Otherwise Applicable Tariff Revenue								Allocation Ratio
					RER1		DGC		DFC		TOTAL		RER1		DGC		DFC		TOTAL
1	CEI	Rate RS		2,576,378,511		0.2787		0.1171		0.0345		0.4303	$	7,180,367	$	3,016,939	$	888,851	$	11,086,157		54.60	%
2	CEI	Rate GS		3,529,472,016		0.0000		0.1171		0.0345		0.1516	$	0	$	4,133,012	$	1,217,668	$	5,350,680		26.35	%
3	CEI	Rate GP 1		134,859,708		0.0000		0.1130		0.0345		0.1475	$	0	$	152,391	$	46,527	$	198,918		0.98	%
4	CEI	Rate GP 2		69,431,894		0.0000		0.0000		0.0345		0.0345	$	0	$	0	$	23,954	$	23,954		0.12	%
5	CEI	Rate GSU 1		1,781,056,126		0.0000		0.1099		0.0345		0.1444	$	0	$	1,957,381	$	614,464	$	2,571,845		12.67	%
6	CEI	Rate GSU 2		147,722,702		0.0000		0.0000		0.0345		0.0345	$	0	$	0	$	50,964	$	50,964		0.25	%
7	CEI	Rate GT 1		469,488,715		0.0000		0.1097		0.0345		0.1442	$	0	$	515,029	$	161,974	$	677,003		3.33	%
8	CEI	Rate GT 2		551,005,295		0.0000		0.0000		0.0345		0.0345	$	0	$	0	$	190,097	$	190,097		0.94	%
9	CEI	Rate STL		63,194,628		0.0000		0.1171		0.0345		0.1516	$	0	$	74,001	$	21,802	$	95,803		0.47	%
10	CEI	Rate POL		29,283,302		0.0000		0.1171		0.0345		0.1516	$	0	$	34,291	$	10,103	$	44,393		0.22	%
11	CEI	Rate TRF		8,996,539		0.0000		0.1171		0.0345		0.1516	$	0	$	10,535	$	3,104	$	13,639		0.07	%
12	CEI	Rate ESIP				0.0000		0.0000		0.0000		0.0000	$	0	$	0	$	0	$	0		0.00	%
13	CEI	TOTAL		9,360,889,437									$	7,180,367	$	9,893,579	$	3,229,507	$	20,303,453		100.00	%
14
15	OE	Rate RS		4,417,606,731		0.3114		0.0000		0.0362		0.3476	$	13,756,427	$	0	$	1,599,174	$	15,355,601		84.82	%
16	OE	Rate GS		3,322,756,199		0.0000		0.0000		0.0362		0.0362	$	0	$	0	$	1,202,838	$	1,202,838		6.64	%
17	OE	Rate GP		1,415,224,337		0.0000		0.0000		0.0362		0.0362	$	0	$	0	$	512,311	$	512,311		2.83	%
18	OE	Rate GSU		519,654,272		0.0000		0.0000		0.0362		0.0362	$	0	$	0	$	188,115	$	188,115		1.04	%
19	OE	Rate GT		2,239,971,058		0.0000		0.0000		0.0362		0.0362	$	0	$	0	$	810,870	$	810,870		4.48	%
20	OE	Rate STL		15,062,508		0.0000		0.0000		0.0362		0.0362	$	0	$	0	$	5,453	$	5,453		0.03	%
21	OE	Rate POL		17,925,372		0.0000		0.0000		0.0362		0.0362	$	0	$	0	$	6,489	$	6,489		0.04	%
22	OE	Rate TRF		8,335,177		0.0000		0.0000		0.0362		0.0362	$	0	$	0	$	3,017	$	3,017		0.02	%
23	OE	Rate ESIP		50,286,811		0.0000		0.0000		0.0362		0.0362	$	0	$	0	$	18,204	$	18,204		0.10	%
24	OE	TOTAL		12,006,822,464									$	13,756,427	$	0	$	4,346,470	$	18,102,897		100.00	%
25
26	TE	Rate RS		1,190,363,084		0.0000		0.0000		0.0257		0.0257	$	0	$	0	$	305,923	$	305,923		22.09	%
27	TE	Rate GS		1,029,986,844		0.0000		0.0000		0.0257		0.0257	$	0	$	0	$	264,707	$	264,707		19.11	%
28	TE	Rate GP		537,628,374		0.0000		0.0000		0.0257		0.0257	$	0	$	0	$	138,170	$	138,170		9.98	%
29	TE	Rate GSU		58,074,478		0.0000		0.0000		0.0257		0.0257	$	0	$	0	$	14,925	$	14,925		1.08	%
30	TE	Rate GT		2,540,943,349		0.0000		0.0000		0.0257		0.0257	$	0	$	0	$	653,022	$	653,022		47.15	%
31	TE	Rate STL		24,854,471		0.0000		0.0000		0.0257		0.0257	$	0	$	0	$	6,388	$	6,388		0.46	%
32	TE	Rate POL		5,451,752		0.0000		0.0000		0.0257		0.0257	$	0	$	0	$	1,401	$	1,401		0.10	%
33	TE	Rate TRF		1,519,955		0.0000		0.0000		0.0257		0.0257	$	0	$	0	$	391	$	391		0.03	%
34	TE	Rate ESIP				0.0000		0.0000		0.0000		0.0000	$	0	$	0	$	0	$	0		0.00	%
35	TE	TOTAL		5,388,822,306									$	0	$	0	$	1,384,927	$	1,384,927		100.00	%

NOTES
*	Illustrative calculation of initial Rider PIR charge, estimated to be effective January 1, 2013. As part of the Rider PIR reconciliation process, existing riders that would otherwise go to zero absent the securitization will be reflected as zero in the determination of the allocation factors. For example, under the existing recovery methodology, Rider RER1 is expected to be fully recovered by approximately June 2014 for CEI and OE. Accordingly, the prices in column E will be updated to zero at this time and the allocation factors will be calculated accordingly.
(D)	Estimated kWh sales for the upcoming six-month period based on the most recent sales forecast.
(E)-(G)	Estimated average tariff rates that would otherwise be in effect over the upcoming six-month period
(H)	Calculation: Column E + Column F + Column G
(I)	Calculation: Column D x Column E
(J)	Calculation: Column D x Column F
(K)	Calculation: Column D x Column G
(L)	Calculation: Column I + Column J + Column K
(M)	Calculation: Column L / Company Total Column L

Rider PIR - Rate Design	Exhibit F - Attachment 1
Illustrative Example - Initial Rider PIR Charge	Page 3 of 3

Line	Line Item Description	CEI			OE			TE			TOTAL
1	Rider PIR Revenue Requirement	$	18,171,590		$	16,654,665		$	1,344,764		$	36,171,020
2
3	Allocation Ratio
4	Rate RS		54.60	%		84.82	%		22.09	%
5	Rate GS		26.35	%		6.64	%		19.11	%
6	Rate GP 1		0.98	%		2.83	%		9.98	%
7	Rate GP 2		0.12	%
8	Rate GSU 1		12.67	%		1.04	%		1.08	%
9	Rate GSU 2		0.25	%
10	Rate GT 1		3.33	%		4.48	%		47.15	%
11	Rate GT 2		0.94	%
12	Rate STL		0.47	%		0.03	%		0.46	%
13	Rate POL		0.22	%		0.04	%		0.10	%
14	Rate TRF		0.07	%		0.02	%		0.03	%
15	Rate ESIP					0.10	%
16	Total Allocation Ratios		100.00	%		100.00	%		100.00	%
17
18	Allocated Revenue Requirement
19	Rate RS	$	9,922,110		$	14,127,153		$	297,052		$	24,346,315
20	Rate GS	$	4,788,858		$	1,106,611		$	257,030		$	6,152,499
21	Rate GP 1	$	178,032		$	471,326		$	134,164		$	783,522
22	Rate GP 2	$	21,439								$	21,439
23	Rate GSU 1	$	2,301,801		$	173,066		$	14,492		$	2,489,359
24	Rate GSU 2	$	45,613								$	45,613
25	Rate GT 1	$	605,917		$	746,000		$	634,085		$	1,986,002
26	Rate GT 2	$	170,137								$	170,137
27	Rate STL	$	85,744		$	5,016		$	6,202		$	96,963
28	Rate POL	$	39,732		$	5,970		$	1,360		$	47,063
29	Rate TRF	$	12,207		$	2,776		$	379		$	15,362
30	Rate ESIP				$	16,748					$	16,748
31	Total Revenue Requirement	$	18,171,590		$	16,654,665		$	1,344,764		$	36,171,020
32
33	Estimated kWh Sales
34	Rate RS		2,576,378,511			4,417,606,731			1,190,363,084			8,184,348,326
35	Rate GS		3,529,472,016			3,322,756,199			1,029,986,844			7,882,215,059
36	Rate GP 1		134,859,708			1,415,224,337			537,628,374			2,087,712,420
37	Rate GP 2		69,431,894									69,431,894
38	Rate GSU 1		1,781,056,126			519,654,272			58,074,478			2,358,784,875
39	Rate GSU 2		147,722,702									147,722,702
40	Rate GT 1		469,488,715			2,239,971,058			2,540,943,349			5,250,403,122
41	Rate GT 2		551,005,295									551,005,295
42	Rate STL		63,194,628			15,062,508			24,854,471			103,111,607
43	Rate POL		29,283,302			17,925,372			5,451,752			52,660,425
44	Rate TRF		8,996,539			8,335,177			1,519,955			18,851,671
45	Rate ESIP					50,286,811						50,286,811
46	Total Estimated kWh Sales		9,360,889,437			12,006,822,464			5,388,822,306			26,756,534,207
47
48	Rider PIR Rate (¢/kWh)
49	Rate RS		0.3851			0.3198			0.0250
50	Rate GS		0.1357			0.0333			0.0250
51	Rate GP 1		0.1320			0.0333			0.0250
52	Rate GP 2		0.0309
53	Rate GSU 1		0.1292			0.0333			0.0250
54	Rate GSU 2		0.0309
55	Rate GT 1		0.1291			0.0333			0.0250
56	Rate GT 2		0.0309
57	Rate STL		0.1357			0.0333			0.0250
58	Rate POL		0.1357			0.0333			0.0250
59	Rate TRF		0.1357			0.0333			0.0250
60	Rate ESIP					0.0333

NOTES
1	Total amount to be billed under Rider PIR for the upcoming 6 months - Page 1, Line 48
3-16	Allocation ratios based on estimated revenue to be billed under existing Riders RER1, DGC, and DFC - Page 2, Column M
18-31	Calculation: Rider PIR Revenue Requirement x Allocation Ratio
33-46	Estimated kWh sales for the upcoming 6 months
48-60	Calculation: Allocated Revenue Requirement x 100 / Estimated kWh Sales

Exhibit G

CEI - Page 1 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Standard (Rate RS)
1		0		250	$	33.94	$	33.82	$	(0.11	)		-0.3	%
2		0		500	$	63.84	$	63.61	$	(0.23	)		-0.4	%
3		0		750	$	93.74	$	93.41	$	(0.34	)		-0.4	%
4		0		1,000	$	123.65	$	123.20	$	(0.45	)		-0.4	%
5		0		1,250	$	153.55	$	152.99	$	(0.56	)		-0.4	%
6		0		1,500	$	183.46	$	182.78	$	(0.68	)		-0.4	%
7		0		2,000	$	243.27	$	242.36	$	(0.90	)		-0.4	%
8		0		2,500	$	302.84	$	301.71	$	(1.13	)		-0.4	%
9		0		3,000	$	362.42	$	361.07	$	(1.36	)		-0.4	%
10		0		3,500	$	422.00	$	420.42	$	(1.58	)		-0.4	%
11		0		4,000	$	481.58	$	479.77	$	(1.81	)		-0.4	%
12		0		4,500	$	541.16	$	539.12	$	(2.03	)		-0.4	%
13		0		5,000	$	600.74	$	598.48	$	(2.26	)		-0.4	%
14		0		5,500	$	660.31	$	657.83	$	(2.49	)		-0.4	%
15		0		6,000	$	719.89	$	717.18	$	(2.71	)		-0.4	%
16		0		6,500	$	779.47	$	776.53	$	(2.94	)		-0.4	%
17		0		7,000	$	839.05	$	835.88	$	(3.16	)		-0.4	%
18		0		7,500	$	898.63	$	895.24	$	(3.39	)		-0.4	%
19		0		8,000	$	958.20	$	954.59	$	(3.62	)		-0.4	%
20		0		8,500	$	1,017.78	$	1,013.94	$	(3.84	)		-0.4	%
21		0		9,000	$	1,077.36	$	1,073.29	$	(4.07	)		-0.4	%
22		0		9,500	$	1,136.94	$	1,132.64	$	(4.29	)		-0.4	%
23		0		10,000	$	1,196.52	$	1,192.00	$	(4.52	)		-0.4	%
24		0		10,500	$	1,256.09	$	1,251.35	$	(4.75	)		-0.4	%
25		0		11,000	$	1,315.67	$	1,310.70	$	(4.97	)		-0.4	%
26		0		11,500	$	1,375.25	$	1,370.05	$	(5.20	)		-0.4	%
27		0		12,000	$	1,434.83	$	1,429.41	$	(5.42	)		-0.4	%
28		0		12,500	$	1,494.41	$	1,488.76	$	(5.65	)		-0.4	%
29		0		13,000	$	1,553.99	$	1,548.11	$	(5.88	)		-0.4	%
30		0		13,500	$	1,613.56	$	1,607.46	$	(6.10	)		-0.4	%
31		0		14,000	$	1,673.14	$	1,666.81	$	(6.33	)		-0.4	%
32		0		14,500	$	1,732.72	$	1,726.17	$	(6.55	)		-0.4	%
33		0		15,000	$	1,792.30	$	1,785.52	$	(6.78	)		-0.4	%
34		0		15,500	$	1,851.60	$	1,844.59	$	(7.01	)		-0.4	%
35		0		16,000	$	1,910.89	$	1,903.66	$	(7.23	)		-0.4	%
36		0		16,500	$	1,970.19	$	1,962.73	$	(7.46	)		-0.4	%
37		0		17,000	$	2,029.49	$	2,021.80	$	(7.68	)		-0.4	%
38		0		17,500	$	2,088.79	$	2,080.88	$	(7.91	)		-0.4	%

Exhibit G

CEI - Page 2 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Electric Heating (Rate RS)
1		0		250	$	25.29	$	25.17	$	(0.11	)		-0.4	%
2		0		500	$	46.54	$	46.31	$	(0.23	)		-0.5	%
3		0		750	$	58.79	$	58.46	$	(0.34	)		-0.6	%
4		0		1,000	$	71.05	$	70.60	$	(0.45	)		-0.6	%
5		0		1,250	$	83.30	$	82.74	$	(0.56	)		-0.7	%
6		0		1,500	$	95.56	$	94.88	$	(0.68	)		-0.7	%
7		0		2,000	$	120.07	$	119.16	$	(0.90	)		-0.8	%
8		0		2,500	$	144.34	$	143.21	$	(1.13	)		-0.8	%
9		0		3,000	$	168.62	$	167.27	$	(1.36	)		-0.8	%
10		0		3,500	$	192.90	$	191.32	$	(1.58	)		-0.8	%
11		0		4,000	$	217.18	$	215.37	$	(1.81	)		-0.8	%
12		0		4,500	$	241.46	$	239.42	$	(2.03	)		-0.8	%
13		0		5,000	$	265.74	$	263.48	$	(2.26	)		-0.9	%
14		0		5,500	$	290.01	$	287.53	$	(2.49	)		-0.9	%
15		0		6,000	$	314.29	$	311.58	$	(2.71	)		-0.9	%
16		0		6,500	$	338.57	$	335.63	$	(2.94	)		-0.9	%
17		0		7,000	$	362.85	$	359.68	$	(3.16	)		-0.9	%
18		0		7,500	$	387.13	$	383.74	$	(3.39	)		-0.9	%
19		0		8,000	$	411.40	$	407.79	$	(3.62	)		-0.9	%
20		0		8,500	$	435.68	$	431.84	$	(3.84	)		-0.9	%
21		0		9,000	$	459.96	$	455.89	$	(4.07	)		-0.9	%
22		0		9,500	$	484.24	$	479.94	$	(4.29	)		-0.9	%
23		0		10,000	$	508.52	$	504.00	$	(4.52	)		-0.9	%
24		0		10,500	$	532.79	$	528.05	$	(4.75	)		-0.9	%
25		0		11,000	$	557.07	$	552.10	$	(4.97	)		-0.9	%
26		0		11,500	$	581.35	$	576.15	$	(5.20	)		-0.9	%
27		0		12,000	$	605.63	$	600.21	$	(5.42	)		-0.9	%
28		0		12,500	$	629.91	$	624.26	$	(5.65	)		-0.9	%
29		0		13,000	$	654.19	$	648.31	$	(5.88	)		-0.9	%
30		0		13,500	$	678.46	$	672.36	$	(6.10	)		-0.9	%
31		0		14,000	$	702.74	$	696.41	$	(6.33	)		-0.9	%
32		0		14,500	$	727.02	$	720.47	$	(6.55	)		-0.9	%
33		0		15,000	$	751.30	$	744.52	$	(6.78	)		-0.9	%
34		0		15,500	$	775.30	$	768.29	$	(7.01	)		-0.9	%
35		0		16,000	$	799.29	$	792.06	$	(7.23	)		-0.9	%
36		0		16,500	$	823.29	$	815.83	$	(7.46	)		-0.9	%
37		0		17,000	$	847.29	$	839.60	$	(7.68	)		-0.9	%
38		0		17,500	$	871.29	$	863.38	$	(7.91	)		-0.9	%

Exhibit G

CEI - Page 3 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Water Heating (Rate RS)
1		0		250	$	33.94	$	33.82	$	(0.11	)		-0.3	%
2		0		500	$	63.84	$	63.61	$	(0.23	)		-0.4	%
3		0		750	$	88.24	$	87.91	$	(0.34	)		-0.4	%
4		0		1,000	$	112.65	$	112.20	$	(0.45	)		-0.4	%
5		0		1,250	$	137.05	$	136.49	$	(0.56	)		-0.4	%
6		0		1,500	$	161.46	$	160.78	$	(0.68	)		-0.4	%
7		0		2,000	$	210.27	$	209.36	$	(0.90	)		-0.4	%
8		0		2,500	$	258.84	$	257.71	$	(1.13	)		-0.4	%
9		0		3,000	$	307.42	$	306.07	$	(1.36	)		-0.4	%
10		0		3,500	$	356.00	$	354.42	$	(1.58	)		-0.4	%
11		0		4,000	$	404.58	$	402.77	$	(1.81	)		-0.4	%
12		0		4,500	$	453.16	$	451.12	$	(2.03	)		-0.4	%
13		0		5,000	$	501.74	$	499.48	$	(2.26	)		-0.5	%
14		0		5,500	$	550.31	$	547.83	$	(2.49	)		-0.5	%
15		0		6,000	$	598.89	$	596.18	$	(2.71	)		-0.5	%
16		0		6,500	$	647.47	$	644.53	$	(2.94	)		-0.5	%
17		0		7,000	$	696.05	$	692.88	$	(3.16	)		-0.5	%
18		0		7,500	$	744.63	$	741.24	$	(3.39	)		-0.5	%
19		0		8,000	$	793.20	$	789.59	$	(3.62	)		-0.5	%
20		0		8,500	$	841.78	$	837.94	$	(3.84	)		-0.5	%
21		0		9,000	$	890.36	$	886.29	$	(4.07	)		-0.5	%
22		0		9,500	$	938.94	$	934.64	$	(4.29	)		-0.5	%
23		0		10,000	$	987.52	$	983.00	$	(4.52	)		-0.5	%
24		0		10,500	$	1,036.09	$	1,031.35	$	(4.75	)		-0.5	%
25		0		11,000	$	1,084.67	$	1,079.70	$	(4.97	)		-0.5	%
26		0		11,500	$	1,133.25	$	1,128.05	$	(5.20	)		-0.5	%
27		0		12,000	$	1,181.83	$	1,176.41	$	(5.42	)		-0.5	%
28		0		12,500	$	1,230.41	$	1,224.76	$	(5.65	)		-0.5	%
29		0		13,000	$	1,278.99	$	1,273.11	$	(5.88	)		-0.5	%
30		0		13,500	$	1,327.56	$	1,321.46	$	(6.10	)		-0.5	%
31		0		14,000	$	1,376.14	$	1,369.81	$	(6.33	)		-0.5	%
32		0		14,500	$	1,424.72	$	1,418.17	$	(6.55	)		-0.5	%
33		0		15,000	$	1,473.30	$	1,466.52	$	(6.78	)		-0.5	%
34		0		15,500	$	1,521.60	$	1,514.59	$	(7.01	)		-0.5	%
35		0		16,000	$	1,569.89	$	1,562.66	$	(7.23	)		-0.5	%
36		0		16,500	$	1,618.19	$	1,610.73	$	(7.46	)		-0.5	%
37		0		17,000	$	1,666.49	$	1,658.80	$	(7.68	)		-0.5	%
38		0		17,500	$	1,714.79	$	1,706.88	$	(7.91	)		-0.5	%

Exhibit G

CEI - Page 4 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Standard (Rate RS)
1		0		250	$	36.22	$	36.11	$	(0.11	)		-0.3	%
2		0		500	$	68.41	$	68.19	$	(0.23	)		-0.3	%
3		0		750	$	100.60	$	100.27	$	(0.34	)		-0.3	%
4		0		1,000	$	132.80	$	132.34	$	(0.45	)		-0.3	%
5		0		1,250	$	164.99	$	164.42	$	(0.56	)		-0.3	%
6		0		1,500	$	197.18	$	196.50	$	(0.68	)		-0.3	%
7		0		2,000	$	261.56	$	260.66	$	(0.90	)		-0.3	%
8		0		2,500	$	325.71	$	324.58	$	(1.13	)		-0.3	%
9		0		3,000	$	389.86	$	388.51	$	(1.36	)		-0.3	%
10		0		3,500	$	454.02	$	452.43	$	(1.58	)		-0.3	%
11		0		4,000	$	518.17	$	516.36	$	(1.81	)		-0.3	%
12		0		4,500	$	582.32	$	580.28	$	(2.03	)		-0.3	%
13		0		5,000	$	646.47	$	644.21	$	(2.26	)		-0.3	%
14		0		5,500	$	710.62	$	708.14	$	(2.49	)		-0.3	%
15		0		6,000	$	774.77	$	772.06	$	(2.71	)		-0.4	%
16		0		6,500	$	838.93	$	835.99	$	(2.94	)		-0.4	%
17		0		7,000	$	903.08	$	899.91	$	(3.16	)		-0.4	%
18		0		7,500	$	967.23	$	963.84	$	(3.39	)		-0.4	%
19		0		8,000	$	1,031.38	$	1,027.76	$	(3.62	)		-0.4	%
20		0		8,500	$	1,095.53	$	1,091.69	$	(3.84	)		-0.4	%
21		0		9,000	$	1,159.68	$	1,155.62	$	(4.07	)		-0.4	%
22		0		9,500	$	1,223.84	$	1,219.54	$	(4.29	)		-0.4	%
23		0		10,000	$	1,287.99	$	1,283.47	$	(4.52	)		-0.4	%
24		0		10,500	$	1,352.14	$	1,347.39	$	(4.75	)		-0.4	%
25		0		11,000	$	1,416.29	$	1,411.32	$	(4.97	)		-0.4	%
26		0		11,500	$	1,480.44	$	1,475.24	$	(5.20	)		-0.4	%
27		0		12,000	$	1,544.59	$	1,539.17	$	(5.42	)		-0.4	%
28		0		12,500	$	1,608.75	$	1,603.10	$	(5.65	)		-0.4	%
29		0		13,000	$	1,672.90	$	1,667.02	$	(5.88	)		-0.4	%
30		0		13,500	$	1,737.05	$	1,730.95	$	(6.10	)		-0.4	%
31		0		14,000	$	1,801.20	$	1,794.87	$	(6.33	)		-0.4	%
32		0		14,500	$	1,865.35	$	1,858.80	$	(6.55	)		-0.4	%
33		0		15,000	$	1,929.50	$	1,922.72	$	(6.78	)		-0.4	%
34		0		15,500	$	1,993.37	$	1,986.37	$	(7.01	)		-0.4	%
35		0		16,000	$	2,057.25	$	2,050.01	$	(7.23	)		-0.4	%
36		0		16,500	$	2,121.12	$	2,113.66	$	(7.46	)		-0.4	%
37		0		17,000	$	2,184.99	$	2,177.30	$	(7.68	)		-0.4	%
38		0		17,500	$	2,248.86	$	2,240.95	$	(7.91	)		-0.4	%

Exhibit G

CEI - Page 5 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Electric Heating (Rate RS)
1		0		250	$	36.22	$	36.11	$	(0.11	)		-0.3	%
2		0		500	$	68.41	$	68.19	$	(0.23	)		-0.3	%
3		0		750	$	91.60	$	91.27	$	(0.34	)		-0.4	%
4		0		1,000	$	114.80	$	114.34	$	(0.45	)		-0.4	%
5		0		1,250	$	137.99	$	137.42	$	(0.56	)		-0.4	%
6		0		1,500	$	161.18	$	160.50	$	(0.68	)		-0.4	%
7		0		2,000	$	207.56	$	206.66	$	(0.90	)		-0.4	%
8		0		2,500	$	253.71	$	252.58	$	(1.13	)		-0.4	%
9		0		3,000	$	299.86	$	298.51	$	(1.36	)		-0.5	%
10		0		3,500	$	346.02	$	344.43	$	(1.58	)		-0.5	%
11		0		4,000	$	392.17	$	390.36	$	(1.81	)		-0.5	%
12		0		4,500	$	438.32	$	436.28	$	(2.03	)		-0.5	%
13		0		5,000	$	484.47	$	482.21	$	(2.26	)		-0.5	%
14		0		5,500	$	530.62	$	528.14	$	(2.49	)		-0.5	%
15		0		6,000	$	576.77	$	574.06	$	(2.71	)		-0.5	%
16		0		6,500	$	622.93	$	619.99	$	(2.94	)		-0.5	%
17		0		7,000	$	669.08	$	665.91	$	(3.16	)		-0.5	%
18		0		7,500	$	715.23	$	711.84	$	(3.39	)		-0.5	%
19		0		8,000	$	761.38	$	757.76	$	(3.62	)		-0.5	%
20		0		8,500	$	807.53	$	803.69	$	(3.84	)		-0.5	%
21		0		9,000	$	853.68	$	849.62	$	(4.07	)		-0.5	%
22		0		9,500	$	899.84	$	895.54	$	(4.29	)		-0.5	%
23		0		10,000	$	945.99	$	941.47	$	(4.52	)		-0.5	%
24		0		10,500	$	992.14	$	987.39	$	(4.75	)		-0.5	%
25		0		11,000	$	1,038.29	$	1,033.32	$	(4.97	)		-0.5	%
26		0		11,500	$	1,084.44	$	1,079.24	$	(5.20	)		-0.5	%
27		0		12,000	$	1,130.59	$	1,125.17	$	(5.42	)		-0.5	%
28		0		12,500	$	1,176.75	$	1,171.10	$	(5.65	)		-0.5	%
29		0		13,000	$	1,222.90	$	1,217.02	$	(5.88	)		-0.5	%
30		0		13,500	$	1,269.05	$	1,262.95	$	(6.10	)		-0.5	%
31		0		14,000	$	1,315.20	$	1,308.87	$	(6.33	)		-0.5	%
32		0		14,500	$	1,361.35	$	1,354.80	$	(6.55	)		-0.5	%
33		0		15,000	$	1,407.50	$	1,400.72	$	(6.78	)		-0.5	%
34		0		15,500	$	1,453.37	$	1,446.37	$	(7.01	)		-0.5	%
35		0		16,000	$	1,499.25	$	1,492.01	$	(7.23	)		-0.5	%
36		0		16,500	$	1,545.12	$	1,537.66	$	(7.46	)		-0.5	%
37		0		17,000	$	1,590.99	$	1,583.30	$	(7.68	)		-0.5	%
38		0		17,500	$	1,636.86	$	1,628.95	$	(7.91	)		-0.5	%

Exhibit G

CEI - Page 6 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Water Heating (Rate RS)
1		0		250	$	36.22	$	36.11	$	(0.11	)		-0.3	%
2		0		500	$	68.41	$	68.19	$	(0.23	)		-0.3	%
3		0		750	$	95.10	$	94.77	$	(0.34	)		-0.4	%
4		0		1,000	$	121.80	$	121.34	$	(0.45	)		-0.4	%
5		0		1,250	$	148.49	$	147.92	$	(0.56	)		-0.4	%
6		0		1,500	$	175.18	$	174.50	$	(0.68	)		-0.4	%
7		0		2,000	$	228.56	$	227.66	$	(0.90	)		-0.4	%
8		0		2,500	$	281.71	$	280.58	$	(1.13	)		-0.4	%
9		0		3,000	$	334.86	$	333.51	$	(1.36	)		-0.4	%
10		0		3,500	$	388.02	$	386.43	$	(1.58	)		-0.4	%
11		0		4,000	$	441.17	$	439.36	$	(1.81	)		-0.4	%
12		0		4,500	$	494.32	$	492.28	$	(2.03	)		-0.4	%
13		0		5,000	$	547.47	$	545.21	$	(2.26	)		-0.4	%
14		0		5,500	$	600.62	$	598.14	$	(2.49	)		-0.4	%
15		0		6,000	$	653.77	$	651.06	$	(2.71	)		-0.4	%
16		0		6,500	$	706.93	$	703.99	$	(2.94	)		-0.4	%
17		0		7,000	$	760.08	$	756.91	$	(3.16	)		-0.4	%
18		0		7,500	$	813.23	$	809.84	$	(3.39	)		-0.4	%
19		0		8,000	$	866.38	$	862.76	$	(3.62	)		-0.4	%
20		0		8,500	$	919.53	$	915.69	$	(3.84	)		-0.4	%
21		0		9,000	$	972.68	$	968.62	$	(4.07	)		-0.4	%
22		0		9,500	$	1,025.84	$	1,021.54	$	(4.29	)		-0.4	%
23		0		10,000	$	1,078.99	$	1,074.47	$	(4.52	)		-0.4	%
24		0		10,500	$	1,132.14	$	1,127.39	$	(4.75	)		-0.4	%
25		0		11,000	$	1,185.29	$	1,180.32	$	(4.97	)		-0.4	%
26		0		11,500	$	1,238.44	$	1,233.24	$	(5.20	)		-0.4	%
27		0		12,000	$	1,291.59	$	1,286.17	$	(5.42	)		-0.4	%
28		0		12,500	$	1,344.75	$	1,339.10	$	(5.65	)		-0.4	%
29		0		13,000	$	1,397.90	$	1,392.02	$	(5.88	)		-0.4	%
30		0		13,500	$	1,451.05	$	1,444.95	$	(6.10	)		-0.4	%
31		0		14,000	$	1,504.20	$	1,497.87	$	(6.33	)		-0.4	%
32		0		14,500	$	1,557.35	$	1,550.80	$	(6.55	)		-0.4	%
33		0		15,000	$	1,610.50	$	1,603.72	$	(6.78	)		-0.4	%
34		0		15,500	$	1,663.37	$	1,656.37	$	(7.01	)		-0.4	%
35		0		16,000	$	1,716.25	$	1,709.01	$	(7.23	)		-0.4	%
36		0		16,500	$	1,769.12	$	1,761.66	$	(7.46	)		-0.4	%
37		0		17,000	$	1,821.99	$	1,814.30	$	(7.68	)		-0.4	%
38		0		17,500	$	1,874.86	$	1,866.95	$	(7.91	)		-0.4	%

Exhibit G

CEI - Page 7 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Secondary (Rate GS)
1		10		1,000	$	168.90	$	168.75	$	(0.16	)		-0.1	%
2		10		2,000	$	251.37	$	251.05	$	(0.32	)		-0.1	%
3		10		3,000	$	333.41	$	332.94	$	(0.48	)		-0.1	%
4		10		4,000	$	415.43	$	414.79	$	(0.64	)		-0.2	%
5		10		5,000	$	497.47	$	496.68	$	(0.80	)		-0.2	%
6		10		6,000	$	579.49	$	578.54	$	(0.95	)		-0.2	%
7		1,000		100,000	$	18,434.64	$	18,418.74	$	(15.90	)		-0.1	%
8		1,000		200,000	$	26,581.28	$	26,549.48	$	(31.80	)		-0.1	%
9		1,000		300,000	$	34,727.93	$	34,680.23	$	(47.70	)		-0.1	%
10		1,000		400,000	$	42,874.57	$	42,810.97	$	(63.60	)		-0.1	%
11		1,000		500,000	$	51,021.22	$	50,941.72	$	(79.50	)		-0.2	%
12		1,000		600,000	$	59,167.87	$	59,072.47	$	(95.40	)		-0.2	%

Exhibit G

CEI - Page 8 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Primary (Rate GP)
1		500		50,000	$	5,571.63	$	5,563.88	$	(7.75	)		-0.1	%
2		500		100,000	$	9,120.95	$	9,105.45	$	(15.50	)		-0.2	%
3		500		150,000	$	12,670.27	$	12,647.02	$	(23.25	)		-0.2	%
4		500		200,000	$	16,219.60	$	16,188.60	$	(31.00	)		-0.2	%
5		500		250,000	$	19,768.92	$	19,730.17	$	(38.75	)		-0.2	%
6		500		300,000	$	23,318.24	$	23,271.74	$	(46.50	)		-0.2	%
7		5,000		500,000	$	54,260.99	$	54,183.49	$	(77.50	)		-0.1	%
8		5,000		1,000,000	$	89,285.28	$	89,130.28	$	(155.00	)		-0.2	%
9		5,000		1,500,000	$	123,374.51	$	123,142.01	$	(232.50	)		-0.2	%
10		5,000		2,000,000	$	157,463.74	$	157,153.74	$	(310.00	)		-0.2	%
11		5,000		2,500,000	$	191,552.97	$	191,165.47	$	(387.50	)		-0.2	%
12		5,000		3,000,000	$	225,642.21	$	225,177.21	$	(465.00	)		-0.2	%

Exhibit G

CEI - Page 9 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Subtransmission (Rate GSU)
1		1,000		100,000	$	9,226.24	$	9,211.04	$	(15.20	)		-0.2	%
2		1,000		200,000	$	15,944.59	$	15,914.19	$	(30.40	)		-0.2	%
3		1,000		300,000	$	22,662.93	$	22,617.33	$	(45.60	)		-0.2	%
4		1,000		400,000	$	29,381.28	$	29,320.48	$	(60.80	)		-0.2	%
5		1,000		500,000	$	36,099.63	$	36,023.63	$	(76.00	)		-0.2	%
6		1,000		600,000	$	42,817.97	$	42,726.77	$	(91.20	)		-0.2	%
7		10,000		1,000,000	$	90,068.19	$	89,916.19	$	(152.00	)		-0.2	%
8		10,000		2,000,000	$	154,443.65	$	154,139.65	$	(304.00	)		-0.2	%
9		10,000		3,000,000	$	218,819.12	$	218,363.12	$	(456.00	)		-0.2	%
10		10,000		4,000,000	$	283,194.58	$	282,586.58	$	(608.00	)		-0.2	%
11		10,000		5,000,000	$	347,570.04	$	346,810.04	$	(760.00	)		-0.2	%
12		10,000		6,000,000	$	411,945.50	$	411,033.50	$	(912.00	)		-0.2	%

Exhibit G

CEI - Page 10 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Transmission (Rate GT)
1		2,000		200,000	$	25,495.84	$	25,465.64	$	(30.20	)		-0.1	%
2		2,000		400,000	$	34,015.33	$	33,954.93	$	(60.40	)		-0.2	%
3		2,000		600,000	$	42,534.82	$	42,444.22	$	(90.60	)		-0.2	%
4		2,000		800,000	$	51,054.31	$	50,933.51	$	(120.80	)		-0.2	%
5		2,000		1,000,000	$	59,104.87	$	58,953.87	$	(151.00	)		-0.3	%
6		2,000		1,200,000	$	67,062.76	$	66,881.56	$	(181.20	)		-0.3	%
7		20,000		2,000,000	$	248,717.33	$	248,415.33	$	(302.00	)		-0.1	%
8		20,000		4,000,000	$	328,296.26	$	327,692.26	$	(604.00	)		-0.2	%
9		20,000		6,000,000	$	407,875.18	$	406,969.18	$	(906.00	)		-0.2	%
10		20,000		8,000,000	$	487,454.11	$	486,246.11	$	(1,208.00	)		-0.2	%
11		20,000		10,000,000	$	567,033.03	$	565,523.03	$	(1,510.00	)		-0.3	%
12		20,000		12,000,000	$	646,611.96	$	644,799.96	$	(1,812.00	)		-0.3	%

Exhibit G

CEI - Page 11 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
1		Company Owned - Incandescent Lighting (a)
2		Overhead Service
3		1,000		24	$	12.00	$	11.99	$	(0.00	)		0.0	%
4		2,000		56	$	13.42	$	13.41	$	(0.01	)		-0.1	%
5		2,500		70	$	14.07	$	14.06	$	(0.01	)		-0.1	%
6		4,000		126	$	16.57	$	16.55	$	(0.02	)		-0.1	%
7		6,000		157	$	17.94	$	17.91	$	(0.02	)		-0.1	%
8		10,000		242	$	21.75	$	21.71	$	(0.04	)		-0.2	%
9		15,000		282	$	23.53	$	23.48	$	(0.04	)		-0.2	%
10		Underground Service
11		1,000		24	$	7.16	$	7.15	$	(0.00	)		-0.1	%
12		2,000		56	$	8.58	$	8.57	$	(0.01	)		-0.1	%
13		2,500		70	$	9.23	$	9.22	$	(0.01	)		-0.1	%
14		4,000		126	$	11.73	$	11.71	$	(0.02	)		-0.2	%
15		6,000		157	$	13.10	$	13.07	$	(0.02	)		-0.2	%
16		10,000		242	$	16.91	$	16.87	$	(0.04	)		-0.2	%
17		15,000		282	$	18.69	$	18.64	$	(0.04	)		-0.2	%
18		Company Owned - Mercury Street Lighting (b)
19		Overhead Service - Wood Pole
20		175		69	$	10.48	$	10.47	$	(0.01	)		-0.1	%
21		250		104	$	13.46	$	13.44	$	(0.02	)		-0.1	%
22		400		158	$	18.45	$	18.43	$	(0.03	)		-0.1	%
23		1,000		380	$	40.49	$	40.42	$	(0.06	)		-0.1	%
24		Underground Service - Post Type
25		175		69	$	14.83	$	14.82	$	(0.01	)		-0.1	%
26		Underground Service - Pole Type
27		175		69	$	21.39	$	21.38	$	(0.01	)		-0.1	%
28		250		104	$	25.18	$	25.16	$	(0.02	)		-0.1	%
29		400		158	$	30.39	$	30.37	$	(0.03	)		-0.1	%
30		400		158	$	30.64	$	30.62	$	(0.03	)		-0.1	%
31		400		316	$	46.95	$	46.90	$	(0.05	)		-0.1	%
32		1000		380	$	54.32	$	54.25	$	(0.06	)		-0.1	%

Exhibit G

CEI - Page 12 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
33		Company Owned - High Pressure Sodium Lighting (c)
34		Overhead Service - Wood Pole
35		100		42	$	12.19	$	12.18	$	(0.01	)		-0.1	%
36		150		62	$	13.71	$	13.70	$	(0.01	)		-0.1	%
37		250		105	$	17.90	$	17.88	$	(0.02	)		-0.1	%
38		400		163	$	22.46	$	22.43	$	(0.03	)		-0.1	%
39		Underground Service - Post Type
40		100		42	$	16.71	$	16.70	$	(0.01	)		0.0	%
41		Underground Service - Pole Type
42		100		42	$	23.75	$	23.74	$	(0.01	)		0.0	%
43		150		62	$	25.52	$	25.51	$	(0.01	)		0.0	%
44		250		105	$	29.55	$	29.53	$	(0.02	)		-0.1	%
45		250		210	$	46.82	$	46.79	$	(0.03	)		-0.1	%
46		400		163	$	33.92	$	33.89	$	(0.03	)		-0.1	%
47		Special Architectural Pole Installations
48		100		42	$	22.18	$	22.17	$	(0.01	)		0.0	%
49		100		42	$	34.21	$	34.20	$	(0.01	)		0.0	%
50		150		62	$	24.25	$	24.24	$	(0.01	)		0.0	%
51		150		62	$	35.92	$	35.91	$	(0.01	)		0.0	%
52		250		105	$	29.13	$	29.11	$	(0.02	)		-0.1	%
53		250		105	$	40.96	$	40.94	$	(0.02	)		0.0	%
54		400		163	$	33.69	$	33.66	$	(0.03	)		-0.1	%
55		400		163	$	46.33	$	46.30	$	(0.03	)		-0.1	%
56		Customer Owned - All Lamp Types
57		N/A		25	$	1.12	$	1.12	$	(0.00	)		-0.4	%
58		N/A		50	$	2.24	$	2.23	$	(0.01	)		-0.4	%
59		N/A		75	$	4.22	$	4.21	$	(0.01	)		-0.3	%
60		N/A		100	$	6.49	$	6.47	$	(0.02	)		-0.2	%
61		N/A		125	$	8.11	$	8.09	$	(0.02	)		-0.2	%
62		N/A		150	$	11.24	$	11.21	$	(0.02	)		-0.2	%
63		N/A		175	$	13.48	$	13.45	$	(0.03	)		-0.2	%
64		N/A		200	$	17.66	$	17.63	$	(0.03	)		-0.2	%
65		N/A		225	$	20.20	$	20.16	$	(0.04	)		-0.2	%
66		N/A		250	$	11.19	$	11.15	$	(0.04	)		-0.4	%
67		N/A		275	$	13.17	$	13.12	$	(0.04	)		-0.3	%
68		N/A		300	$	15.44	$	15.39	$	(0.05	)		-0.3	%
69		N/A		325	$	17.06	$	17.01	$	(0.05	)		-0.3	%
70		N/A		350	$	20.19	$	20.13	$	(0.06	)		-0.3	%
71		N/A		375	$	22.43	$	22.37	$	(0.06	)		-0.3	%
72		N/A		400	$	26.59	$	26.52	$	(0.06	)		-0.2	%

Exhibit G

CEI - Page 13 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
73		Customer Owned, Limited Company Maintenance - All Lamp Types
74		N/A		25	$	1.12	$	1.12	$	(0.00	)		-0.4	%
75		N/A		50	$	2.24	$	2.23	$	(0.01	)		-0.4	%
76		N/A		75	$	5.67	$	5.66	$	(0.01	)		-0.2	%
77		N/A		100	$	9.87	$	9.85	$	(0.02	)		-0.2	%
78		N/A		125	$	12.32	$	12.30	$	(0.02	)		-0.2	%
79		N/A		150	$	18.83	$	18.80	$	(0.02	)		-0.1	%
80		N/A		175	$	22.94	$	22.91	$	(0.03	)		-0.1	%
81		N/A		200	$	32.24	$	32.21	$	(0.03	)		-0.1	%
82		N/A		225	$	37.20	$	37.16	$	(0.04	)		-0.1	%
83		N/A		250	$	11.19	$	11.15	$	(0.04	)		-0.4	%
84		N/A		275	$	14.62	$	14.57	$	(0.04	)		-0.3	%
85		N/A		300	$	18.82	$	18.77	$	(0.05	)		-0.3	%
86		N/A		325	$	21.27	$	21.22	$	(0.05	)		-0.2	%
87		N/A		350	$	27.78	$	27.72	$	(0.06	)		-0.2	%
88		N/A		375	$	31.89	$	31.83	$	(0.06	)		-0.2	%
89		N/A		400	$	41.17	$	41.10	$	(0.06	)		-0.2	%

Exhibit G

CEI - Page 14 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Private Outdoor Lighting Service (Rate POL)
1		Mercury Lighting
2		Overhead Service - Wood Pole
3		175		69	$	15.57	$	15.56	$	(0.01	)		-0.1	%
4		400		158	$	31.88	$	31.86	$	(0.03	)		-0.1	%
5		1,000		380	$	63.69	$	63.62	$	(0.06	)		-0.1	%
6		All Other Installations
7		175		69	$	17.91	$	17.90	$	(0.01	)		-0.1	%
8		High Pressure Sodium Lighting
9		Overhead Service - Wood Pole
10		100		42	$	17.14	$	17.13	$	(0.01	)		0.0	%
11		150		62	$	21.44	$	21.43	$	(0.01	)		0.0	%
12		250		105	$	27.34	$	27.32	$	(0.02	)		-0.1	%
13		400		163	$	37.29	$	37.26	$	(0.03	)		-0.1	%
14		All Other Installations
15		100		42	$	20.22	$	20.21	$	(0.01	)		0.0	%
16		150		62	$	26.84	$	26.83	$	(0.01	)		0.0	%
17		150		88	$	41.53	$	41.52	$	(0.01	)		0.0	%
18		250		105	$	34.08	$	34.06	$	(0.02	)		0.0	%
19		250		105	$	45.82	$	45.80	$	(0.02	)		0.0	%
20		400		163	$	41.61	$	41.58	$	(0.03	)		-0.1	%

Exhibit G

CEI - Page 15 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Traffic Lighting Schedule (Rate TRF)
1		0		100	$	5.94	$	5.92	$	(0.02	)		-0.3	%
2		0		200	$	11.89	$	11.86	$	(0.03	)		-0.3	%
3		0		300	$	17.81	$	17.76	$	(0.05	)		-0.3	%
4		0		400	$	23.75	$	23.68	$	(0.06	)		-0.3	%
5		0		500	$	29.70	$	29.62	$	(0.08	)		-0.3	%
6		0		600	$	35.64	$	35.54	$	(0.10	)		-0.3	%

Exhibit G

CEI - Page 16 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Secondary (Rate GS)
1		10		1,000	$	178.05	$	177.90	$	(0.16	)		-0.1	%
2		10		2,000	$	269.66	$	269.34	$	(0.32	)		-0.1	%
3		10		3,000	$	360.85	$	360.38	$	(0.48	)		-0.1	%
4		10		4,000	$	452.02	$	451.38	$	(0.64	)		-0.1	%
5		10		5,000	$	543.21	$	542.42	$	(0.79	)		-0.1	%
6		10		6,000	$	634.37	$	633.42	$	(0.95	)		-0.2	%
7		1,000		100,000	$	19,349.34	$	19,333.44	$	(15.90	)		-0.1	%
8		1,000		200,000	$	28,410.68	$	28,378.88	$	(31.80	)		-0.1	%
9		1,000		300,000	$	37,472.03	$	37,424.33	$	(47.70	)		-0.1	%
10		1,000		400,000	$	46,533.37	$	46,469.77	$	(63.60	)		-0.1	%
11		1,000		500,000	$	55,594.72	$	55,515.22	$	(79.50	)		-0.1	%
12		1,000		600,000	$	64,656.07	$	64,560.67	$	(95.40	)		-0.1	%

Exhibit G

CEI - Page 17 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Primary (Rate GP)
1		500		50,000	$	6,013.13	$	6,005.38	$	(7.75	)		-0.1	%
2		500		100,000	$	10,003.95	$	9,988.45	$	(15.50	)		-0.2	%
3		500		150,000	$	13,994.77	$	13,971.52	$	(23.25	)		-0.2	%
4		500		200,000	$	17,985.60	$	17,954.60	$	(31.00	)		-0.2	%
5		500		250,000	$	21,976.42	$	21,937.67	$	(38.75	)		-0.2	%
6		500		300,000	$	25,967.24	$	25,920.74	$	(46.50	)		-0.2	%
7		5,000		500,000	$	58,675.99	$	58,598.49	$	(77.50	)		-0.1	%
8		5,000		1,000,000	$	98,115.28	$	97,960.28	$	(155.00	)		-0.2	%
9		5,000		1,500,000	$	136,619.51	$	136,387.01	$	(232.50	)		-0.2	%
10		5,000		2,000,000	$	175,123.74	$	174,813.74	$	(310.00	)		-0.2	%
11		5,000		2,500,000	$	213,627.97	$	213,240.47	$	(387.50	)		-0.2	%
12		5,000		3,000,000	$	252,132.21	$	251,667.21	$	(465.00	)		-0.2	%

Exhibit G

CEI - Page 18 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Subtransmission (Rate GSU)
1		1,000		100,000	$	10,084.44	$	10,069.24	$	(15.20	)		-0.2	%
2		1,000		200,000	$	17,660.99	$	17,630.59	$	(30.40	)		-0.2	%
3		1,000		300,000	$	25,237.53	$	25,191.93	$	(45.60	)		-0.2	%
4		1,000		400,000	$	32,814.08	$	32,753.28	$	(60.80	)		-0.2	%
5		1,000		500,000	$	40,390.63	$	40,314.63	$	(76.00	)		-0.2	%
6		1,000		600,000	$	47,967.17	$	47,875.97	$	(91.20	)		-0.2	%
7		10,000		1,000,000	$	98,650.19	$	98,498.19	$	(152.00	)		-0.2	%
8		10,000		2,000,000	$	171,607.65	$	171,303.65	$	(304.00	)		-0.2	%
9		10,000		3,000,000	$	244,565.12	$	244,109.12	$	(456.00	)		-0.2	%
10		10,000		4,000,000	$	317,522.58	$	316,914.58	$	(608.00	)		-0.2	%
11		10,000		5,000,000	$	390,480.04	$	389,720.04	$	(760.00	)		-0.2	%
12		10,000		6,000,000	$	463,437.50	$	462,525.50	$	(912.00	)		-0.2	%

Exhibit G

CEI - Page 19 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Transmission (Rate GT)
1		2,000		200,000	$	27,210.44	$	27,180.24	$	(30.20	)		-0.1	%
2		2,000		400,000	$	37,444.53	$	37,384.13	$	(60.40	)		-0.2	%
3		2,000		600,000	$	47,678.62	$	47,588.02	$	(90.60	)		-0.2	%
4		2,000		800,000	$	57,912.71	$	57,791.91	$	(120.80	)		-0.2	%
5		2,000		1,000,000	$	67,677.87	$	67,526.87	$	(151.00	)		-0.2	%
6		2,000		1,200,000	$	77,350.36	$	77,169.16	$	(181.20	)		-0.2	%
7		20,000		2,000,000	$	265,863.33	$	265,561.33	$	(302.00	)		-0.1	%
8		20,000		4,000,000	$	362,588.26	$	361,984.26	$	(604.00	)		-0.2	%
9		20,000		6,000,000	$	459,313.18	$	458,407.18	$	(906.00	)		-0.2	%
10		20,000		8,000,000	$	556,038.11	$	554,830.11	$	(1,208.00	)		-0.2	%
11		20,000		10,000,000	$	652,763.03	$	651,253.03	$	(1,510.00	)		-0.2	%
12		20,000		12,000,000	$	749,487.96	$	747,675.96	$	(1,812.00	)		-0.2	%

Exhibit G

CEI - Page 20 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
1		Company Owned - Incandescent Lighting (a)
2		Overhead Service
3		1,000		24	$	12.22	$	12.21	$	(0.00	)		0.0	%
4		2,000		56	$	13.93	$	13.92	$	(0.01	)		-0.1	%
5		2,500		70	$	14.71	$	14.70	$	(0.01	)		-0.1	%
6		4,000		126	$	17.72	$	17.70	$	(0.02	)		-0.1	%
7		6,000		157	$	19.38	$	19.35	$	(0.02	)		-0.1	%
8		10,000		242	$	23.97	$	23.93	$	(0.04	)		-0.2	%
9		15,000		282	$	26.11	$	26.06	$	(0.04	)		-0.2	%
10		Underground Service
11		1,000		24	$	7.38	$	7.37	$	(0.00	)		-0.1	%
12		2,000		56	$	9.09	$	9.08	$	(0.01	)		-0.1	%
13		2,500		70	$	9.87	$	9.86	$	(0.01	)		-0.1	%
14		4,000		126	$	12.88	$	12.86	$	(0.02	)		-0.2	%
15		6,000		157	$	14.54	$	14.51	$	(0.02	)		-0.2	%
16		10,000		242	$	19.13	$	19.09	$	(0.04	)		-0.2	%
17		15,000		282	$	21.27	$	21.22	$	(0.04	)		-0.2	%
18		Company Owned - Mercury Street Lighting (b)
19		Overhead Service - Wood Pole
20		175		69	$	11.11	$	11.10	$	(0.01	)		-0.1	%
21		250		104	$	14.41	$	14.39	$	(0.02	)		-0.1	%
22		400		158	$	19.90	$	19.88	$	(0.03	)		-0.1	%
23		1,000		380	$	43.96	$	43.89	$	(0.06	)		-0.1	%
24		Underground Service - Post Type
25		175		69	$	15.46	$	15.45	$	(0.01	)		-0.1	%
26		Underground Service - Pole Type
27		175		69	$	22.02	$	22.01	$	(0.01	)		0.0	%
28		250		104	$	26.13	$	26.11	$	(0.02	)		-0.1	%
29		400		158	$	31.84	$	31.82	$	(0.03	)		-0.1	%
30		400		158	$	32.09	$	32.07	$	(0.03	)		-0.1	%
31		400		316	$	49.84	$	49.79	$	(0.05	)		-0.1	%
32		1000		380	$	57.79	$	57.72	$	(0.06	)		-0.1	%

Exhibit G

CEI - Page 21 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
33		Company Owned - High Pressure Sodium Lighting (c)
34		Overhead Service - Wood Pole
35		100		42	$	12.57	$	12.56	$	(0.01	)		-0.1	%
36		150		62	$	14.28	$	14.27	$	(0.01	)		-0.1	%
37		250		105	$	18.86	$	18.84	$	(0.02	)		-0.1	%
38		400		163	$	23.95	$	23.92	$	(0.03	)		-0.1	%
39		Underground Service - Post Type
40		100		42	$	17.09	$	17.08	$	(0.01	)		0.0	%
41		Underground Service - Pole Type
42		100		42	$	24.13	$	24.12	$	(0.01	)		0.0	%
43		150		62	$	26.09	$	26.08	$	(0.01	)		0.0	%
44		250		105	$	30.51	$	30.49	$	(0.02	)		-0.1	%
45		250		210	$	48.74	$	48.71	$	(0.03	)		-0.1	%
46		400		163	$	35.41	$	35.38	$	(0.03	)		-0.1	%
47		Special Architectural Pole Installations
48		100		42	$	22.56	$	22.55	$	(0.01	)		0.0	%
49		100		42	$	34.59	$	34.58	$	(0.01	)		0.0	%
50		150		62	$	24.82	$	24.81	$	(0.01	)		0.0	%
51		150		62	$	36.49	$	36.48	$	(0.01	)		0.0	%
52		250		105	$	30.09	$	30.07	$	(0.02	)		-0.1	%
53		250		105	$	41.92	$	41.90	$	(0.02	)		0.0	%
54		400		163	$	35.18	$	35.15	$	(0.03	)		-0.1	%
55		400		163	$	47.82	$	47.79	$	(0.03	)		-0.1	%
56		Customer Owned - All Lamp Types
57		N/A		25	$	1.34	$	1.34	$	(0.00	)		-0.3	%
58		N/A		50	$	2.70	$	2.69	$	(0.01	)		-0.3	%
59		N/A		75	$	4.90	$	4.89	$	(0.01	)		-0.2	%
60		N/A		100	$	7.41	$	7.39	$	(0.02	)		-0.2	%
61		N/A		125	$	9.25	$	9.23	$	(0.02	)		-0.2	%
62		N/A		150	$	12.62	$	12.59	$	(0.02	)		-0.2	%
63		N/A		175	$	15.08	$	15.05	$	(0.03	)		-0.2	%
64		N/A		200	$	19.49	$	19.46	$	(0.03	)		-0.2	%
65		N/A		225	$	22.26	$	22.22	$	(0.04	)		-0.2	%
66		N/A		250	$	13.47	$	13.43	$	(0.04	)		-0.3	%
67		N/A		275	$	15.69	$	15.64	$	(0.04	)		-0.3	%
68		N/A		300	$	18.18	$	18.13	$	(0.05	)		-0.3	%
69		N/A		325	$	20.04	$	19.99	$	(0.05	)		-0.3	%
70		N/A		350	$	23.39	$	23.33	$	(0.06	)		-0.2	%
71		N/A		375	$	25.86	$	25.80	$	(0.06	)		-0.2	%
72		N/A		400	$	30.25	$	30.18	$	(0.06	)		-0.2	%

Exhibit G

CEI - Page 22 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
73		Customer Owned, Limited Company Maintenance - All Lamp Types
74		N/A		25	$	1.34	$	1.34	$	(0.00	)		-0.3	%
75		N/A		50	$	2.70	$	2.69	$	(0.01	)		-0.3	%
76		N/A		75	$	6.35	$	6.34	$	(0.01	)		-0.2	%
77		N/A		100	$	10.79	$	10.77	$	(0.02	)		-0.1	%
78		N/A		125	$	13.46	$	13.44	$	(0.02	)		-0.1	%
79		N/A		150	$	20.21	$	20.18	$	(0.02	)		-0.1	%
80		N/A		175	$	24.54	$	24.51	$	(0.03	)		-0.1	%
81		N/A		200	$	34.07	$	34.04	$	(0.03	)		-0.1	%
82		N/A		225	$	39.26	$	39.22	$	(0.04	)		-0.1	%
83		N/A		250	$	13.47	$	13.43	$	(0.04	)		-0.3	%
84		N/A		275	$	17.14	$	17.09	$	(0.04	)		-0.3	%
85		N/A		300	$	21.56	$	21.51	$	(0.05	)		-0.2	%
86		N/A		325	$	24.25	$	24.20	$	(0.05	)		-0.2	%
87		N/A		350	$	30.98	$	30.92	$	(0.06	)		-0.2	%
88		N/A		375	$	35.32	$	35.26	$	(0.06	)		-0.2	%
89		N/A		400	$	44.83	$	44.76	$	(0.06	)		-0.1	%

Exhibit G

CEI - Page 23 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Private Outdoor Lighting Service (Rate POL)
1		Mercury Lighting
2		Overhead Service - Wood Pole
3		175		69	$	16.20	$	16.19	$	(0.01	)		-0.1	%
4		400		158	$	33.33	$	33.31	$	(0.03	)		-0.1	%
5		1,000		380	$	67.16	$	67.09	$	(0.06	)		-0.1	%
6		All Other Installations
7		175		69	$	18.54	$	18.53	$	(0.01	)		-0.1	%
8		High Pressure Sodium Lighting
9		Overhead Service - Wood Pole
10		100		42	$	17.52	$	17.51	$	(0.01	)		0.0	%
11		150		62	$	22.01	$	22.00	$	(0.01	)		0.0	%
12		250		105	$	28.30	$	28.28	$	(0.02	)		-0.1	%
13		400		163	$	38.78	$	38.75	$	(0.03	)		-0.1	%
14		All Other Installations
15		100		42	$	20.60	$	20.59	$	(0.01	)		0.0	%
16		150		62	$	27.41	$	27.40	$	(0.01	)		0.0	%
17		150		88	$	42.34	$	42.33	$	(0.01	)		0.0	%
18		250		105	$	35.04	$	35.02	$	(0.02	)		0.0	%
19		250		105	$	46.78	$	46.76	$	(0.02	)		0.0	%
20		400		163	$	43.10	$	43.07	$	(0.03	)		-0.1	%

Exhibit G

CEI - Page 24 of 24

The Cleveland Electric Illuminating Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Traffic Lighting Schedule (Rate TRF)
1		0		100	$	6.86	$	6.84	$	(0.02	)		-0.2	%
2		0		200	$	13.72	$	13.69	$	(0.03	)		-0.2	%
3		0		300	$	20.55	$	20.50	$	(0.05	)		-0.2	%
4		0		400	$	27.41	$	27.34	$	(0.06	)		-0.2	%
5		0		500	$	34.27	$	34.19	$	(0.08	)		-0.2	%
6		0		600	$	41.13	$	41.03	$	(0.10	)		-0.2	%

Exhibit G

OE - Page 1 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Standard (Rate RS)
1		0		250	$	34.74	$	34.67	$	(0.07	)		-0.2	%
2		0		500	$	65.45	$	65.31	$	(0.14	)		-0.2	%
3		0		750	$	96.15	$	95.95	$	(0.21	)		-0.2	%
4		0		1,000	$	126.86	$	126.58	$	(0.28	)		-0.2	%
5		0		1,250	$	157.57	$	157.22	$	(0.35	)		-0.2	%
6		0		1,500	$	188.28	$	187.86	$	(0.42	)		-0.2	%
7		0		2,000	$	249.69	$	249.14	$	(0.56	)		-0.2	%
8		0		2,500	$	310.88	$	310.18	$	(0.69	)		-0.2	%
9		0		3,000	$	372.06	$	371.23	$	(0.83	)		-0.2	%
10		0		3,500	$	433.25	$	432.27	$	(0.97	)		-0.2	%
11		0		4,000	$	494.43	$	493.32	$	(1.11	)		-0.2	%
12		0		4,500	$	555.62	$	554.37	$	(1.25	)		-0.2	%
13		0		5,000	$	616.80	$	615.41	$	(1.39	)		-0.2	%
14		0		5,500	$	677.99	$	676.46	$	(1.53	)		-0.2	%
15		0		6,000	$	739.17	$	737.50	$	(1.67	)		-0.2	%
16		0		6,500	$	800.36	$	798.55	$	(1.81	)		-0.2	%
17		0		7,000	$	861.54	$	859.60	$	(1.95	)		-0.2	%
18		0		7,500	$	922.73	$	920.64	$	(2.09	)		-0.2	%
19		0		8,000	$	983.91	$	981.69	$	(2.22	)		-0.2	%
20		0		8,500	$	1,045.10	$	1,042.73	$	(2.36	)		-0.2	%
21		0		9,000	$	1,106.28	$	1,103.78	$	(2.50	)		-0.2	%
22		0		9,500	$	1,167.47	$	1,164.82	$	(2.64	)		-0.2	%
23		0		10,000	$	1,228.65	$	1,225.87	$	(2.78	)		-0.2	%
24		0		10,500	$	1,289.84	$	1,286.92	$	(2.92	)		-0.2	%
25		0		11,000	$	1,351.02	$	1,347.96	$	(3.06	)		-0.2	%
26		0		11,500	$	1,412.20	$	1,409.01	$	(3.20	)		-0.2	%
27		0		12,000	$	1,473.39	$	1,470.05	$	(3.34	)		-0.2	%
28		0		12,500	$	1,534.57	$	1,531.10	$	(3.48	)		-0.2	%
29		0		13,000	$	1,595.76	$	1,592.15	$	(3.61	)		-0.2	%
30		0		13,500	$	1,656.94	$	1,653.19	$	(3.75	)		-0.2	%
31		0		14,000	$	1,718.13	$	1,714.24	$	(3.89	)		-0.2	%
32		0		14,500	$	1,779.31	$	1,775.28	$	(4.03	)		-0.2	%
33		0		15,000	$	1,840.50	$	1,836.33	$	(4.17	)		-0.2	%
34		0		15,500	$	1,901.40	$	1,897.09	$	(4.31	)		-0.2	%
35		0		16,000	$	1,962.31	$	1,956.90	$	(5.41	)		-0.3	%
36		0		16,500	$	2,023.21	$	2,018.62	$	(4.59	)		-0.2	%
37		0		17,000	$	2,084.12	$	2,079.39	$	(4.73	)		-0.2	%
38		0		17,500	$	2,145.02	$	2,140.15	$	(4.86	)		-0.2	%

Exhibit G

OE - Page 2 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Electric Heating (Rate RS)
1		0		250	$	34.74	$	34.67	$	(0.07	)		-0.2	%
2		0		500	$	65.45	$	65.31	$	(0.14	)		-0.2	%
3		0		750	$	86.98	$	86.77	$	(0.21	)		-0.2	%
4		0		1,000	$	108.51	$	108.23	$	(0.28	)		-0.3	%
5		0		1,250	$	130.04	$	129.70	$	(0.35	)		-0.3	%
6		0		1,500	$	142.65	$	142.24	$	(0.42	)		-0.3	%
7		0		2,000	$	167.87	$	167.31	$	(0.56	)		-0.3	%
8		0		2,500	$	192.85	$	192.16	$	(0.70	)		-0.4	%
9		0		3,000	$	217.84	$	217.00	$	(0.83	)		-0.4	%
10		0		3,500	$	242.82	$	241.85	$	(0.97	)		-0.4	%
11		0		4,000	$	267.81	$	266.70	$	(1.11	)		-0.4	%
12		0		4,500	$	292.79	$	291.54	$	(1.25	)		-0.4	%
13		0		5,000	$	317.78	$	316.39	$	(1.39	)		-0.4	%
14		0		5,500	$	342.76	$	341.23	$	(1.53	)		-0.4	%
15		0		6,000	$	367.75	$	366.08	$	(1.67	)		-0.5	%
16		0		6,500	$	392.73	$	390.92	$	(1.81	)		-0.5	%
17		0		7,000	$	417.72	$	415.77	$	(1.95	)		-0.5	%
18		0		7,500	$	442.70	$	440.62	$	(2.09	)		-0.5	%
19		0		8,000	$	467.69	$	465.46	$	(2.22	)		-0.5	%
20		0		8,500	$	492.67	$	490.31	$	(2.36	)		-0.5	%
21		0		9,000	$	517.66	$	515.15	$	(2.50	)		-0.5	%
22		0		9,500	$	542.64	$	540.00	$	(2.64	)		-0.5	%
23		0		10,000	$	567.63	$	564.85	$	(2.78	)		-0.5	%
24		0		10,500	$	592.61	$	589.69	$	(2.92	)		-0.5	%
25		0		11,000	$	617.60	$	614.54	$	(3.06	)		-0.5	%
26		0		11,500	$	642.58	$	639.38	$	(3.20	)		-0.5	%
27		0		12,000	$	667.56	$	664.23	$	(3.34	)		-0.5	%
28		0		12,500	$	692.55	$	689.07	$	(3.48	)		-0.5	%
29		0		13,000	$	717.53	$	713.92	$	(3.61	)		-0.5	%
30		0		13,500	$	742.52	$	738.77	$	(3.75	)		-0.5	%
31		0		14,000	$	767.50	$	763.61	$	(3.89	)		-0.5	%
32		0		14,500	$	792.49	$	788.46	$	(4.03	)		-0.5	%
33		0		15,000	$	817.47	$	813.30	$	(4.17	)		-0.5	%
34		0		15,500	$	842.18	$	837.87	$	(4.31	)		-0.5	%
35		0		16,000	$	866.88	$	861.47	$	(5.41	)		-0.6	%
36		0		16,500	$	891.59	$	887.00	$	(4.59	)		-0.5	%
37		0		17,000	$	916.29	$	911.56	$	(4.73	)		-0.5	%
38		0		17,500	$	940.99	$	936.13	$	(4.87	)		-0.5	%

Exhibit G

OE - Page 3 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Water Heating (Rate RS)
1		0		250	$	34.74	$	34.67	$	(0.07	)		-0.2	%
2		0		500	$	65.45	$	65.31	$	(0.14	)		-0.2	%
3		0		750	$	91.73	$	91.52	$	(0.21	)		-0.2	%
4		0		1,000	$	118.01	$	117.73	$	(0.28	)		-0.2	%
5		0		1,250	$	144.29	$	143.95	$	(0.35	)		-0.2	%
6		0		1,500	$	170.58	$	170.16	$	(0.42	)		-0.2	%
7		0		2,000	$	223.14	$	222.59	$	(0.56	)		-0.2	%
8		0		2,500	$	275.48	$	274.78	$	(0.70	)		-0.3	%
9		0		3,000	$	327.81	$	326.98	$	(0.83	)		-0.3	%
10		0		3,500	$	380.15	$	379.17	$	(0.97	)		-0.3	%
11		0		4,000	$	432.48	$	431.37	$	(1.11	)		-0.3	%
12		0		4,500	$	484.82	$	483.57	$	(1.25	)		-0.3	%
13		0		5,000	$	537.15	$	535.76	$	(1.39	)		-0.3	%
14		0		5,500	$	589.49	$	587.96	$	(1.53	)		-0.3	%
15		0		6,000	$	641.82	$	640.15	$	(1.67	)		-0.3	%
16		0		6,500	$	694.16	$	692.35	$	(1.81	)		-0.3	%
17		0		7,000	$	746.49	$	744.55	$	(1.95	)		-0.3	%
18		0		7,500	$	798.83	$	796.74	$	(2.09	)		-0.3	%
19		0		8,000	$	851.16	$	848.94	$	(2.22	)		-0.3	%
20		0		8,500	$	903.50	$	901.13	$	(2.36	)		-0.3	%
21		0		9,000	$	955.83	$	953.33	$	(2.50	)		-0.3	%
22		0		9,500	$	1,008.17	$	1,005.52	$	(2.64	)		-0.3	%
23		0		10,000	$	1,060.50	$	1,057.72	$	(2.78	)		-0.3	%
24		0		10,500	$	1,112.84	$	1,109.92	$	(2.92	)		-0.3	%
25		0		11,000	$	1,165.17	$	1,162.11	$	(3.06	)		-0.3	%
26		0		11,500	$	1,217.50	$	1,214.31	$	(3.20	)		-0.3	%
27		0		12,000	$	1,269.84	$	1,266.50	$	(3.34	)		-0.3	%
28		0		12,500	$	1,322.17	$	1,318.70	$	(3.47	)		-0.3	%
29		0		13,000	$	1,374.51	$	1,370.90	$	(3.61	)		-0.3	%
30		0		13,500	$	1,426.84	$	1,423.09	$	(3.75	)		-0.3	%
31		0		14,000	$	1,479.18	$	1,475.29	$	(3.89	)		-0.3	%
32		0		14,500	$	1,531.51	$	1,527.48	$	(4.03	)		-0.3	%
33		0		15,000	$	1,583.85	$	1,579.68	$	(4.17	)		-0.3	%
34		0		15,500	$	1,635.90	$	1,631.59	$	(4.31	)		-0.3	%
35		0		16,000	$	1,687.96	$	1,682.55	$	(5.41	)		-0.3	%
36		0		16,500	$	1,740.01	$	1,735.42	$	(4.59	)		-0.3	%
37		0		17,000	$	1,792.07	$	1,787.34	$	(4.73	)		-0.3	%
38		0		17,500	$	1,844.12	$	1,839.25	$	(4.86	)		-0.3	%

Exhibit G

OE - Page 4 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Standard (Rate RS)
1		0		250	$	37.03	$	36.96	$	(0.07	)		-0.2	%
2		0		500	$	70.02	$	69.88	$	(0.14	)		-0.2	%
3		0		750	$	103.01	$	102.81	$	(0.21	)		-0.2	%
4		0		1,000	$	136.01	$	135.73	$	(0.28	)		-0.2	%
5		0		1,250	$	169.00	$	168.66	$	(0.35	)		-0.2	%
6		0		1,500	$	202.00	$	201.58	$	(0.42	)		-0.2	%
7		0		2,000	$	267.99	$	267.43	$	(0.56	)		-0.2	%
8		0		2,500	$	333.75	$	333.05	$	(0.69	)		-0.2	%
9		0		3,000	$	399.50	$	398.67	$	(0.83	)		-0.2	%
10		0		3,500	$	465.26	$	464.29	$	(0.97	)		-0.2	%
11		0		4,000	$	531.02	$	529.91	$	(1.11	)		-0.2	%
12		0		4,500	$	596.78	$	595.53	$	(1.25	)		-0.2	%
13		0		5,000	$	662.54	$	661.15	$	(1.39	)		-0.2	%
14		0		5,500	$	728.30	$	726.77	$	(1.53	)		-0.2	%
15		0		6,000	$	794.05	$	792.39	$	(1.67	)		-0.2	%
16		0		6,500	$	859.81	$	858.00	$	(1.81	)		-0.2	%
17		0		7,000	$	925.57	$	923.62	$	(1.95	)		-0.2	%
18		0		7,500	$	991.33	$	989.24	$	(2.09	)		-0.2	%
19		0		8,000	$	1,057.09	$	1,054.86	$	(2.22	)		-0.2	%
20		0		8,500	$	1,122.85	$	1,120.48	$	(2.36	)		-0.2	%
21		0		9,000	$	1,188.60	$	1,186.10	$	(2.50	)		-0.2	%
22		0		9,500	$	1,254.36	$	1,251.72	$	(2.64	)		-0.2	%
23		0		10,000	$	1,320.12	$	1,317.34	$	(2.78	)		-0.2	%
24		0		10,500	$	1,385.88	$	1,382.96	$	(2.92	)		-0.2	%
25		0		11,000	$	1,451.64	$	1,448.58	$	(3.06	)		-0.2	%
26		0		11,500	$	1,517.40	$	1,514.20	$	(3.20	)		-0.2	%
27		0		12,000	$	1,583.15	$	1,579.82	$	(3.34	)		-0.2	%
28		0		12,500	$	1,648.91	$	1,645.44	$	(3.47	)		-0.2	%
29		0		13,000	$	1,714.67	$	1,711.06	$	(3.61	)		-0.2	%
30		0		13,500	$	1,780.43	$	1,776.68	$	(3.75	)		-0.2	%
31		0		14,000	$	1,846.19	$	1,842.30	$	(3.89	)		-0.2	%
32		0		14,500	$	1,911.95	$	1,907.91	$	(4.03	)		-0.2	%
33		0		15,000	$	1,977.70	$	1,973.53	$	(4.17	)		-0.2	%
34		0		15,500	$	2,043.18	$	2,038.87	$	(4.31	)		-0.2	%
35		0		16,000	$	2,108.66	$	2,103.25	$	(5.41	)		-0.3	%
36		0		16,500	$	2,174.14	$	2,169.55	$	(4.59	)		-0.2	%
37		0		17,000	$	2,239.61	$	2,234.89	$	(4.73	)		-0.2	%
38		0		17,500	$	2,305.09	$	2,300.23	$	(4.86	)		-0.2	%

Exhibit G

OE - Page 5 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Electric Heating (Rate RS)
1		0		250	$	37.03	$	36.96	$	(0.07	)		-0.2	%
2		0		500	$	70.02	$	69.88	$	(0.14	)		-0.2	%
3		0		750	$	93.84	$	93.63	$	(0.21	)		-0.2	%
4		0		1,000	$	117.66	$	117.38	$	(0.28	)		-0.2	%
5		0		1,250	$	141.48	$	141.13	$	(0.35	)		-0.2	%
6		0		1,500	$	165.30	$	164.88	$	(0.42	)		-0.3	%
7		0		2,000	$	212.94	$	212.38	$	(0.56	)		-0.3	%
8		0		2,500	$	260.35	$	259.65	$	(0.69	)		-0.3	%
9		0		3,000	$	307.75	$	306.92	$	(0.83	)		-0.3	%
10		0		3,500	$	355.16	$	354.19	$	(0.97	)		-0.3	%
11		0		4,000	$	402.57	$	401.46	$	(1.11	)		-0.3	%
12		0		4,500	$	449.98	$	448.73	$	(1.25	)		-0.3	%
13		0		5,000	$	497.39	$	496.00	$	(1.39	)		-0.3	%
14		0		5,500	$	544.80	$	543.27	$	(1.53	)		-0.3	%
15		0		6,000	$	592.20	$	590.54	$	(1.67	)		-0.3	%
16		0		6,500	$	639.61	$	637.80	$	(1.81	)		-0.3	%
17		0		7,000	$	687.02	$	685.07	$	(1.95	)		-0.3	%
18		0		7,500	$	734.43	$	732.34	$	(2.09	)		-0.3	%
19		0		8,000	$	781.84	$	779.61	$	(2.22	)		-0.3	%
20		0		8,500	$	829.25	$	826.88	$	(2.36	)		-0.3	%
21		0		9,000	$	876.65	$	874.15	$	(2.50	)		-0.3	%
22		0		9,500	$	924.06	$	921.42	$	(2.64	)		-0.3	%
23		0		10,000	$	971.47	$	968.69	$	(2.78	)		-0.3	%
24		0		10,500	$	1,018.88	$	1,015.96	$	(2.92	)		-0.3	%
25		0		11,000	$	1,066.29	$	1,063.23	$	(3.06	)		-0.3	%
26		0		11,500	$	1,113.70	$	1,110.50	$	(3.20	)		-0.3	%
27		0		12,000	$	1,161.10	$	1,157.77	$	(3.34	)		-0.3	%
28		0		12,500	$	1,208.51	$	1,205.04	$	(3.47	)		-0.3	%
29		0		13,000	$	1,255.92	$	1,252.31	$	(3.61	)		-0.3	%
30		0		13,500	$	1,303.33	$	1,299.58	$	(3.75	)		-0.3	%
31		0		14,000	$	1,350.74	$	1,346.85	$	(3.89	)		-0.3	%
32		0		14,500	$	1,398.15	$	1,394.11	$	(4.03	)		-0.3	%
33		0		15,000	$	1,445.55	$	1,441.38	$	(4.17	)		-0.3	%
34		0		15,500	$	1,492.68	$	1,488.37	$	(4.31	)		-0.3	%
35		0		16,000	$	1,539.81	$	1,534.40	$	(5.41	)		-0.4	%
36		0		16,500	$	1,586.94	$	1,582.35	$	(4.59	)		-0.3	%
37		0		17,000	$	1,634.06	$	1,629.34	$	(4.73	)		-0.3	%
38		0		17,500	$	1,681.19	$	1,676.33	$	(4.86	)		-0.3	%

Exhibit G

OE - Page 6 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Water Heating (Rate RS)
1		0		250	$	37.03	$	36.96	$	(0.07	)		-0.2	%
2		0		500	$	70.02	$	69.88	$	(0.14	)		-0.2	%
3		0		750	$	98.59	$	98.38	$	(0.21	)		-0.2	%
4		0		1,000	$	127.16	$	126.88	$	(0.28	)		-0.2	%
5		0		1,250	$	155.73	$	155.38	$	(0.35	)		-0.2	%
6		0		1,500	$	184.30	$	183.88	$	(0.42	)		-0.2	%
7		0		2,000	$	241.44	$	240.88	$	(0.56	)		-0.2	%
8		0		2,500	$	298.35	$	297.65	$	(0.69	)		-0.2	%
9		0		3,000	$	355.25	$	354.42	$	(0.83	)		-0.2	%
10		0		3,500	$	412.16	$	411.19	$	(0.97	)		-0.2	%
11		0		4,000	$	469.07	$	467.96	$	(1.11	)		-0.2	%
12		0		4,500	$	525.98	$	524.73	$	(1.25	)		-0.2	%
13		0		5,000	$	582.89	$	581.50	$	(1.39	)		-0.2	%
14		0		5,500	$	639.80	$	638.27	$	(1.53	)		-0.2	%
15		0		6,000	$	696.70	$	695.04	$	(1.67	)		-0.2	%
16		0		6,500	$	753.61	$	751.80	$	(1.81	)		-0.2	%
17		0		7,000	$	810.52	$	808.57	$	(1.95	)		-0.2	%
18		0		7,500	$	867.43	$	865.34	$	(2.09	)		-0.2	%
19		0		8,000	$	924.34	$	922.11	$	(2.22	)		-0.2	%
20		0		8,500	$	981.25	$	978.88	$	(2.36	)		-0.2	%
21		0		9,000	$	1,038.15	$	1,035.65	$	(2.50	)		-0.2	%
22		0		9,500	$	1,095.06	$	1,092.42	$	(2.64	)		-0.2	%
23		0		10,000	$	1,151.97	$	1,149.19	$	(2.78	)		-0.2	%
24		0		10,500	$	1,208.88	$	1,205.96	$	(2.92	)		-0.2	%
25		0		11,000	$	1,265.79	$	1,262.73	$	(3.06	)		-0.2	%
26		0		11,500	$	1,322.70	$	1,319.50	$	(3.20	)		-0.2	%
27		0		12,000	$	1,379.60	$	1,376.27	$	(3.34	)		-0.2	%
28		0		12,500	$	1,436.51	$	1,433.04	$	(3.47	)		-0.2	%
29		0		13,000	$	1,493.42	$	1,489.81	$	(3.61	)		-0.2	%
30		0		13,500	$	1,550.33	$	1,546.58	$	(3.75	)		-0.2	%
31		0		14,000	$	1,607.24	$	1,603.35	$	(3.89	)		-0.2	%
32		0		14,500	$	1,664.15	$	1,660.11	$	(4.03	)		-0.2	%
33		0		15,000	$	1,721.05	$	1,716.88	$	(4.17	)		-0.2	%
34		0		15,500	$	1,777.68	$	1,773.37	$	(4.31	)		-0.2	%
35		0		16,000	$	1,834.31	$	1,828.90	$	(5.41	)		-0.3	%
36		0		16,500	$	1,890.94	$	1,886.35	$	(4.59	)		-0.2	%
37		0		17,000	$	1,947.56	$	1,942.84	$	(4.73	)		-0.2	%
38		0		17,500	$	2,004.19	$	1,999.33	$	(4.86	)		-0.2	%

Exhibit G

OE - Page 7 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Secondary (Rate GS)
1		10		1,000	$	149.00	$	148.97	$	(0.03	)		0.0	%
2		10		2,000	$	226.58	$	226.53	$	(0.06	)		0.0	%
3		10		3,000	$	303.71	$	303.62	$	(0.09	)		0.0	%
4		10		4,000	$	380.84	$	380.73	$	(0.12	)		0.0	%
5		10		5,000	$	457.98	$	457.83	$	(0.14	)		0.0	%
6		10		6,000	$	535.08	$	534.91	$	(0.17	)		0.0	%
7		1,000		100,000	$	15,534.93	$	15,532.03	$	(2.90	)		0.0	%
8		1,000		200,000	$	23,191.57	$	23,185.77	$	(5.80	)		0.0	%
9		1,000		300,000	$	30,848.21	$	30,839.51	$	(8.70	)		0.0	%
10		1,000		400,000	$	38,504.84	$	38,493.24	$	(11.60	)		0.0	%
11		1,000		500,000	$	46,161.48	$	46,146.98	$	(14.50	)		0.0	%
12		1,000		600,000	$	53,818.11	$	53,800.71	$	(17.40	)		0.0	%

Exhibit G

OE - Page 8 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Primary (Rate GP)
1		500		50,000	$	5,978.56	$	5,977.11	$	(1.45	)		0.0	%
2		500		100,000	$	9,459.58	$	9,456.68	$	(2.90	)		0.0	%
3		500		150,000	$	12,940.60	$	12,936.25	$	(4.35	)		0.0	%
4		500		200,000	$	16,421.62	$	16,415.82	$	(5.80	)		0.0	%
5		500		250,000	$	19,902.63	$	19,895.38	$	(7.25	)		0.0	%
6		500		300,000	$	23,383.65	$	23,374.95	$	(8.70	)		0.0	%
7		5,000		500,000	$	58,330.38	$	58,315.88	$	(14.50	)		0.0	%
8		5,000		1,000,000	$	92,617.21	$	92,588.21	$	(29.00	)		0.0	%
9		5,000		1,500,000	$	125,860.49	$	125,816.99	$	(43.50	)		0.0	%
10		5,000		2,000,000	$	159,103.77	$	159,045.77	$	(58.00	)		0.0	%
11		5,000		2,500,000	$	192,347.06	$	192,274.56	$	(72.50	)		0.0	%
12		5,000		3,000,000	$	225,590.34	$	225,503.34	$	(87.00	)		0.0	%

Exhibit G

OE - Page 9 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Subtransmission (Rate GSU)
1		1,000		100,000	$	9,257.49	$	9,254.59	$	(2.90	)		0.0	%
2		1,000		200,000	$	15,847.43	$	15,841.63	$	(5.80	)		0.0	%
3		1,000		300,000	$	22,437.36	$	22,428.66	$	(8.70	)		0.0	%
4		1,000		400,000	$	29,027.30	$	29,015.70	$	(11.60	)		0.0	%
5		1,000		500,000	$	35,617.24	$	35,602.74	$	(14.50	)		0.0	%
6		1,000		600,000	$	42,207.17	$	42,189.77	$	(17.40	)		0.0	%
7		10,000		1,000,000	$	90,146.35	$	90,117.35	$	(29.00	)		0.0	%
8		10,000		2,000,000	$	152,911.91	$	152,853.91	$	(58.00	)		0.0	%
9		10,000		3,000,000	$	215,677.48	$	215,590.48	$	(87.00	)		0.0	%
10		10,000		4,000,000	$	278,443.04	$	278,327.04	$	(116.00	)		0.0	%
11		10,000		5,000,000	$	341,208.60	$	341,063.60	$	(145.00	)		0.0	%
12		10,000		6,000,000	$	403,974.17	$	403,800.17	$	(174.00	)		0.0	%

Exhibit G

OE - Page 10 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Transmission (Rate GT)
1		2,000		200,000	$	28,326.82	$	28,321.02	$	(5.80	)		0.0	%
2		2,000		400,000	$	37,071.69	$	37,060.09	$	(11.60	)		0.0	%
3		2,000		600,000	$	45,816.56	$	45,799.16	$	(17.40	)		0.0	%
4		2,000		800,000	$	54,561.43	$	54,538.23	$	(23.20	)		0.0	%
5		2,000		1,000,000	$	62,782.96	$	62,753.96	$	(29.00	)		0.0	%
6		2,000		1,200,000	$	70,901.07	$	70,866.27	$	(34.80	)		0.0	%
7		20,000		2,000,000	$	276,646.92	$	276,588.92	$	(58.00	)		0.0	%
8		20,000		4,000,000	$	357,828.05	$	357,712.05	$	(116.00	)		0.0	%
9		20,000		6,000,000	$	439,009.18	$	438,835.18	$	(174.00	)		0.0	%
10		20,000		8,000,000	$	520,190.30	$	519,958.30	$	(232.00	)		0.0	%
11		20,000		10,000,000	$	601,371.43	$	601,081.43	$	(290.00	)		0.0	%
12		20,000		12,000,000	$	682,552.55	$	682,204.55	$	(348.00	)		-0.1	%

Exhibit G

OE - Page 11 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
1		Company Owned - Incandescent Lighting (a)
2		1,000		24	$	17.82	$	17.82	$	(0.00	)		0.0	%
3		2,000		56	$	19.30	$	19.30	$	(0.00	)		0.0	%
4		2,500		70	$	19.99	$	19.99	$	(0.00	)		0.0	%
5		4,000		126	$	22.60	$	22.59	$	(0.00	)		0.0	%
6		6,000		157	$	24.04	$	24.04	$	(0.00	)		0.0	%
7		10,000		242	$	28.01	$	28.00	$	(0.01	)		0.0	%
8		15,000		282	$	29.90	$	29.89	$	(0.01	)		0.0	%
9		Company Owned - Mercury Street Lighting (b)
10		Overhead Service - Wood Pole
11		100		43	$	7.82	$	7.82	$	(0.00	)		0.0	%
12		175		69	$	8.30	$	8.30	$	(0.00	)		0.0	%
13		250		104	$	10.13	$	10.13	$	(0.00	)		0.0	%
14		400		158	$	12.65	$	12.65	$	(0.00	)		0.0	%
15		700		287	$	19.16	$	19.15	$	(0.01	)		0.0	%
16		1,000		380	$	23.15	$	23.14	$	(0.01	)		0.0	%
17		Overhead Service - Metal Pole
18		100		43	$	15.64	$	15.64	$	(0.00	)		0.0	%
19		175		69	$	16.18	$	16.18	$	(0.00	)		0.0	%
20		250		104	$	18.95	$	18.95	$	(0.00	)		0.0	%
21		250		208	$	26.89	$	26.89	$	(0.01	)		0.0	%
22		400		158	$	20.89	$	20.89	$	(0.00	)		0.0	%
23		400		316	$	31.57	$	31.57	$	(0.01	)		0.0	%
24		700		287	$	28.92	$	28.91	$	(0.01	)		0.0	%
25		1000		380	$	33.03	$	33.02	$	(0.01	)		0.0	%
26		1000		760	$	56.97	$	56.94	$	(0.02	)		0.0	%
27		Underground Service - Post Type
28		100		43	$	10.66	$	10.66	$	(0.00	)		0.0	%
29		175		69	$	11.67	$	11.67	$	(0.00	)		0.0	%
30		250		104	$	14.55	$	14.55	$	(0.00	)		0.0	%
31		Underground Service - Pole Type
32		100		43	$	18.04	$	18.04	$	(0.00	)		0.0	%
33		175		69	$	18.88	$	18.88	$	(0.00	)		0.0	%
34		250		104	$	23.35	$	23.35	$	(0.00	)		0.0	%
35		400		158	$	26.18	$	26.18	$	(0.00	)		0.0	%
36		700		287	$	50.86	$	50.85	$	(0.01	)		0.0	%
37		1000		380	$	54.68	$	54.67	$	(0.01	)		0.0	%
38		1000		760	$	76.93	$	76.90	$	(0.02	)		0.0	%

Exhibit G

OE - Page 12 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
39		Bridge or Underpass Wallpack
40		175		69	$	10.73	$	10.73	$	(0.00	)		0.0	%
41		250		104	$	12.79	$	12.79	$	(0.00	)		0.0	%
42		Company Owned - High Pressure Sodium Lighting (c)
43		Overhead Service - Wood Pole
44		70		29	$	7.72	$	7.72	$	(0.00	)		0.0	%
45		100		42	$	8.01	$	8.01	$	(0.00	)		0.0	%
46		150		62	$	8.58	$	8.58	$	(0.00	)		0.0	%
47		215		89	$	10.04	$	10.04	$	(0.00	)		0.0	%
48		250		105	$	10.43	$	10.43	$	(0.00	)		0.0	%
49		400		163	$	13.10	$	13.10	$	(0.00	)		0.0	%
50		1000		410	$	26.98	$	26.97	$	(0.01	)		0.0	%
51		Overhead Service - Metal Pole
52		70		29	$	15.51	$	15.51	$	(0.00	)		0.0	%
53		100		42	$	15.84	$	15.84	$	(0.00	)		0.0	%
54		150		62	$	17.45	$	17.45	$	(0.00	)		0.0	%
55		215		89	$	18.83	$	18.83	$	(0.00	)		0.0	%
56		250		105	$	19.23	$	19.23	$	(0.00	)		0.0	%
57		400		163	$	22.91	$	22.91	$	(0.00	)		0.0	%
58		1000		410	$	35.95	$	35.94	$	(0.01	)		0.0	%
59		Underground Service - Post Type
60		70		29	$	10.82	$	10.82	$	(0.00	)		0.0	%
61		100		42	$	11.45	$	11.45	$	(0.00	)		0.0	%
62		150		62	$	12.67	$	12.67	$	(0.00	)		0.0	%
63		Underground Service - Pole Type
64		70		29	$	17.81	$	17.81	$	(0.00	)		0.0	%
65		100		42	$	18.43	$	18.43	$	(0.00	)		0.0	%
66		150		62	$	21.87	$	21.87	$	(0.00	)		0.0	%
67		200		88	$	23.78	$	23.78	$	(0.00	)		0.0	%
68		215		89	$	21.43	$	21.43	$	(0.00	)		0.0	%
69		250		105	$	24.37	$	24.37	$	(0.00	)		0.0	%
70		310		128	$	26.41	$	26.40	$	(0.00	)		0.0	%
71		400		163	$	44.78	$	44.78	$	(0.00	)		0.0	%
72		400		326	$	56.70	$	56.69	$	(0.01	)		0.0	%
73		1000		410	$	59.74	$	59.73	$	(0.01	)		0.0	%
74		Bridge or Underpass Wallpack
75		70		29	$	11.38	$	11.38	$	(0.00	)		0.0	%
76		100		42	$	12.70	$	12.70	$	(0.00	)		0.0	%
77		150		62	$	13.42	$	13.42	$	(0.00	)		0.0	%
78		215		89	$	13.34	$	13.34	$	(0.00	)		0.0	%
79		250		105	$	15.85	$	15.85	$	(0.00	)		0.0	%

Exhibit G

OE - Page 13 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
80		Customer Owned - All Lamp Types
81		N/A		25	$	1.26	$	1.25	$	(0.00	)		-0.1	%
82		N/A		50	$	2.50	$	2.50	$	(0.00	)		-0.1	%
83		N/A		75	$	3.76	$	3.75	$	(0.00	)		-0.1	%
84		N/A		100	$	5.01	$	5.01	$	(0.00	)		-0.1	%
85		N/A		125	$	6.26	$	6.25	$	(0.00	)		-0.1	%
86		N/A		150	$	7.50	$	7.50	$	(0.00	)		-0.1	%
87		N/A		175	$	8.77	$	8.76	$	(0.01	)		-0.1	%
88		N/A		200	$	10.03	$	10.03	$	(0.01	)		-0.1	%
89		N/A		225	$	11.27	$	11.26	$	(0.01	)		-0.1	%
90		N/A		250	$	12.51	$	12.50	$	(0.01	)		-0.1	%
91		N/A		275	$	13.77	$	13.76	$	(0.01	)		-0.1	%
92		N/A		300	$	15.03	$	15.02	$	(0.01	)		-0.1	%
93		N/A		325	$	16.27	$	16.26	$	(0.01	)		-0.1	%
94		N/A		350	$	17.52	$	17.51	$	(0.01	)		-0.1	%
95		N/A		375	$	18.77	$	18.76	$	(0.01	)		-0.1	%
96		N/A		400	$	20.02	$	20.01	$	(0.01	)		-0.1	%
97		Customer Owned, Limited Company Maintenance - All Lamp Types
98		N/A		25	$	1.88	$	1.87	$	(0.00	)		0.0	%
99		N/A		50	$	3.73	$	3.73	$	(0.00	)		0.0	%
100		N/A		75	$	5.61	$	5.60	$	(0.00	)		0.0	%
101		N/A		100	$	7.48	$	7.48	$	(0.00	)		0.0	%
102		N/A		125	$	9.35	$	9.34	$	(0.00	)		0.0	%
103		N/A		150	$	11.20	$	11.20	$	(0.00	)		0.0	%
104		N/A		175	$	13.08	$	13.07	$	(0.01	)		0.0	%
105		N/A		200	$	14.96	$	14.96	$	(0.01	)		0.0	%
106		N/A		225	$	16.82	$	16.81	$	(0.01	)		0.0	%
107		N/A		250	$	18.67	$	18.66	$	(0.01	)		0.0	%
108		N/A		275	$	20.55	$	20.54	$	(0.01	)		0.0	%
109		N/A		300	$	22.43	$	22.42	$	(0.01	)		0.0	%
110		N/A		325	$	24.29	$	24.28	$	(0.01	)		0.0	%
111		N/A		350	$	26.15	$	26.14	$	(0.01	)		0.0	%
112		N/A		375	$	28.02	$	28.01	$	(0.01	)		0.0	%
113		N/A		400	$	29.89	$	29.88	$	(0.01	)		0.0	%

Exhibit G

OE - Page 14 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
114		Efficiency Safety Incentive Program - All Lamp Types
115		N/A		25	$	2.65	$	2.64	$	(0.00	)		0.0	%
116		N/A		50	$	5.27	$	5.27	$	(0.00	)		0.0	%
117		N/A		75	$	7.92	$	7.91	$	(0.00	)		0.0	%
118		N/A		100	$	10.56	$	10.56	$	(0.00	)		0.0	%
119		N/A		125	$	13.19	$	13.18	$	(0.00	)		0.0	%
120		N/A		150	$	15.82	$	15.82	$	(0.00	)		0.0	%
121		N/A		175	$	18.47	$	18.46	$	(0.01	)		0.0	%
122		N/A		200	$	21.11	$	21.11	$	(0.01	)		0.0	%
123		N/A		225	$	23.74	$	23.73	$	(0.01	)		0.0	%
124		N/A		250	$	26.37	$	26.36	$	(0.01	)		0.0	%
125		N/A		275	$	29.01	$	29.00	$	(0.01	)		0.0	%
126		N/A		300	$	31.66	$	31.65	$	(0.01	)		0.0	%
127		N/A		325	$	34.28	$	34.27	$	(0.01	)		0.0	%
128		N/A		350	$	36.92	$	36.91	$	(0.01	)		0.0	%
129		N/A		375	$	39.56	$	39.55	$	(0.01	)		0.0	%
130		N/A		400	$	42.19	$	42.18	$	(0.01	)		0.0	%

Exhibit G

OE - Page 15 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Private Outdoor Lighting Service (Rate POL)
1		Mercury Lighting
2		Overhead Service - Wood Pole
3		175		69	$	10.50	$	10.50	$	(0.00	)		0.0	%
4		400		158	$	17.43	$	17.43	$	(0.00	)		0.0	%
5		1,000		380	$	31.42	$	31.41	$	(0.01	)		0.0	%
6		All Other Installations
7		175		69	$	14.90	$	14.90	$	(0.00	)		0.0	%
8		High Pressure Sodium Lighting
9		Overhead Service - Wood Pole
10		100		42	$	10.16	$	10.16	$	(0.00	)		0.0	%
11		250		105	$	16.18	$	16.18	$	(0.00	)		0.0	%
12		400		163	$	20.28	$	20.28	$	(0.00	)		0.0	%
13		All Other Installations
14		100		42	$	15.19	$	15.19	$	(0.00	)		0.0	%
15		Metal Halide Lighting
16		Overhead Service - Wood Pole
17		15,000		73	$	15.45	$	15.45	$	(0.00	)		0.0	%
18		23,000		111	$	17.62	$	17.62	$	(0.00	)		0.0	%
19		40,000		172	$	21.15	$	21.15	$	(0.00	)		0.0	%
20		All Other Installations
21		15,000		73	$	25.23	$	25.23	$	(0.00	)		0.0	%
22		23,000		111	$	27.40	$	27.40	$	(0.00	)		0.0	%
23		40,000		172	$	30.93	$	30.93	$	(0.00	)		0.0	%

Exhibit G

OE - Page 16 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kWH) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Traffic Lighting Schedule (Rate TRF)
1		0		100	$	6.52	$	6.52	$	(0.00	)		0.0	%
2		0		200	$	13.00	$	13.00	$	(0.01	)		0.0	%
3		0		300	$	19.47	$	19.46	$	(0.01	)		0.0	%
4		0		400	$	25.94	$	25.93	$	(0.01	)		0.0	%
5		0		500	$	32.42	$	32.41	$	(0.01	)		0.0	%
6		0		600	$	38.90	$	38.89	$	(0.02	)		0.0	%

Exhibit G

OE - Page 17 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Secondary (Rate GS)
1		10		1,000	$	158.15	$	158.12	$	(0.03	)		0.0	%
2		10		2,000	$	244.87	$	244.82	$	(0.06	)		0.0	%
3		10		3,000	$	331.15	$	331.06	$	(0.09	)		0.0	%
4		10		4,000	$	417.43	$	417.32	$	(0.12	)		0.0	%
5		10		5,000	$	503.72	$	503.57	$	(0.15	)		0.0	%
6		10		6,000	$	589.96	$	589.79	$	(0.17	)		0.0	%
7		1,000		100,000	$	16,449.63	$	16,446.73	$	(2.90	)		0.0	%
8		1,000		200,000	$	25,020.97	$	25,015.17	$	(5.80	)		0.0	%
9		1,000		300,000	$	33,592.31	$	33,583.61	$	(8.70	)		0.0	%
10		1,000		400,000	$	42,163.64	$	42,152.04	$	(11.60	)		0.0	%
11		1,000		500,000	$	50,734.98	$	50,720.48	$	(14.50	)		0.0	%
12		1,000		600,000	$	59,306.31	$	59,288.91	$	(17.40	)		0.0	%

Exhibit G

OE - Page 18 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Primary (Rate GP)
1		500		50,000	$	6,420.06	$	6,418.61	$	(1.45	)		0.0	%
2		500		100,000	$	10,342.58	$	10,339.68	$	(2.90	)		0.0	%
3		500		150,000	$	14,265.10	$	14,260.75	$	(4.35	)		0.0	%
4		500		200,000	$	18,187.62	$	18,181.82	$	(5.80	)		0.0	%
5		500		250,000	$	22,110.13	$	22,102.88	$	(7.25	)		0.0	%
6		500		300,000	$	26,032.65	$	26,023.95	$	(8.70	)		0.0	%
7		5,000		500,000	$	62,745.38	$	62,730.88	$	(14.50	)		0.0	%
8		5,000		1,000,000	$	101,447.21	$	101,418.21	$	(29.00	)		0.0	%
9		5,000		1,500,000	$	139,105.49	$	139,061.99	$	(43.50	)		0.0	%
10		5,000		2,000,000	$	176,763.77	$	176,705.77	$	(58.00	)		0.0	%
11		5,000		2,500,000	$	214,422.06	$	214,349.56	$	(72.50	)		0.0	%
12		5,000		3,000,000	$	252,080.34	$	251,993.34	$	(87.00	)		0.0	%

Exhibit G

OE - Page 19 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Subtransmission (Rate GSU)
1		1,000		100,000	$	10,115.69	$	10,112.79	$	(2.90	)		0.0	%
2		1,000		200,000	$	17,563.83	$	17,558.03	$	(5.80	)		0.0	%
3		1,000		300,000	$	25,011.96	$	25,003.26	$	(8.70	)		0.0	%
4		1,000		400,000	$	32,460.10	$	32,448.50	$	(11.60	)		0.0	%
5		1,000		500,000	$	39,908.24	$	39,893.74	$	(14.50	)		0.0	%
6		1,000		600,000	$	47,356.37	$	47,338.97	$	(17.40	)		0.0	%
7		10,000		1,000,000	$	98,728.35	$	98,699.35	$	(29.00	)		0.0	%
8		10,000		2,000,000	$	170,075.91	$	170,017.91	$	(58.00	)		0.0	%
9		10,000		3,000,000	$	241,423.48	$	241,336.48	$	(87.00	)		0.0	%
10		10,000		4,000,000	$	312,771.04	$	312,655.04	$	(116.00	)		0.0	%
11		10,000		5,000,000	$	384,118.60	$	383,973.60	$	(145.00	)		0.0	%
12		10,000		6,000,000	$	455,466.17	$	455,292.17	$	(174.00	)		0.0	%

Exhibit G

OE - Page 20 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Transmission (Rate GT)
1		2,000		200,000	$	30,041.42	$	30,035.62	$	(5.80	)		0.0	%
2		2,000		400,000	$	40,500.89	$	40,489.29	$	(11.60	)		0.0	%
3		2,000		600,000	$	50,960.36	$	50,942.96	$	(17.40	)		0.0	%
4		2,000		800,000	$	61,419.83	$	61,396.63	$	(23.20	)		0.0	%
5		2,000		1,000,000	$	71,355.96	$	71,326.96	$	(29.00	)		0.0	%
6		2,000		1,200,000	$	81,188.67	$	81,153.87	$	(34.80	)		0.0	%
7		20,000		2,000,000	$	293,792.92	$	293,734.92	$	(58.00	)		0.0	%
8		20,000		4,000,000	$	392,120.05	$	392,004.05	$	(116.00	)		0.0	%
9		20,000		6,000,000	$	490,447.18	$	490,273.18	$	(174.00	)		0.0	%
10		20,000		8,000,000	$	588,774.30	$	588,542.30	$	(232.00	)		0.0	%
11		20,000		10,000,000	$	687,101.43	$	686,811.43	$	(290.00	)		0.0	%
12		20,000		12,000,000	$	785,428.55	$	785,080.55	$	(348.00	)		0.0	%

Exhibit G

OE - Page 21 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
1		Company Owned - Incandescent Lighting (a)
2		1,000		24	$	18.04	$	18.04	$	(0.00	)		0.0	%
3		2,000		56	$	19.81	$	19.81	$	(0.00	)		0.0	%
4		2,500		70	$	20.63	$	20.63	$	(0.00	)		0.0	%
5		4,000		126	$	23.75	$	23.74	$	(0.00	)		0.0	%
6		6,000		157	$	25.48	$	25.48	$	(0.00	)		0.0	%
7		10,000		242	$	30.23	$	30.22	$	(0.01	)		0.0	%
8		15,000		282	$	32.48	$	32.47	$	(0.01	)		0.0	%
9		Company Owned - Mercury Street Lighting (b)
10		Overhead Service - Wood Pole
11		100		43	$	8.22	$	8.22	$	(0.00	)		0.0	%
12		175		69	$	8.93	$	8.93	$	(0.00	)		0.0	%
13		250		104	$	11.08	$	11.08	$	(0.00	)		0.0	%
14		400		158	$	14.10	$	14.10	$	(0.00	)		0.0	%
15		700		287	$	21.79	$	21.78	$	(0.01	)		0.0	%
16		1,000		380	$	26.62	$	26.61	$	(0.01	)		0.0	%
17		Overhead Service - Metal Pole
18		100		43	$	16.04	$	16.04	$	(0.00	)		0.0	%
19		175		69	$	16.81	$	16.81	$	(0.00	)		0.0	%
20		250		104	$	19.90	$	19.90	$	(0.00	)		0.0	%
21		250		208	$	28.79	$	28.79	$	(0.01	)		0.0	%
22		400		158	$	22.34	$	22.34	$	(0.00	)		0.0	%
23		400		316	$	34.46	$	34.46	$	(0.01	)		0.0	%
24		700		287	$	31.55	$	31.54	$	(0.01	)		0.0	%
25		1000		380	$	36.50	$	36.49	$	(0.01	)		0.0	%
26		1000		760	$	63.93	$	63.90	$	(0.02	)		0.0	%
27		Underground Service - Post Type
28		100		43	$	11.06	$	11.06	$	(0.00	)		0.0	%
29		175		69	$	12.30	$	12.30	$	(0.00	)		0.0	%
30		250		104	$	15.50	$	15.50	$	(0.00	)		0.0	%
31		Underground Service - Pole Type
32		100		43	$	18.44	$	18.44	$	(0.00	)		0.0	%
33		175		69	$	19.51	$	19.51	$	(0.00	)		0.0	%
34		250		104	$	24.30	$	24.30	$	(0.00	)		0.0	%
35		400		158	$	27.63	$	27.63	$	(0.00	)		0.0	%
36		700		287	$	53.49	$	53.48	$	(0.01	)		0.0	%
37		1000		380	$	58.15	$	58.14	$	(0.01	)		0.0	%
38		1000		760	$	83.89	$	83.86	$	(0.02	)		0.0	%

Exhibit G

OE - Page 22 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
39		Bridge or Underpass Wallpack
40		175		69	$	11.36	$	11.36	$	(0.00	)		0.0	%
41		250		104	$	13.74	$	13.74	$	(0.00	)		0.0	%
42		Company Owned - High Pressure Sodium Lighting (c)
43		Overhead Service - Wood Pole
44		70		29	$	7.98	$	7.98	$	(0.00	)		0.0	%
45		100		42	$	8.39	$	8.39	$	(0.00	)		0.0	%
46		150		62	$	9.15	$	9.15	$	(0.00	)		0.0	%
47		215		89	$	10.86	$	10.86	$	(0.00	)		0.0	%
48		250		105	$	11.39	$	11.39	$	(0.00	)		0.0	%
49		400		163	$	14.59	$	14.59	$	(0.00	)		0.0	%
50		1000		410	$	30.73	$	30.72	$	(0.01	)		0.0	%
51		Overhead Service - Metal Pole
52		70		29	$	15.77	$	15.77	$	(0.00	)		0.0	%
53		100		42	$	16.22	$	16.22	$	(0.00	)		0.0	%
54		150		62	$	18.02	$	18.02	$	(0.00	)		0.0	%
55		215		89	$	19.65	$	19.65	$	(0.00	)		0.0	%
56		250		105	$	20.19	$	20.19	$	(0.00	)		0.0	%
57		400		163	$	24.40	$	24.40	$	(0.00	)		0.0	%
58		1000		410	$	39.70	$	39.69	$	(0.01	)		0.0	%
59		Underground Service - Post Type
60		70		29	$	11.08	$	11.08	$	(0.00	)		0.0	%
61		100		42	$	11.83	$	11.83	$	(0.00	)		0.0	%
62		150		62	$	13.24	$	13.24	$	(0.00	)		0.0	%
63		Underground Service - Pole Type
64		70		29	$	18.07	$	18.07	$	(0.00	)		0.0	%
65		100		42	$	18.81	$	18.81	$	(0.00	)		0.0	%
66		150		62	$	22.44	$	22.44	$	(0.00	)		0.0	%
67		200		88	$	24.59	$	24.59	$	(0.00	)		0.0	%
68		215		89	$	22.25	$	22.25	$	(0.00	)		0.0	%
69		250		105	$	25.33	$	25.33	$	(0.00	)		0.0	%
70		310		128	$	27.58	$	27.57	$	(0.00	)		0.0	%
71		400		163	$	46.27	$	46.27	$	(0.00	)		0.0	%
72		400		326	$	59.68	$	59.67	$	(0.01	)		0.0	%
73		1000		410	$	63.49	$	63.48	$	(0.01	)		0.0	%
74		Bridge or Underpass Wallpack
75		70		29	$	11.64	$	11.64	$	(0.00	)		0.0	%
76		100		42	$	13.08	$	13.08	$	(0.00	)		0.0	%
77		150		62	$	13.99	$	13.99	$	(0.00	)		0.0	%
78		215		89	$	14.16	$	14.16	$	(0.00	)		0.0	%
79		250		105	$	16.81	$	16.81	$	(0.00	)		0.0	%

Exhibit G

OE - Page 23 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
80		Customer Owned - All Lamp Types
81		N/A		25	$	1.48	$	1.47	$	(0.00	)		0.0	%
82		N/A		50	$	2.96	$	2.96	$	(0.00	)		0.0	%
83		N/A		75	$	4.44	$	4.43	$	(0.00	)		0.0	%
84		N/A		100	$	5.93	$	5.93	$	(0.00	)		0.0	%
85		N/A		125	$	7.40	$	7.39	$	(0.00	)		0.0	%
86		N/A		150	$	8.88	$	8.88	$	(0.00	)		0.0	%
87		N/A		175	$	10.37	$	10.36	$	(0.01	)		0.0	%
88		N/A		200	$	11.86	$	11.86	$	(0.01	)		0.0	%
89		N/A		225	$	13.33	$	13.32	$	(0.01	)		0.0	%
90		N/A		250	$	14.79	$	14.78	$	(0.01	)		0.0	%
91		N/A		275	$	16.29	$	16.28	$	(0.01	)		0.0	%
92		N/A		300	$	17.77	$	17.76	$	(0.01	)		0.0	%
93		N/A		325	$	19.25	$	19.24	$	(0.01	)		0.0	%
94		N/A		350	$	20.72	$	20.71	$	(0.01	)		0.0	%
95		N/A		375	$	22.20	$	22.19	$	(0.01	)		0.0	%
96		N/A		400	$	23.68	$	23.67	$	(0.01	)		0.0	%
97		Customer Owned, Limited Company Maintenance - All Lamp Types
98		N/A		25	$	2.10	$	2.09	$	(0.00	)		0.0	%
99		N/A		50	$	4.19	$	4.19	$	(0.00	)		0.0	%
100		N/A		75	$	6.29	$	6.28	$	(0.00	)		0.0	%
101		N/A		100	$	8.40	$	8.40	$	(0.00	)		0.0	%
102		N/A		125	$	10.49	$	10.48	$	(0.00	)		0.0	%
103		N/A		150	$	12.58	$	12.58	$	(0.00	)		0.0	%
104		N/A		175	$	14.68	$	14.67	$	(0.01	)		0.0	%
105		N/A		200	$	16.79	$	16.79	$	(0.01	)		0.0	%
106		N/A		225	$	18.88	$	18.87	$	(0.01	)		0.0	%
107		N/A		250	$	20.95	$	20.94	$	(0.01	)		0.0	%
108		N/A		275	$	23.07	$	23.06	$	(0.01	)		0.0	%
109		N/A		300	$	25.17	$	25.16	$	(0.01	)		0.0	%
110		N/A		325	$	27.27	$	27.26	$	(0.01	)		0.0	%
111		N/A		350	$	29.35	$	29.34	$	(0.01	)		0.0	%
112		N/A		375	$	31.45	$	31.44	$	(0.01	)		0.0	%
113		N/A		400	$	33.55	$	33.54	$	(0.01	)		0.0	%

Exhibit G

OE - Page 24 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
114		Efficiency Safety Incentive Program - All Lamp Types
115		N/A		25	$	2.87	$	2.86	$	(0.00	)		0.0	%
116		N/A		50	$	5.73	$	5.73	$	(0.00	)		0.0	%
117		N/A		75	$	8.60	$	8.59	$	(0.00	)		0.0	%
118		N/A		100	$	11.48	$	11.48	$	(0.00	)		0.0	%
119		N/A		125	$	14.33	$	14.32	$	(0.00	)		0.0	%
120		N/A		150	$	17.20	$	17.20	$	(0.00	)		0.0	%
121		N/A		175	$	20.07	$	20.06	$	(0.01	)		0.0	%
122		N/A		200	$	22.94	$	22.94	$	(0.01	)		0.0	%
123		N/A		225	$	25.80	$	25.79	$	(0.01	)		0.0	%
124		N/A		250	$	28.65	$	28.64	$	(0.01	)		0.0	%
125		N/A		275	$	31.53	$	31.52	$	(0.01	)		0.0	%
126		N/A		300	$	34.40	$	34.39	$	(0.01	)		0.0	%
127		N/A		325	$	37.26	$	37.25	$	(0.01	)		0.0	%
128		N/A		350	$	40.12	$	40.11	$	(0.01	)		0.0	%
129		N/A		375	$	42.99	$	42.98	$	(0.01	)		0.0	%
130		N/A		400	$	45.85	$	45.84	$	(0.01	)		0.0	%

Exhibit G

OE - Page 25 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Private Outdoor Lighting Service (Rate POL)
1		Mercury Lighting
2		Overhead Service - Wood Pole
3		175		69	$	11.09	$	11.09	$	(0.00	)		0.0	%
4		400		158	$	18.85	$	18.84	$	(0.00	)		0.0	%
5		1,000		380	$	34.86	$	34.85	$	(0.01	)		0.0	%
6		All Other Installations
7		175		69	$	15.49	$	15.49	$	(0.00	)		0.0	%
8		High Pressure Sodium Lighting
9		Overhead Service - Wood Pole
10		100		42	$	10.51	$	10.51	$	(0.00	)		0.0	%
11		250		105	$	17.11	$	17.11	$	(0.00	)		0.0	%
12		400		163	$	21.74	$	21.73	$	(0.00	)		0.0	%
13		All Other Installations
14		100		42	$	15.54	$	15.54	$	(0.00	)		0.0	%
15		Metal Halide Lighting
16		Overhead Service - Wood Pole
17		15,000		73	$	16.08	$	16.08	$	(0.00	)		0.0	%
18		23,000		111	$	18.61	$	18.60	$	(0.00	)		0.0	%
19		40,000		172	$	22.69	$	22.68	$	(0.00	)		0.0	%
20		All Other Installations
21		15,000		73	$	25.86	$	25.86	$	(0.00	)		0.0	%
22		23,000		111	$	28.39	$	28.38	$	(0.00	)		0.0	%
23		40,000		172	$	32.47	$	32.46	$	(0.00	)		0.0	%

Exhibit G

OE - Page 26 of 26

Ohio Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Traffic Lighting Schedule (Rate TRF)
1		0		100	$	7.44	$	7.44	$	(0.00	)		0.0	%
2		0		200	$	14.83	$	14.83	$	(0.01	)		0.0	%
3		0		300	$	22.21	$	22.20	$	(0.01	)		0.0	%
4		0		400	$	29.60	$	29.59	$	(0.01	)		0.0	%
5		0		500	$	36.99	$	36.98	$	(0.01	)		0.0	%
6		0		600	$	44.39	$	44.38	$	(0.02	)		0.0	%

Exhibit G

TE - Page 1 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Standard (Rate RS)
1		0		250	$	35.03	$	35.03	$	(0.00	)		0.0	%
2		0		500	$	66.02	$	66.02	$	(0.00	)		0.0	%
3		0		750	$	97.02	$	97.01	$	(0.01	)		0.0	%
4		0		1,000	$	128.01	$	128.01	$	(0.01	)		0.0	%
5		0		1,250	$	159.01	$	159.00	$	(0.01	)		0.0	%
6		0		1,500	$	190.01	$	190.00	$	(0.01	)		0.0	%
7		0		2,000	$	252.00	$	251.98	$	(0.01	)		0.0	%
8		0		2,500	$	313.76	$	313.74	$	(0.02	)		0.0	%
9		0		3,000	$	375.52	$	375.50	$	(0.02	)		0.0	%
10		0		3,500	$	437.28	$	437.26	$	(0.02	)		0.0	%
11		0		4,000	$	499.04	$	499.02	$	(0.03	)		0.0	%
12		0		4,500	$	560.80	$	560.77	$	(0.03	)		0.0	%
13		0		5,000	$	622.57	$	622.53	$	(0.03	)		0.0	%
14		0		5,500	$	684.33	$	684.29	$	(0.04	)		0.0	%
15		0		6,000	$	746.09	$	746.05	$	(0.04	)		0.0	%
16		0		6,500	$	807.85	$	807.80	$	(0.05	)		0.0	%
17		0		7,000	$	869.61	$	869.56	$	(0.05	)		0.0	%
18		0		7,500	$	931.37	$	931.32	$	(0.05	)		0.0	%
19		0		8,000	$	993.13	$	993.08	$	(0.06	)		0.0	%
20		0		8,500	$	1,054.89	$	1,054.83	$	(0.06	)		0.0	%
21		0		9,000	$	1,116.66	$	1,116.59	$	(0.06	)		0.0	%
22		0		9,500	$	1,178.42	$	1,178.35	$	(0.07	)		0.0	%
23		0		10,000	$	1,240.18	$	1,240.11	$	(0.07	)		0.0	%
24		0		10,500	$	1,301.94	$	1,301.87	$	(0.07	)		0.0	%
25		0		11,000	$	1,363.70	$	1,363.62	$	(0.08	)		0.0	%
26		0		11,500	$	1,425.46	$	1,425.38	$	(0.08	)		0.0	%
27		0		12,000	$	1,487.22	$	1,487.14	$	(0.08	)		0.0	%
28		0		12,500	$	1,548.98	$	1,548.90	$	(0.09	)		0.0	%
29		0		13,000	$	1,610.74	$	1,610.65	$	(0.09	)		0.0	%
30		0		13,500	$	1,672.51	$	1,672.41	$	(0.09	)		0.0	%
31		0		14,000	$	1,734.27	$	1,734.17	$	(0.10	)		0.0	%
32		0		14,500	$	1,796.03	$	1,795.93	$	(0.10	)		0.0	%
33		0		15,000	$	1,857.79	$	1,857.68	$	(0.11	)		0.0	%
34		0		15,500	$	1,919.27	$	1,919.16	$	(0.11	)		0.0	%
35		0		16,000	$	1,980.75	$	1,980.64	$	(0.11	)		0.0	%
36		0		16,500	$	2,042.23	$	2,042.12	$	(0.12	)		0.0	%
37		0		17,000	$	2,103.71	$	2,103.59	$	(0.12	)		0.0	%
38		0		17,500	$	2,165.19	$	2,165.07	$	(0.12	)		0.0	%

Exhibit G

TE - Page 2 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Electric Heating (Rate RS)
1		0		250	$	35.03	$	35.03	$	(0.00	)		0.0	%
2		0		500	$	66.02	$	66.02	$	(0.00	)		0.0	%
3		0		750	$	87.87	$	87.86	$	(0.01	)		0.0	%
4		0		1,000	$	109.71	$	109.71	$	(0.01	)		0.0	%
5		0		1,250	$	131.56	$	131.55	$	(0.01	)		0.0	%
6		0		1,500	$	153.41	$	153.40	$	(0.01	)		0.0	%
7		0		2,000	$	197.10	$	197.08	$	(0.01	)		0.0	%
8		0		2,500	$	225.06	$	225.04	$	(0.02	)		0.0	%
9		0		3,000	$	253.02	$	253.00	$	(0.02	)		0.0	%
10		0		3,500	$	280.98	$	280.96	$	(0.02	)		0.0	%
11		0		4,000	$	308.94	$	308.92	$	(0.03	)		0.0	%
12		0		4,500	$	336.90	$	336.87	$	(0.03	)		0.0	%
13		0		5,000	$	364.87	$	364.83	$	(0.04	)		0.0	%
14		0		5,500	$	392.83	$	392.79	$	(0.04	)		0.0	%
15		0		6,000	$	420.79	$	420.75	$	(0.04	)		0.0	%
16		0		6,500	$	448.75	$	448.70	$	(0.05	)		0.0	%
17		0		7,000	$	476.71	$	476.66	$	(0.05	)		0.0	%
18		0		7,500	$	504.67	$	504.62	$	(0.05	)		0.0	%
19		0		8,000	$	532.63	$	532.58	$	(0.06	)		0.0	%
20		0		8,500	$	560.59	$	560.53	$	(0.06	)		0.0	%
21		0		9,000	$	588.56	$	588.49	$	(0.06	)		0.0	%
22		0		9,500	$	616.52	$	616.45	$	(0.07	)		0.0	%
23		0		10,000	$	644.48	$	644.41	$	(0.07	)		0.0	%
24		0		10,500	$	672.44	$	672.37	$	(0.07	)		0.0	%
25		0		11,000	$	700.40	$	700.32	$	(0.08	)		0.0	%
26		0		11,500	$	728.36	$	728.28	$	(0.08	)		0.0	%
27		0		12,000	$	756.32	$	756.24	$	(0.08	)		0.0	%
28		0		12,500	$	784.28	$	784.20	$	(0.09	)		0.0	%
29		0		13,000	$	812.24	$	812.15	$	(0.09	)		0.0	%
30		0		13,500	$	840.21	$	840.11	$	(0.09	)		0.0	%
31		0		14,000	$	868.17	$	868.07	$	(0.10	)		0.0	%
32		0		14,500	$	896.13	$	896.03	$	(0.10	)		0.0	%
33		0		15,000	$	924.09	$	923.98	$	(0.11	)		0.0	%
34		0		15,500	$	951.77	$	951.66	$	(0.11	)		0.0	%
35		0		16,000	$	979.45	$	979.34	$	(0.11	)		0.0	%
36		0		16,500	$	1,007.13	$	1,007.02	$	(0.12	)		0.0	%
37		0		17,000	$	1,034.81	$	1,034.69	$	(0.12	)		0.0	%
38		0		17,500	$	1,062.49	$	1,062.37	$	(0.12	)		0.0	%

Exhibit G

TE - Page 3 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Electric Heating Apartment (Rate RS)
1		0		250	$	24.83	$	24.83	$	(0.00	)		0.0	%
2		0		500	$	45.62	$	45.62	$	(0.00	)		0.0	%
3		0		750	$	57.27	$	57.26	$	(0.01	)		0.0	%
4		0		1,000	$	68.91	$	68.91	$	(0.01	)		0.0	%
5		0		1,250	$	80.56	$	80.55	$	(0.01	)		0.0	%
6		0		1,500	$	92.21	$	92.20	$	(0.01	)		0.0	%
7		0		2,000	$	115.50	$	115.48	$	(0.01	)		0.0	%
8		0		2,500	$	158.96	$	158.94	$	(0.02	)		0.0	%
9		0		3,000	$	202.42	$	202.40	$	(0.02	)		0.0	%
10		0		3,500	$	245.88	$	245.86	$	(0.02	)		0.0	%
11		0		4,000	$	289.34	$	289.32	$	(0.03	)		0.0	%
12		0		4,500	$	332.80	$	332.77	$	(0.03	)		0.0	%
13		0		5,000	$	376.27	$	376.23	$	(0.04	)		0.0	%
14		0		5,500	$	419.73	$	419.69	$	(0.04	)		0.0	%
15		0		6,000	$	463.19	$	463.15	$	(0.04	)		0.0	%
16		0		6,500	$	506.65	$	506.60	$	(0.05	)		0.0	%
17		0		7,000	$	550.11	$	550.06	$	(0.05	)		0.0	%
18		0		7,500	$	593.57	$	593.52	$	(0.05	)		0.0	%
19		0		8,000	$	637.03	$	636.98	$	(0.06	)		0.0	%
20		0		8,500	$	680.49	$	680.43	$	(0.06	)		0.0	%
21		0		9,000	$	723.96	$	723.89	$	(0.06	)		0.0	%
22		0		9,500	$	767.42	$	767.35	$	(0.07	)		0.0	%
23		0		10,000	$	810.88	$	810.81	$	(0.07	)		0.0	%
24		0		10,500	$	854.34	$	854.27	$	(0.07	)		0.0	%
25		0		11,000	$	897.80	$	897.72	$	(0.08	)		0.0	%
26		0		11,500	$	941.26	$	941.18	$	(0.08	)		0.0	%
27		0		12,000	$	984.72	$	984.64	$	(0.08	)		0.0	%
28		0		12,500	$	1,028.18	$	1,028.10	$	(0.09	)		0.0	%
29		0		13,000	$	1,071.64	$	1,071.55	$	(0.09	)		0.0	%
30		0		13,500	$	1,115.11	$	1,115.01	$	(0.09	)		0.0	%
31		0		14,000	$	1,158.57	$	1,158.47	$	(0.10	)		0.0	%
32		0		14,500	$	1,202.03	$	1,201.93	$	(0.10	)		0.0	%
33		0		15,000	$	1,245.49	$	1,245.38	$	(0.11	)		0.0	%
34		0		15,500	$	1,288.67	$	1,288.56	$	(0.11	)		0.0	%
35		0		16,000	$	1,331.85	$	1,331.74	$	(0.11	)		0.0	%
36		0		16,500	$	1,375.03	$	1,374.92	$	(0.12	)		0.0	%
37		0		17,000	$	1,418.21	$	1,418.09	$	(0.12	)		0.0	%
38		0		17,500	$	1,461.39	$	1,461.27	$	(0.12	)		0.0	%

Exhibit G

TE - Page 4 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Water Heating (Rate RS)
1		0		250	$	35.03	$	35.03	$	(0.00	)		0.0	%
2		0		500	$	66.02	$	66.02	$	(0.00	)		0.0	%
3		0		750	$	91.37	$	91.36	$	(0.01	)		0.0	%
4		0		1,000	$	116.71	$	116.71	$	(0.01	)		0.0	%
5		0		1,250	$	142.06	$	142.05	$	(0.01	)		0.0	%
6		0		1,500	$	167.41	$	167.40	$	(0.01	)		0.0	%
7		0		2,000	$	218.10	$	218.08	$	(0.01	)		0.0	%
8		0		2,500	$	268.56	$	268.54	$	(0.02	)		0.0	%
9		0		3,000	$	319.02	$	319.00	$	(0.02	)		0.0	%
10		0		3,500	$	369.48	$	369.46	$	(0.02	)		0.0	%
11		0		4,000	$	419.94	$	419.92	$	(0.03	)		0.0	%
12		0		4,500	$	470.40	$	470.37	$	(0.03	)		0.0	%
13		0		5,000	$	520.87	$	520.83	$	(0.03	)		0.0	%
14		0		5,500	$	571.33	$	571.29	$	(0.04	)		0.0	%
15		0		6,000	$	621.79	$	621.75	$	(0.04	)		0.0	%
16		0		6,500	$	672.25	$	672.20	$	(0.05	)		0.0	%
17		0		7,000	$	722.71	$	722.66	$	(0.05	)		0.0	%
18		0		7,500	$	773.17	$	773.12	$	(0.05	)		0.0	%
19		0		8,000	$	823.63	$	823.58	$	(0.06	)		0.0	%
20		0		8,500	$	874.09	$	874.03	$	(0.06	)		0.0	%
21		0		9,000	$	924.56	$	924.49	$	(0.06	)		0.0	%
22		0		9,500	$	975.02	$	974.95	$	(0.07	)		0.0	%
23		0		10,000	$	1,025.48	$	1,025.41	$	(0.07	)		0.0	%
24		0		10,500	$	1,075.94	$	1,075.87	$	(0.07	)		0.0	%
25		0		11,000	$	1,126.40	$	1,126.32	$	(0.08	)		0.0	%
26		0		11,500	$	1,176.86	$	1,176.78	$	(0.08	)		0.0	%
27		0		12,000	$	1,227.32	$	1,227.24	$	(0.08	)		0.0	%
28		0		12,500	$	1,277.78	$	1,277.70	$	(0.09	)		0.0	%
29		0		13,000	$	1,328.24	$	1,328.15	$	(0.09	)		0.0	%
30		0		13,500	$	1,378.71	$	1,378.61	$	(0.09	)		0.0	%
31		0		14,000	$	1,429.17	$	1,429.07	$	(0.10	)		0.0	%
32		0		14,500	$	1,479.63	$	1,479.53	$	(0.10	)		0.0	%
33		0		15,000	$	1,530.09	$	1,529.98	$	(0.11	)		0.0	%
34		0		15,500	$	1,580.27	$	1,580.16	$	(0.11	)		0.0	%
35		0		16,000	$	1,630.45	$	1,630.34	$	(0.11	)		0.0	%
36		0		16,500	$	1,680.63	$	1,680.52	$	(0.12	)		0.0	%
37		0		17,000	$	1,730.81	$	1,730.69	$	(0.12	)		0.0	%
38		0		17,500	$	1,780.99	$	1,780.87	$	(0.12	)		0.0	%

Exhibit G

TE - Page 5 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Standard (Rate RS)
1		0		250	$	37.31	$	37.31	$	(0.00	)		0.0	%
2		0		500	$	70.60	$	70.59	$	(0.00	)		0.0	%
3		0		750	$	103.88	$	103.87	$	(0.01	)		0.0	%
4		0		1,000	$	137.16	$	137.15	$	(0.01	)		0.0	%
5		0		1,250	$	170.44	$	170.44	$	(0.01	)		0.0	%
6		0		1,500	$	203.73	$	203.72	$	(0.01	)		0.0	%
7		0		2,000	$	270.29	$	270.28	$	(0.01	)		0.0	%
8		0		2,500	$	336.63	$	336.61	$	(0.02	)		0.0	%
9		0		3,000	$	402.96	$	402.94	$	(0.02	)		0.0	%
10		0		3,500	$	469.30	$	469.27	$	(0.02	)		0.0	%
11		0		4,000	$	535.63	$	535.60	$	(0.03	)		0.0	%
12		0		4,500	$	601.97	$	601.93	$	(0.03	)		0.0	%
13		0		5,000	$	668.30	$	668.27	$	(0.03	)		0.0	%
14		0		5,500	$	734.64	$	734.60	$	(0.04	)		0.0	%
15		0		6,000	$	800.97	$	800.93	$	(0.04	)		0.0	%
16		0		6,500	$	867.30	$	867.26	$	(0.05	)		0.0	%
17		0		7,000	$	933.64	$	933.59	$	(0.05	)		0.0	%
18		0		7,500	$	999.97	$	999.92	$	(0.05	)		0.0	%
19		0		8,000	$	1,066.31	$	1,066.25	$	(0.06	)		0.0	%
20		0		8,500	$	1,132.64	$	1,132.58	$	(0.06	)		0.0	%
21		0		9,000	$	1,198.98	$	1,198.92	$	(0.06	)		0.0	%
22		0		9,500	$	1,265.31	$	1,265.25	$	(0.07	)		0.0	%
23		0		10,000	$	1,331.65	$	1,331.58	$	(0.07	)		0.0	%
24		0		10,500	$	1,397.98	$	1,397.91	$	(0.07	)		0.0	%
25		0		11,000	$	1,464.32	$	1,464.24	$	(0.08	)		0.0	%
26		0		11,500	$	1,530.65	$	1,530.57	$	(0.08	)		0.0	%
27		0		12,000	$	1,596.99	$	1,596.90	$	(0.08	)		0.0	%
28		0		12,500	$	1,663.32	$	1,663.23	$	(0.09	)		0.0	%
29		0		13,000	$	1,729.66	$	1,729.56	$	(0.09	)		0.0	%
30		0		13,500	$	1,795.99	$	1,795.90	$	(0.09	)		0.0	%
31		0		14,000	$	1,862.33	$	1,862.23	$	(0.10	)		0.0	%
32		0		14,500	$	1,928.66	$	1,928.56	$	(0.10	)		0.0	%
33		0		15,000	$	1,994.99	$	1,994.89	$	(0.11	)		0.0	%
34		0		15,500	$	2,061.05	$	2,060.94	$	(0.11	)		0.0	%
35		0		16,000	$	2,127.10	$	2,126.99	$	(0.11	)		0.0	%
36		0		16,500	$	2,193.16	$	2,193.04	$	(0.12	)		0.0	%
37		0		17,000	$	2,259.21	$	2,259.09	$	(0.12	)		0.0	%
38		0		17,500	$	2,325.26	$	2,325.14	$	(0.12	)		0.0	%

Exhibit G

TE - Page 6 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Electric Heating (Rate RS)
1		0		250	$	37.31	$	37.31	$	(0.00	)		0.0	%
2		0		500	$	70.60	$	70.59	$	(0.00	)		0.0	%
3		0		750	$	94.73	$	94.72	$	(0.01	)		0.0	%
4		0		1,000	$	118.86	$	118.85	$	(0.01	)		0.0	%
5		0		1,250	$	142.99	$	142.99	$	(0.01	)		0.0	%
6		0		1,500	$	167.13	$	167.12	$	(0.01	)		0.0	%
7		0		2,000	$	215.39	$	215.38	$	(0.01	)		0.0	%
8		0		2,500	$	263.43	$	263.41	$	(0.02	)		0.0	%
9		0		3,000	$	311.46	$	311.44	$	(0.02	)		0.0	%
10		0		3,500	$	359.50	$	359.47	$	(0.02	)		0.0	%
11		0		4,000	$	407.53	$	407.50	$	(0.03	)		0.0	%
12		0		4,500	$	455.57	$	455.53	$	(0.03	)		0.0	%
13		0		5,000	$	503.60	$	503.57	$	(0.03	)		0.0	%
14		0		5,500	$	551.64	$	551.60	$	(0.04	)		0.0	%
15		0		6,000	$	599.67	$	599.63	$	(0.04	)		0.0	%
16		0		6,500	$	647.70	$	647.66	$	(0.05	)		0.0	%
17		0		7,000	$	695.74	$	695.69	$	(0.05	)		0.0	%
18		0		7,500	$	743.77	$	743.72	$	(0.05	)		0.0	%
19		0		8,000	$	791.81	$	791.75	$	(0.06	)		0.0	%
20		0		8,500	$	839.84	$	839.78	$	(0.06	)		0.0	%
21		0		9,000	$	887.88	$	887.82	$	(0.06	)		0.0	%
22		0		9,500	$	935.91	$	935.85	$	(0.07	)		0.0	%
23		0		10,000	$	983.95	$	983.88	$	(0.07	)		0.0	%
24		0		10,500	$	1,031.98	$	1,031.91	$	(0.07	)		0.0	%
25		0		11,000	$	1,080.02	$	1,079.94	$	(0.08	)		0.0	%
26		0		11,500	$	1,128.05	$	1,127.97	$	(0.08	)		0.0	%
27		0		12,000	$	1,176.09	$	1,176.00	$	(0.08	)		0.0	%
28		0		12,500	$	1,224.12	$	1,224.03	$	(0.09	)		0.0	%
29		0		13,000	$	1,272.16	$	1,272.06	$	(0.09	)		0.0	%
30		0		13,500	$	1,320.19	$	1,320.10	$	(0.09	)		0.0	%
31		0		14,000	$	1,368.23	$	1,368.13	$	(0.10	)		0.0	%
32		0		14,500	$	1,416.26	$	1,416.16	$	(0.10	)		0.0	%
33		0		15,000	$	1,464.29	$	1,464.19	$	(0.11	)		0.0	%
34		0		15,500	$	1,512.05	$	1,511.94	$	(0.11	)		0.0	%
35		0		16,000	$	1,559.80	$	1,559.69	$	(0.11	)		0.0	%
36		0		16,500	$	1,607.56	$	1,607.44	$	(0.12	)		0.0	%
37		0		17,000	$	1,655.31	$	1,655.19	$	(0.12	)		0.0	%
38		0		17,500	$	1,703.06	$	1,702.94	$	(0.12	)		0.0	%

Exhibit G

TE - Page 7 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase ($) (E)			Percent Increase (%) (E)
Residential Service - Water Heating (Rate RS)
1		0		250	$	37.31	$	37.31	$	(0.00	)		0.0	%
2		0		500	$	70.60	$	70.59	$	(0.00	)		0.0	%
3		0		750	$	98.23	$	98.22	$	(0.01	)		0.0	%
4		0		1,000	$	125.86	$	125.85	$	(0.01	)		0.0	%
5		0		1,250	$	153.49	$	153.49	$	(0.01	)		0.0	%
6		0		1,500	$	181.13	$	181.12	$	(0.01	)		0.0	%
7		0		2,000	$	236.39	$	236.38	$	(0.01	)		0.0	%
8		0		2,500	$	291.43	$	291.41	$	(0.02	)		0.0	%
9		0		3,000	$	346.46	$	346.44	$	(0.02	)		0.0	%
10		0		3,500	$	401.50	$	401.47	$	(0.02	)		0.0	%
11		0		4,000	$	456.53	$	456.50	$	(0.03	)		0.0	%
12		0		4,500	$	511.57	$	511.53	$	(0.03	)		0.0	%
13		0		5,000	$	566.60	$	566.57	$	(0.03	)		0.0	%
14		0		5,500	$	621.64	$	621.60	$	(0.04	)		0.0	%
15		0		6,000	$	676.67	$	676.63	$	(0.04	)		0.0	%
16		0		6,500	$	731.70	$	731.66	$	(0.05	)		0.0	%
17		0		7,000	$	786.74	$	786.69	$	(0.05	)		0.0	%
18		0		7,500	$	841.77	$	841.72	$	(0.05	)		0.0	%
19		0		8,000	$	896.81	$	896.75	$	(0.06	)		0.0	%
20		0		8,500	$	951.84	$	951.78	$	(0.06	)		0.0	%
21		0		9,000	$	1,006.88	$	1,006.82	$	(0.06	)		0.0	%
22		0		9,500	$	1,061.91	$	1,061.85	$	(0.07	)		0.0	%
23		0		10,000	$	1,116.95	$	1,116.88	$	(0.07	)		0.0	%
24		0		10,500	$	1,171.98	$	1,171.91	$	(0.07	)		0.0	%
25		0		11,000	$	1,227.02	$	1,226.94	$	(0.08	)		0.0	%
26		0		11,500	$	1,282.05	$	1,281.97	$	(0.08	)		0.0	%
27		0		12,000	$	1,337.09	$	1,337.00	$	(0.08	)		0.0	%
28		0		12,500	$	1,392.12	$	1,392.03	$	(0.09	)		0.0	%
29		0		13,000	$	1,447.16	$	1,447.06	$	(0.09	)		0.0	%
30		0		13,500	$	1,502.19	$	1,502.10	$	(0.09	)		0.0	%
31		0		14,000	$	1,557.23	$	1,557.13	$	(0.10	)		0.0	%
32		0		14,500	$	1,612.26	$	1,612.16	$	(0.10	)		0.0	%
33		0		15,000	$	1,667.29	$	1,667.19	$	(0.11	)		0.0	%
34		0		15,500	$	1,722.05	$	1,721.94	$	(0.11	)		0.0	%
35		0		16,000	$	1,776.80	$	1,776.69	$	(0.11	)		0.0	%
36		0		16,500	$	1,831.56	$	1,831.44	$	(0.12	)		0.0	%
37		0		17,000	$	1,886.31	$	1,886.19	$	(0.12	)		0.0	%
38		0		17,500	$	1,941.06	$	1,940.94	$	(0.12	)		0.0	%

Exhibit G

TE - Page 8 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Secondary (Rate GS)
1		10		1,000	$	165.01	$	165.00	$	(0.01	)		0.0	%
2		10		2,000	$	245.56	$	245.55	$	(0.01	)		0.0	%
3		10		3,000	$	325.64	$	325.61	$	(0.02	)		0.0	%
4		10		4,000	$	405.72	$	405.69	$	(0.03	)		0.0	%
5		10		5,000	$	485.81	$	485.77	$	(0.04	)		0.0	%
6		10		6,000	$	565.87	$	565.83	$	(0.04	)		0.0	%
7		1,000		100,000	$	18,590.88	$	18,590.18	$	(0.70	)		0.0	%
8		1,000		200,000	$	26,542.97	$	26,541.57	$	(1.40	)		0.0	%
9		1,000		300,000	$	34,495.07	$	34,492.97	$	(2.10	)		0.0	%
10		1,000		400,000	$	42,447.16	$	42,444.36	$	(2.80	)		0.0	%
11		1,000		500,000	$	50,399.26	$	50,395.76	$	(3.50	)		0.0	%
12		1,000		600,000	$	58,351.36	$	58,347.16	$	(4.20	)		0.0	%

Exhibit G

TE - Page 9 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Primary (Rate GP)
1		500		50,000	$	5,559.79	$	5,559.44	$	(0.35	)		0.0	%
2		500		100,000	$	9,200.24	$	9,199.54	$	(0.70	)		0.0	%
3		500		150,000	$	12,840.69	$	12,839.64	$	(1.05	)		0.0	%
4		500		200,000	$	16,481.14	$	16,479.74	$	(1.40	)		0.0	%
5		500		250,000	$	20,121.58	$	20,119.83	$	(1.75	)		0.0	%
6		500		300,000	$	23,762.03	$	23,759.93	$	(2.10	)		0.0	%
7		5,000		500,000	$	54,142.69	$	54,139.19	$	(3.50	)		0.0	%
8		5,000		1,000,000	$	89,636.27	$	89,629.27	$	(7.00	)		0.0	%
9		5,000		1,500,000	$	123,313.50	$	123,303.00	$	(10.50	)		0.0	%
10		5,000		2,000,000	$	156,990.73	$	156,976.73	$	(14.00	)		0.0	%
11		5,000		2,500,000	$	190,667.96	$	190,650.46	$	(17.50	)		0.0	%
12		5,000		3,000,000	$	224,345.19	$	224,324.19	$	(21.00	)		0.0	%

Exhibit G

TE - Page 10 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Subtransmission (Rate GSU)
1		1,000		100,000	$	9,299.80	$	9,299.10	$	(0.70	)		0.0	%
2		1,000		200,000	$	16,035.00	$	16,033.60	$	(1.40	)		0.0	%
3		1,000		300,000	$	22,770.19	$	22,768.09	$	(2.10	)		0.0	%
4		1,000		400,000	$	29,505.39	$	29,502.59	$	(2.80	)		0.0	%
5		1,000		500,000	$	36,240.59	$	36,237.09	$	(3.50	)		0.0	%
6		1,000		600,000	$	42,975.78	$	42,971.58	$	(4.20	)		0.0	%
7		10,000		1,000,000	$	90,181.83	$	90,174.83	$	(7.00	)		0.0	%
8		10,000		2,000,000	$	152,079.29	$	152,065.29	$	(14.00	)		0.0	%
9		10,000		3,000,000	$	213,976.75	$	213,955.75	$	(21.00	)		0.0	%
10		10,000		4,000,000	$	275,874.21	$	275,846.21	$	(28.00	)		0.0	%
11		10,000		5,000,000	$	337,771.68	$	337,736.68	$	(35.00	)		0.0	%
12		10,000		6,000,000	$	399,669.14	$	399,627.14	$	(42.00	)		0.0	%

Exhibit G

TE - Page 11 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Transmission (Rate GT)
1		2,000		200,000	$	27,145.94	$	27,144.54	$	(1.40	)		0.0	%
2		2,000		400,000	$	35,803.53	$	35,800.73	$	(2.80	)		0.0	%
3		2,000		600,000	$	44,461.12	$	44,456.92	$	(4.20	)		0.0	%
4		2,000		800,000	$	53,118.71	$	53,113.11	$	(5.60	)		0.0	%
5		2,000		1,000,000	$	60,865.41	$	60,858.41	$	(7.00	)		0.0	%
6		2,000		1,200,000	$	68,432.10	$	68,423.70	$	(8.40	)		0.0	%
7		20,000		2,000,000	$	262,129.87	$	262,115.87	$	(14.00	)		0.0	%
8		20,000		4,000,000	$	337,796.79	$	337,768.79	$	(28.00	)		0.0	%
9		20,000		6,000,000	$	413,463.72	$	413,421.72	$	(42.00	)		0.0	%
10		20,000		8,000,000	$	489,130.64	$	489,074.64	$	(56.00	)		0.0	%
11		20,000		10,000,000	$	564,797.57	$	564,727.57	$	(70.00	)		0.0	%
12		20,000		12,000,000	$	640,464.49	$	640,380.49	$	(84.00	)		0.0	%

Exhibit G

TE - Page 12 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
1		Company Owned - Incandescent Street Lighting (a)
2		Overhead Wood Service (Single lamps)
3		1,000		24	$	12.13	$	12.13	$	(0.00	)		0.0	%
4		2,000		56	$	13.68	$	13.68	$	(0.00	)		0.0	%
5		2,500		70	$	14.38	$	14.38	$	(0.00	)		0.0	%
6		4,000		126	$	17.11	$	17.11	$	(0.00	)		0.0	%
7		6,000		157	$	18.60	$	18.60	$	(0.00	)		0.0	%
8		10,000		242	$	22.76	$	22.75	$	(0.00	)		0.0	%
9		15,000		282	$	24.72	$	24.72	$	(0.00	)		0.0	%
10		Overhead Steel Service (Single lamps)
11		1,000		24	$	13.11	$	13.11	$	(0.00	)		0.0	%
12		2,000		56	$	14.66	$	14.66	$	(0.00	)		0.0	%
13		2,500		70	$	15.36	$	15.36	$	(0.00	)		0.0	%
14		4,000		126	$	18.09	$	18.09	$	(0.00	)		0.0	%
15		6,000		157	$	19.58	$	19.58	$	(0.00	)		0.0	%
16		10,000		242	$	23.74	$	23.73	$	(0.00	)		0.0	%
17		15,000		282	$	25.70	$	25.70	$	(0.00	)		0.0	%
18		Underground Service (Single lamps)
19		1,000		24	$	19.31	$	19.31	$	(0.00	)		0.0	%
20		2,000		56	$	20.86	$	20.86	$	(0.00	)		0.0	%
21		2,500		70	$	21.56	$	21.56	$	(0.00	)		0.0	%
22		4,000		126	$	24.29	$	24.29	$	(0.00	)		0.0	%
23		6,000		157	$	25.78	$	25.78	$	(0.00	)		0.0	%
24		10,000		242	$	29.94	$	29.93	$	(0.00	)		0.0	%
25		15,000		282	$	31.90	$	31.90	$	(0.00	)		0.0	%
26		Underground Service (Dual lamps)
27		1,000		48	$	34.62	$	34.61	$	(0.00	)		0.0	%
28		2,000		112	$	37.71	$	37.71	$	(0.00	)		0.0	%
29		2,500		140	$	39.09	$	39.08	$	(0.00	)		0.0	%
30		4,000		252	$	44.55	$	44.55	$	(0.00	)		0.0	%
31		6,000		314	$	47.58	$	47.58	$	(0.00	)		0.0	%
32		10,000		484	$	55.87	$	55.87	$	(0.00	)		0.0	%
33		15,000		564	$	59.75	$	59.75	$	(0.00	)		0.0	%

Exhibit G

TE - Page 13 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
34		Company Owned - Fluorescent Street Lighting (a)
35		Overhead Steel Service (Single lamps)
36		6,000		45	$	19.00	$	19.00	$	(0.00	)		0.0	%
37		13,800		94	$	21.40	$	21.40	$	(0.00	)		0.0	%
38		21,800		135	$	23.39	$	23.39	$	(0.00	)		0.0	%
39		43,600		264	$	29.68	$	29.68	$	(0.00	)		0.0	%
40		Underground Service (Single lamps)
41		6,000		45	$	17.26	$	17.26	$	(0.00	)		0.0	%
42		13,800		94	$	19.66	$	19.66	$	(0.00	)		0.0	%
43		21,800		135	$	21.65	$	21.65	$	(0.00	)		0.0	%
44		43,600		264	$	27.94	$	27.94	$	(0.00	)		0.0	%
45		Underground Service (Dual lamps)
46		6,000		90	$	24.98	$	24.98	$	(0.00	)		0.0	%
47		13,800		188	$	29.75	$	29.75	$	(0.00	)		0.0	%
48		21,800		270	$	33.75	$	33.75	$	(0.00	)		0.0	%
49		43,600		528	$	46.36	$	46.35	$	(0.00	)		0.0	%
50		Company Owned - Mercury Street Lighting - Single lamp (c)
51		Overhead Service - Wood Pole
52		175		69	$	9.35	$	9.35	$	(0.00	)		0.0	%
53		250		104	$	11.64	$	11.64	$	(0.00	)		0.0	%
54		400		158	$	15.96	$	15.96	$	(0.00	)		0.0	%
55		700		287	$	27.43	$	27.43	$	(0.00	)		0.0	%
56		1000		380	$	34.41	$	34.41	$	(0.00	)		0.0	%
57		Overhead Service - Metal Pole
58		175		69	$	11.63	$	11.63	$	(0.00	)		0.0	%
59		250		104	$	13.76	$	13.76	$	(0.00	)		0.0	%
60		400		158	$	18.66	$	18.66	$	(0.00	)		0.0	%
61		700		287	$	30.34	$	30.34	$	(0.00	)		0.0	%
62		1000		380	$	37.38	$	37.38	$	(0.00	)		0.0	%
63		Underground Service
64		175		69	$	15.35	$	15.35	$	(0.00	)		0.0	%
65		250		104	$	17.60	$	17.60	$	(0.00	)		0.0	%
66		400		158	$	22.29	$	22.29	$	(0.00	)		0.0	%
67		700		287	$	32.20	$	32.20	$	(0.00	)		0.0	%
68		1000		380	$	39.02	$	39.02	$	(0.00	)		0.0	%

Exhibit G

TE - Page 14 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)			Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
69		Company Owned - Mercury Street Lighting - Dual lamps (c)
70		Overhead Service - Wood Pole
71		175			138	$	16.90	$	16.89	$	(0.00	)		0.0	%
72		400			316	$	29.95	$	29.95	$	(0.00	)		0.0	%
73		Overhead Service - Metal Pole
74		400			316	$	32.61	$	32.61	$	(0.00	)		0.0	%
75		Underground Service
76		250			208	$	27.69	$	27.69	$	(0.00	)		0.0	%
77		400			316	$	35.88	$	35.88	$	(0.00	)		0.0	%
78		Company Owned - High Pressure Sodium Lighting - Single lamps (d)
79		Overhead Service - Wood Pole
80		100			42	$	11.21	$	11.21	$	(0.00	)		0.0	%
81		150			62	$	13.36	$	13.36	$	(0.00	)		0.0	%
82		200			88	$	17.51	$	17.51	$	(0.00	)		0.0	%
83		250			105	$	15.50	$	15.50	$	(0.00	)		0.0	%
84		400			163	$	21.54	$	21.54	$	(0.00	)		0.0	%
85		Overhead Service - Metal Pole
86		100			42	$	13.06	$	13.06	$	(0.00	)		0.0	%
87		150			62	$	14.68	$	14.68	$	(0.00	)		0.0	%
88		200			88	$	19.63	$	19.63	$	(0.00	)		0.0	%
89		250			105	$	19.47	$	19.47	$	(0.00	)		0.0	%
90		400			163	$	24.97	$	24.97	$	(0.00	)		0.0	%
91		Underground Service
92		100			42	$	16.81	$	16.81	$	(0.00	)		0.0	%
93		100 (orn.	)		42	$	28.11	$	28.11	$	(0.00	)		0.0	%
94		150			62	$	15.69	$	15.69	$	(0.00	)		0.0	%
95		200			88	$	23.58	$	23.58	$	(0.00	)		0.0	%
96		250			105	$	21.17	$	21.17	$	(0.00	)		0.0	%
97		250 (dwntwn	)		105	$	36.19	$	36.19	$	(0.00	)		0.0	%
98		400			163	$	25.70	$	25.70	$	(0.00	)		0.0	%
99		400 (dwntwn	)		25	$	46.77	$	46.77	$	(0.00	)		0.0	%

Exhibit G

TE - Page 15 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)			Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
100		Company Owned - High Pressure Sodium Lighting - Dual lamps (d)
101		Overhead Service - Wood Pole
102		100			84	$	21.97	$	21.97	$	(0.00	)		0.0	%
103		150			124	$	24.94	$	24.94	$	(0.00	)		0.0	%
104		250			210	$	31.17	$	31.17	$	(0.00	)		0.0	%
105		Overhead Service - Metal Pole
106		100			84	$	22.86	$	22.86	$	(0.00	)		0.0	%
107		150			124	$	25.38	$	25.38	$	(0.00	)		0.0	%
108		250			210	$	32.58	$	32.58	$	(0.00	)		0.0	%
109		Underground Service
110		100			84	$	27.10	$	27.10	$	(0.00	)		0.0	%
111		150			124	$	32.06	$	32.06	$	(0.00	)		0.0	%
112		250			210	$	38.83	$	38.83	$	(0.00	)		0.0	%
113		400 (davit	)		326	$	38.97	$	38.96	$	(0.00	)		0.0	%
114		Customer Owned - Limited Company Maintenance - All Lamp Types
115		N/A			25	$	1.23	$	1.23	$	(0.00	)		0.0	%
116		N/A			50	$	2.42	$	2.42	$	(0.00	)		0.0	%
117		N/A			75	$	4.77	$	4.77	$	(0.00	)		0.0	%
118		N/A			100	$	7.49	$	7.49	$	(0.00	)		0.0	%
119		N/A			125	$	9.36	$	9.36	$	(0.00	)		0.0	%
120		N/A			150	$	13.16	$	13.16	$	(0.00	)		0.0	%
121		N/A			175	$	15.81	$	15.81	$	(0.00	)		0.0	%
122		N/A			200	$	20.99	$	20.99	$	(0.00	)		0.0	%
123		N/A			225	$	24.05	$	24.05	$	(0.00	)		0.0	%
124		N/A			250	$	12.18	$	12.18	$	(0.00	)		0.0	%
125		N/A			275	$	14.52	$	14.52	$	(0.00	)		0.0	%
126		N/A			300	$	17.23	$	17.23	$	(0.00	)		0.0	%
127		N/A			325	$	19.10	$	19.09	$	(0.00	)		0.0	%
128		N/A			350	$	22.92	$	22.92	$	(0.00	)		0.0	%
129		N/A			375	$	25.58	$	25.58	$	(0.00	)		0.0	%
130		N/A			400	$	30.73	$	30.73	$	(0.00	)		0.0	%

Exhibit G

TE - Page 16 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens or Watts) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Private Outdoor Lighting Service (Rate POL)
1		Mercury Lighting
2		Overhead Service - Wood Pole
3		175		69	$	11.76	$	11.76	$	(0.00	)		0.0	%
4		400		158	$	30.25	$	30.25	$	(0.00	)		0.0	%
5		1,000		380	$	54.98	$	54.98	$	(0.00	)		0.0	%
6		All Other Installations
7		175		69	$	18.35	$	18.35	$	(0.00	)		0.0	%
8		High Pressure Sodium Lighting
9		Overhead Service - Wood Pole
10		200		88	$	15.97	$	15.97	$	(0.00	)		0.0	%
11		400		163	$	28.77	$	28.77	$	(0.00	)		0.0	%

Exhibit G

TE - Page 17 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Winter Bill ($) (C)		Proposed Winter Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Traffic Lighting Schedule (Rate TRF)
1		0		100	$	10.95	$	10.95	$	(0.00	)		0.0	%
2		0		200	$	21.89	$	21.89	$	(0.00	)		0.0	%
3		0		300	$	32.82	$	32.82	$	(0.00	)		0.0	%
4		0		400	$	43.78	$	43.78	$	(0.00	)		0.0	%
5		0		500	$	54.74	$	54.74	$	(0.00	)		0.0	%
6		0		600	$	65.66	$	65.65	$	(0.00	)		0.0	%

Exhibit G

TE - Page 18 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Secondary (Rate GS)
1		10		1,000	$	174.16	$	174.15	$	(0.01	)		0.0	%
2		10		2,000	$	263.85	$	263.84	$	(0.01	)		0.0	%
3		10		3,000	$	353.08	$	353.05	$	(0.02	)		0.0	%
4		10		4,000	$	442.31	$	442.28	$	(0.03	)		0.0	%
5		10		5,000	$	531.55	$	531.51	$	(0.03	)		0.0	%
6		10		6,000	$	620.75	$	620.71	$	(0.04	)		0.0	%
7		1,000		100,000	$	19,505.58	$	19,504.88	$	(0.70	)		0.0	%
8		1,000		200,000	$	28,372.37	$	28,370.97	$	(1.40	)		0.0	%
9		1,000		300,000	$	37,239.17	$	37,237.07	$	(2.10	)		0.0	%
10		1,000		400,000	$	46,105.96	$	46,103.16	$	(2.80	)		0.0	%
11		1,000		500,000	$	54,972.76	$	54,969.26	$	(3.50	)		0.0	%
12		1,000		600,000	$	63,839.56	$	63,835.36	$	(4.20	)		0.0	%

Exhibit G

TE - Page 19 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Primary (Rate GP)
1		500		50,000	$	6,001.29	$	6,000.94	$	(0.35	)		0.0	%
2		500		100,000	$	10,083.24	$	10,082.54	$	(0.70	)		0.0	%
3		500		150,000	$	14,165.19	$	14,164.14	$	(1.05	)		0.0	%
4		500		200,000	$	18,247.14	$	18,245.74	$	(1.40	)		0.0	%
5		500		250,000	$	22,329.08	$	22,327.33	$	(1.75	)		0.0	%
6		500		300,000	$	26,411.03	$	26,408.93	$	(2.10	)		0.0	%
7		5,000		500,000	$	58,557.69	$	58,554.19	$	(3.50	)		0.0	%
8		5,000		1,000,000	$	98,466.27	$	98,459.27	$	(7.00	)		0.0	%
9		5,000		1,500,000	$	136,558.50	$	136,548.00	$	(10.50	)		0.0	%
10		5,000		2,000,000	$	174,650.73	$	174,636.73	$	(14.00	)		0.0	%
11		5,000		2,500,000	$	212,742.96	$	212,725.46	$	(17.50	)		0.0	%
12		5,000		3,000,000	$	250,835.19	$	250,814.19	$	(21.00	)		0.0	%

Exhibit G

TE - Page 20 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Subtransmission (Rate GSU)
1		1,000		100,000	$	10,158.00	$	10,157.30	$	(0.70	)		0.0	%
2		1,000		200,000	$	17,751.40	$	17,750.00	$	(1.40	)		0.0	%
3		1,000		300,000	$	25,344.79	$	25,342.69	$	(2.10	)		0.0	%
4		1,000		400,000	$	32,938.19	$	32,935.39	$	(2.80	)		0.0	%
5		1,000		500,000	$	40,531.59	$	40,528.09	$	(3.50	)		0.0	%
6		1,000		600,000	$	48,124.98	$	48,120.78	$	(4.20	)		0.0	%
7		10,000		1,000,000	$	98,763.83	$	98,756.83	$	(7.00	)		0.0	%
8		10,000		2,000,000	$	169,243.29	$	169,229.29	$	(14.00	)		0.0	%
9		10,000		3,000,000	$	239,722.75	$	239,701.75	$	(21.00	)		0.0	%
10		10,000		4,000,000	$	310,202.21	$	310,174.21	$	(28.00	)		0.0	%
11		10,000		5,000,000	$	380,681.68	$	380,646.68	$	(35.00	)		0.0	%
12		10,000		6,000,000	$	451,161.14	$	451,119.14	$	(42.00	)		0.0	%

Exhibit G

TE - Page 21 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
General Service Transmission (Rate GT)
1		2,000		200,000	$	28,860.54	$	28,859.14	$	(1.40	)		0.0	%
2		2,000		400,000	$	39,232.73	$	39,229.93	$	(2.80	)		0.0	%
3		2,000		600,000	$	49,604.92	$	49,600.72	$	(4.20	)		0.0	%
4		2,000		800,000	$	59,977.11	$	59,971.51	$	(5.60	)		0.0	%
5		2,000		1,000,000	$	69,438.41	$	69,431.41	$	(7.00	)		0.0	%
6		2,000		1,200,000	$	78,719.70	$	78,711.30	$	(8.40	)		0.0	%
7		20,000		2,000,000	$	279,275.87	$	279,261.87	$	(14.00	)		0.0	%
8		20,000		4,000,000	$	372,088.79	$	372,060.79	$	(28.00	)		0.0	%
9		20,000		6,000,000	$	464,901.72	$	464,859.72	$	(42.00	)		0.0	%
10		20,000		8,000,000	$	557,714.64	$	557,658.64	$	(56.00	)		0.0	%
11		20,000		10,000,000	$	650,527.57	$	650,457.57	$	(70.00	)		0.0	%
12		20,000		12,000,000	$	743,340.49	$	743,256.49	$	(84.00	)		0.0	%

Exhibit G

TE - Page 22 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens  or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
1		Company Owned - Incandescent Street Lighting (a)
2		Overhead Wood Service (Single lamps)
3		1,000		24	$	12.35	$	12.35	$	(0.00	)		0.0	%
4		2,000		56	$	14.19	$	14.19	$	(0.00	)		0.0	%
5		2,500		70	$	15.02	$	15.02	$	(0.00	)		0.0	%
6		4,000		126	$	18.26	$	18.26	$	(0.00	)		0.0	%
7		6,000		157	$	20.04	$	20.04	$	(0.00	)		0.0	%
8		10,000		242	$	24.98	$	24.97	$	(0.00	)		0.0	%
9		15,000		282	$	27.30	$	27.30	$	(0.00	)		0.0	%
10		Overhead Steel Service (Single lamps)
11		1,000		24	$	13.33	$	13.33	$	(0.00	)		0.0	%
12		2,000		56	$	15.17	$	15.17	$	(0.00	)		0.0	%
13		2,500		70	$	16.00	$	16.00	$	(0.00	)		0.0	%
14		4,000		126	$	19.24	$	19.24	$	(0.00	)		0.0	%
15		6,000		157	$	21.02	$	21.02	$	(0.00	)		0.0	%
16		10,000		242	$	25.96	$	25.95	$	(0.00	)		0.0	%
17		15,000		282	$	28.28	$	28.28	$	(0.00	)		0.0	%
18		Underground Service (Single lamps)
19		1,000		24	$	19.53	$	19.53	$	(0.00	)		0.0	%
20		2,000		56	$	21.37	$	21.37	$	(0.00	)		0.0	%
21		2,500		70	$	22.20	$	22.20	$	(0.00	)		0.0	%
22		4,000		126	$	25.44	$	25.44	$	(0.00	)		0.0	%
23		6,000		157	$	27.22	$	27.22	$	(0.00	)		0.0	%
24		10,000		242	$	32.16	$	32.15	$	(0.00	)		0.0	%
25		15,000		282	$	34.48	$	34.48	$	(0.00	)		0.0	%
26		Underground Service (Dual lamps)
27		1,000		48	$	35.05	$	35.04	$	(0.00	)		0.0	%
28		2,000		112	$	38.74	$	38.74	$	(0.00	)		0.0	%
29		2,500		140	$	40.37	$	40.36	$	(0.00	)		0.0	%
30		4,000		252	$	46.86	$	46.86	$	(0.00	)		0.0	%
31		6,000		314	$	50.46	$	50.46	$	(0.00	)		0.0	%
32		10,000		484	$	60.30	$	60.30	$	(0.00	)		0.0	%
33		15,000		564	$	64.91	$	64.91	$	(0.00	)		0.0	%

Exhibit G

TE - Page 23 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens  or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
34		Company Owned - Fluorescent Street Lighting (a)
35		Overhead Steel Service (Single lamps)
36		6,000		45	$	19.41	$	19.41	$	(0.00	)		0.0	%
37		13,800		94	$	22.26	$	22.26	$	(0.00	)		0.0	%
38		21,800		135	$	24.63	$	24.63	$	(0.00	)		0.0	%
39		43,600		264	$	32.10	$	32.10	$	(0.00	)		0.0	%
40		Underground Service (Single lamps)
41		6,000		45	$	17.67	$	17.67	$	(0.00	)		0.0	%
42		13,800		94	$	20.52	$	20.52	$	(0.00	)		0.0	%
43		21,800		135	$	22.89	$	22.89	$	(0.00	)		0.0	%
44		43,600		264	$	30.36	$	30.36	$	(0.00	)		0.0	%
45		Underground Service (Dual lamps)
46		6,000		90	$	25.80	$	25.80	$	(0.00	)		0.0	%
47		13,800		188	$	31.47	$	31.47	$	(0.00	)		0.0	%
48		21,800		270	$	36.22	$	36.22	$	(0.00	)		0.0	%
49		43,600		528	$	51.19	$	51.18	$	(0.00	)		0.0	%
50		Company Owned - Mercury Street Lighting - Single lamp (c)
51		Overhead Service - Wood Pole
52		175		69	$	9.98	$	9.98	$	(0.00	)		0.0	%
53		250		104	$	12.59	$	12.59	$	(0.00	)		0.0	%
54		400		158	$	17.41	$	17.41	$	(0.00	)		0.0	%
55		700		287	$	30.06	$	30.06	$	(0.00	)		0.0	%
56		1000		380	$	37.88	$	37.88	$	(0.00	)		0.0	%
57		Overhead Service - Metal Pole
58		175		69	$	12.26	$	12.26	$	(0.00	)		0.0	%
59		250		104	$	14.71	$	14.71	$	(0.00	)		0.0	%
60		400		158	$	20.11	$	20.11	$	(0.00	)		0.0	%
61		700		287	$	32.97	$	32.97	$	(0.00	)		0.0	%
62		1000		380	$	40.85	$	40.85	$	(0.00	)		0.0	%
63		Underground Service
64		175		69	$	15.98	$	15.98	$	(0.00	)		0.0	%
65		250		104	$	18.55	$	18.55	$	(0.00	)		0.0	%
66		400		158	$	23.74	$	23.74	$	(0.00	)		0.0	%
67		700		287	$	34.83	$	34.83	$	(0.00	)		0.0	%
68		1000		380	$	42.49	$	42.49	$	(0.00	)		0.0	%

Exhibit G

TE - Page 24 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens  or Watts) (A)			Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
69		Company Owned - Mercury Street Lighting - Dual lamps (c)
70		Overhead Service - Wood Pole
71		175			138	$	18.16	$	18.15	$	(0.00	)		0.0	%
72		400			316	$	32.84	$	32.84	$	(0.00	)		0.0	%
73		Overhead Service - Metal Pole
74		400			316	$	35.50	$	35.50	$	(0.00	)		0.0	%
75		Underground Service
76		250			208	$	29.59	$	29.59	$	(0.00	)		0.0	%
77		400			316	$	38.77	$	38.77	$	(0.00	)		0.0	%
78		Company Owned - High Pressure Sodium Lighting - Single lamps (d)
79		Overhead Service - Wood Pole
80		100			42	$	11.59	$	11.59	$	(0.00	)		0.0	%
81		150			62	$	13.93	$	13.93	$	(0.00	)		0.0	%
82		200			88	$	18.32	$	18.32	$	(0.00	)		0.0	%
83		250			105	$	16.46	$	16.46	$	(0.00	)		0.0	%
84		400			163	$	23.03	$	23.03	$	(0.00	)		0.0	%
85		Overhead Service - Metal Pole
86		100			42	$	13.44	$	13.44	$	(0.00	)		0.0	%
87		150			62	$	15.25	$	15.25	$	(0.00	)		0.0	%
88		200			88	$	20.44	$	20.44	$	(0.00	)		0.0	%
89		250			105	$	20.43	$	20.43	$	(0.00	)		0.0	%
90		400			163	$	26.46	$	26.46	$	(0.00	)		0.0	%
91		Underground Service
92		100			42	$	17.19	$	17.19	$	(0.00	)		0.0	%
93		100 (orn.	)		42	$	28.49	$	28.49	$	(0.00	)		0.0	%
94		150			62	$	16.26	$	16.26	$	(0.00	)		0.0	%
95		200			88	$	24.39	$	24.39	$	(0.00	)		0.0	%
96		250			105	$	22.13	$	22.13	$	(0.00	)		0.0	%
97		250 (dwntwn	)		105	$	37.15	$	37.15	$	(0.00	)		0.0	%
98		400			163	$	27.19	$	27.19	$	(0.00	)		0.0	%
99		400 (dwntwn	)		25	$	46.99	$	46.99	$	(0.00	)		0.0	%

Exhibit G

TE - Page 25 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens  or Watts) (A)			Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Street Lighting Service (Rate STL)
100		Company Owned - High Pressure Sodium Lighting - Dual lamps (d)
101		Overhead Service - Wood Pole
102		100			84	$	22.74	$	22.74	$	(0.00	)		0.0	%
103		150			124	$	26.07	$	26.07	$	(0.00	)		0.0	%
104		250			210	$	33.09	$	33.09	$	(0.00	)		0.0	%
105		Overhead Service - Metal Pole
106		100			84	$	23.63	$	23.63	$	(0.00	)		0.0	%
107		150			124	$	26.51	$	26.51	$	(0.00	)		0.0	%
108		250			210	$	34.50	$	34.50	$	(0.00	)		0.0	%
109		Underground Service
110		100			84	$	27.87	$	27.87	$	(0.00	)		0.0	%
111		150			124	$	33.19	$	33.19	$	(0.00	)		0.0	%
112		250			210	$	40.75	$	40.75	$	(0.00	)		0.0	%
113		400 (davit	)		326	$	41.95	$	41.94	$	(0.00	)		0.0	%
114		Customer Owned - Limited Company Maintenance - All Lamp Types
115		N/A			25	$	1.45	$	1.45	$	(0.00	)		0.0	%
116		N/A			50	$	2.88	$	2.88	$	(0.00	)		0.0	%
117		N/A			75	$	5.45	$	5.45	$	(0.00	)		0.0	%
118		N/A			100	$	8.41	$	8.41	$	(0.00	)		0.0	%
119		N/A			125	$	10.50	$	10.50	$	(0.00	)		0.0	%
120		N/A			150	$	14.54	$	14.54	$	(0.00	)		0.0	%
121		N/A			175	$	17.41	$	17.41	$	(0.00	)		0.0	%
122		N/A			200	$	22.82	$	22.82	$	(0.00	)		0.0	%
123		N/A			225	$	26.11	$	26.11	$	(0.00	)		0.0	%
124		N/A			250	$	14.46	$	14.46	$	(0.00	)		0.0	%
125		N/A			275	$	17.04	$	17.04	$	(0.00	)		0.0	%
126		N/A			300	$	19.97	$	19.97	$	(0.00	)		0.0	%
127		N/A			325	$	22.08	$	22.07	$	(0.00	)		0.0	%
128		N/A			350	$	26.12	$	26.12	$	(0.00	)		0.0	%
129		N/A			375	$	29.01	$	29.01	$	(0.00	)		0.0	%
130		N/A			400	$	34.39	$	34.39	$	(0.00	)		0.0	%

Exhibit G

TE - Page 26 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Bulb Rating (Lumens  or Watts) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Private Outdoor Lighting Service (Rate POL)
1		Mercury Lighting
2		Overhead Service - Wood Pole
3		175		69	$	13.22	$	13.22	$	(0.00	)		0.0	%
4		400		158	$	33.60	$	33.60	$	(0.00	)		0.0	%
5		1,000		380	$	63.01	$	63.01	$	(0.00	)		0.0	%
6		All Other Installations
7		175		69	$	19.81	$	19.81	$	(0.00	)		0.0	%
8		High Pressure Sodium Lighting
9		Overhead Service - Wood Pole
10		200		88	$	17.84	$	17.84	$	(0.00	)		0.0	%
11		400		163	$	32.21	$	32.21	$	(0.00	)		0.0	%

Exhibit G

TE - Page 27 of 27

The Toledo Edison Company

Case No. 12-1465-EL-ATS

Estimated Typical Bills - Comparison (Q2 2012 vs. Q2 2012 w/ Securitization)

Bill Data
Line No.	Level of Demand (kW) (A)		Level of Usage (kWH) (B)		Current Summer Bill ($) (C)		Proposed Summer  Bill ($) (D)		Dollar Increase (D)-(C) (E)			Percent Increase (E)/(C) (F)
Traffic Lighting Schedule (Rate TRF)
1		0		100	$	11.87	$	11.87	$	(0.00	)		0.0	%
2		0		200	$	23.72	$	23.72	$	(0.00	)		0.0	%
3		0		300	$	35.56	$	35.56	$	(0.00	)		0.0	%
4		0		400	$	47.44	$	47.44	$	(0.00	)		0.0	%
5		0		500	$	59.31	$	59.31	$	(0.00	)		0.0	%
6		0		600	$	71.15	$	71.14	$	(0.00	)		0.0	%

EXHIBIT H - PROPOSED TARIFFS SHEETS FOR RIDER PIR

The Cleveland Electric Illuminating Company		Original Sheet X
Cleveland, Ohio	P.U.C.O. No. 13	Page 1 of 1

RIDER PIR

Phase-In Recovery Rider

APPLICABILITY:

Applicable to any customer who receives electric service under the Company’s rate schedules set forth below. The Phase-In Recovery Rider (PIR) charges will apply, by rate schedule, for all kWhs per kWh. This Rider is nonbypassable within the meaning of O.R.C. § 4928.231 and is not avoidable for customers who take electric generation service from a certified supplier.

RATE:

RS	x.xxxx	¢
GS	x.xxxx	¢
GP1	x.xxxx	¢
GP2	x.xxxx	¢
GSU1	x.xxxx	¢
GSU2	x.xxxx	¢
GT1	x.xxxx	¢
GT2	x.xxxx	¢
STL	x.xxxx	¢
TRF	x.xxxx	¢
POL	x.xxxx	¢

PROVISIONS:

1. The charges set forth in this Rider recover costs associated with phase-in recovery bonds issued to securitize costs for which the Company was previously authorized recovery, in accordance with O.R.C. §§ 4928.23 through 4928.2318.

2. The GP2, GSU2, and GT2 PIR charges are applicable to those customers served under a special contract that included a fixed price for service where such fixed price was different than the rate under the otherwise applicable tariff and where the contract term included the period January 1, 2009 through May 31, 2009. The GP1, GSU1, and GT1 PIR charges are applicable to all other customers taking service under these rate schedules.

RIDER UPDATES:

The charges contained in this Rider shall be updated on a semi-annual basis. No later than November 1^st and May 1st of each year, the Company will file with the PUCO a request for approval of the Rider charges which, unless otherwise ordered by the PUCO, shall become effective on a service rendered basis on January 1^st and July 1^st of each year.

Filed pursuant to Order dated                     , in Case No.                     , before

The Public Utilities Commission of Ohio

Issued by:                     , President Effective: [DATE]

EXHIBIT H - PROPOSED TARIFFS SHEETS FOR RIDER PIR

Ohio Edison Company		Original Sheet X
Akron, Ohio	P.U.C.O. No. 13	Page 1 of 1

RIDER PIR

Phase-In Recovery Rider

APPLICABILITY:

Applicable to any customer who receives electric service under the Company’s rate schedules set forth below. The Phase-In Recovery Rider (PIR) charges will apply, by rate schedule, for all kWhs per kWh. This Rider is nonbypassable within the meaning of O.R.C. § 4928.231 and is not avoidable for customers who take electric generation service from a certified supplier.

RATE:

RS	x.xxxx	¢
GS	x.xxxx	¢
GP	x.xxxx	¢
GSU	x.xxxx	¢
GT	x.xxxx	¢
STL	x.xxxx	¢
TRF	x.xxxx	¢
POL	x.xxxx	¢

PROVISIONS:

The charges set forth in this Rider recover costs associated with phase-in recovery bonds issued to securitize costs for which the Company was previously authorized recovery, in accordance with O.R.C. §§ 4928.23 through 4928.2318.

RIDER UPDATES:

The charges contained in this Rider shall be updated on a semi-annual basis. No later than November 1^st and May 1st of each year, the Company will file with the PUCO a request for approval of the Rider charges which, unless otherwise ordered by the PUCO, shall become effective on a service rendered basis on January 1^st and July 1^st of each year.

Filed pursuant to Order dated                     , in Case No.                     , before

The Public Utilities Commission of Ohio

Issued by:                     , President Effective: [DATE]

EXHIBIT H - PROPOSED TARIFFS SHEETS FOR RIDER PIR

The Toledo Edison Company		Original Sheet X
Toledo, Ohio	P.U.C.O. No. 13	Page 1 of 1

RIDER PIR

Phase-In Recovery Rider

APPLICABILITY:

Applicable to any customer who receives electric service under the Company’s rate schedules set forth below. The Phase-In Recovery Rider (PIR) charges will apply, by rate schedule, for all kWhs per kWh. This Rider is nonbypassable within the meaning of O.R.C. § 4928.231 and is not avoidable for customers who take electric generation service from a certified supplier.

RATE:

RS	x.xxxx	¢
GS	x.xxxx	¢
GP	x.xxxx	¢
GSU	x.xxxx	¢
GT	x.xxxx	¢
STL	x.xxxx	¢
TRF	x.xxxx	¢
POL	x.xxxx	¢

PROVISIONS:

The charges set forth in this Rider recover costs associated with phase-in recovery bonds issued to securitize costs for which the Company was previously authorized recovery, in accordance with O.R.C. §§ 4928.23 through 4928.2318.

RIDER UPDATES:

The charges contained in this Rider shall be updated on a semi-annual basis. No later than November 1^st and May 1st of each year, the Company will file with the PUCO a request for approval of the Rider charges which, unless otherwise ordered by the PUCO, shall become effective on a service rendered basis on January 1^st and July 1^st of each year.

Filed pursuant to Order dated                     , in Case No.                     , before

The Public Utilities Commission of Ohio

Issued by:                     , President Effective: [DATE]

EXHIBIT I – PROPOSED BILL FORMAT Page 1 of 2

Bill Based On: Actual Meter Reading February 18, 2012 I20

Billing Period:	Jan 20 to Feb 17, 2012	Account Number: 999 999 999 999
Name	JOHN DOE	Amount Due: $190.67
Service	123 MAIN ST	Due Date: March 05, 2012
Address	ANYTOWN OH 11111

To report an emergency or an outage, call 24 hours a day 1-888-544-4877. For Customer Service, call 1-800-589-3101. For Payment Options, call 1-800-686-9901.

Pay your bill online at www.firstenergycorp.com.

Bill issued by: The Illuminating Company, PO Box 3638, Akron OH 44309-3638

Messages

To avoid a 1.5% Late Payment Charge being added to your bill, please pay the AMOUNT DUE by the Due Date.

Your current PRICE TO COMPARE for bypassable generation and transmission from Ohio Edison is 6.84 cents per kWh. For you to save, a supplier’s price must be lower. To obtain an Apples to Apples comparison of available competitive electric supplier offers, visit the PUCO web site at www.PUCO.ohio.gov.

Your next meter reading is scheduled for Mar 19, 2012.

Earned Income Tax Credit (EITC) is a tax credit for certain lower-income Individuals. For information and to determine if you qualify, call 1-800-829-1040.

If termination of service would be especially dangerous to your health or the health of someone in your household, please contact our office regarding certification of the related medical condition by a licensed physician, physician’s assistant, clinical nurse specialist, certified nurse practitioner, certified nurse-midwife or local board of health physician so that service can be maintained.

For a brochure describing your customer rights and obligations, please call our Customer Service phone number.

Usage History

Month	KWH		Month	KWH
Feb 11		4,033	Aug 11		722
Mar 11		2,947	Sep 11		724
Apr 11		1,674	Oct 11		1,286
May 11		1,293	Nov 11		1,696
Jun 11		1,071	Dec 11		2,422
Jul 11		686	Jan 12		4,378
			Feb 12		3,830

	Feb 11		Feb 12
Average Daily Use (KWH)		144		137
Average Daily Temperature		26		22
Days in Billing Period		28		28
Last 12 Months Use (KWH)				23,857
Average Monthly Use (KWH)				1,988

Account Summary		Amount Due
Previous Balance	232.18
Payments/Adjustments	-232.18
Balance at Billing on Feb 18, 2012	0.00		0.00
The Illuminating Company - Consumption	190.67		190.67
Amount Due by Mar 05, 2012		$	190.67

Usage Information for Meter Number 301027

Feb 17, 2012 KWH Reading (Actual)	92,931
Jan 20, 2012 KWH Reading (Estimate)	89,101
KWH used for 29 day billing period	3,830

Charges from The Illuminating Company

Customer Number 0000000000 0000000000
Rate: Residential Service CE-RSF
Customer Charge		4.00
Distribution Related Component		208.56
Cost Recovery Charges		-3.23
Bypassable Generation and Transmission Related Component		262.08
Residential Distribution Credit		-56.61
Residential Generation Credit		-160.86
Residential Non-Standard Credit		-63.27
Current Consumption Bill Charges	$	190.67

Detail Payment and Adjustment Information

02/04/12 Payment -232.18

JOHN DOE

123 MAIN ST

ANYTOWN OH 11111-9999

Return this part with a check or money order payable to The Illuminating Company

Account Number: 999 999 999 999

Amount Paid
Amount Due	$	190.67
Due Date		Mar 05, 2012

THE ILLUMINATING COMPANY

PO BOX 3638

AKRON OH 44309-3638

04999999999999000000000000000000000000190670000190671

Explanation of Terms

Bypassable Generation and Transmission Related Component – Charges for purchasing power and delivering it through the transmission system. These charges are avoided when switching to a Certified Retail Electric Service provider.

Cost Recovery Charges – Recovers previously incurred costs, including PUCO-approved Phase-In Recovery Charges CEI collects from all customers on behalf of a subsidiary, CEI Funding LLC, which owns the right to impose and collect such charges.

Customer Charge – Monthly charge that offsets costs for billing, meter reading, equipment, and service line maintenance.

Distribution Related Component – Charge for moving electricity over distribution lines to a service location.

Economic Development Component – Charges related to economic development support.

Estimated Reading – On the months we do not read a meter, we calculate the bill based on past electrical usage.

KWH (Kilowatt Hour) – A unit of measure for electricity usage equal to 1,000 watts used for one hour.

Late Payment Charge – A charge added to the bill on balances owed after the Due Date.

Price to Compare (PTC) – The utility’s price per KWH for bypassable generation and transmission; can be compared with the price offered by another supplier.

Residential Distribution Credit – A distribution credit for a qualifying rate applied to all usage over 500 KWH during the winter billing period.

Residential Generation Credit – A credit for a qualifying rate and usage applied to all usage during the billing periods beginning October 31 and ending March 31.

Residential Non-Standard Credit – A generation credit for a qualifying rate applied to all usage over 500 KWH during the winter billing period.

Important Information

If you have billing questions or complaints about your Illuminating Company account or for a written explanation of the Price to Compare:

Call Customer Service at 1-800-589-3101 from Monday–Friday, 8:00 a.m.–6:00 p.m.

Call Payment Options at 1-800-686-9901 from Monday–Friday, 8:00 a.m.–6:00 p.m.

Visit our web site at www.firstenergycorp.com

Write to us at The Illuminating Company, 76 S. Main St., A-RPC. Akron, OH 44308-1890.

For customers who have a hearing or speech impairment and use a text telephone, call the TTY (Teletype) at 1-800-750-0750.

We welcome the opportunity to work with you and will try to answer your questions. If your complaint is not resolved after you have called your electric utility, or for general utility information, residential and business customers may contact the Public Utilities Commission of Ohio for assistance at 1-800-686-7826 (toll free), or for TTY at 1-800-686-1570 (toll free), from 8:00 a.m. to 5:00 p.m. weekdays, or at www.PUCO.ohio.gov.

Residential customers may also contact the Ohio Consumers’ Counsel for assistance with complaints and utility issues at 1-877-742-5622 (toll free) from 8:00 a.m. to 5:00 p.m. weekdays or at www.pickocc.org.

For Energy Assistance: Contact the Home Energy Assistance Program (HEAP) at 1-800-282-0880 (TDD/TTY 1-800-686-1577) Monday – Friday between 8:00 a.m. and 5:00 p.m.

For your protection, all of our employees wear Photo I.D. badges.

Electronic Check Conversion – Your check authorizes us either to make a one-time electronic funds transfer (EFT) from your account or process as a check. If you have questions about this program, or do not wish to participate, call 1-866-283-8081.

To provide a customer meter reading, use the dials provided and enter the reading online at www.firstenergycorp.com/meterreading or by calling 1-800-589-3101. Have the date you took the reading available.

Page 1 of 1

Exhibit J

Structure / Transaction Flow Chart

* Charges may be collected directly (A) and / or indirectly (B)

This foregoing document was electronically filed with the Public Utilities

Commission of Ohio Docketing Information System on

5/3/2012 5:04:55 PM

in

Case No(s). 12-1465-EL-ATS

Summary: Application for Authority to Recover Phase-In Costs and Financing Costs, Issue Phase-In Recovery Bonds and Impose and Collect Phase-In Charges and for Tariff and Bill Format Approvals and for Commission Action on an Expedited Basis

ATTACHMENT A

TO THE MEMORANDUM IN SUPPORT OF APPLICATION FOR REHEARING

OF OHIO EDISON COMPANY, THE CLEVELAND ELECTRIC ILLUMINATING

COMPANY, AND THE TOLEDO EDISON COMPANY

BEFORE

THE PUBLIC UTILITIES COMMISSION OF OHIO

In the Matter of the Joint Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Issue Phase-In-Recovery Bonds and Impose, Charge and Collect Phase-In-Recovery Charges and for Approval of Tariff and Bill Format Changes. ) ) ) ) ) ) ) ) Case No. 12-1465-EL-ATS

FINANCING ORDER

The Commission finds:

I. BACKGROUND

Pursuant to its March 15, 2009, Opinion and Order in Case No. 08-935-EL-SSO (08-935), In the Matter of the Application of Ohio Edison Company, the Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Establish a Standard Service Offer Pursuant to Section 4928.143, Revised Code, in the Form of an Electric Security Plan, its March 24, 2010, Opinion and Order in Case No. 07-1003-EL-ATA, In the Matter of the Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Modify Certain Accounting Practices and for Tariff Approvals, and its August 25, 2010, Opinion and Order in Case No. 10-388-EL-SSO, In the Matter of the Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Establish a Standard Service Offer Pursuant to Section 4928.143, Revised Code, in the Form of an Electric Security Plan, the Commission authorized Ohio Edison Company (Ohio Edison), The Cleveland Electric Illuminating Company (CEI), and The Toledo Edison Company (Toledo Edison) (collectively. Applicants) to defer and recover as regulatory assets certain costs, and associated carrying charges, through a Deferred Fuel Cost Recovery Rider (Rider DFC), related to fuel costs in the 2006-2007 time frame. Specifically, the rider provides for the recovery of uncollected fuel costs for the time frame covering January 1, 2006 through December 31, 2007. Full recovery of the deferred costs associated with this rider is expected to occur by approximately 2035 (Staff Comments at 29).

In its Order of March 25, 2009, in 08-935, the Commission authorized CEI to defer and recover as a regulatory asset the power costs and related carrying charges through a Deferred Generation Cost Recovery Rider (Rider DGC). Specifically, the rider provides for recovery of uncollected purchase power costs for the time frame January 1, 2009, through May 31, 2009. Full recovery of the deferred costs associated with this rider is expected to occur by approximately 2021 (Id.).

12-1465-EL-ATS -2-

In its May 25, 2011, Opinion and Order in Case No. 10-176-EL-ATA, In the Matter of the Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Approval of a New Rider and Revision of an Existing Rider, the Commission authorized Ohio Edison and CEI to defer and recover as a regulatory asset the costs and associated carrying charges associated with the transition of all electric customers toward market pricing beginning in 2011. This recovery is to be accomplished through a Residential Electric Heating Recover Rider (Rider RERl). Full recovery of the deferred costs associated with this rider is expected by occur by approximately June 2014 (Id.).

II. APPLICABLE LAW

The 129th General Assembly passed HB 364 on December 14, 2011, establishing Sections 4928.23 through 4928.2318, Revised Code, (the Act), for the purpose of providing electric distribution utilities (EDUs) with the mechanism to securitize, through the issuance of Phase-In-Recovery Bonds (PIR Bonds), certain costs previously approved by the Commission for deferred recovery (Phase-In Costs). Pursuant to the Act, which was signed into law on December 21, 2011, and became effective on March 22, 2012, EDUs may seek a Financing Order from the Commission to securitize certain types of costs known as deferred assets. These assets include fuel costs, infrastructure costs, and environmental clean-up expenses that the Commission has allowed a utility to defer and collect from customers. Section 4928.231(B), Revised Code, describes the requisite components of the application for a Financing Order.

Section 4928.01(A)(6), Revised Code provides that an EDU means an electric utility that supplies at least retail electric distribution service. Pursuant to Section 4928.231, Revised Code, an EDU may apply to the Commission for a Financing Order that authorizes the following:

(1) The issuance of PIR Bonds, in one or more series to recover uncollected Phase-In Costs;

(2) The imposition, charging, and collection of Phase-In- Recovery Charges, in accordance with the adjustment mechanism, approved by the Commission under Section 4928.232, Revised Code, and consistent with the Commission’s authority regarding governmental aggregation as provided in division (I) of Section 4928.20, Revised Code, to recover both of the following:

(a) Uncollected Phase-In Costs;

(b) Financing costs.

(3) The creation of Phase-In Recovery Property under the Financing Order.

12-1465-EL-ATS -3-

Pursuant to Section 4928.231, Revised Code, the application must include the following:

(1) A description of the uncollected Phase-In Costs that the EDU seeks to recover through the issuance of PIR Bonds;

(2) An estimate of the date each series of PIR Bonds are expected to be issued;

(3) The expected term during which the Phase-In Costs associated with the issuance of each series of PIR Bonds are expected to be recovered;

(4) An estimate of the financing costs, as described in Section 4928.23, Revised Code, associated with the issuance of each series of PIR Bonds;

(5) An estimate of the amount of Phase-In-Recovery Charges necessary to recover the Phase-In Costs and financing costs set forth in the application and the calculation for that estimate, which calculation shall take into account the estimated date or dates of issuance and the estimated principal amount of each series of PIR Bonds;

(6) For Phase-In-Recovery Charges not subject to allocation according to an existing order, a proposed methodology for allocating Phase-In-Recovery Charges among customer classes, including a proposed methodology for allocating such charges to government aggregation customers based upon the proportionate benefit determination made under division (I) of Section 4928.20, Revised Code;

(7) A description of a proposed adjustment mechanism for use as described in division (A)(2) of this Section 4928.31, Revised Code;

(8) A description and valuation of how the issuance of PIR Bonds, including financing costs, will both result in cost savings to customers and mitigate rate impacts to customers when compared to the use of other financing mechanisms or cost-recovery methods available to the EDU; and

(9) Any other information required by the Commission.

Consistent with Section 4928.232(D)(1), Revised Code, the Commission shall not issue a Financing Order under Section 4928.232(C), Revised Code, unless the Commission determines that the Financing Order is consistent with Section 4928.02, Revised Code. Pursuant to Section 4928.232(D)(2), Revised Code, in order to issue a financing order, the Commission must find that the issuance of the PIR Bonds and the Phase-In Recovery Charges authorized by the order results in, consistent with market conditions, both

12-1465-EL-ATS -4-

measurably enhancing cost savings to customers and mitigating impacts to customer as compared with traditional financing mechanisms or traditional cost recovery methods available to the EDU or, if the Commission previously approved a recovery method, as compared with that recovery method.

III. APPLICATION OVERVIEW AND PROCEDURAL HISTORY

On May 3, 2012, as amended on August 16, 2012, Applicants filed a joint application (application) and exhibits, pursuant to Section 4928.231, Revised Code, seeking authority to recover Phase-In Costs and financing costs, issue PIR Bonds, and impose and collect Phase-In-Recovery Charges. Additionally, Applicants seek the requested tariff and bill format approvals. Further, Applicants request that the Commission consider the application on an expedited basis.

Applicants represent that they are Ohio corporations engaged in the distribution of electricity for sale to retail customers in the State of Ohio under rates and tariffs approved by this Commission and are EDUs, pursuant to Section 4928.01(A)(6), Revised Code (Application at 3).

According to Applicants, the Act provides for EDUs to securitize Phase-In Costs through the issuance of PIR Bonds pursuant to a Financing Order issued by the Commission. As contemplated by the application, Applicants request that the Commission authorize the issuance of the PIR Bonds if such issuances result in, consistent with market conditions, measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with the Commission’s previously-approved recovery methods, and are consistent with Section 4928.02, Revised Code (Id.). Applicants represent that these benefits to customers are reflected in a reduction in the expected amount payable by the customers on both a nominal and a net present value basis as compared with existing recovery mechanisms (Id.).

Applicants request that the Commission issue a Financing Order pursuant to the provisions of Section 4928.232(C) and (D)(2) authorizing the issuance of PIR Bonds up to an aggregate principal amount of $555 million in one or more series and in one or more classes/tranches. Specifically, Applicants request that the Commission approve the issuance of PIR Bonds in amounts of $280 million for CEI, $220 million for Ohio Edison and $55 million for Toledo Edison as described in the application. (Application at 3-5.)

Through their application, Applicants propose to establish a new Phase-In-Recovery Rider (Rider PIR) in order to recover securitized costs associated with Applicants’ existing riders (i.e., DFC, DGC, and RER1). Once the Rider PIR is approved and effective, Riders RERl, DGC, and DFC will be withdrawn (Staff Comments at 29). All of these existing riders for which there are uncollected balances constitute Phase-In Costs to be financed through the proposed securitization in this case (Application at 3). Applicants propose to develop a revenue requirement for Rider PIR based on the securitization costs of each Applicant’s special purpose entity (SPE). The allocated

12-1465-EL-ATS -5-

revenue requirement is to be divided by the expected kWh sales in order to arrive at proposed Rider PIR rates. Once approved, the rates will be included in the EDUs tariff and will remain in effect until the next scheduled update (Id.).

Applicants state that the proceeds from the PIR Bonds will: (i) allow full collection of the associated financing costs, and (ii) compensate the Applicants for Phase-In Costs at an effective interest rate (after taking into account upfront and ongoing financing costs) that is lower than each Applicant’s Commission authorized rate of return for such regulatory assets (Id.). Each Applicant intends to use a portion of the proceeds from the issuance of the PIR Bonds to repay existing long-term debt, pay financing costs, and to assist with other corporate purposes (Id. at 4). The current and pro forma capitalization in connection with the issuance of PIR Bonds is presented in Exhibit D to the application (Id.).

Applicants submit that the proposed securitization will benefit customers by providing both cost savings and rate mitigation through reducing the overall cost of the deferred regulatory assets and by reducing the rates customers are currently paying toward their recovery of the deferred assets (Id. at 2). Specifically, Applicants aver the issuance of the PIR Bonds is expected to significantly reduce the carrying charges over the recovery period for these Phase-In Costs, resulting in estimated nominal costs savings to customers of approximately $104 million in the aggregate as shown on Exhibit B to the application (Id.). According to the application, rate mitigation will occur by flowing the cost savings through to customers annually in a manner that yields lower associated rates compared to the traditional cost recovery mechanisms previously approved by the Commission (Id.)

The PIR Bonds are expected to be recorded in accordance with Generally Accepted Accounting Principles (GAAP) primarily as long term debt on the balance sheet of each Applicant’s SPE for financial reporting purposes. Such SPE’s PIR Bonds will also appear on the consolidated balance sheet of the respective parent company in its GAAP financial statements (Id. at 5). Applicants note that the repayment of existing long-term debt by the Applicants may result in improved credit metrics for each of the Applicants as the PIR Bonds are not expected to be classified as debt of the Applicants by rating agencies because they will not be supported by the general revenue streams or collateralized by assets of any Applicant (Id. at 4).

Regarding implementation of the proposed securitization, each individual Applicant will form a SPE, a separate, wholly-owned limited liability company expected to be organized in Delaware, for the purposes of the securitization transaction. Each individual Applicant will then transfer, sell or assign its Phase-In-Recovery Property to its respective SPE. A structure/transaction flow chart has been provided as Exhibit J to the application. Applicants request that the Financing Order confirm the formation of each SPE, the creation of Phase-In-Recovery Property simultaneous with its sale to each SPE, and the issuance by each SPE of PIR Bonds secured by the Phase-In-Recovery Property and other assets and property (subject to possible limited exceptions described in the application) owned by such SPE. (Id. at 16-21.)

12-1465-EL-ATS -6-

In order to accomplish the securitization, each individual Applicant will enter into several agreements with its respective SPE subsidiary, as more fully described in the application. Such agreements will be substantially similar among each Applicant and its respective subsidiary (Id. at 26-28).

Applicants’ estimated deferral balances subject to securitization are provided in Exhibit A to the application. Applicants intend that the PIR Bonds overall scheduled recovery period will not exceed the remaining recovery period under the existing riders (Id. at 7). Applicants explain that different tranches (classes) of bonds with different maturity dates will be issued in order to reduce the average interest costs (Id.).

The issuance date for the PIR Bonds, assuming no material changes in market conditions, is expected to be within 120 days of the Financing Order becoming the Final Financing Order (Id. at 8). For illustrative purposes of the application, the assumed issuance date for the PIR Bonds is December 31, 2012. The indicative transaction structure, including the recommended tranches with initial principal amounts, first scheduled principal payment dates, expected maturity dates, final legal maturity dates, and average lives are provided in Exhibit E to the application (Id.). According to Applicants, at the time of the issuance of the PIR Bonds, certain of these financing costs are likely to vary from such estimated amounts reflected in the application as a result of the market conditions and other factors (e.g., the actual costs of redeeming or otherwise retiring existing long-term debt) (Id.).

Exhibit C to the application reflects an estimate of the corresponding upfront and ongoing financing costs. Applicants currently estimate that the financing costs will be $8.4 million exclusive of debt retirement costs. Applicants recognize that actual financing costs will vary from these estimates due to market conditions. Applicants represent that, promptly upon final determination, a statement setting forth the final upfront financing costs will be provided. (Id. at 8, 9.)

While recognizing that the debt retirement costs may vary significantly in response to market conditions and as a result of the terms of the various debt securities to be retired, each Applicant agrees to retire debt only in a manner that will permit the securitization transaction to achieve enhanced cost savings to customers and mitigate rate impacts for customers (Id. at 9).

Applicants opine that, as reflected in Exhibit B to the application, the issuance of the PIR Bonds measurably enhances cost savings to customers relative to the uncollected Phase-In Recovery Charges under the existing riders (Id. at 10).

In support of the assertions set forth in the application regarding the alleged savings. Applicants represent that:

(1) Ohio Edison customers will have an estimated initial Phase-In-Recovery Charge of 0.3198 cents/kWh resulting in a monthly cost of $3.20 for the typical residential bill (1,000 kWh). If the existing riders continued as

12-1465-EL-ATS -7-

approved, a 1,000 kWh customer would pay on average for Rider DFC, and the Rider RER1, a total monthly charge of 0.3476 cents/kWh resulting in a monthly cost of $3.48.

(2) CEI customers would have an estimated initial Phase-In-Recovery Charge of 0.3851 cents/kWh resulting in a monthly cost of $3.85 for a typical residential bill (1,000 kWh). If the existing riders continued as approved, a 1,000 kWh customer would pay on average for the Deferred Generation Cost Rider, DFC, and RER1, a total monthly charge of 0.4303 cents/kWh resulting in a monthly cost of $4.30.

(3) Toledo Edison customers would have an estimated initial Phase-In-Recovery Charge of 0.0250 cents/kWh resulting in a monthly cost of $0.25 for the typical residential bill (1,000 kWh). If the existing riders continued as approved, a 1,000 kWh customer will pay an average for Rider DFC, a total monthly charge of 0.0257 cents/kWh resulting in a monthly cost of $0.26.

(See Application, Ex. G). Additionally, Applicants note that the Phase-In-Recovery Charges are nonbypassable and that all customers, including those participating in government aggregation will be responsible for repayment of the PIR Bonds (Id. at 4, 14).

As reflected in Exhibit F to the application, Applicants propose a formula-based adjustment mechanism for Phase-In-Recovery Charges whereby an initial update to each applicant’s Riders PIR will occur sometime within the first 12 months of the issuance date for the PIR Bonds. Thereafter, each Applicant’s Rider PIR will be updated semiannually with the exception of the last year of maturity which may require monthly updates for each series of outstanding PIR Bonds (Id. at 12, 35).

Specifically, pursuant to Applicants’ proposal, no later than May 1 and November 1 of each year, the Applicants will file a request for approval of the adjusted Phase-In-Recovery Charges. Review of the adjustments is limited to whether mathematical errors occurred in the application of the formula-based mechanism relating to the appropriate amount of any over- or under-collection of Phase-In-Recovery Charges (Id. at 35). Adjustments may also occur to address increases or decreases in trustee and servicing costs, rating agency surveillance fees, and legal and accounting fees and other ongoing financing costs. Adjustments may also occur related to the difference between estimated and actual costs. These adjustments will take into account revised projections of electricity consumption and customer payment information (Id.).

Proposed tariff sheets reflecting Phase-In-Recovery Charges that are expected to approximate the final tariff charges are included in Exhibit H to the application. According to the application, following the issuance of the Financing Order and upon pricing of the PIR Bonds, the proposed tariff sheets will be updated in accordance with the Commission-approved adjustment mechanism to reflect the actual costs and any other revised

12-1465-EL-ATS -8-

assumptions and filed with the Commission. The existing riders will be reduced to zero on the effective date of the final initial tariff sheets subject to final reconciliation of the remaining deferral balances, if any, which will be maintained on the Applicants’ books subject to carrying charges until full cost recovery occurs.

Finally, Applicants seek approval of a modified bill format that includes language relating to cost recovery charges in the notes section of the bill as provided in Exhibit I to the application.

In order to afford all interested persons the opportunity to provide comments on the application filed by Ohio Edison, CEI, and Toledo Edison, a comment cycle for the filing of initial and reply comments was established pursuant to the attorney examiner Entry of May 25, 2012.

Pursuant to the attorney examiner Entry of June 8, 2012, the automatic approval time frames set forth in Rule 4901:1-10-22(C), Ohio Administrative Code (O.A.C.), were suspended. On June 7, 2012, the office of the Ohio Consumers’ Counsel (OCC) filed a motion to intervene in this case. In support of its motion, OCC points out that, if the requested Phase-In Costs and financing costs are approved, they will be charged to the residential utility customers of the applicants, who are represented by OCC. Therefore, OCC submits that the interests of Ohio residential customers may be adversely affected by this case. As a result, OCC avers that intervention should be granted inasmuch as it satisfies the criteria set forth in Section 4903.221, Revised Code, and Rules 4901-1-11(A) and (B), O.A.C. OCC’s motion to intervene is reasonable and should be granted.

IV. COMMENT SUMMARIES

On June 25, 2012, the Commission Staff (Staff) filed its comments and recommendations. Also on June 25, 2012, OCC filed its comments relative to the application. On July 9, 2012, reply comments were submitted by both Applicants and OCC.

Staff reviewed Applicants’ securitization application and concurs that the financing terms and costs projected by the Applicants appear to be in conformance with general market conditions and are, therefore, reasonable. In particular, Staff states that it applied the following tests and reviews in order to verify whether the proposed securitization transaction satisfied certain conditions: (1) the total revenue test, (2) the present value test, (3) the proceeds test, (4) the debt retirement review, and (5) the bond structuring and pricing review (Staff Comments at 12).

Staff believes that the proposed securitization meets the total revenue test based on the conclusion that total revenue from the Phase-In-Recovery Charges will be less than the total revenue requirements under conventional utility financing methods in the expected case scenarios (Id. at 12,13). Specifically, Staff opines that in the expected case scenario, securitization will result in revenues of about $52 million less for CEI, $44 million less for

12-1465-EL-ATS -9-

Ohio Edison, and $8 million less for Toledo Edison than the revenues under the Commission’s previously-approved recovery methods/conventional financing methods (Id. at 12).

Using the present value test, Staff also concludes that, under the expected case scenario, the securitization will result in tangible and quantifiable benefits to consumers due to the fact that they will pay less than if the same balances were recovered through previously-approved recovery methods/conventional financing methods. In particular, Staff states that CEI retail consumers will pay $27 million less, Ohio Edison retail consumers will pay $17 million less, and Toledo Edison retail consumers will pay $2 million less on a present value basis. (Id. at 12,15.)

Staff believes that the proceeds test will be satisfied when Applicants primarily use the proceeds they receive from the issuance of PIR Bonds in exchange for the sale of the Phase-In-Recovery Property to retire their existing debt securities (Id. at 13, 15, 16). Staff notes that in the case of Toledo Edison, in addition to using a portion of the PIR Bonds proceeds for retiring certain debt securities, the company proposes to use $11 million for other corporate purposes (Id. at 13). In regard to this $11 million, Staff recommends that Toledo Edison consider investing this sum of money for other corporate purposes, including investment in the FirstEnergy Utility Money Pool on a short-term basis, or in other types of short-term investments comparable to the Money Pool, if the interest rates for such investment alternatives are greater than the interest rate that it would realize by investment in the Money Pool (Id. at 22).

Staff has verified the deferral balances as of May 2012, associated with Deferred Generation Costs, Deferred Fuel Costs, and Residential All Electric Credits (Id. at 23). Upon comparing the debt retirement costs as a percentage of the total debt retired by each company (debt retirement review), Staff opines that the debt retirement of CEI and Ohio Edison appears to be reasonable (Id. at 16). With respect to Toledo Edison, Staff notes that the company will be incurring debt retirement cost of about $8 million to retire about $25 million of its existing long-term debt. This equates to 33 percent of the debt proposed to be retired. Despite this high percentage, Staff concludes that, to the extent that Toledo Edison is part of a combined large issuance of the PIR Bonds, it will still be able to realize certain cost savings (Id. at 16, 17). In particular, Staff identifies that the estimated cost savings of the proposed securitization as a result of the reduction in carrying charges over the recovery period for the Phase-In Costs will be $52 million, $44 million, and $8 million for the customers of CEI, Ohio Edison, and Toledo Edison, respectively (Id. at 17).

Regarding the bond structuring and pricing review, Staff points out that this test is intended to ensure that the structuring and pricing of the PIR Bonds results in the lowest Phase-In-Recovery Charges consistent with market conditions and the terms of the Financing Order. Specific to the current application, Staff notes that Applicants have structured the proposed securitization financing to ensure that the PIR Bonds receive the highest bond rating reasonably possible and at the same time obtaining the lowest overall cost of financing through securitized PIR Bonds (Id. at 17, 18). According to Staff, the actual investor market-clearing interest rates for PIR Bonds will be determined through the marketing and price discovery process (Id. at 18).

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Based on the comparison set forth in the application of the effects of the proposed securitization relative to the existing rate-making mechanisms, Staff believes that customers will benefit due to an estimated nominal savings of $104 million in the aggregate (Id. at 25). Staff notes that the recovery period will not exceed the overall recovery period under the existing recovery methodologies approved by the Commission for such regulatory assets. Staff points out that the proposed securitization is expected to mitigate rate impacts to customers by flowing the cost savings through to customers annually in a manner that yields lower associated rates compared to the traditional cost recovery mechanisms previously approved by the Commission (Id.).

For the purpose of ensuring that the actual financing terms and costs incurred by the Applicants reflect the projected financing terms and costs, Staff recommends that the Commission condition its approval of the securitization financing costs of the PIR Bonds at an amount not to exceed 105 percent of the projections provided in the application (Id. at 18). To the extent that the upfront financing costs and/or the ongoing financing costs at the time of pricing the bonds exceed the estimated cost reflected in the application by 105 percent, Staff recommends that Applicants seek specific Commission approval (Id. at 26).

Additionally, Staff believes that fixed interest rates for PIR Bonds, rather than floating interest rates, are necessary in order to ensure that consumers benefit from the proposed securitization (Id. at 21). Further, while recognizing that Applicants require certain flexibility in establishing the terms and conditions for the PIR Bonds, Staff recommends that this flexibility exist only up until the time of issuance and not be available after bond issuance in order to guarantee cost savings to customers and the mitigation of rate impacts (Id. at 23).

Staff proposes that the Commission require Applicants to file an Issuance Advice Letter, including a certification from the individual affected Applicant for each series of PIR Bonds following the determination of the final terms of the bonds and prior to their issuance. Staff recommends that the Issuance Advice Letter be filed with the Commission no later than the end of the first business day after the pricing date for that series of PIR Bonds (Id. at 19).

Staff provided a draft of its proposed Issuance Advice Letter, which incorporates several supporting schedules. According to Staff, through an Issuance Advice Letter, each of the Applicants will provide a confirmation to the Commission that the PIR Bonds have been priced to be sold at the lowest market-clearing rates consistent with the market conditions on the day of pricing (Id. at 18). Staff recommends that the Issuance Advice Letter for each series of PIR Bonds should reflect the final structure of the PIR Bonds including the best estimate of the total ongoing financing costs and actual dollar amount of the initial Phase-In-Recovery Charges and other information specific to the PIR Bonds to be issued (Id. at 19). Staff opines that the initial Phase-In-Recovery Charges and the final

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terms of the PIR Bonds set forth in the Issuance Advice Letters should become effective on the date of the issuance of the PIR Bonds unless prior to noon on the fourth business day after pricing, the Commission issues a Supplemental Financing Order finding that the proposed issuance does not comply with the requirements of the Financing Order (Id. at 20).

Staff agrees with the Applicants’ proposal that each Applicant be authorized to recover its average long-term debt rate, without reduction for accumulated deferred income taxes on its respective SPE’s capitalization amount, as an ongoing financing cost (Id. at 24). Staff also agrees with the proposed Phase-In-Recovery Charges adjustment mechanism process (Id. at 26).

Staff responds to Applicants’ request for the Commission to consider allowing third parties to bill and/or collect any Phase-In-Recovery Charges. In particular, Staff submits that under the current law, Phase-In-Recovery Charges can only be collected by EDUs. Therefore, Staff believes that Applicants’ request is premature and unnecessary at this time inasmuch as third party billing/collection is not permitted under the existing statutes (Id. at 30).

Applicants respond to Staff’s recommendation that the Applicants seek Commission approval if, after the pricing of the PIR Bonds, the upfront financing costs and/or the ongoing financing costs are in excess of 105 percent of the estimated costs. Specifically, Applicants reject Staff’s supposition that relative to the debt retirement portion of the financing costs, an increase in financing costs means that customer savings will be impacted (Applicants’ Reply Comments at 3.) Rather, Applicants submit that an increase in debt retirement costs may be offset by lower interest rates on the PIR Bonds. Under this scenario, Applicants state that debt retirement costs should not adversely impact customer savings in any meaningful way (Id. at 4). Therefore, to the extent that the Commission believes that some form of a cap for debt retirement is necessary, Applicants propose a formula that attempts to tie the actual debt retirement costs and interest rates to the estimated debt retirement costs and interest rates set forth in the application and then provides for a 15-percent adjustment range. Under the Applicants’ proposal, if the customer savings are impacted by more than 15 percent, the Applicants would be obligated to provide Staff with revised exhibits explaining the difference (Id. at 5, 6.)

Regarding Staff’s concerns related to third-party billing agent parameters, Applicants believe that it is important that minimum standards be specified in the Financing Order simply because third-party billing and/or collection could potentially be authorized in the future during the life of the PIR Bonds. As a result of this potentiality, Applicants believe that third-party billing must be addressed in order for the bonds to be considered the highest credit quality instrument and correspondingly bear a low rate of interest and deliver the expected savings.

In support of their position, Applicants note that the PIR Bonds may have an expected maturity in excess of 20 years and that there is no guarantee that third-party

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billing and/or collection will not be implemented during this time frame. While the Commission may take necessary steps to address third-party billing and/or collection in the future, Applicants do not believe that such an approach will be sufficient for the purposes of the bonds that are the subject of this proceeding. Additionally, Applicants posit that the proposed minimum standards are similar to those typically found in financing orders issued in jurisdictions where third-party billing and/or collection have been permitted. To the extent that the State of Ohio or the Commission ultimately permits third-party billing and/or collection in the future, Applicants opine that standards similar to that proposed would be incorporated (Id. at 6-9.)

Applicants also respond to Staff’s proposed requirement that the Issuance Advice Letter include a certification to be made by the Applicants that the structuring and pricing of the PIR Bonds will result in the lowest PIR Bond charges consistent with market conditions and the terms of the Financing Order. In particular, Applicants believe that the imposition of such a standard is not required by the Act and is beyond the scope of the Commission’s designated authority and may serve to undermine the viability of securitization (Id. at 10).

Applicants have provided revisions to the Issuance Advice Letter drafted by Staff in order to resolve any discrepancies between such letter and either the requirements of the Act or the Applicants’ modeling. Applicants assert that the submission of any Issuance Advice Letter to the Commission subsequent to pricing should only be used to confirm consistency with the form of the Issuance Advice Letter approved in the Final Financing Order and to confirm the arithmetical accuracy of the information included therein (Id. at 13,14.)

Applicants request that Staff’s proposed time frame for review of the Issuance Advice Letter be shortened from four days to the next business day after submission (Id. at 14). Applicants request that the Financing Order state that if the Commission does not act within the prescribed time frame, the Issuance Advice Letter will be deemed accepted (Id.). Finally, Applicants concur with Staff’s recommendation that the PIR Bonds be issued with fixed rates and not rely upon floating rates (Id. at 15).

OCC submits that pursuant to Section 4928.232(D)(1), Revised Code, the Commission must find that the issuance of a Financing Order is consistent with the State of Ohio’s electric services policies as set forth in Section 4928.02, Revised Code. Specifically, OCC advocates that when considering the issue of consistency with the State’s policies, the following factors should be liberally applied when reviewing and approving the terms and conditions of the Financing Order in this proceeding:

(1) The availability of adequate, reliable, safe, efficient, nondiscriminatory, and reasonably priced electric service;

(2) The protection of at-risk populations; and

(3) The facilitation of the State’s effectiveness in the global economy.

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(OCC Initial Comments at 10).

To the extent that a Financing Order is consistent with the State of Ohio’s electric services policies, OCC asserts that, in accordance with Section 4928.232(D)(2), Revised Code, the Commission must next determine whether the issuance of the PIR Bonds and the authorization of the Phase-In-Recovery Charges are consistent with market conditions, and will result in both measurably enhancing cost savings to customers and mitigate customer rate impacts as compared with traditional financing mechanisms or traditional cost-recovery methods available to the EDU. (Id. at 9-11.)

As part of the Commission’s review process, OCC notes that, currently, there are no guidelines in place regarding the upfront and ongoing financing costs, the hiring and use of an investment banking firm, and the marketing and pricing of PIR Bonds. In regard to this concern, OCC recommends that the Commission establish certain guidelines and/or benchmarks, such as the hiring of an independent financial advisor, in order to ensure that the securitization measurably enhances savings for customers. (Id. at 11.)

With respect to the issue of the selection of an investment banking firm to provide advice and service regarding the issuance of the PIR Bonds, OCC considers this selection to be a key component of the securitization process since the banking firm will be the primary financial advisor to the Applicants throughout the securitization process. Despite this important function, OCC submits that the application provides no information regarding the identity and expertise of the selected firm, the process used in the selection process, the tasks to be performed, or the compensation structure for the services provided. (Id. at 20.) Additionally, OCC seeks information in order to determine if the fees to be charged by the selected firm and the other upfront financing costs are reasonable and comparable to the industry norm (Id.). OCC believes that such information is necessary in order to determine if the application meets the statutory requirements of advancing state electric policies and whether the proposed securitization will measurably enhance cost savings to customers and mitigate customer rate impact (Id.).

OCC also asserts that the Commission should retain its own independent financial advisor in order to review the reasonableness of the Applicants’ proposal, including the financing costs that customers will be asked to pay. OCC also believes that the Commission should hire and independent financial advisor in order to review whether the estimated debt retirement costs are reasonable and if the costs conform to terms and conditions of debt securities commonly accepted in the financial industry (OCC Initial Comments at 24.)

OCC expresses concern regarding the proposed use of a privately negotiated sale of the PIR Bonds rather than via an open auction or other type of competitive bid process (Id.). OCC believes that the use of a competitive process to price and sell PIR Bonds may be desirable for the purpose of attracting more buyers and a lower interest rate. (Id. at 21, 22.)

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OCC questions the proposed transaction structure for the PIR Bonds. Citing to the application, OCC notes that in order to reduce the average interest cost, the PIR Bonds will likely be issued in the following three classes (tranches):

(1) $122,000,000 initial principal amount with a three-year maturity and projected interest rate of 0.62 percent.

(2) $92,400,000 initial principal amount with a seven-year maturity and projected interest rate of 1.4 percent.

(3) $270,397,439 initial principal amount with a 20.5-year maturity and projected interest rate of 3.22 percent.

Specifically, OCC raises concern regarding the third proposed issuance, which constitutes 55.78 percent of the total bonds to be issued. OCC asserts that Applicants have not provided a rationale for this particular transaction structure. OCC believes that Applicants should be required to present alternative transaction structures for review and comparison of the projected impacts on customers. In particular, OCC recommends that Applicants consider relying less on PIR Bonds with long expected maturity and, instead, focus on PIR Bonds with a shorter maturity in order to reduce the interest costs for customers. (Id. at 22, 23.)

OCC expresses concern regarding the upfront financing costs related to the application. Specifically, OCC notes that the upfront financing costs of approximately $48.5 million are even more than the estimated net present value of total savings in the amount of $46.9 million. In its opinion, OCC believes that, while providing little detailed supporting information, Applicants are requesting customers to pay a very substantial prepayment penalty to retire existing debt securities that were used to finance the deferred costs. OCC notes that, since this is the first securitization case to come before the Commission, there is little benchmark information for the Commission to rely upon other than the information included in the application. (Id. at 23.)

Regarding debt retirement expenses, OCC recommends that the Commission order the submission of additional information in support of the estimated costs (OCC Initial Comments at 24). Specifically, OCC disagrees with Staff’s determination that the debt retirement costs are reasonable for Ohio Edison and Toledo Edison. To illustrate its concern, OCC highlights the fact that there are significant variations in the percentage of debt retirement costs as a percentage of debt retired (i.e., 5 percent for CEI, 12 percent for Ohio Edison, and 33 percent for Toledo Edison) and that Applicants have failed to provide a valid explanation for the differences (Id. at 8, 9).

OCC opines that the same percentage should be utilized as the applicable cap since the debt retirement of the three EDUs will taking place during the same time period and the debt securities should have similar conditions related to debt retirement since they were all issued by the three EDUs with similar financial ratings and controlled by the same parent (OCC Reply Comments at 8, 9). In particular, OCC believes that a cap of 8 percent should

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be utilized for the purpose of this proceeding due to the fact that it represents a 60 percent additional allowance on the baseline number of 5 percent (Id. at 9). Based on this percentage, OCC proposes that the debt retirement costs for Ohio Edison should be capped at $13,221,169, instead of the estimated $19,910,070 in the application. Additionally, OCC recommends that the debt retirement costs for Toledo Edison should be capped at $2,038,9971 instead of the $8,410,757 estimated in the application (Id.).

While OCC agrees with Staff that the Applicants should seek Commission approval of the securitization structure if the upfront and ongoing financing costs exceed a threshold of the estimated costs by 105 percent, it does not agree that the amount of the estimated financing costs provided in Exhibit C to the application should be used as the baseline since Applicants failed to provide supporting documents, reports, or studies to validate these estimated costs (OCC Reply Comments at 7). Additionally, OCC questions whether Staff is proposing a threshold of 105 percent or a threshold of 205 percent which is based on the 100 percent of the baseline plus an allowed variance of 105 percent. In support of its position, OCC notes that 205 percent of the estimated financing cost of $48,465,099 is $99,5353,453, which would potentially diminish the net savings of $46.9 million resulting from the proposed securitization (Id. at 6, 7).

OCC recommends that the Commission establish caps on certain upfront expense items (i.e., Accountant’s/Auditor Fees, Fee for Applicants’ Structure Advisor, Legal Fees and Expenses for Applicants’/Issuer’s Counsel, Legal Fees and Expenses for Trustee’s Counsel, Legal Fees and Expenses for Underwriter’s Counsel, Service Set-up Costs, and Miscellaneous Costs) based on the typical or average expenses incurred by Applicants for debt securities over the past five to ten years. OCC suggests that the Commission also take into consideration caps established in similar securitization transactions in other states. (Id. at 24.) To the extent that expenses exceed the established caps, OCC recommends that Applicants be responsible for the additional amounts due to the fact that they receive many benefits from the securitization of the regulatory assets (Id.).

OCC does not object to Toledo Edison’s decision to issue PIR Bonds in an amount greater than sum of the amount retired, debt retirement costs and insurance expense and using the funds for general corporate purposes. However, OCC does object to Staff’s proposal that Toledo Edison consider investing the estimated $11 million in “extra proceeds” from the PIR Bonds into other types of short-term investments comparable to First Energy Money Pool if the interest rates for such investment alternatives are greater than the interest that would be realized by investment in the Money Pool (Id. at 10).

Additionally, OCC asserts that since only part of the funds obtained through the securitization is for refinancing of deferred costs and the remainder are “extra proceeds,” it is only reasonable that just a portion of the issuance expense and debt retirement costs associated with the securitization be recovered through a Phase-In-Recovery Charge to Toledo Edison’s customers (Id. at 10). Based on its contention that that Toledo Edison will be utilizing 70 percent of the bond proceeds for debt retirement purposes and 30 percent for other corporate purposes, OCC believes that an issuance expense of $941,755 and a

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debt retirement cost of $8,410,757 should be allocated to Toledo Edison. Notwithstanding these determinations, OCC then recommends that Toledo Edison’s debt retirement cost be capped at $2,038,971, as discussed supra. (Id. at 10, 11.)

OCC supports Staff’s recommendation that the PIR Bonds should only be issued with fixed interest rates. In support of its position, OCC notes that “the purposes of PIR Bonds are to ensure that customers achieve a guaranteed level of savings in financing costs, to permit EDUs to collect the deferred costs immediately, and to assure that bond investors are not exposed to any risks greater than those associated with the highest-rated bonds” (OCC Reply Comments at 5). Since there is no guarantee that Applicants will save interest costs by issuing bonds with floating interest rates, OCC believes that PIR Bonds should only be issued with fixed interest rates (Id.). Similarly, OCC concurs with Staff’s recommendation that flexibility in establishing the terms and conditions for the PIR Bonds to accommodate changes in market conditions should only be permitted prior to the issuance of the bonds. According to OCC, such a condition will help ensure a guarantee of measurably enhanced savings to customers (Id. at 6).

Applicants note that, despite filing comments in opposition to the request in this case, OCC never asserts that customers will not realize measurably enhanced cost savings under the proposed securitization or that the statutory standards have not been met. In response to OCC’s concerns regarding upfront financing costs, Applicants represent that the estimated fees included in the application are reasonable estimated levels for the proposed securitization transactions and that the fees to be actually included in the Rider PIR will reflect the actual financing costs incurred by the Applicants for services needed to accomplish the issuance and administration of the PIR Bonds (Applicants’ Reply Comments at 16).

Applicants explain that the calculation of debt retirement costs will be based on: (1) the current interest rates on U.S. Treasury securities with a similar remaining maturity as the debt to be redeemed, (2) interest rates on existing debt to be redeemed, and (3) the maturity period remaining on the existing debt to be redeemed. They may also seek to utilize a public tender offer for the purposes of retiring existing debt (Id. at 17). While OCC believes that the Applicants should absorb part of the costs incurred to undertake the securitization transaction, Applicants contend that such an approach is not consistent with the Act. Therefore, Applicants assert that they should not be forced to absorb any the financing costs, especially in light of the fact that the proposed transaction is projected to save customers in excess of $100 million in the aggregate (Id. at 18). Applicants note that by retiring existing debt, both the Applicants and their customers benefit due the reduction in borrowing costs (Id. at 18).

Applicant’s reject OCC’s proposal that the Commission consider the use of a competitive bid process to market and price PIR Bonds rather than relying on negotiated sales to investors, coordinated through underwriters, initial purchasers or placement agents. In particular, Applicants contend that negotiated sales are preferred and the most frequent due to the very fact that it involves issuers and underwriters, and investors in order to price

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the transaction at a level where there is expected to be adequate demand for the bonds to be fully distributed to investors. (Id. at 19.) In support of its position, Applicants represent that the selected structuring advisor in connection with this securitization transaction has represented that “obtaining the lowest interest rate is more likely to be obtained through a broad, transparent marketing process to a broad range of institutional investors, with the full cooperation and support of the Applicants in explaining the securities, rather than a competitive bid process where bids will be based upon underwriters’ subjective judgments on market clearing price” (Id. at 20).

Applicants note that the underwriters, initial purchasers or placement agents have not yet been selected with respect to this securitization transaction (Id.). Regarding OCC’s concerns regarding the identity of the structuring advisor selected for this securitization transaction, Applicants state that Goldman Sachs, a recognized leader in the field of securitization transactions, has been selected (Id. at 21). Applicants represent that Goldman Sachs has served as an underwriter on over $24 billion worth of electric utility securitizations and advised on the structuring of several such transactions, including two completed by a utility company affiliated with the Applicants (Id. at 21).

V. DISCUSSION AND CONCLUSIONS

This case represents the first time that the Commission is considering an application filed by an EDU pursuant to the Act, seeking a financing order for the issuance of PIR Bonds and to recover uncollected Phase-In Costs. Applicants are EDUs pursuant to Section 4928.01(A)(6), Revised Code, and, therefore, have the proper standing to have their application in this proceeding considered by the Commission. Prior to setting forth the actual statutorily required provisions of the Financing Order pursuant to Section 4928.232, Revised Code, the Commission will first resolve the disputed issues as raised in the context of the parties’ comments in this case.

Based on the comment summaries supra, the first issue in dispute between the parties relates to the Staff’s recommendation that the Commission condition its approval of the Applicants’ securitization financing costs of the PIR Bonds at an amount not to exceed 105 percent of the projections provided in the application (Staff Comments at 18).

As noted above, Applicants focus on the issue of debt retirement costs and assert that while an increase in debt retirement costs may occur, it will be offset by the lower interest rates on the PIR Bonds. Applicants then propose a formula that attempts to tie the actual debt retirement costs and interest rates to the estimated debt retirement costs and interest rates set forth in the application. Under the Applicants’ proposal, if the customer savings are impacted by more than 15 percent, Applicants would be obligated to provide Staff with revised exhibits (Applicants’ Reply Comments at 3-6).

OCC is unclear as to the actual threshold being proposed by Staff. Additionally, regardless of the threshold to be utilized, OCC does not believe that the estimated financing costs provided in Exhibit C of the application should be relied upon as the applicable baseline (OCC Reply Comments at 6, 7).

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While the Commission agrees with the conceptual framework proposed by Staff, we recognize the confusion identified by OCC regarding the intended manner by which the threshold is to be implemented. Therefore, the Commission clarifies that the actual financing costs (both up front and ongoing) of the PIR Bonds, excluding debt retirement costs, cannot exceed the estimated financing costs identified in the application by more than 5 percent. With respect to the issue of debt retirement costs, the Commission agrees with Applicants that these costs should be afforded more flexibility. Therefore, the actual costs related to debt retirement cannot exceed the estimated retirement costs identified in the application by more than 15 percent. While OCC questions the reasonableness of the estimated financing costs identified on Exhibit C to the application, the Commission agrees with the Staff’s determination that the financing costs projected by the Applicants appear to be in conformance with general market conditions and, therefore, are reasonable.

The next dispute between the parties relates to the Applicants’ request that the Commission consider allowing third parties to bill and/or collect any Phase-In-Recovery Charges. As discussed supra, Applicants believe that it is important that minimum standards be specified in the Financing Order due to the fact that third-party billing and/or collection could be potentially authorized in the future during the life of the PIR Bonds. Based on this potentiality, Applicants assert that third-party billing must be addressed in order for the bonds to be considered the highest credit quality instrument and correspondingly bear a low rate of interest and deliver the expected savings (Applicants’ Comments at 6-9).

Applicants also explain that the establishment of minimum standards is important in order to minimize the potential risk to customers of any defaults by third parties that may in the future bill and collect the Phase-In-Recovery Charges. Specifically, Applicants opine that, in the absence of minimum standards, if a third party failed to properly remit collected charges due to a bankruptcy, the bondholders could suffer a shortfall and the shortfall would be recovered from all customers through an adjustment to future Phase-In-Recovery Charges in the true-up mechanism. (Id. at 8.)

In response to Applicants’ desire for the inclusion of language pertaining to the billing and/or collecting of Phase-In-Recovery Charges by third parties, Staff points out that currently Phase-In-Recovery Charges can only be collected by EDUs. Therefore, Staff believes that Applicants’ request is premature and unnecessary (Staff Comments at 30).

The Commission notes that there is no dispute that competitive third-party billing/collection is not currently permitted by the Commission’s rules. However, if the Commission, in the future, establishes rules relating to competitive third-party billing/collection, the Commission will take the necessary steps to ensure nonbypassability, both to preserve the high credit quality of the PIR Bonds and to minimize the likelihood that any defaults by any such third party result in an increase in

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charges thereafter billed to all customers. Further, any such third-party billing/collection costs shall be included as part of the recoverable, ongoing costs as contemplated by the application and the Act, or as part of any other rates and charges, as appropriate.

The next issue in dispute concerns Staff’s proposed requirement that the Issuance Advice Letter include a certification by the Applicants that the structuring and pricing of the PIR Bonds will result in the lowest Phase-In-Recovery Charges consistent with market conditions and the terms of the Financing Order. In particular, Applicants believe that the imposition of such a standard is not required by the applicable statute and is beyond the scope of the Commission’s designated authority and may serve to undermine the viability of securitization (Id. at 10).

Based on their reading of Section 4928.232(D)(2), Revised Code, Applicants assert that the relevant statutory standard does not focus on whether the Phase-In-Recovery Charges are the lowest possible but, rather, relates to whether cost savings are measurably enhanced as compared to existing recovery methods. (Id. at 10, 11.) Applicants submit that the “lowest cost” standard advocated by Staff is an impossible standard to satisfy inasmuch as there may always be something else out there that theoretically could have been less expensive (Id. at 12).

The Commission agrees with Applicants that, consistent with the criteria forth in Section 4928.32(D)(2), Revised Code, the Commission must determine whether

the issuance of the phase-in-recovery bonds and the phase-in-recovery charges authorized by the order results in, consistent with market conditions, both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost-recovery methods available to the electric distribution utility or, if the Commission previously approved a recovery method, as compared with that recovery method.

[Section 4928.32(D)(2), Revised Code]

A review of this statutory language reflects the absence of a specific required demonstration that Applicants certify that they have obtained the lowest Phase-In-Recovery Charges. Rather, the focus is on whether the issuance of the PIR Bonds will result in both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost-recovery methods available to the EDU. Specifically, as part of this showing, the Commission expects that the EDU establish that the PIR Bonds reflect a market price of most recently issued comparable securities that demonstrates both measurably enhancing cost savings and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost-recovery methods available to the EDU. Therefore, the requisite terms of the certification (the Certification) shall be amended consistent with this determination.

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Another disputed issue related to the filing of the Issuance Advice Letter concerns the effective date of the initial Phase-In-Recovery Charges and the final terms of the PIR Bonds as set forth in the Issuance Advice Letter. Staff proposes that the terms and charges in the Issuance Advice Letter will become effective on the date of issuance of the PIR Bonds unless prior to noon on the fourth business day after pricing, the Commission issues a Supplemental Financing Order finding that the proposed issuance does not comply with the requirements of the Financing Order. (Staff Comments at 19, 20.)

Applicants request that the Staff’s proposed time frame for review of the Issuance Advice Letter be shortened from four days to the next business day. Applicants contend that the shortened time frame substantially reduces the risk of an unexpected obstacle in the closing process and allows the parties to focus on getting the transaction consummated. (Applicants’ Reply Comments at 14.) Further, Applicants assert that the submission of an Issuance Advice Letter to the Commission subsequent to pricing should only be used to confirm consistency with the form of the Issuance Advice Letter approved in the final Financing Order and to confirm the arithmetical accuracy of the information included therein. Applicants highlight that the Commission’s review of the Issuance Advice Letter should not extend beyond these parameters in order avoid introducing a level of risk and uncertainty to the bond pricing process that would be difficult for the Applicants, the underwriters and prospective investors to manage. (Id. at 13, 14.)

The Commission determines that for each series of PIR Bonds, each Applicant shall file a completed Issuance Advice Letter in the form attached hereto no later than the first business day following the pricing date for that series of PIR Bonds. The Commission will be provided four complete business days following the filing of the Issuance Advice Letter to review the Issuance Advice Letter. The Commission may stop the issuance of the PIR Bonds through the issuance of an order if the Applicants fail to make the requisite demonstration pursuant Section 4928.235(C)(2), Revised Code. If the Commission does not act within this specified time frame, the terms and charges will become effective at the end of the fourth business day following the filing of the Issuance Advice Letter. This time frame will provide an adequate amount of time for the Commission to complete its review of the Issuance Advice Letter for both form and substance and take the appropriate action if necessary consistent with the Act. This determination is reasonable especially in light of the irrevocability of the Financing Order once it becomes final in accordance with Section 4928.235(B), Revised Code.

Regarding OCC’s concerns regarding the lack of information related to the identity and the expertise of investment banking firm selected by Applicants to provide advice and service regarding the issuance of the PIR Bonds, the Commission notes that Applicants have now identified Goldman Sachs as the selected structuring advisor. The Commission finds that this selection is reasonable based on Goldman Sachs’ experience in the field of securitization as described in the application. With respect to OCC’s request that the Commission hire an independent financial advisor to assist in the review of the reasonableness of the Applicants’ proposal, including a determination of whether the estimated debt retirement costs are reasonable and if the costs conform to terms and conditions of debt securities commonly accepted in the financial industry, the Commission finds that such upfront action is not appropriate at this time.

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The Commission next considers OCC’s stated concern that over 55 percent of the total amount of the proposed bonds to be issued are included in one of the three tranches and that no alternative bond issuance scenario has been offered for the Commission’s consideration. The Commission highlights that all of the transactions contemplated by the Act are to be market driven. Applicants have set forth an actual proposal containing terms which they believe the market will currently bear. The Commission has analyzed the application to ensure that, based on the underlying terms and provisions, it satisfies the Act.

Regarding OCC’s concerns the proposed upfront financing costs of $48.5 million, the Commission first notes that this amount simply represents the estimated upfront financing costs. The actual dollar amount may actually be less than the estimated level. The Commission also points out that the estimated financing costs include approximately $40 million in debt retirement costs. Although, on their face, these are significant dollar amounts, the Commission’s primary focus is on the ultimate net savings that will be experienced as a result of the proposed securitization and on determining whether this savings constitutes measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost-recovery methods available to the EDU or, if the Commission previously approved a recovery method, as compared with that recovery method.

In order to provide measurably enhanced savings, Applicants will undertake the retirement of a portion of their existing long-term obligations. By the very terms of these existing financial instruments, early retirement costs must be incurred. Based on a review of the upfront financing costs set forth in the application, the Commission finds that these costs are reasonable and allow for measurably enhancing cost savings to customers and mitigating rate impacts to customers.

As discussed supra, OCC’s requests either the establishment of benchmarks and/or guidelines relative to the expenses and fees associated with the securitization process or in the absence of such reference points, the establishment of caps on certain expenses. In regard to this request, the Commission finds that the review of each securitization application requires its own independent analysis based on the existing market conditions and costs at a specific point and time. Therefore, the use of established benchmarks/guidelines and caps as proposed by OCC does not appear to be very conducive to the requisite review needed to be performed by the Commission. Additionally, in lieu of the caps proposed by OCC, the Commission, as noted supra, has adopted a five-percent adjustment factor to serve as the cap on the approved costs.

As noted supra, OCC believes that a cap of 8 percent should be used as the percentage of debt retirement costs to the amount of debt retired for this proceeding for all three Applicants (OCC Reply Comments at 9). OCC believes that this amount is

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appropriate since it reflects a 60 percent additional allowance on the lowest percentage of the three Applicants (i.e., CEI’s 5 percent compared with Ohio Edison’s 12 percent and Toledo Edison’s 33 percent). In support of its position, OCC focuses on the fact that the debt securities for the three Applicants are expected to be retired at the same time and should have similar terms and conditions regarding debt retirement because they are issued with similar financial ratings and are controlled by the same parent company.

Upon a review of OCC’s arguments, the Commission finds that OCC’s request to establish a cap of 8 percent for each of the Applicants should be denied. As discussed supra, regarding the issue of establishing benchmarks and caps, the Commission will review each request on a company-specific basis and will not establish generic levels to be applied across the three Applicants in this case. Additionally, while OCC opines that the debt securities should have similar terms and conditions; this is simply a general hypothesis with no company-specific analysis provided. Rather, based on the company-specific information provided in the application and considering the benefits of the application in its entirety, the Commission finds the indicated retirement costs for each Applicant to be reasonable.

As discussed supra, while OCC does not object to Toledo Edison’s request to issue PIR Bonds in an amount greater than the sum of the amounts of debt retired, debt retirement and issuance expense, it does not support Staff’s recommendation that Applicants be permitted to invest the additional $11 million in other types of short-term investments comparable to the FirstEnergy Money Pool. Additionally, OCC submits that since only a portion of the funds obtained through the proposed securitization is for the refinancing of Toledo Edison’s deferred costs, only a portion of the issuance expense and debt retirement costs associated with the securitization should be recovered through the Phase-In-Recovery Charges to customers. (OCC Reply Comments at 10.)

The Commission determines that OCC’s objections regarding this issue should be denied. First, the Commission notes that OCC has failed to provide any rationale regarding its objection to the Applicant investment of the additional $11 million. Additionally, while OCC is correct that only a portion of the funds obtained through the proposed securitization is for the refinancing of Toledo Edison’s deferred costs, this fact does not preclude the Applicant’s ability to fully recover for the related issuance and debt retirement expenses. In support of this conclusion, the Commission notes that the company would be entitled to the recovery of the $11 million in deferred assets regardless of whether the PIR Bonds are issued or not. Based on the record, the required recovery amount will be reduced through the securitization even when taking into account the issuance and debt retirement expense for the $11 million (See Application, Exhibit C). Consistent with market conditions, this reduction results in both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional recovery methods. Finally, the Commission notes that the inclusion of the $11 million as part of the securitization will provide volumetric benefit for the purpose of bringing the proposed offering to market.

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Finally, the Commission addresses OCC’s request that the Commission consider the use of an open and competitive process for the sale of the PIR Bonds rather than through a negotiated sale to investors. As discussed supra, according to Applicants, the selected structuring advisor (Goldman Sachs) in connection with this securitization transaction has represented that “obtaining the lowest interest rate is more likely to be obtained through a broad, transparent marketing process to a broad range of institutional investors, with the full cooperation and support of the Applicants in explaining the securities, rather than a competitive bid process where bids will be based upon underwriters’ subjective judgments on market clearing price.” (Id. at 20.)

In regard to this issue, the Commission notes that it expects Applicants to rely on Goldman Sachs, as the structuring advisor, to structure the PIR Bond offering in such a manner in order to obtain the most optimal rates, terms and conditions for the purpose of satisfying the requisite conditions set forth in the Act. Additionally, the Commission notes that upon the filing of the Issuance Advice Letter, including the Certification, and consistent with the Financing Order, it will ultimately have the ability to review the reasonableness of the results from this approach.

VI. TERMS AND CONDITIONS

Pursuant to Section 4928.232(E)(1)-(7), Revised Code, the Commission must include the following components in a Financing Order:

(1) A determination of the maximum amount and a description of the Phase-In Costs that may be recovered through PIR Bonds issued under the Financing Order;

(2) A description of Phase-In-Recovery Property, the creation of which is authorized by the Financing Order;

(3) A description of the financing costs that may be recovered through Phase-In-Recovery Charges and the period over which those costs may be recovered;

(4) For Phase-In-Recovery Charges not subject to allocation according to an existing order, a description of the methodology and calculation for allocating Phase-In-Recovery Charges among customer classes, including the allocation of such charges, if any, to governmental aggregation customers based upon the proportionate benefit determination made under division (I) of Section 4928.20, Revised Code;

(5) A description of the adjustment mechanism for use in the imposition, charging, and collection of the Phase-In-Recovery Charges;

(6) The maximum term of the PIR Bonds; and

(7) Any other provisions the Commission considers appropriate to ensure the full and timely imposition, charging, collection, and adjustment, pursuant to an approved adjustment mechanism, of the Phase-In-Recovery Charges described in divisions (E)(3) to (5) of this section.

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Additionally, the Commission recognizes that in order for investors to be willing to accept a relatively lower interest rate for the PIR Bonds, the bonds must have relatively low associated credit risk. In order to accomplish this objective and satisfy specific statutory requirements, there are a number of expressed regulatory authorizations that are incorporated in the Financing Order, including those related to (a) Irrevocability; (b) State pledge; (c) True sale; (d) Successor utility; (e) Security interest; (f) Bankruptcy of the electric distribution utility; (g) Non-bypassability; and (i) Validity of the Financing Order; and (j) Treatment of Phase-In-Recovery Charges.

Subject to the determinations set forth above, the Commission finds that the proposed securitization transactions are consistent with Section 4928.02, Revised Code, and result in, consistent with market conditions, both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost-recovery methods available to EDUs or compared with previously approved recovery methods. In support of these determinations, the Commission finds that a review of Exhibits A, B, and E to the application reflects that the proposed securitization will result in a reduction in the reimbursement period for the deferred expenses and at the same time reduce the applicable interest rate; eventually netting a cost savings of approximately $104,000,000. Additionally, the Commission relies upon the Applicants’ representation that pursuant to the proposed securitization, it is expected that the following should occur:

(1) CEI customers will have an estimated Phase-In-Recovery Charge of 0.3851 cents/kWh resulting in a monthly cost of $3.85 for the typical residential bill compared a monthly cost of $4.30 under the existing riders.

(2) Ohio Edison customers will have an estimated Phase-In-Recovery Charge of .3198 cents/kWh resulting in a monthly cost of $3.20 for the typical residential bill compared to a monthly cost of $3.48 under the existing riders.

(3) Toledo Edison customers will have an estimated Phase-In-Recovery Charge of .0250 cents/kWh resulting in a monthly cost of $.25 for the typical residential bill compared to the monthly cost of $.26 under the existing riders.

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(Application at 11.)

Specifically, in accordance with the application, and together with the determinations set forth in this Financing Order, the Commission authorizes the following:

A. Formation of SPEs and Creation and Transfer of Phase-In-Recovery Property.

(1) Each Applicant is authorized to form a separate, wholly-owned limited liability company as a SPE for the purposes of effectuating the respective securitization transactions described in the application. Each SPE is expected to be organized in Delaware. Upon formation of its respective SPE, each Applicant is then authorized to then transfer, sell, or assign its Phase-In-Recovery Property to such entity. Each SPE will be an “Assignee” of Phase-In-Recovery Property as defined in Section 4928.23(B), Revised Code, and as provided for in Section 4928.234(A), Revised Code.

(2) Consistent with the representations set forth in the application, each SPE will be a bankruptcy remote, special purpose limited liability company, in that its activities generally will be limited to (i) purchasing, owning, administering and servicing the Phase-In-Recovery Property transferred, sold or assigned to it, (ii) issuing and, if applicable, registering the PIR Bonds, (iii) making payments on the PIR Bonds, (iv) managing, selling, assigning, pledging, collecting amounts due on, and otherwise dealing with the Phase-In-Recovery Property and (v) granting a statutory first priority security interest in the Phase-In-Recovery Property to secure such PIR Bonds.

(3) The LLC Agreement for each SPE should reflect that each SPE is not permitted to engage in any activity not related to its restricted purposes and should contain provisions regarding separateness, independent mangers and restrictions on commencing bankruptcy and insolvency proceedings.

(4) Each Applicant will capitalize its respective SPE in an amount of not less than 0.50 percent of its initial principal balance of the PIR Bonds, as may be adjusted upward at the time of issuance based on rating agency requirements and the return of and on such capitalization shall be maintained as an ongoing financing cost. Each Applicant will be authorized to receive a return on its respective SPE’s capitalization amount as an ongoing financing cost based on its average long-term debt rate without reduction for accumulated deferred income taxes. Upon the full repayment of the PIR Bonds, the capitalization amount will be returned to each Applicant to the extent of the available funds.

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(5) Each SPE will have no employees and will engage with other parties to undertake the activities necessary to issue the PIR Bonds and perform other functions in connection with each issuance.

(6) Upon the sale of the Phase-In-Recovery Property by each Applicant to its SPE subsidiary, there will arise and constitute an existing present property right and interest in such Phase-In-Recovery Property, which shall continue to exist until the PIR Bonds and all financing costs are paid in full. Consistent with Section 4928.232(G), Revised Code, the creation of each Applicant’s Phase-In-Recovery Property is confirmed and shall be simultaneous with the sale of that property to its respective SPE and the grant of a security interest therein, among other assets and property of such SPE to secure the payment of such SPE’s PIR Bonds and other obligations referenced in (7) below.

(7) Consistent with Section 4928.2312, Revised Code, a valid and binding security interest in the Phase-In-Recovery Property, among other SPE assets and property, will be created, perfected and enforced to secure the repayment of the principal of and interest on the PIR Bonds, amounts payable under any ancillary agreement, and other financing costs. Such security interest is to be a continuously perfected security interest of the bondholder with priority over any other lien that may subsequently attach to the Phase-In-Recovery Property unless the holder of such lien otherwise agrees in writing.

(8) All Phase-In-Recovery Property shall continue to exist regardless of whether the Phase-In-Recovery Charges have been billed, have accrued, or have been collected, and notwithstanding any requirement that the value or amount of the property is dependent on the future provision of service to customers by the EDU. Further, all such Phase-In-Recovery Property shall continue to exist until the PIR Bonds are paid in full and all financing costs have been paid in full.

(9) Each SPE will acquire the Phase-In-Recovery Property from the applicable Applicant with the proceeds from the PIR Bonds, the repayment of which will be secured by a first priority pledge and security interest in all right, title, and interest of the SPE in (i) the Phase-In-Recovery Property, (ii) the transaction documents, (iii) the collection account and all subaccounts established in the bond indentures under which the PIR Bonds will be issued; (iv) the cash used to capitalize the SPE; (v) all other property owned by the SPE (with limited exceptions as may be appropriate); and (vi) all proceeds of each of the foregoing.

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(10) Consistent with Section 4928.2313, Revised Code, any sale of the Phase-In-Recovery Property under this Financing Order shall be a true sale of, and not a pledge of or secured transaction relating to, the sellers right, title and interest in, to, and under the Phase-In-Recovery Property. This characterization of the sale as a true sale shall be effective and perfected against all third parties and shall not be affected or impaired by the occurrences set forth in Section 4928.2313(B), Revised Code.

B. PIR Bonds

(1) CEI, through its SPE, is authorized to issue in one or more series and in one or more classes/tranches PIR Bonds in an amount up to $280 million in the aggregate. The actual amount of CEI’s bond issuance cannot exceed the aggregate amount of the deferral balances and associated costs for the Riders DFC, DGC, and RER1 at the time of issuance, plus CEI’s portion of actual upfront financing costs. The proceeds of these bonds are to be used to recover, finance or refinance CEI’s portion of the actual and estimated financing costs and the following Phase-In Costs:

(a) The remaining uncollected balances of the deferred costs with carrying charges, associated with the actual fuel costs incurred that exceeded the fuel recovery mechanism revenues collected from January 1, 2006, through December 31, 2007, which currently are being recovered through a separate rider mechanism, namely the Rider DFC;

(b) The remaining uncollected balances of its deferred costs, with carrying charges, associated purchase power costs incurred that exceeded the purchase power recovery mechanism revenue from January 1, 2009, through May 31, 2009, which currently are being recovered through a separate rider mechanism, namely the Rider DGC.

(c) The remaining uncollected balances of its deferred costs, with carrying charges, associated with purchase power costs incurred from March 17, 2010, through June 30, 2011, that exceeded the associated purchase power recovery mechanism revenue due to the implementation of the Residential Generation Credit Rider (Rider RGC), which currently are being recovered through a separate rider mechanism, namely Rider RER1.

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(2) Ohio Edison, through its SPE, is authorized to issue in one or more series and one or more classes/tranches PIR Bonds in an amount up to $220 million in the aggregate. The actual amount of Ohio Edison’s bond issuance cannot exceed the aggregate amount of the deferral balances and associated costs for the Riders DFC and RER1 at the time of issuance, plus Ohio Edison’s portion of actual upfront financing costs. The proceeds of these bonds are to be used to recover, finance or refinance Ohio Edison’s portion of the actual and estimated financing costs and the following Phase-In Costs:

(a) The remaining uncollected balances of its deferred costs, with carrying charges, associated with the actual fuel costs incurred that exceeded the fuel recovery mechanisms collected from January 1, 2006, through December 31, 2007, which currently are being recovered through a separate rider mechanism, namely Rider DFC; and

(b) The remaining uncollected balances of its deferred costs, with carrying charges, associated with purchase power costs incurred from March 17, 2010, through June 30, 2011, that exceeded the associated purchase power recovery mechanism revenue due to implementation of the Rider RGC, which currently are being recovered through a separate rider mechanism, RER1.

(3) Toledo Edison, through its SPE, is authorized to issue in one or more series and one or more classes/tranches PIR Bonds in an amount up to $55 million in the aggregate. The actual amount of Toledo Edison’s bond issuance cannot exceed the aggregate amount of the deferral balances and associated costs for the Rider DFC at the time of issuance, plus Toledo Edison’s portion of actual upfront financing costs. The proceeds of these bonds are to be used to recover, finance or refinance Toledo Edison’s portion of the actual and estimated financing costs and the Phase-In Costs related to the remaining uncollected balances of its deferred costs, with carrying charges, associated with the actual fuel costs incurred that exceeded the fuel recovery mechanism revenues collected from January 1, 2006, through December 31, 2007, which are correctly being recovered through a separate rider mechanism, Rider DFC.

(4) Each SPE’s PIR Bonds will be non-recourse to the respective Applicant and its assets provided; however, that each Applicant could be liable to holders of PIR Bonds in the event that it breached representations, warranties, or covenants made by it in connection with its Sales Agreement, Servicing Agreement or otherwise to such holders in connection with securitization.

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(5) The PIR Bonds may be issued and sold through either (i) registered public offering under the U.S. Securities Act of 1933, as amended (the Securities Act), or (ii) an unregistered offering exempt from the registration pursuant to Section 4(a)(2) (formerly Section 4(2)) of the Securities Act (A) with subsequent resales generally to qualified institutional buyers and/or purchasers outside the United States pursuant to Rule 144A and Regulation S, respectively, under the Securities Act or (B) as a negotiated private placement.

(6) The PIR Bonds should receive a AAA (or equivalent) credit rating from applicable rating agencies.

(7) Applicants shall have flexibility in establishing the terms and conditions for the PIR Bonds to accommodate changes in market conditions, including repayment reschedules, interest rates, financing costs, collateral requirements, required debt service, and reserves or other credit enhancement provided such changes are performed consistent with this Financing Order. Each Applicant, at its option, will also have the ability to affect a series of issuances of PIR Bonds and correlated assignments, sales, pledges, or other transfers of Phase-In-Recovery Property within the parameters set forth in the application and this Financing Order.

(8) Notwithstanding the preceding provision, the PIR Bonds shall be issued only with fixed interest rates that are no more than 200 basis points higher than those referenced in the application (i.e. a weighted average yield, exclusive of upfront and ongoing financing costs, of less than five percent) in order to ensure that the securitization results in cost savings consistent with Section 4928.235(C)(2), Revised Code. Additionally, the recovery period for the Phase-In-Recovery Charges will not exceed the overall recovery period authorized under the existing riders.

(9) In the case of a registered public offering: (i) material agreements will generally be filed as exhibits to a registration statement filed with the U.S. Securities and Exchange Commission (SEC); and (ii) the material terms of each such agreement will also be summarized in the related prospectus included in any such registration statement and used in the offer and sale of the PIR Bonds. In the case of an unregistered offering, the material terms of each material agreement will typically be summarized in an offering memorandum (or private placement memorandum) used in connection with the marketing of the securities, and are generally made available to current or prospective security holders.

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(10) In order to accomplish securitization, each Applicant is authorized to enter into the necessary agreements with its respective SPE subsidiary. Applicants must file copies of the agreements with their respective SPEs in this docket.

(11) Consistent with Section 4928.2313, Revised Code, each Applicant is authorized to enter into Sales Agreements with its respective SPE. Each Sales Agreement shall provide the terms and conditions of the absolute transfer and true sale of the appropriate Applicant’s right, title and interest in, to, and under its Phase-In-Recovery Property to its SPE.

(12) Each Applicant is authorized to enter into Administrative Agreements with its respective SPE for administrative functions including services related to the preparation of financial statements, required filings with the SEC (if any), any tax return required to be filed under applicable law, qualification to do business and minutes of managers’ meetings. Each Applicant (or any successor administrator thereof) will receive a periodic administration fee, expected to be $50,000 annually, for performing these services, which, together with costs and expenses incurred by the administrator, will be recovered through Phase-In- Recovery Charges, as financing costs.

(13) Each Applicant is authorized to enter into a Servicing Agreement with its respective SPE detailing the services that the Applicant will provide to its SPE principally with respect to calculating, billing and collecting the Phase-In-Recovery Charges. Each servicer under the Applicable Servicing Agreement will be responsible for, among other things: (i) posting of collections, (ii) responding to inquiries by customers, competitive retail electric suppliers (if any), the Commission or others regarding Phase-In-Recovery Charges, (iii) calculating historical electricity usage and customer payment information (e.g., uncollectibles, typical lags between billing and collection charges), (iv) projecting future electricity usage and customer payment information, (v) accounting for collections, (vi) furnishing periodic reports and statements, (vii) making certain filings as necessary to perfect the trustee’s lien on the Phase-In-Recovery Property, and (viii) taking all necessary action in connection with Phase-In-Recovery Charge adjustments.

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(14) Each Applicant (or any successor EDU) is authorized to receive a periodic servicing fee, which will be recovered through Phase-In-Recovery Charges as a financing cost. Based upon both estimated costs of performing the servicing function and market precedent for such fees, the annual servicing fee to be paid to the respective Applicant or its successor EDU shall be 0.10 percent of the initial principal amounts of the PIR Bonds issued by the SPE of such Applicant. In the event that there is no EDU successor willing or able to perform such servicing functions, a non-utility servicer shall be engaged, and given the incremental costs to perform the servicing function shall be entitled to an increased annual servicing fee to preserve the PIR Bond ratings. However, the annual servicing fee for such non-utility successor shall not exceed 0.75 percent of the initial principal amount of the PIR Bonds.

(15) The PIR Bonds will not be included in the regulatory capital structure of the Applicants going forward. The PIR Bonds shall be recorded in accordance with GAAP as long-term debt on the balance sheet of each Applicant’s SPE to which the Phase-In- Recovery Property is sold in connection with the securitization for financial reporting purposes. Each SPE’s PIR Bonds will also appear on the consolidated balance sheet of the respective Applicant, as the parent company, in its GAAP financial statements.

C. Phase-In-Recovery Trusts (PIR Trust)

(1) As an alternative to directly issuing and marketing the PIR Bonds to unaffiliated investors through either a registered public offering or unregistered exempt offering, each SPE may issue the PIR Bonds to a single purpose trust established jointly by the Applicants.

(2) Notes or other pass-through certificates or similar instruments (the PIR Certificates) may be issued by the PIR Trust to investors representing undivided beneficial interests in the SPE’s PIR Bonds held by the PIR Trust. The PIR Trust shall engage in no activities other than the holding of the PIR Bonds, issuing the PIR Certificates and engaging in other related activities.

(3) The PIR Certificates issued by the PIR Trust shall be sold either through a registered public offering or an unregistered exempt offering.

(4) None of the SPEs shall be obligated with respect to any other SPE’s PIR Bonds. Therefore, the customers of the respective Applicants will not be affected by the actions of any other Applicant or the adequacy of the Phase-In-Recovery Property of such other Applicant.

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(5) The PIR Trust will transfer an allocable portion of the net proceeds from the sale of the PIR Certificates to the applicable SPE and each such SPE will in turn transfer the proceeds to the applicable Applicant in consideration for the Phase-In-Recovery Property sold to such SPE by the respective Applicant.

(6) In deciding whether to directly issue and market the PIR Bonds to unaffiliated investors through a registered public offering, an unregistered exempt offering or a PIR Trust, Applicants must negotiate and obtain terms that result in both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost- recovery methods available to the EDU.

(7) The costs of setting up and maintaining the PIR Trust, including fees and expenses of the trustee and its counsel, shall be included in and constitute upfront and ongoing financing costs.

D. Phase-In-Recovery Charges

(1) Phase-In-Recovery Charges, together with the adjustment mechanism, will provide for the full and timely recovery of all costs associated with the issuance of or use of proceeds from the PIR Bonds approved in this proceeding, including all Phase-In Costs and financing costs as described in this Financing Order.

(2) Consistent with Section 4928.239(B)(1), Revised Code, all of the Applicants’ customers will be responsible for the repayment of PIR Bonds and financing costs through the imposition of separate, nonbypassable Phase-In- Recovery Charges.

(3) Consistent with Section 4928.238(B), Revised Code, there may be an allocation of proportionate charges to government aggregation customers.

(4) Phase-In-Recovery Charges will be included on each Applicant’s customer bills which will incorporate a notation reflecting that the right to impose, charge, and collect Phase-In-Recovery Charges is owned by the SPE formed by the respective Applicant. Applicants are authorized to modify their bill format to include the language proposed in the application. As requested in the application, similar language may be included in billing inserts or other communications

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to customers. Applicants must provide customers with a one-time notification regarding the change to allow for the inclusion of the Rider PIR as part of the charges recovered on the bill.

(5) If a customer of the EDU purchases electric generation service from a competitive retail electric service provider, the EDU shall collect the Phase-In- Recovery Charges directly from that customer. If a customer of the EDU subsequently receives retail electric distribution service from another EDU operating in the same service area, including by succession, assignment, transfer, or merger, the Phase-In-Recovery Charges shall continue to apply to the customer.

(6) Each Applicant is authorized to estimate the amount of revenue otherwise collected from each rate schedule under the existing riders identified. These estimated revenues, by rate schedule, will then be used to determine allocation ratios representing the proportion of the total revenue collected from each rate schedule under the existing recovery methodology on a monthly basis. These allocation ratios will then be applied to the estimated amounts to be recovered tinder the Phase-In-Recovery Charges in order that in essence, each rate schedule will be paying approximately the same proportion of the Phase-In-Recovery Charges as they are currently paying for each applicable rider under the existing recovery methodology. This same methodology should be utilized for governmental aggregation customers. In the event that, for any reason, any Phase-In- Recovery Charges cannot be allocated to a given customer class, such charges shall be allocated to the remaining customer classes, using the same ratable allocation to the customer classes excluding the customer classes where allocation is not feasible.

(7) Each SPE shall, pursuant to its indenture or organizational documents, have a priority of payments that shall establish how collection of Phase-In-Recovery Charges and any other amounts are applied to pay principal, interest on, and other costs related to PIR Bonds. The right to impose, charge and collect Phase-In-Recovery Charges, although owned by the applicable SPE, will be considered EDU charges for the purpose of priority of customer payments and termination/reconnection of service will be considered charges of the respective Applicant and will be accorded similar treatment with the Applicant’s own charges under applicable statutes, the Commission’s rules, and tariffs of the respective tariffs.

(8) The determination of Phase-in-Recovery Charges for each Applicant will take into account (a) the timing and amounts of principal, interest, and other financing costs, (b) the expected monthly

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electricity consumption by customers of the Applicant, (c) the expected delays between the billing and collection of the Phase-In-Recovery Charges, and (d) the expected uncollectibles related to Phase-In-Recovery Charges.

(9) To ensure the full and timely collection of Phase-In- Recovery Charges, including minimizing the likelihood that customer defaults in the payment of Phase-In-Recovery Charges result in additional charges being borne by other nondefaulting customers, Applicants may terminate any customer who defaults payment of the Phase-In-Recovery Charges. This disconnection shall occur in accordance with applicable statutes, Commission rules and orders and the Applicants’ rules, tariffs, and practices applicable to other charges owed directly to an Applicant.

(10) Applicants represent that their current estimate of upfront financing costs is approximately $8.4 million in the aggregate, exclusive of debt retirement costs. Through the filing of their Issuance Advice Letter, Applicants are required to provide the Commission with their actual upfront and estimated ongoing financing costs. The aggregate upfront and ongoing financing costs for the issuance of the PIR Bonds exclusive of the debt retirement costs, under the single combined issuance, and should not exceed, by more than 5 percent, the total of the amounts reflected in columns B-D on Exhibit C of the application, Pages 1, 2 and the financial advisor expenses discussed infra. The debt retirement costs should not exceed, by more than 15 percent, the total of the amounts reflected in columns B-D on Exhibit C of the application, Page 1.

(11) In the context of this proceeding, consistent with Section 4928.23(K), Revised Code, Phase-In- Recovery Property is comprised of the property, rights and interests of the EDU under a Final Financing Order, including the right to impose, charge and collect the Phase-In-Recovery Charges that shall be used to pay and secure the payment of PIR Bonds and financing costs, and including the right to obtain adjustments to Phase-In-Recovery Charges, and any revenues, receipts, collections, rights to payment, payments, moneys, claims, or other proceeds arising from the rights and interests created under the Final Financing Order.

(12) Each Applicant is authorized to create its respective Phase-In-Recovery Property.

(13) Applicants are authorized to recover their upfront and ongoing financing costs through the issuance of the PIR Bonds and the

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collection of Phase-In-Recovery Charges. The right to recover financing costs constitutes Phase-In-Recovery Property consistent with Section 4928.23(K), Revised Code. The authorized estimated, upfront financing costs include without limitation, the estimated costs associated with the retiring or refunding of existing long-term debt of the Applicants, counsel fees, structural advisory fees, underwriting fees, rating agency fees, independent auditors’ fees, and filing and printing expenses. The estimated ongoing financing costs include, without limitation, servicing fees, other administrative fees, the cost of any reserves or other credit enhancement (if required) for the PIR Bonds, the periodic costs for servicing the PIR Bonds and the Phase-In-Recovery Charges, trustee and other administrative costs and, if the PIR Bonds are issued in a registered public offering, ongoing Securities and Exchange Commission (SEC) compliance costs. Financing costs also include the recovery of all tax liabilities associated with the collection of the Phase-In-Recovery Charges or otherwise arising due to the securitization.

(14) Applicants propose tariff sheets reflecting Phase-In-Recovery Charges that are expected to approximate the final tariff charges based upon currently available information related to the terms of the proposed issuance of the PIR Bonds. These tariff sheets are approved in form only. Consistent with Section 4928.232(H), Revised Code, Applicants are directed to file updated tariff sheets to reflect the final initial Phase-In-Recovery Charges determined in accordance with the Commission approved adjustment mechanism to reflect the actual costs and any other revised assumptions. The actual costs to be utilized must be consistent with the criteria discussed in this Financing Order. The final initial Phase-In-Recovery Charges to be included in the final initial tariff sheets are to reflect the terms and conditions of the Final Financing Order including all Phase-In Costs and financing costs. Unless suspended by the Commission, these updated tariff sheets shall be considered approved and effective upon the issuance of the PIR Bonds.

(15) The existing riders will be reduced to zero on the effective date of the Final Initial Tariff Sheets subject to final reconciliation of the remaining deferral balances, if any, which will be maintained on the Applicants’ books subject to carrying charges until the full cost recovery occurs. Any final reconciliation that reduces deferral balances below zero shall similarly produce a customer credit and will not affect the Phase-In-Recovery Charges, which are irrevocable. The existing riders shall cease to exist upon the issuance of the PIR Bonds and approval of the corresponding tariff sheets.

12-1465-EL-ATS -36-

E. Adjustment Mechanism

(1) Consistent with the methodology set forth in the application (Exhibit F), each Applicant is authorized to make periodic adjustments to the Phase-In- Recovery Charges to be paid by its customers pursuant to this Order.

(2) The initial update to each Applicant’s Rider PIR will be up to 12 months after the issuance date of the PIR Bonds. Subsequently, each Applicant’s Rider PIR shall be updated semiannually with the exception of the last year each series of PIR Bonds is expected to be outstanding. Specifically, no later than November 1^st and May 1^st of each year, each Applicant must file a request for approval of the adjusted Phase-In-Recovery Charges and the corresponding amended tariff sheets.

(3) Unless otherwise ordered by the Commission, these adjusted charges and the associated tariff amendments shall become automatically effective on a service rendered basis sixty days after the filing of the request. Consistent with Section 4928.238, Revised Code, the Commission’s review of this request shall be limited to a determination of whether there is any mathematical error in the application of the adjustment mechanism to the Phase-In-Recovery Charges.

(4) With respect to the last year that each series of PIR Bonds are expected to be outstanding, updates as frequently as monthly may be necessary.

(5) No adjustment approved under Section 4928.238, Revised Code, shall in any way effect the irrevocability of the Final Financing Order as specified in Section 4928.235, Revised Code.

(6) Consistent with Section 4928.2312, Revised Code, no application for an adjustment mechanism, pursuant to Section 4928.238, Revised Code, shall affect the validity, perfection, or priority of the security interest in or the transfer of Phase-In-Recovery Property under the Final Financing Order.

F. Additional Requirements

(1) The Commission directs Applicants to retain an independent financial advisor selected by the Commission Staff for the purpose of engaging in its review of the final terms of the proposed transaction consistent with Section (F) infra, including, but not

12-1465-EL-ATS -37-

limited to the attestation that the final terms and conditions of the transaction are consistent with this Financing Order and the requisite statutory provisions.

(2) In order to ensure, as required by Section 4928.32(D)(2), Revised Code, that the structuring and pricing of the PIR Bonds result in the charges consistent with market conditions and the terms of this Financing Order, it is necessary for the Commission, acting through its designated representative or financial advisor, to have a decision making role co-equal with Applicants with respect to the structuring and pricing of the PIR Bonds and that all matters relating to the structuring and pricing of the PIR Bonds shall be determined through a joint decision of Applicant and the Commission’s designated representative or financing advisor. The primary responsibilities of the Commission’s financial advisor are to ensure that the structuring and pricing of the PIR Bonds result in charges consistent with market conditions and the terms of this Financing Order and that it protects the competitiveness of the retail electric market in this State. To fulfill its obligations under this Financing Order, the Commission’s financial advisor must give effect to the Commission’s directive that the PIR Bonds reflect a market price of most recently issued comparable securities that demonstrates both measurably enhancing cost savings and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost-recovery.

(3) To properly advise the Commission, the Commission’s financial advisor must not participate in the underwriting of the PIR Bonds and its fee should not be based upon a percentage of the PIR Bond issuance. Its role should be limited to advising the Commission or acting on behalf of the Commission regarding the structure and pricing of the PIR Bonds. The financial advisor must, however, have an integral role in the pricing, marketing and structuring of the PIR Bonds in order to provide competent advice to the Commission. This requires the financial advisor to participate fully in all plans and decisions related to the pricing, marketing, and structuring of the PIR Bonds and that it be provided timely information as necessary to fulfill its obligation to advise the Commission in a timely manner. In addition, the financial advisor’s fee should be capped at an amount not to exceed $500,000, which will be included as part of the upfront financing costs.

(4) For each PIR Bond tranche, upon the determination of the final structure of the bonds but prior to the actual issuance, the Applicants shall file the Issuance Advice Letter, including the Certification,

12-1465-EL-ATS -38-

attached to this Financing Order, no later than the end of the first business day after the pricing date for that series of PIR Bonds. The issuance advice letter should include the actual dollar amount of the initial Phase- In-Recovery Charges and other information specific to the PIR Bonds to be issued.

(5) The Commission has four complete business days following the filing of the Issuance Advice Letter to complete its review for both format and substance. If the Commission does not act within this specified time frame, terms and charges will become effective at the end of the fourth business day following the filing of the Issuance Advice Letter.

(6) Consistent with Section 4928.2315, the Commission, on behalf of the State of Ohio, pledges to and agrees with bondholders, any assignee, and any financing parties under a Final Financing Order that the State will not take or permit any action that impairs the value of the Phase-In-Recovery Property under the Final Financing Order or revises the Phase-In Costs for which recovery is authorized under the Final Financing Order or, except as allowed under Section 4928.238, Revised Code, reduce, alter, or impair Phase-In-Recovery Charges that are imposed, charged, collected, or remitted for the benefit of the bondholders, any assignee, and any financing parties, until any principal, interest, and redemption premium in respect of PIR Bonds, all financing costs, and all amounts to be paid to an assignee or financing party under an ancillary agreement are paid and performed in full.

(7) Consistent with Section 4928.2311, Revised Code, any successor to any Applicant, shall be bound to the requirements of Sections 4928.23, Revised Code, to 4928.317, Revised Code, and shall be obliged to perform and satisfy all obligations of the EDU under the Final Financing Order, including those related to the servicing of the bonds.

(8) Consistent with Section 4928.2310, Revised Code, if any Applicant subject to this Financing Order defaults on any required payment of a Phase-In- Recovery Revenues, a court, upon application by an interested party and without limiting any other remedies available to the Applicant, shall order the sequestration and payment of the revenues for the benefit of bondholders, any assignee, and any financing parties. The court order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to any Applicant or its affiliate. Customers of any Applicant shall be held harmless for the failure of

12-1465-EL-ATS -39-

the Applicant to remit any required payment of Phase-In-Recovery Revenues, and such failure shall in no way affect the Phase-In- Recovery Property or the rights to impose, collect, and adjust the Phase-In-Recovery Charges. Phase-In-Recovery Property under a Final Financing Order and the interests of an assignee, bondholder, or financing party in that property under a financing agreement are not subject to setoff, counterclaim, surcharge, or defense by the Applicant, including as a result of its failure to provide, past, present, or future services, or in connection with the bankruptcy reorganization, or other insolvency proceeding of an Applicant, any affiliate, or any other entity.

(9) Consistent with Section 4928.235, a Final Financing Order in this proceeding shall:

(a) remain in effect until the Phase-In- Recovery Bonds issued under the Order and all financing costs have been paid in full;

(b) remain in effect and unabated notwithstanding the bankruptcy, reorganization, or insolvency of any Applicant or its affiliate or the commencement of any judicial or nonjudicial proceeding on the Final Financing Order;

(c) be considered irrevocable and the Commission may not reduce, impair, postpone, or terminate the Phase-In-Recovery Charges authorized in the Final Financing Order or impair the Phase-In-Recovery Property or the collection or recovery of the Phase-In Costs.

(10) Consistent with Section 4928.235, Revised Code, subsequent to a Financing Order being issued or becoming final and taking effect, but before PIR Bonds have been issued, if marketing conditions are such that customers will not realize cost savings from the issuance of the PIR Bonds, Applicants shall not proceed with securitization under the Final Financing Order.

(11) If and to the extent that the Commission subsequently allows third parties to bill and/or collect any Phase-In-Recovery Charges, the Commission will take steps to ensure nonbypassability and minimize the likelihood of default by third-party servicers, which generally would include (i) operational standards and minimum credit requirements for any such third party billing servicer, or require a cash deposit, letter of credit or other credit mitigant in lieu thereof, (ii) a finding that, regardless of who is responsible for

12-1465-EL-ATS -40-

billing, customers shall continue to be responsible for Phase-In-Recovery Charges, (iii) if a third party meters and bills for the Phase-In-Recovery Charges, that the electric distribution utility (as servicer) must have access to information on billing and usage by customers to provide for proper reporting to the SPE and to perform its obligations as servicer, (iv) in the case of a third party default, billing responsibilities must be promptly transferred to another party to minimize potential losses; and (v) the failure of customers to pay Phase-In-Recovery Charges shall allow service termination by the electric distribution utility on behalf of the SPE of the customers failing to pay Phase-In-Recovery Charges in accordance with Commission-approved service termination rules and orders. Any costs associated with such third-party billing and/or collection shall be included as part of the recoverable, ongoing Phase-In Costs or any other rates or charges, as appropriate. Further, the Commission shall not permit implementation of any third-party billing/collection that would result in a downgrade of the PIR Bonds.

FINDINGS OF FACT AND CONCLUSIONS OF LAW:

(1) Applicants are EDUs, as defined in Section 4928.02(A)(6), Revised Code.

(2) Sections 4928.23 through 4928.2318, Revised Code, provide EDUs with the mechanism to securitize, through the issuance of PIR Bonds previously approved deferred assets.

(3) On May 3, 2012, as amended on August 16, 2012, Applicants filed a joint application requesting authority, pursuant to Sections 4928.23 through 4928.2318, Revised Code, to recover certain specified Phase-In Costs through the issuance of PIR Bonds.

(4) On June 25, 2012, initial comments were filed by Staff and OCC. On July 9, 2012, reply comments were filed by Applicants and OCC.

(5) The proposed securitization transactions, as discussed and amended by this Financing Order, results in, consistent with market conditions, both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with previously approved recovery methods.

(6) The proposed securitization transactions, as set forth in this Financing Order, are consistent with Section 4928.02, Revised Code.

(7) This Financing Order shall become final and take effect as provided in Section 4928.233(E), Revised Code, and thereafter shall be considered as the Final Financing Order.

12-1465-EL-ATS -41-

ORDER:

It is, therefore,

ORDERED, That the application be approved consistent with the conditions set forth in this Financing Order. It is, further,

ORDERED, That CEI, Toledo Edison, and Ohio Edison be authorized to enter into transactions for the issuance of PIR Bonds and to assess and collect Phase-In- Recovery Charges, as set forth in this Financing Order. It is, further,

ORDERED, That Applicants file the applicable SPE agreements in accordance with the terms of this Financing Order. It is, further,

ORDERED, That Applicants file their respective Issuance Advice Letters with the accompanying certification consistent with this Financing Order, It is, further,

ORDERED, That Applicants retain a financial advisor on behalf of the Commission consistent with this Order, It is, further,

ORDERED, That concurrent with the filing of the Issuance Advice Letter, the Commission’s financial advisor shall file its attestation consistent with this Order. It is, further,

ORDERED, That all reports issued by the Commission’s financial advisor shall be docketed in this proceeding. It is, further,

ORDERED, That Applicants file a confirmation upon the final issuance of the PIR Bonds consistent with this Financing Order. It is, further,

ORDERED, That Applicants file their revised tariff sheets consistent with this Financing Order. It is, further,

ORDERED, That the revised tariff sheets be considered approved and upon the issuance of the PIR Bonds, It is, further,

ORDERED, That Applicants modify their bill formats consistent with this Financing Order. It is, further,

ORDERED, That, consistent with this Financing Order, Applicants provide customer notice of the Rider PIR charges. It is, further,

ORDERED, That Applicants comply with the adjustment mechanism set forth in this Financing Order. It is, further,

12-1465-EL-ATS -42-

ORDERED, That OCC’s motion to intervene be granted. It is further, ORDERED, That Applicants’ request that the Commission consider the application on an expedited basis is denied. It is, further,

ORDERED, That a copy of this Financing Order be served upon all parties and interested persons of record in this case.

ATTACHMENT B

TO THE MEMORANDUM IN SUPPORT OF APPLICATION FOR REHEARING

OF OHIO EDISON COMPANY, THE CLEVELAND ELECTRIC

ILLUMINATING COMPANY, AND THE TOLEDO EDISON COMPANY

Case No. 12-1465-EL-ATS

Page 1 of 12

ATTACHMENT 1

FORM OF ISSUANCE ADVICE LETTER

    day                         , 201    

Case No. 12-1465-EL-ATS

The Public Utilities Commission of Ohio

SUBJECT: ISSUANCE ADVICE LETTER FOR PHASE-IN-RECOVERY BONDS

Pursuant to the Financing Order issued In the Matter of the Joint Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Issue Phase-In-Recovery Bonds and Impose, Charge and Collect Phase-In-Recovery Charges and for Approvals of Tariff and Bill Format Changes in Case No. 12-1465-EL-ATS, each Applicant hereby submits, no later than the end of the first business day after the pricing of this series of PIR Bonds, the information referenced below. This Issuance Advice Letter is for the PIR Bonds series    , tranches             . Any capitalized terms not defined in this Issuance Advice Letter shall have the meanings ascribed to them in the Financing Order.

PURPOSE:

This filing establishes the following:

(a) The total amount of Phase-In Costs and financing costs being securitized;

(b) Confirmation of compliance with issuance standards;

(c) The actual terms and structure of the PIR Bonds being issued;

(d) The initial Phase-In-Recovery Charges for retail users; and

(e) The identification of the SPEs.

PHASE-IN COSTS BEING SECURITIZED:

The total amount of Phase-In Costs and financing costs being securitized is presented in Attachment 1.

Case No. 12-1465-EL-ATS

Page 2 of 12

COMPLIANCE WITH ISSUANCE STANDARDS

The Financing Order requires Applicants to confirm, using the methodology approved therein, that the actual terms of the PIR Bonds result in compliance with the standards set forth in the Financing Order. These standards are:

1. The total amount of Phase-In-Recovery Charge revenues to be collected under the Financing Order is less than the revenue requirement that would be recovered using traditional cost recovery mechanisms (See Exhibit-A, Attachment 2, Schedule C and D);

2. The PIR Bonds will be issued in one or more series comprised of one or more tranches having final maturities of     years and legal final maturities not exceeding     years from the date of issuance of such series (See Exhibit-A, Attachment 2, Schedule A); and

The structuring and pricing of the PIR Bonds is certified by the Applicants to result in the Phase-In-Recovery Charges as of the date of issuance consistent with market conditions and the terms set out in this Financing Order (See Exhibit-A, Attachment 3) that demonstrates both measurably enhanced cost savings to customers and mitigates rate impacts to customers as compared with traditional cost recovery methods available to the Applicants.

Case No. 12-1465-EL-ATS

Page 3 of 12

ACTUAL TERMS OF ISSUANCE

PIR Bond Series:                     

PIR Bond Issuer: [SPE]

Trustee:

Closing date:                     , 201    

Bond ratings: S&P AAA, Fitch AAA, Moody’s Aaa

Amount Issued: $             

PIR Bond Issuance Costs (upfront financing costs): See Attachment        Schedule    

PIR Bond Support and Servicing (ongoing financing costs): See Attachment        Schedule    

Tranche	Coupon Rate	Expected Final Maturity		Legal Final Maturity
A-1			/     /		/     /
A-2			/     /		/     /
A-3			/     /		/     /

Effective Annual Weighted Average Interest Rate of the PIR Bonds		%
Life of Series:	years
Weighted Average Life of Series:	years
Call Provisions (including premium, if any):
Target Amortization Schedule:
Target Final Maturity Dates:
Legal final Maturity Dates:
Payments to Investors:	Semiannually Beginning                          , 201
Initial annual Servicing Fee as a percent of original PIR Bond principal balance:		%

Case No. 12-1465-EL-ATS

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INITIAL PHASE-IN-RECOVERY CHARGES

Table I below shows the current assumptions for variables used in the calculation of the initial Phase-In-Recovery Charges.

TABLE I

Input Values For Initial Phase-In-Recovery Charges

Applicable period: from             ,            to             ,
Forecasted retail kWh sales for the applicable period:
PIR Bond debt service for the applicable period:	$
Percent of billed amounts expected to be charged-off		%
Forecasted % of Billing Paid in the Applicable Period:		%
Forecasted retail kWh sales billed and collected for the applicable period:
Current PIR Bond outstanding balance:	$	.
Target PIR Bond outstanding balance as of     /    /	$
Total Periodic Billing Requirement for applicable period:	$

Case No. 12-1465-EL-ATS

Page 5 of 12

ATTACHMENT-1

SCHEDULE A

TOTAL AMOUNT SECURITIZED

	OE	CEI	TE	Total
Amount permitted to be securitized by Financing Order	$	$	$	$
Phase-In Costs	$	$	$	$
Upfront financing costs	$	$	$	$
TOTAL AMOUNT SECURITIZED	$	$	$	$

Case No. 12-1465-EL-ATS

Page 6 of 12

ATTACHMENT-l

SCHEDULE B

ESTIMATED UPFRONT FINANCING COSTS

		AMOUNT1
1	Accountant’s/Auditor’s Fees
2	Fee for Applicants’ Structuring Advisor
3	Legal Fees and Expenses for Applicants/Issuer’s Counsel
4	Legal Fees and Expenses for Trustee’s Counsel
5	Legal Fees and Expenses for Underwriter’s Counsel
6	Printing and Filing Fees
7	Rating Agency Fee2
8	SEC Registration Fees3
9	Servicer Set-up Costs4
10	Trustee Payments
11	Underwriting Costs5
12	Fees & Expenses for Commission’s Financial Advisor
13	Miscellaneous6
14	Subtotal Issuance Expenses (Sum Lines 1-13)
15	Debt Retirement Costs7
16	TOTAL ESTIMATED UP-FRONT FINANCING COSTS
	(Lines 14 + Line 15)

¹  Up-front financing costs expected to be allocated based upon Phase-In Cost amounts assuming an SEC-registered single combined offering, unless otherwise noted.

²  Based upon current fee schedules applied to issuance amounts which change from time to time.

³  Based upon current fee level of $0.0000393 applied to issuance amounts

⁴  Assumes $100,000 per Applicant.

⁵  Based upon fee level of 0.50% applied to issuance amounts.

⁶  Unforeseen expenses, if any, will be described in the [Final Financing Order] following the issuance of the PIR Bonds.

⁷  Will vary depending upon market conditions and the timing and method of debt retirement.

Case No. 12-1465-EL-ATS

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ATTACHMENT-2

SCHEDULE-A

PIR BOND REPAYMENT SCHEDULE

SERIES              , TRANCHE

Payment Date Principal
Balance Interest Principal Total
Payment

SERIES              , TRANCHE

Payment Date Principal
Balance Interest Principal Total
Payment

SERIES              , TRANCHE

Payment Date Principal
Balance Interest Principal Total
Payment

Case No. 12-1465-EL-ATS

Page 8 of 12

ATTACHMENT-2

SCHEDULE-B

ONGOING FINANCING COSTS

	ANNUAL AMOUNT1
Ongoing Servicer Fee (The Companies as Servicer)2 (0.10% of issuance amount) OR Ongoing Servicer Fee (Third Party as Servicer) (    % of issuance amount)
Administration Fees and Expenses
Trustee Fees and Expenses
Legal Fees
Accounting Fees
SPE Independent Manager’s Fees
Rating Agency Fees3
Reporting and SEC Filing Fees
Miscellaneous
Return on Capital Account4
Dealers in Intangible Tax5
TOTAL ONGOING FINANCING COSTS

Note: The amounts shown for each category of operating expense on this attachment are the expected expenses for the first year of the PIR Bonds. Phase-In Recovery Charges will be adjusted at least semi-annually to reflect any changes in ongoing financing costs through the true-up process described in the Financing Order.

¹  Ongoing financing costs expected to be allocated ratably based upon issuance amount assuming an SEC-registered single combined offering.

²  Assumes each Applicant acts as servicer and earns annual servicing fees equal to 0.10% of issuance amount.

³  Based upon current scheduled fee levels.

⁴  Assumes each Applicant funds reserve account equal to 0.50% of issuance amount and earns an annual rate of return of 6.85% thereon.

⁵  Assumes each securitization SPE is required to pay a 0.8% annual tax on amounts funded in capital account.

Case No. 12-1465-EL-ATS

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ATTACHMENT-2

SCHEDULE-C

SUMMARY OF PHASE-IN-RECOVERY CHARGES

Year (a) PIR
Bond
Payments¹
(b) Ongoing
Financing
Costs²
(c) Total
Nominal
Phase-In-
Recovery
Charge
Requirement³
(d) Present Value
of
Phase-In-
Recovery
Charges⁴
(e)

¹  From Attachment 2, Schedule A.

²  From Attachment 2, Schedule B.

³  Sum of PIR Bond payments and ongoing financing costs, adjusted for applicable taxes, uncollectibles and billing lags

⁴  The discount rate used is the weighted average effective annual interest rate of the PIR Bonds.

Case No. 12-1465-EL-ATS

Page 10 of 12

ATTACHMENT-2

SCHEDULE-D

COMPLIANCE WITH THE PRESENT VALUE STANDARD¹

	Existing Ratemaking2	Securitization Financing3	Savings/ (Cost) of Securitization Financing
Nominal	$	$	$
Present Value	$	$	$

¹  Calculated in accordance with the methodology used in the Joint Application using the discount rate referenced in footnote 4 on Attachment-2, Schedule-C, page 9 of 12.

²  Carrying Costs at 6.85%.

³  From Attachment 2, Schedule C.

Case No. 12-1465-EL-ATS

Page 11 of 12

ATTACHMENT-3

CERTIFICATION OF COMPLIANCE

[FE Companies Letterhead]

Date:             , 201    

Re: Joint Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company, Case No. 12-1465-EL-ATS

Applicants, Ohio Edison, Cleveland Electric, and Toledo Edison submit this Certification pursuant to the Financing Order In the Matter of the Joint Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Issue Phase-In-Recovery Bonds and Impose, Charge and Collect Phase-In-Recovery Charges and for Approvals of Tariff and Bill Format Changes in Case No. 12-1465-EL-ATS. All capitalized terms not defined in this letter shall have the meanings ascribed to them in the Financing Order.

In its issuance advice letter dated                  , 201    , the Applicant has set forth the following particulars of the PIR Bonds:

Name of PIR Bonds:             

PIR Bond Issuer: [SPE]

Trustee:

Closing date:             , 201    

Amount Issued: $             

Expected Amortization Schedule: See Attachment 2, Schedule A to the Issuance Advice Letter

Distributions to Investors (quarterly or semi-annually):

Weighted Average Coupon Rate:     %

Weighted Average Yield:    %

The following actions were taken in connection with the design, structuring and pricing of the PIR Bonds:

<Insert actions actually taken here>

Case No. 12-1465-EL-ATS

Page 12 of 12

Based upon the information reasonably available to its officers, agents, and employees of the Applicants, the Applicants hereby certify that the structuring and pricing of the PIR Bonds, as described in the Issuance Advice Letter, will result in the Phase-In-Recovery Charges as of the date of issuance, consistent with market conditions and the terms set out in this Financing Order that demonstrates both measurably enhanced cost savings to customers and mitigates rate impacts to customers as compared with traditional cost recovery methods available to the Applicants.

The forgoing certifications do not mean that lower Phase-In-Recovery Charges could not have been achieved under different market conditions, or that structuring and pricing the PIR Bonds under conditions not permitted by the Financing Order could not also have achieved lower PIR Bond charges.

The Applicants are delivering this Certification to the Commission solely to assist the Commission in establishing compliance with the aforementioned standard. The Applicants specifically disclaim any responsibility to any other person for the contents of this Certification, whether such person claims rights directly or as third-party beneficiary.

Respectfully submitted,

OHIO EDISON COMPANY

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

THE TOLEDO EDISON COMPANY

By:

Name:

Title:

EX-99.2

Exhibit 99.2

Entry Nunc Pro Tunc

Issued by The Public Utilities Commission of Ohio

on January 9, 2013

BEFORE

THE PUBLIC UTILITIES COMMISSION OF OHIO

In the Matter of the Joint Application of	)
Ohio Edison Company, The Cleveland	)
Electric illuminating Company, and The	)
Toledo Edison Company for Authority to	)	Case No. 12-1465-EL-ATS
Issue Phase-In-Recovery Bonds and	)
Impose, Charge and Collect Phase-In-	)
Recovery Charges and for Approval of	)
Tariff and Bill Format Changes.	)

ENTRY NUNC PRO TUNC

The Commission finds:

(1) Pursuant to its December 19, 2012, Entry on Rehearing, the Commission granted in part and denied in part the application for rehearing filed by Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company (collectively, Joint Applicants).

(2) The second full paragraph, second sentence on page 5 of the December 19, 2012, Entry on Rehearing states that:

Specifically, the Commission clarifies that the Financing Order, p. 40, (10) should reflect that upfront and ongoing Financing Costs for the issuance of PIR Bonds, under the single combined issuance should not exceed five percent of the amounts reflected in columns B-D on Exhibit C of the application, Pages 1, 2 and the financial advisor expenses discussed infra.

In order to be consistent with our treatment of debt retirement costs, the aforementioned sentence should be revised as follows:

Specifically, the Commission clarifies that the Financing Order, p. 40, (10) should reflect that upfront and ongoing Financing Costs for the issuance of PIR Bonds, under the single combined issuance, should not exceed by more than five percent the amounts reflected in columns B-D on Exhibit C of the application, Pages 1, 2 and the financial advisor expenses discussed infra.

12-1465-EL-ATS -2

(3) The third full paragraph, second sentence on page 9 provides “that the first full paragraph on p. 21 of the Financing Order should be revised to read as follows….” The aforementioned sentence should be revised to reflect “that the second full paragraph on p. 21 of the Financing Order should be revised to read as follows ….”

(4) The last finding on page 21 of the Financing Order reflects that “Joint Applicants propose that the following language should be adopted in the Financing Order at 41, Section VI.D.2:” The aforementioned sentence should be revised to reflect that “Joint Applicants propose that the following language should be adopted in the Financing Order at 41, Section Vl.D.13:”

(5) Column (e) on Page 9 of the Revised Issuance Advice Letter currently is captioned as “Present Value of Phase-In-Recovery.” It should be captioned “Present Value of Phase-In-Recovery Charges.”

It is, therefore,

ORDERED, That the December 19, 2012, Entry on Rehearing be amended nunc pro tunc, to provide for the revised sentences and corrections as set forth above. It is, further,

12-1465-EL-ATS -3

ORDERED, That a copy of this Entry be served upon all parties of record.

THE PUBLIC UTILITIES COMMISSION OF OHIO

Todd A. Snitchler, Chairman

/s/ Steven D. Lesser
Steven D. Lesser	Andre T. Porter

Lynn Slaby

JSA/vrm

Entered in the Journal

J“N 0 9 2C\3

Barcy F. McNeal

Secretary

Exhibit 99.2

Entry On Rehearing

Issued by The Public Utilities Commission of Ohio

on December 19, 2012

BEFORE

THE PUBLIC UTILITIES COMMISSION OF OHIO

In the Matter of the Joint Application of	)
Ohio Edison Company, The Cleveland	)
Electric Illuminating Company, and The	)
Toledo Edison Company for Authority to	)	Case No. 12-1465-EL-ATS
Issue Phase-In-Recovery Bonds and	)
Impose, Charge and Collect Phase-In-	)
Recovery Charges and for Approval of	)
Tariff and Bill Format Changes.	)

ENTRY ON REHEARING

The Commission finds:

(1) Pursuant to its October 10, 2012, Financing Order, the Commission approved, subject to specific stated conditions, the joint application of Ohio Edison Company, The Oeveland Electric Illuminating Company, and The Toledo Edison Company (collectively, Joint Applicants) for authority to issue Phase-In-Recovery (PIR) Bonds and impose, charge and collect PIR Charges. Additionally, the Commission approved the requested tariff and bill format changes.

(2) On November 9, 2012, Joint Applicants filed an application for rehearing regarding the Commission’s Financing Order.

(3) On November 19, 2012, the Ohio Consumers’ Counsel (OCC) filed its memorandum contra Joint Applicants’ application for rehearing.

(4) Section 4903.10, Revised Code, provides that any party who has entered an appearance in a proceeding may apply for rehearing with respect to any matter determined by the proceeding by filing an application within 30 days of the entry of the order in the Commission’s journal. The Commission may grant and hold rehearing on the matter specified in the application if, in its judgment, sufficient reason appears to exist.

(5) The application for rehearing has been timely filed as required by Section 4903.10, Revised Code.

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(6) In their first assig’iunent of error, Joint Applicants assert that the Financing Order unreasonably and unlawfully caps all Financing Costs at five percent of the companies’ estimated costs, instead of 105 percent of the Financing Costs, excluding debt retirement costs, and 115 percent for debt retirement costs (Application for Rehearing at 1).

Joint Applicants point out that based on the representations set forth in their application, the estimated upfront Financing Costs for a combined issuance, exclusive of debt retirement costs, would be approximately $8.4 million. Additionally, Joint Applicants note that based on the representations set forth in their application, the ongoing Financing Costs for a combined issuance would be approximately $1.1 million annually and result in savings of almost $300,000 annually. (Id., Memorandum in Support at 5.)

Joint Applicants recognize that, in its Financing Order at p. 20, the Commission established that the debt retirement costs should not exceed the debt retirement costs estimated in the application by more than 15 percent and that the Financing Costs other than debt retirement costs should not exceed the estimated costs provided in the application by more than five percent (Id.).

Notwithstanding this determination, Joint Applicants point out that the Commission in Section VI.D.10 of its Financing Order, p. 40, established limits on the Financing Costs that both conflict with the Commission’s findings earlier in the Financing Order and are unworkable (Id. at 6). In particular, Joint Applicants highlight that the Commission determined that “upfront and ongoing Financing Costs for the issuance of PIR Bonds, under the single combined issuance, and the debt retirement costs should not exceed five percent of the amounts reflected in columns B-D on Exhibit C of the application, Pages 1, 2 and the financial advisor expenses discussed infra” (Id. at 5, citing Financing Order at 40).

Joint Applicants also submit that while the Commission, in Section VI.D.10 of its Financing Order, p. 40, required them to file an Issuance Advice Letter setting forth their actual upfront and ongoing Financing Costs, this requirement cannot be satisfied due to the fact that the actual ongoing Financial Costs will be incurred over the term of the PIR Bonds (Id. at 7).

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Additionally, Joint Applicants submit that caps on Financing Costs are not needed and can only work to the detriment of customers by denying them of millions of dollars in savings in the aggregate due to the implementation of an arbitrary cap (Id. at 4). Referencing Sections 4928.232(E)(1) and 4928.232(F), Revised Code, Joint Applicants contend that the General Assembly recognized that Financing Costs will fluctuate with market conditions and, therefore, only authorized a cap on total Phase-In Costs. Further, Joint Applicants submit that because the securitization structure created by the General Assembly ensures that customers will benefit from a securitization, arbitrary caps on costs are unnecessary and counterproductive (Id.).

(7) OCC responds that it is reasonable for the Commission to establish caps on individual items and on the aggregate amount of Financing Costs associated with the issuance of PIR Bonds. Relying upon the statutory cap on total Phase-In Costs provided pursuant to Section 4928.232(F), Revised Code, OCC asserts that this cap can only be achieved through reasonable caps on all related upfront Financing Costs and on-going Financing Costs (OCC Memorandum Contra at 3).

OCC believes that the estimations of upfront and on-going Financing Costs set forth in the application are relevant and that the Commission, in its Order, has provided ample flexibility to accommodate possible changes in market conditions (Id. at 4). In support of its position, OCC asserts that the companies should have provided accurate estimates in their application as to their financing and debt retirement costs. OCC points out that if the companies’ estimates are inaccurate or unreliable, the benefits to customers regarding the proposed securitization cannot be determined and the Commission will be unable to determine if customers will realize cost savings from the issuance of the PIR Bonds. Therefore, OCC recommends that the Commission not permit the companies to proceed with the proposed securitization and, instead, should obtain and review answers from Joint Applicants regarding their estimates of the Financing Costs contained in the joint applicant and relied upon the Commission and the parties in this proceeding (Id. at 4, 5).

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OCC also highlights that, pursuant to Section 4928.232(D)(2), Revised Code, there must be a demonstration that customer savings are measurably enhanced and not simply that customers will benefit from the securitization. According to OCC, the capping of upfront and ongoing Financing Costs helps ensure that this requirement is satisfied (Id. at 5, 6).

In response to Joint Applicants’ assertion that the applicable statute only requires a cap on total Phase-In Costs, OCC points out that the law does not prohibit the Commission from establishing a cap on upfront and ongoing Financing Costs. Therefore, OCC believes that it is appropriate for the Commission to apply its technical expertise to determine caps on financing and debt retirement costs on a case-by-case basis (Id. at 5). Additionally, OCC asserts that capping the upfront and ongoing Financing Costs is necessary to achieve the cap on total Phase-In Costs, as required by the statute (Id. at 6).

(8) Upon a review of the arguments raised by Joint Applicants in their first assignment of error, the Commission finds that the application for rehearing should be granted in part and denied in part.

In regard to Joint Applicant’s objection to the Commission’s determination to cap both upfront and ongoing Financing Costs rather than just capping total Phase-In Costs, the Commission finds that the application for rehearing should be denied. In reaching this determination, the Commission highlights that, pursuant to Section 4928.232(E)(1), Revised Code, it is authorized to establish the maximum amount and a description of the Phase-In Costs that may be recovered through the issuance of the PIR Bonds. Consistent with this authority, the Commission properly established caps setting forth the maximum amount to be permitted for both upfront and ongoing Financing Costs and for debt retirement costs which comprise the Phase-In Costs authorized pursuant to Section 4928.232(E)(1), Revised Code. In reaching this determination the Commission notes that unlike the issue of interest rate identification discussed, infra, many of these costs are largely quantifiable.

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To the extent that Joint Applicants are continuing to advocate that the Commission should utilize the thresholds of 105 percent of the Financing Costs, excluding debt retirement costs, and 115 percent for debt retirement costs in lieu of the five and 15 percent caps as set forth in the Financing Order, the application for rehearing is denied. In reaching this determination, the Commission finds that such an interpretation will result in the recovery of an unreasonable amount of costs related to the approved securitization.

With respect to Joint Applicant’s objection regarding the alleged inconsistencies in the Financing Order regarding the authorized cap for debt retirement costs, the Commission finds that the application for rehearing should be granted. Specifically, the Commission clarifies that the Financing Order, p. 40, (10) should reflect that upfront and ongoing Financing Costs for the issuance of PIR Bonds, under the single combined issuance should not exceed five percent of the amounts reflected in columns B-D on Exhibit C of the application, Pages 1, 2 and the financial advisor expenses discussed infra. Further, the debt retirement costs should not exceed the debt retirement costs estimated in the application by more than 15 percent of the amounts reflected in columns B-D on Exhibit C of the application, Pages 1, 2. Finally, rehearing is granted for the purpose of modifying the Financing Order to no longer require the inclusion of the ongoing Financing Costs in the Issuance Advice Letter inasmuch as such amount will not be specifically identifiable at the time of the filing of the Issuance Advice Letter.

(9) In their second assignment of error, Joint Applicants assert that the Commission must provide minimum standards for third­ party billing. While recognizing that third parties currently cannot bill and/or collect Phase-In-Recovery Charges, Joint Applicants point out that the application in this proceeding contemplates the billing and collection of Phase-In-Recovery Charges through 2034. (Application for Rehearing at 7.) Therefore, Joint Applicants contend that the Commission, in its Financing Order, must address and minimize the risk that third-party billing and collection presents to future billing and collection of Phase-In-Recovery Charges (Id. at 8). While recognizing that the Commission noted that Joint Applicants “should be allowed to implement such features subject to the

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terms and conditions of competitive third-party billing set forth by the Commission at that time,” Joint Applicants assert that such a determination does nothing to mitigate the risk as reflected in the bond rating (Id. at 10 citing Financing Order at 21).

In support of their position, Joint Applicants aver that the risk that third-party billing and/ or collection could be implemented during the time period when the PIR Bonds are outstanding represents a risk to investors that is considered by rating agencies in determining the appropriate rating for the PIR Bonds and that this risk affects the ultimate interest borne by the PIR Bonds and incorporated into the Phase-In-Recovery Charges (Id. at 8). Joint Applicants submit that in light of the risk of future third-party billing and collection relative to Phase-In-Recovery Charges, rating agencies require that Financing Orders authorizing utility securitizations include minimum standards for billing and collection agents in order for those securitizations to receive a AAA rating (Id.) According to Joint Applicants, unless the Commission corrects the Financing Order’s failure to acknowledge and mitigate the risk of third-party billing and collection of Phase-In-Recovery Charges, they may be unable to complete the securitization and customers will be harmed by having to forego millions of dollars of savings in the aggregate (Id.).

Joint Applicants believe that it is critical to the proposed securitization that the Commission grant rehearing and issue a revised Financing Order that includes the specific minimum standards identified below in order that the PIR Bonds be considered as the highest credit quality instruments and deliver the expected savings to customers. In particular, Joint Applicants opine that the minimum standards must address rating agency concerns concerning the risks presented by the possibility of having third-party billing and collection service approved in the state of Ohio prior to the year 2035 (Id. at 8, 9).

In support of their position, Joint Applicants assert that particular rating agencies have now included third-party billing standards as a factor in their rating of the creditworthiness of securitization bond (Id. at 9). Joint Applicants opine that in order “[f)or rating agencies to stress test the Companies proposed securitization using an

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assumption that third-party billing and/ or collections could occur during the term of the PIR Bonds, they must have guidance from this Commission as to the standards that may be applicable….” (Id. at 10). Reiterating the minimum standards set forth in their application that they believe must be included in a Financing Order, Joint Applicants state that:

Such steps should generally require that (i) the Commission establish operational standards and minimum credit requirements for any such third-party billing intermediary, or require a cash deposit, letter of credit or other credit mitigant in lieu thereof, (ii) the Commission find that regardless of who is responsible for billing, the customers of that electric distribution utility shall continue to be responsible for Phase-In-Recovery Charges, (iii) if a third party meters and bills for the Phase-In-Recovery Charges, that the electric distribution utility (as servicer) must have access to information on billing and usage by customers to provide for proper reporting to the [Special Purpose Entity] SPE and to perform its obligations as servicer, (iv) in the case of a third­ party default, billing responsibilities must be promptly transferred to another party to minimize potential losses; and (v) the failure of customers to pay Phase-In-Recovery Charges shall allow service termination by the electric distribution company on behalf of the SPE of the customers failing to pay Phase-In-Recovery Charges in accordance with Commission-approved service termination rules and orders.

(Id. at 8, 9 citing Application at 24).

Additionally, Joint Applicants assert that the Commission improperly determined that, to the extent that it authorized third-party billing and/or collection of Phase-In-Recovery Charges in the future, such billing and collection costs should not be included as part of the recoverable, ongoing Phase-In­ Costs or other rates and charges (ld. at 10, 11 citing Financing Order at 47). In support of its position, Joint Applicants explain that under a third-party billing scenario, the third-party would

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be compensated directly or indirectly by all customers for this service, including those customers paying the Phase-In­ Recovery Charges. Joint Applicants submit that they should not be precluded from recovering prudently-incurred costs of providing electric service to customers (Id. at 11). Further, Joint Applicants aver that to the extent that “any incremental costs are incurred by the companies in connection with third-party billing and collection services, they must be appropriately allocated to both the Companies’ distribution service and as a Phase-In-Recovery Charge in order to avoid a compromise of the bankruptcy remote nature of the transaction” (Id.).

Based on the Commission’s language regarding third-party billing, Joint Applicants opine that the bankruptcy remote nature of the SPE will be compromised due to the fact that either the SPE will be forced to incur a charge for which it has no offsetting revenue or the Companies will be forced to subsidize the SPE. Joint Applicants contend that either scenario will jeopardize the bankruptcy remote nature of the SPE and will threaten the AAA rating (Id. at 12).

(10) Upon a review of the arguments raised by Joint Applicants relative to this assignment of error, the Commission finds that the application for rehearing should be granted.

In consideration of this assignment of error, the Commission notes that Joint Applicants’ request that the Commission establish specific minimum third-party billing standards in order to alleviate the concerns of the applicable rating agencies regarding the creditworthiness of the PIR Bonds. Joint Applicants also recognize that third-parties currently cannot bill and/ or collect Phase-In-Recovery Charges either separately or as one billing component that may be levied upon the companies’ customers (Id. at 7). Further, Joint Applicants acknowledge that third-party billing and collection service can only become a reality in the future if authorized by the Commission and that the Commission will have the responsibility to minimize the potential risk to customers of any defaults by third parties that may in the future bill and collect the Phase-In-Recovery Charges (Id. at 10).

As clearly stated in its Financing Order, the Commission recognizes the potential of third-party billing in the future and

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has acknowledged that if it establishes rules in the future relating to competitive third-party billing/ collection, Joint Applicants should be allowed to implement such features subject to the terms and conditions of competitive third-party billing set forth by the Commission at that time (Financing Order at 21). This representation responds to Joint Applicants’ request that the Commission clearly signal today that it is willing to allow for third-party billing of the Phase-In-Recovery Charges in this case in the event that the Commission establishes rules setting forth the minimum standards by which such activity would occur.

Notwithstanding this determination, the Commission is sensitive to Joint Applicants’ need further clarification as to the issue of future third-party billing for inasmuch as it represents a risk to investors that is considered by rating agencies in determining the appropriate rating for the PIR Bonds and affects the ultimate interest borne by the PIR Bonds and incorporated into the Phase-In-Recovery Charges.

Additionally, the Commission finds that rehearing should be granted relative to the Joint Applicants’ assignment of error regarding the determination that to the extent that the Commission authorizes third-party billing and/ or collection of Phase-In-Recovery Charges in the future, such billing and collection costs should not be included as part of the recoverable, ongoing Phase-In-Costs or other rates and charges.

Consistent with these determinations, the Commission finds that Joint Applicants’ proposed modifications with respect to this assignment and error should be granted. Specifically, the Commission finds that the first full paragraph on p. 21 of the Financing Order should be revised to read as follows:

The Commission notes that there is no dispute that competitive third-party billing/ collection is not currently permitted by the Commission’s rules. However, if the Commission, in the future, establishes rules relating to competitive third­ party billing/collection, the Commission will take the necessary steps to ensure nonbypassability, both to preserve the high credit quality of the PIR Bonds and to minimize the likelihood that any

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defaults by any such third party result in an increase in charges thereafter billed to all customers. Further, any such third-party billing/ collection costs shall be included as part of the recoverable, ongoing costs as contemplated by the application and the Act, or as part of any other rates and charges, as appropriate.

Additionally the Commission finds that paragraph VI.F.11 on p. 47 of the Financing Order should be revised to read as follows:

If and to the extent that the Commission subsequently allows third parties to bill and/ or collect any Phase-In-Recovery Charges, the Commission will take steps to ensure nonbypassability and minimize the likelihood of default by third-party servicers, which generally would include (i) operational standards and minimum credit requirements for any such third party billing servicer, or require a cash deposit, letter of credit or other credit mitigant in lieu thereof, (ii) a finding that, regardless of who is responsible for billing, customers shall continue to be responsible for Phase-In-Recovery Charges, (iii) if a third party meters and bills for the Phase­ In-Recovery Charges, that the electric distribution utility (as servicer) must have access to information on billing and usage by customers to provide for proper reporting to the SPE and to perform its obligations as servicer, (iv) in the case of a third party default, billing responsibilities must be promptly transferred to another party to minimize potential losses; and (v) the failure of customers to pay Phase-In-Recovery Charges shall allow service termination by the electric distribution utility on behalf of the SPE of the customers failing to pay Phase-In-Recovery Charges in accordance with Commission­ approved service termination rules and orders. Any costs associated with such third-party billing and/ or collection shall be included as part of the recoverable, ongoing Phase-In-Costs-or any other

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rates or charges, as appropriate. Further, the Commission shall not permit implementation of any third-party billing/ collection that would result in a downgrade of the PIR Bonds.

(11) In their third assignment of error, Joint Applicants contend that the Commission erred by imposing a cap on the interest rate for PIR Bonds at the level of the interest rates originally included with the application filed in this case (Application for Rehearing at 13). In particular, Joint Applicants assert that the rate cap is an unreasonable limitation that jeopardizes the entire securitization and the benefits it is expected to bring to customers (Id. at 13, 14). Additionally, Joint Applicants argue that an interest rate cap is unnecessary due to the fact that, consistent with Section 4928.235(C)(2), Revised Code, the companies will not proceed with the securitization transaction unless savings can be achieved for consumers (Id. at 15).

As further explanation, Joint Applicants indicate that the interest rates referenced in the application were included solely for illustration purposes based on the then current interest rates for a bond issuance with particular structural features and rating (Id. at 14). Based on these assumptions, Joint Applicants – state that, in their application, they estimated that the weighted average yield of PIR Bonds (exclusive of upfront and ongoing financing costs) would be less than three percent on the date that the application was filed (Id.). Additionally, Joint Applicants state that, in their application, they estimated that significant cost savings and mitigation of rate impacts through the issuance of the proposed PIR Bonds would be expected to occur provided the weighted average yield on the various tranches of PIR Bonds was below five percent (Id.).

In support of their position regarding this assignment of error, Joint Applicants explain that the effective interest rate will not be known until the PIR Bonds are priced at the time that they are sold. Joint Applicants opine that the interest rates will most likely be different at the time that the Commission prices the PIR Bonds. Joint Applicants highlight that the Commission’s determination would prohibit even a very small increase in interest rates that would result in a minor decrease in customer savings (Id. at 14). Joint Applicants believe that such an outcome is not reasonable and not consistent with the applicable statute (Id. at 14).

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According to Joint Applicants, any increase in market rates will be mitigated to some extent by a corresponding reduction in debt retirement costs. Specifically, Joint Applicants note that the debt retirement costs are a function of the maturity period remaining on the existing debt to be redeemed and the spread between the current interest on U.S. Treasury securities with a similar remaining maturity as the debt to be redeemed and the interest rates on the existing debt to be redeemed. Joint Applicants note that the smaller the spread between these two interest rates and the shorter the remaining maturity period, the lower the debt retirement costs. (Id. at 15).

While they do not believe that an interest rate cap is necessary, Joint Applicants submit that, to the extent that the Commission does intend to establish such a cap, it should be no less than 200 basis points above the estimated weighted average yield provided for in the application. Joint Applicants believe that this range is necessary to account for market conditions while preserving an opportunity for customer savings.

(12) OCC submits that it is reasonable and lawful for the Commission to impose interest rate caps on the PIR Bonds that are at or below those referenced in the application. OCC disputes Joint Applicants’ claim that the interest rates included in the application were provided solely for the purposes of illustration of the then current market rates. Rather, OCC states that the interest rates were included in part to justify that the proposed securitization would measurably enhance the benefits to customers based on the most reasonably accurate information available (OCC Memorandum Contra at 7).

Further, OCC notes that if there is no cap on the interest rate on the PIR Bonds, the application could be premised on an unreasonably low interest rate for the purpose of justifying the proposed securitization. However, OCC opines that absent an interest rate cap, if the market interest rate does change significantly, the underlying rationale for the securitization would no longer be valid since the companies could not prove that the securitization would result in measurably enhanced benefits (Id. at 7, 8).

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In response to Joint Applicants proposal that any interest rate cap be no less than 200 basis points above the estimated weighted average yield provided in the application, OCC asserts that the proposed threshold should be rejected due to the fact that the companies have failed to provide any support for the proposed threshold. OCC emphasizes that the establishment of an interest rate cap will serve to protect customers in the event that there is a change in market conditions. (Id. at 8.)

(12) Upon a review of the arguments raised by Joint Applicants relative to this assignment of error, the Commission finds that the application for rehearing should be granted. The Commission certainly agrees with OCC regarding the need for securitization applications filed with the Commission to present a sufficient level of certainty relative to the assertions set forth in the application in order to allow for the Commission to reasonably rely on such information when performing its analysis and issuing its decision. To do otherwise will result in the Commission rendering its decisions based on hypotheses, rather than actual facts.

Notwithstanding this pronouncement, the Commission recognizes that there are unique circumstances in which specific requisite criteria cannot be known with certainty and can only be speculated about at the present time. The actual level of a future interest rate is one of these circumstances. While the Commission, in its Financing Order, relied upon the representation set forth in the application that the weighted average yield of PIR Bonds (exclusive of upfront and ongoing financing costs) would be less than three percent on the date that the application was filed, the Commission recognizes that this rate cannot be known at this time. Therefore, the Commission must consider the reasonableness of certain assumptions and then proceed with performing its analysis pursuant to Section 4928.232(0)(2), Revised Code. To the extent that the actual interest rate is higher than anticipated, the Commission will consider this factor as part of its review of the terms of the Issuance Advice Letter in accordance with Section 4928.235(C)(2), Revised Code, discussed infra..

(14) In its fourth assignment of error, Joint Applicants seek clarification of when the Financing Order is to become final and

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not subject to modification by a Supplemental Financing Order. Specifically, Joint Applicants dispute the Commission’s determination that it be afforded four complete business days following receipt of the Issuance Advice Letter to complete its review of the transaction and that, if the Commission does not act during this time period, the Order shall be considered to be the Final Financing Order (Application for Rehearing at 16 citing Financing Order at 45). Additionally, Joint Applicants dispute the Commission’s determination that it may issue a Supplemental Financing Order within the four-day period in order to stop the issuance of the PIR Bonds (Id. citing Financing Order at 23).

In support of this assignment of error, Joint Applicants contend that the date upon which a Financing Order becomes final is determined by Section 4928.33, Revised Code, and that the companies cannot move forward with the pricing of the PIR Bonds until there is a Final Financing Order (Id. at 16). While recognizing that following the issuance of its Financing Order and the filing of the Issuance Advice Letter the Commission may issue an Order determining that customers will not realize cost savings from the securitization, Joint Applicants submit that such an Order is not a Supplemental Financing Order and would not further modify the Final Financing Order (Id. at 17).

Based on its statutory interpretation, Joint Applicants request that the Commission clarify that the Financing Order approved pursuant to its Entry on Rehearing will become the Final Financing Order in accordance with Section 4928.233(E), Revised Code, and not following the filing of the Issuance Advice Letter. Additionally, Joint Applicants request that the Commission clarify that, while it may, pursuant to Section 4928.235(C)(2), Revised Code, stop the issuance of PIR Bonds within four days after receipt of the Issuance Advice Letter, it will not modify or amend a Final Financing Order (Id. at 17).

(15) Upon the a review of the arguments raised by Joint Applicants relative to this assignment of error, the Commission finds that the application for rehearing should be granted in part and denied in part.

Specifically, the Commission agrees with Joint Applicants’ assertion that Section 4928.233, Revised Code, establishes the

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parameters under which a Financing Order becomes final and not subject to modification by the Commission. In particular, the Commission recognizes that, consistent with Section 4928.233(£), Revised Code, a Financing Order shall become final and take effect as follows:

(a) On the expiration of the thirty-day period after the date the Commission issues the Financing Order if no application for rehearing is filed with the [C]ommission within that period;

(b) On the expiration of the sixty-day period after the denial of the application for rehearing, if no notice of appeal is filed with the [S]upreme [C]ourt within that period;

(c) On the expiration of the sixty-day period after the [C]ornission issues an order after rehearing that approves or modifies and approves the [F]inancing [O]rder, if no notice of appeal is filed with the [S]upreme [C]ourt within that period;

(d) On the expiration of the ten-day period after the date that the [S]upreme [C]ourt judgment entry or order that affirms or modifies and affirms a [F]inancing Order is filed with the clerk, including any such order issued by the [c]ourt following a [C)ommission decision on remand, if no motion for reconsideration is filed within that period;

(e) On the date the [S]upreme [C]ourt [O]rder denying a motion for reconsideration of a judgment entry or order that affirmed or modified and affirmed a {F]inancing Order is filed with the clerk;

(f) On the date the [S]upreme [C]ourt judgment entry or order issued after reconsideration of a judgment entry or order that affirmed or modified and affirmed a [F]inancing [O]rder is filed with the clerk;

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(g) On the applicable effective date under division (E)(1), (2), or (3) of this section regarding a [F]inancing [O]rder remanded to the [C]ommission.

[Section 4928.233(E)].

Notwithstanding the actual time upon which a Financing Order becomes final, the Commission finds that, consistent with Section 4928.235(C)(2), Revised Code, it continues to maintain the jurisdiction prior to the actual issuance of the PIR Bonds to determine whether market conditions are such that customers will not realize cost savings from the issuance of PIR Bonds. The Commission will perform this analysis consistent within the four-day window for the review of the Issuance Advice Letter and the attestations of the Commission’s independent financial advisor as set forth in the Financing Order. To the extent that the Commission finds that market conditions are such that customers will not realize cost savings from the issuance of the PIR Bonds, the Commission shall issue an order directing that the EDU not proceed with securitization approved under the final Financing Order.

(16) In their fifth assignment of error, Joint Applicants respond to the Commission’s determination that the fee for the Commission’s designated financial advisor shall not to exceed $1,500,000, $500,000 of which is to be funded out of the underwriter’s spread and $1,000,000 of which will be included as part of the upfront Financing Costs (Id. at 17, 18). Joint Applicants assert that the Commission’s authorized fee for its financial advisor is inappropriate, unnecessarily high, and inconsistent with market precedent (Application for Rehearing at 18).

Specifically, Joint Applicants contend that under the Commission’s structure, the financial advisor’s fee would reduce the fee paid to underwriters that actually conduct the transaction and the financial advisor will earn a fee greater than any of the underwriters (Id.). Further, Joint Applicants conjecture that such an excessive fee cap for the financial advisor will result in Request for Proposal (RFP) responses that include fees well above market. According to Joint Applicants, such a scenario is problematic due to the fact that the

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companies’ customers will have to pay this fee as one component of the upfront Financing Costs. (Id.). As a result of their expressed concerns, Joint Applicants recommend that the Financing Order be amended to reflect that the fee for the Commission’s financial advisor should not exceed $500,000 and that the fee be included as part of the upfront Financing Costs and not be funded out of the underwriter’s spread.

(17) OCC emphasizes that the role of the independent financial advisor is important in light of the fact that this is the first securitization proceeding to be considered by the Commission (OCC Memorandum Contra at 11). Given the important responsibility of the independent financial advisor for minimizing the costs to be incurred by customers, OCC concludes that paying the first $500,000 of the financial advisor’s fee out of the underwriter’s spread is justified and in the best interest of customer (Id. at 10).

OCC believes that the range of the independent financial advisor fee, the disbursement of the fee out of the underwriter’s spread, and the use of a competitive RFP process in selecting the independent financial advisor are reasonable. In reaching its conclusion, OCC compared the level of the proposed fee for the individual financial advisor to the proposed fees for other types of professional services related to the proposed transaction (Id. at 10, 11). OCC does not believe that First Energy has substantiated its assertion that the proposed fee and payment structure will likely result in RFP responses that include a fee structure well above market. Rather, OCC submits that the fee will be determined under the supervision of the Commission Staff (Staff) as a result of a competitive bid process (Id. at 9). Finally, OCC notes that the range of the independent financial advisor fee is on par with those approved by other state Commissions throughout the country (Id. at 11).

(18) Upon the a review of the arguments raised by Joint Applicants relative to this assignment of error, the Commission finds that the application for rehearing should be denied.

In reaching this decision, the Commission highlights the fact that, rather than establishing the actual amount of compensation to be paid to the selected financial advisor, the

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Commission, pursuant to the Financing Order, simply established the ceiling for the level of compensation to be paid to the financial advisor selected to assist the Commission in its review of the final terms of the proposed transaction, including, but not limited to the attestation that the final terms and conditions of the securitization transaction are consistent with the Financing Order and the requisite statutory provisions. See Financing Order at 43, 44.

Specifically, the Commission stated the financial advisor’s fee should be capped at an amount not to exceed $1,500,000; $500,000 of which will be funded out of the underwriter’s spread and $1,000,000 of which will be included as part of the upfront Financing Costs. The actual selection of the financial advisor will occur pursuant to a RFP process under the supervision of Staff. It is incorrect to prematurely assume that RFP process will automatically result in the payment of the capped amount. Additionally, with respect to the disbursement of independent financial advisor’s fee out of the spread of underwriter, the Commission clarifies that the $500,000 amount out of the underwriter’s spread will be adjusted on a prorated basis if the actual fee does not reach the $1,500,000. Finally, the Commission agrees with OCC that the range of the independent financial advisor fee is on par with independent financial advisor fees approved by other state Commission’s throughout the country.

(19) In their sixth assignment of error, Joint Applicants note that, although the Commission addressed the fee available for the companies or any successor electric distribution utility (EDU) as a servicer, it did not address the fee available for a non-EDU servicer to the extent that situation arises (Application for Rehearing at 19). Joint Applicants submit that the Commission fails to recognize that such an omission impacts the confidence of rating agencies and jeopardizes the securitization process and its benefits. In support of its position, Joint Applicants note that, while this proceeding is the first in the state of Ohio to securitize an EDU assets, electric utility customer-backed securitization processes have been implemented in a number of other states across the country (Id.). As a result of these processes, Joint Applicants submit that rating agencies have certain expectations for utility commission financing orders in order to provide greater security for the rating agencies that the securitization will attain an AAA rating (Id.).

12-1465-EL-ATS -19

Additionally, Joint Applicants assert that the Commission should provide that the non-EDU servicer fee should be increased, if necessary, to ensure the collection and true-up of the Phase-In-Recovery Charges and the attainment of a AAA rating from the rating agencies on the PIR Bonds (Id.). In making this proposal, Joint Applicants submit that the servicing fee for such non-utility successors shall not exceed 0.75 percent of the initial principal amount of the PIR Bonds (Id. at 20).

(20) Upon a review of the arguments raised by Joint Applicants relative to this assignment of error, the Commission finds that the application for rehearing should be granted consistent with the clarifications set forth supra regarding potential future third-party billing.

Notwithstanding the fact third-party billing does not currently exist, the Commission is sensitive to the concerns expressed by Joint Applicants regarding the need for certainty in order to enhance the likelihood of the PIR Bonds receiving a AAA rating. Therefore, to the extent that the Commission subsequently amends its rules to provide for the third-party billing of EDU charges, the Commission finds that a non-EDU servicer of the PIR Bonds shall receive an annual servicing fee not to exceed 0.75 percent of the initial principal amounts of the applicable PIR Bonds issued by the respective SPE of the Joint Applicant. Consistent with this determination, paragraph VI. B.14. on p. 36 of the Financing Order shall be amended to provide that:

In the event that there is no EDU successor willing or able to perform such servicing functions, a non-utility servicer shall be engaged, and given the incremental costs to perform the servicing function shall be entitled to an increased annual servicing fee to preserve the PIR Bond ratings. However, the annual servicing fee for such non-utility successor shall not exceed 0.75 percent of the initial principal amount of the PIR Bonds.

12-1465-EL-ATS -20

(21) In their seventh assignment of error, Joint Applicants assert that the Financing Order and the Issuance Advice Letter include specific errors and inconsistencies that warrant correction in order to ensure accuracy and consistency with the applicable statutes and the language of the documents themselves.

(22) Upon a review of corrections identified in this assignment of error, the Commission finds that the application for rehearing shall be granted in part and denied in part. Specifically, all of the proposed language corrections with the exception of those denoted below are approved without any modification.

(23) Joint Applicants propose that in the Financing Order at 29, Section VI.A.4, the first sentence should be revised as follows in order to clarify terms of capitalization of the SPEs:

Each Applicant will capitalize its respective SPE in an amount not less than 0.50 percent of its initial principal balance of the PIR Bonds, as may be adjusted upward at the time of issuance based on rating agency requirements and the return of and on such capitalization as shall be maintained as an ongoing financing cost.

(Application for Rehearing at 21).

(24) The proposed revision shall be denied. In reaching this determination, the Commission calls attention to the fact that the proposed language is substantively different from Joint Applicants’ original proposal that:

[e]ach applicant will capitalize its respective SPE in an amount anticipated to be approximately 0.50 percent of its initial principal balance of Phase-In-Recovery Bonds, as may be adjusted at the time of issuance based on rating agency requirements.

(Application at 17).

12-1465-EL-ATS -21

(25) Joint Applicants propose that the following language should be adopted in the Financing Order at 37, Section VI.C:

The costs of setting up and maintaining the PIR Trust, including fees and expenses of the trustee and its counsel shall be included in and constitute upfront and ongoing financing costs.

(Application for Rehearing at 21).

(26) The proposed language shall be approved with the addition of the clarification that the costs of the setting up and maintaining the PIR Trust shall not exceed the costs authorized pursuant to the Financing Order.

(27) Joint Applicants propose that the following language in the Financing Order at 37, Section VI.D.1, should be adopted:

Phase-In-Recovery Charges together with the adjustment mechanism will provide full and timely recovery of all costs associated with the issuance of or use of proceeds from the PIR Bonds approved in this proceeding including all Phase­ In Costs and financing costs as described in this Financing Order.

(Id.)

(26) The proposed language shall be approved as follows:

Phase-In-Recovery Charges together with the adjustment mechanism will provide full and timely recovery of all costs (i.e. Phase-In Costs and Financing Costs) associated with the issuance of or use of proceeds from the PIR Bonds approved in this proceeding pursuant to this Financing Order.

(27) Joint Applicants propose that the following language should be adopted in the Financing Order at 41, Section VI.D.2:

The estimated ongoing financing costs include without limitation, serv1cmg fees, other administrative fees, the cost of any reserves or other credit enhancement (if required) for the PIR Bonds, the periodic costs for servicing the PIR Bonds and the Phase-In-Recovery Charges,

12-1465-EL-ATS -22

trustee and other administrative costs, return on capital account and applicable taxes, and, if the PIR Bonds (or PIR Trusts, as the case may be) are issued in a registered public offering, ongoing Securities and Exchange Commission (SEC) compliance costs.

(Id. at 22).

(28) The proposed language shall be approved as follows:

The estimated ongoing financing costs include servicing fees, other administrative fees, the cost of any reserves or other credit enhancement (if required) for the PIR Bonds, the periodic costs for servicing the PIR Bonds and the Phase-In­ Recovery Charges, trustee and other administrative costs, return on capital account and applicable taxes, and, if the PIR Bonds (or PIR Trusts, as the case may be) are issued in a registered public offering, ongoing Securities and Exchange Commission (SEC) compliance costs.

(29) Joint Applicants propose that the second paragraph of Issuance Advice Letter at 2 of 12 must be deleted as this standard is not consistent with any standard provided in the Act. Further, Joint Applicants submit that no securitization transaction that is modeled consistent with their application could meet this standard. (Id. at 23.)

(30) The Commission notes that the disputed language relative to this objection is as follows:

The amount securitized will not exceed the present value of traditional cost recovery mechanisms revenue requirement over the life of the proposed PIR Bonds associated with the Securitized PIR (See Exhibit-A, Attachment 2, Schedule A).

(12-1465, Financing Order, Issuance Advice Letter, at 2 of 12).

Upon a review of the disputed language, the Commission finds that the Joint Applicants’ request is denied due to the fact that

12-1465-EL-ATS -23

the concerns raised by Joint Applicants are addressed in the their proposed changes to the Issuance Advice Letter at 10 of

12 (Attachrnent-2, Schedule-D),

(31) The Financing and Order and Issuance Advice Letter issued on October 10, 2012, must be read in conjunction with the rulings/modifications rendered in this Entry on Rehearing for the purpose of setting forth the entirety of terms and conditions under which the proposed securitization is approved. A revised Issuance Advice Letter is attached to this Entry on Rehearing.

It is, therefore,

ORDERED, That the application for rehearing be granted in part and denied in accordance with the findings set forth above. It is, further,

ORDERED, That the Financing Order previously issued in this proceeding as amended pursuant to this Entry on Rehearing be approved. It is, further,

ORDERED, That the Issuance Advice Letter issued in this proceeding as amended pursuant to this Entry on Rehearing be approved. It is, further,

12-1465-EL-ATS -24-

ORDERED, That a copy of this Entry on Rehearing be served upon all parties of record.

THE PUBLIC UTILITIES COMMISSION OF OHIO

Todd A. Snitcher, Chairman

Steven D. Lesser	Andre T. Porter

/s/ Cheryl L. Roberto — dissent
Cheryl L. Roberto	Lynn Slaby

JSA/vrm

Entered in the Journal

DEC I 9 2012

Barcy F. McNeal

Secretary

BEFORE

THE PUBLIC UTILITIES COMMISSION OF OHIO

In the Matter of the Joint Application of	)
Ohio Edison Company, The Cleveland	)
Electric Illuminating Company, and The	)
Toledo Edison Company for Authority to	)	Case No. 12-1465-EL-ATS
Issue Phase-In-Recovery Bonds and	)
Impose, Charge and Collect Phase-In-	)
Recovery Charges and for Approval of	)
Tariff and Bill Format Changes.	)

DISSENTING OPINION OF COMMISSIONER CHERYL L. ROBERTO

Because I have questions regarding the substance of the joint application submitted by the Applicants which were unresolved when the Commission initially acted on this matter and which remain unresolved at this time, I decline to join my colleagues in signing this order.

Cheryl L. Roberto

Entered in the Journal

DEC 19 2012

Barcy F. McNeal

Secretary

Case No. 12-1465-EL-ATS

Page 1 of 12

REVISED ATTACHMENT 1

FORM OF ISSUANCE ADVICE LETTER

     day                     , 201    

Case No. 12-1465-EL-ATS

The Public Utilities Commission of Ohio

SUBJECT: ISSUANCE ADVICE LETTER FOR PHASE-IN-RECOVERY BONDS

Pursuant to the Financing Order issued In the Matter of the Joint Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Issue Phase-In-Recovery Bonds and Impose, Charge and Collect Phase-in-Recovery Charges and for Approvals of Tariff and Bill Format Changes in Case No. 12-1465-EL-ATS, each Applicant hereby submits, no later than the end of the first business day after the pricing of this series of PIR Bonds, the information referenced below. This Issuance Advice Letter is for the PIR Bonds series tranches . Any capitalized terms not defined in this Issuance Advice Letter shall have the meanings ascribed to them in the Financing Order.

PURPOSE:

This filing establishes the following:

(a) The total amount of Phase-In Costs and financing costs being securitized;

(b) Confirmation of compliance with issuance standards;

(c) The actual terms and structure of the PIR Bonds being issued;

(d) The initial Phase-In-Recovery Charges for retail users; and

(e) The identification of the SPEs.

PHASE-IN COSTS BEING SECURITIZED:

The total amount of Phase-In Costs and financing costs being securitized is presented in Attachment I.

Case No. 12-1465-EL-ATS

Page 2 of 12

COMPLIANCE WITH ISSUANCE STANDARDS

The Financing Order requires Applicants to confirm, using the methodology approved therein, that the actual terms of the PIR Bonds result in compliance with the standards set forth in the Financing Order. These standards are:

l. The total amount of Phase-In-Recovery Charge revenues to be collected under the Financing Order is less than the revenue requirement that would be recovered using traditional cost recovery mechanisms (See Exhibit-A, Revised Attachment 2, Schedule C and D);

2. The amount securitized will not exceed the present value of traditional cost recovery mechanisms revenue requirement over the life of the proposed PIR Bonds associated with the Securitized PIR Charges; (See Exhibit-A, Revised Attachment 2, Schedule D);

3. The PIR Bonds will be issued in one or more series comprised of one or more tranches having final maturities of      years and legal final maturities not exceeding      years from the date of issuance of such series (See Exhibit-A, Revised Attachment 2, Schedule A); and

The structuring and pricing of the PIR Bonds is certified by the Applicants to result in the Phase-In-Recovery Charges as of the date of issuance consistent with market conditions and the terms set out in this Financing Order (See Exhibit-A, Revised Attachment 3) that demonstrates both measurably enhanced cost savings to customers and mitigates rate impacts to customers as compared with traditional cost recovery methods available to the Applicants.

Case No. 12-1465-EL-ATS

Page 3 of 12

ACTUAL TERMS OF ISSUANCE

PIR Bond Series:                    

PIR Bond Issuer: [SPE]

Trustee:                     

Closing date:                 , 201    

Bond ratings: S&P AAA, Fitch AAA, Moody’s Aaa

Amount Issued: $             

PIR Bond Issuance Costs (upfront financing costs): See Attachment.              Schedule             

PIR Bond Support and Servicing (ongoing financing costs): See Attachment.              Schedule             

Tranche	Coupon Rate	Expected Final Maturity	Legal Final Maturity
A-1		/    /	/    /
A-2		/    /	/    /
A-3		/    /	/    /

Effective Annual Weighted Average Interest Rate of the PIR Bonds	%
Life of Series:	years
Weighted Average Life of series:	years
Call Provisions (including premium, if any):
Target Amortization Schedule:
Target Final Maturity Dates:
Legal final Maturity Dates:
Payments to Investors:	Semiannually Beginning                   , 201
Initial annual Servicing Fee as a percent of original PIR Bond principal balance:	%

Case No. 12-1465-EL-ATS

Page 4 of 12

INITIAL PHASE-IN-RECOVERY CHARGES

Table I below shows the current assumptions for variables used in the calculation of the initial Phase-In-Recovery Charges.

TABLE I
Input Values For Initial Phase-In-Recovery Charges
Applicable period: from                     ,                     to
Forecasted retail kWh sales for the applicable period:
PIR Bond debt service for the applicable period:	$
Percent of billed amounts expected to be charged-off		%
Forecasted% of Billing Paid in the Applicable Period:		%
Forecasted retail kWh sales billed and collected for the applicable period:
Current PIR Bond outstanding balance:	$
Target PIR Bond outstanding balance as of             /    /	$
Total Periodic Billing Requirement for applicable period:	$

Case No. 12-1465-EL-ATS

Page 5 of 12

REVISED ATTACHMENT -1

SCHEDULE A

TOTAL AMOUNT SECURITIZED

	OE	CEI	TE	Total
Amount pennitted to be securitized by Financing Order	$	$	$	$
Phase-In Costs	$	$	$	$
Upfront financing costs	$	$	$	$
TOTAL AMOUNT	$	$	$	$

Case No. 12-1465-EL-ATS

Page 6 of 12

REVISED ATTACHMENT-I

SCHEDULED

ESTIMATED UPFRONT FINANCING COSTS

		AMOUNT1
1	Accountant’s / Auditor’s Fees
2	Fee for Applicants’ Structuring Advisor
3	Legal Fees arid Expenses for Applicants/Issuer’s Counsel
4	Legal Fees and Expenses for Trustee’s Counsel
5	Legal Fees and Expenses for Underwriter’s Counsel
6	Printing and Filing Fees
7	Rating Agency Fee2
8	SEC Registration Fees,
9	Servicer Set-up Costs
10	Trustee Payments
11	Underwriting Costs5
12	Fees & Expenses for Commission’s Financial Advisor
13	Miscellaneous6
14	Subtotal Issuance Expenses (Sum Lines 1-13)
15	Debt Retirement Costs7
16	ESTIMATED UP-FRONT FINANCING COSTS
	(Lines 14 + Line 15)

¹  Up-front financing costs expected to be allocated based upon Phase-In Cost amounts assuming an SEC-registered single combined offering, unless otherwise noted.

²  Based upon current fee schedules applied to issuance amounts which change from time to time.

³ Based upon current fee level of $0.0000393 applied to issuance amounts.

⁴  Assumes $100,000 per Applicant.

⁵ Based upon fee level of 0.50% applied to issuance amounts.

⁶  Unforeseen expenses, not previously identified in the application.

⁷  Will vary depending upon market conditions and the timing and method of debt retirement.

Case No. 12-1465-EL-ATS

Page 7 of 12

REVISED ATTACHMENT-2

SCHEDULE-A

PIR BOND REPAYMENT SCHEDULE

SERIES                     , TRANCHE
Payment Date	Principal Balance	Interest	Principal	Total Payment

SERIES                     , TRANCHE
Payment Date	Principal Balance	Interest	Principal	Total Payment

SERIES                     , TRANCHE
Payment Date	Principal Balance	Interest	Principal	Total Payment

Case No. 12-1465-EL-ATS

Page 8 of 12

REVISED ATTACHMENT-2

SCHEDULE-B

ONGOING FINANCING COSTS

	ANNUAL AMOUNT1
Ongoing Servicer Fee (The Companies as Serviced (0.10% of issuance amount) OR Ongoing Servicer Fee (Third Party as Servicer) unto .75% of issuance amount\
Administration Fees and Expenses
Trustee Fees and Expenses
Legal Fees
Accounting Fees
SPE Independent Manager’s Fees
Rating Agency Fees
Reporting and SEC Filing Fees
Miscellaneous
Return on Capital Account4
Dealers in Intangible Tax5
TOTAL ONGOING FINANCING COSTS

Note: The amounts shown for each category of operating expense on this attachment are the expected expenses for the first year of the PIR Bonds. Phase-In Recovery Charges will be adjusted at least semi-annually to reflect any changes in ongoing financing costs through the true-up process described in the Financing Order.

¹  Ongoing financing costs expected to be allocated ratably based upon issuance amount assuming an SEC-registered single combined offering.

² Assumes each Applicant acts as servicer and earns annual servicing fees equal to 0.10% of issuance amount

³  Based upon current scheduled fee levels.

⁴ Assumes each Applicant funds reserve account equal to 0.50% of issuance amount and earns an annual rate of return of 6.85% thereon.

⁵  Assumes each securitization SPE is required to pay a 0.8% annual tax on amounts funded in capital account

Case No. 12-1465-EL-ATS

Page 9 of 12

REVISED ATTACHMENT-2

SCHEDULE-C

SUMMARY OF PHASE-IN-RECOVERY CHARGES

Year (a) PIR
Bond
Payments¹(b) Ongoing
Financing:
Costs²
(c) Total Nominal
Phase-In- Recovery
Charge Requirement³
(d) Present
Value of
Phase-In-
Recovery(e)

¹ From Revised Attachment 2, Schedule A.

²  From Revised Attachment 2, Schedule B.

³  Sum of PIR Bond payments and ongoing financing costs, adjusted for applicable taxes, uncollectible and billing lags

⁴  The discount rate used is the weighted average effective annual interest rate of the PIR Bonds.

Case No. 12-1465-EL-ATS

Page 10 of 12

REVISED ATTACHMENT-2

SCHEDULE-D

COMPLIANCE WITH THE PRESENT VALUE STANDARD¹

Existing Ratemaking2	Securitization Financing3	Savings/(Cost) of  Securitization Financing
$	$	$
$	$	$

¹ Calculated in accordance with the methodology used in the Joint Application using the discount rate referenced in footnote 4 on Revised Attachment-2, Schedule-C, page 9 of 12.

²  Carrying Costs at 6.85%.

³ From Revised Attachment 2, Schedule C.

Case No. 12-1465-EL-ATS

Page 11 of 12

REVISED ATTACHMENT-3

CERTIFICATION OF COMPLIANCE

[FE Companies Letterhead]

Date:                  , 201

Re: Joint Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company, Case No. 12-1465-EL-ATS

Applicants, Ohio Edison, Cleveland Electric, and Toledo Edison submit this Certification pursuant to the Financing Order In the Matter of the Joint Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Issue Phase-In-Recovery Bonds and Impose, Charge and Collect Phase-In-Recovery Charges and for Approvals of Tariff and Bill Format Changes in Case No. 12-1465-EL-ATS. All capitalized terms not defined in this letter shall have the meanings ascribed to them in the Financing Order.

In its issuance advice letter dated                 ,, 201    , the Applicant has set forth the following particulars of the PIR Bonds:

Name of PIR Bonds:                 

PIR Bond Issuer: [SPE]

Trustee:

Closing date:                 , 201    

Amount Issued: $            

Expected Amortization Schedule: See Revised Attachment 2, Schedule A to the Issuance Advice Letter

Distributions to Investors (quarterly or semi-annually):

Weighted Average Coupon Rate:     %

Weighted Average Yield:     %

The following actions were taken m connection with the design, structuring and pricing of the PIR Bonds:

<Insert actions actually taken here>

Case No. 12-1465-EL-ATS

Page 12 of 12

Based upon the information reasonably available to its officers, agents, and employees of the Applicants, the Applicants hereby certify that the structuring and pricing of the PIR Bonds, as described in the Issuance Advice Letter, will result in the Phase-In-Recovery Charges as of the date of issuance, consistent with market conditions and the terms set out in this Financing Order that demonstrates both measurably enhanced cost savings to customers and mitigates rate impacts to customers as compared with traditional cost recovery methods available to the Applicants.

The forgoing certifications do not mean that lower Phase-In-Recovery Charges could not have been achieved under different market conditions, or that structuring and pricing the PIR Bonds under conditions not permitted by the Financing Order could not also have achieved lower Phase-In Recovery Charges.

The Applicants are delivering this Certification to the Commission solely to assist the Commission in establishing compliance with the aforementioned standard. The Applicants specifically disclaim any responsibility to any other person for the contents of this Certification, whether such person claims rights directly or as third-party beneficiary.

Respectfully submitted,

OHIO EDISON COMPANY

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

THE TOLEDO EDISON COMPANY

By:

Name:

Title:

Exhibit 99.2

Financing Order

Issued by The Public Utilities Commission of Ohio

on October 10, 2012

BEFORE

THE PUBLIC UTILITIES COMMISSION OF OHIO

In the Matter of the Joint Application of	)
Ohio Edison Company, The Cleveland	)
Electric illuminating Company, and The	)
Toledo Edison Company for Authority to	)	Case No. 12-1465-EL-ATS
Issue Phase-In-Recovery Bonds and	)
Impose, Charge and Collect Phase-In-	)
Recovery Charges and for Approval of	)
Tariff and Bill Format Changes.	)

FINANCING ORDER

The Commission finds:

I. BACKGROUND

Pursuant to its March 25, 2009, Opinion and Order in Case No. 08-935-EL-SSO (08-935), In the Matter of the Application of Ohio Edison Company, the Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Establish a Standard Service Offer Pursuant to Section 4929.143, Revised Code, in the Form of an Electric Security Plan, its March 24, 2010, Opinion and Order in Case No. 07-1003-EL-ATA, In the Matter of the Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Modify Certain Accounting Practices and for Tariff Approvals, and its August 25, 2010, Opinion and Order in Case No. 10-388-EL-SSO, In the Matter of the Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Establish a Standard Service Offer Pursuant to Section 4928.143, Revised Code, in the Form of an Electric Security Plan, the Commission authorized the Ohio Edison Company (Ohio Edison), The Cleveland Electric illuminating Company (CEI), and The Toledo Edison Company (Toledo Edison) (collectively, Applicants) to defer and recover as regulatory assets certain costs, and associated carrying charges, through a Deferred Fuel Cost Recovery Rider (Rider DFC), related to fuel costs in the 2006-2007 time frame. Specifically, the rider provides for the recovery of uncollected fuel costs for the time frame covering January 1, 2006 through December 31, 2007. Full recovery of the deferred costs associated with this rider is expected to occur by approximately 2035 (Staff Comments at 29).

In its Order of March 25, 2009, in 08-935, the Commission authorized CEI to defer and recover as a regulatory asset the power costs and related carrying charges through a Deferred Generation Cost Recovery Rider (Rider DGC). Specifically, the rider provides for recovery of uncollected purchase power costs for the time frame January 1, 2009, through May 31, 2009. Full recovery of the deferred costs associated with this rider is expected to occur by approximately 2021 (Id.).

12-1465-EL-ATS -2

In its May 25, 2011, Opinion and Order in Case No. 10-176-EL-ATA, In the Matter of the Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Approval of a New Rider and Revision of an Existing Rider, the Commission authorized Ohio Edison and CEI to defer and recover as a regulatory asset the costs and associated carrying charges associated with the transition of all electric customers toward market pricing beginning in 2011. This recovery is to be accomplished through a Residential Electric Heating Recover Rider (Rider RER1). Full recovery of the deferred costs associated with this rider is expected by occur by approximately June 2014 (Id.).

II. APPLICABLE LAW

The 129th General Assembly passed HB 364 on December 14, 2011, establishing Sections 4928.23 through 4928.2318, Revised Code, (the Act), for the purpose of providing electric distribution utilities (EDUs) with the mechanism to securitize, through the issuance of Phase-In-Recovery Bonds (PIR Bonds), certain debt previously approved by the Commission. Pursuant to the Act, which was signed into law on December 21, 2011, and became effective on March 22, 2012, EDUs may seek a Financing Order from the Commission to securitize certain types of costs known as deferred assets. These assets include fuel costs, infrastructure costs, and environmental clean-up expenses that the Commission has allowed a utility to defer and collect from customers. Section 4928.231(B), Revised Code, describes the requisite components of the application for a Financing Order.

Section 4928.01(A)(6), Revised Code provides that an electric distribution utility (EDU) means an electric utility that supplies at least retail electric distribution service. Pursuant Section 4928.231, Revised Code, an EDU may apply to the Commission for a Financing Order that authorizes the following:

(1) The issuance of PIR Bonds, in one or more series to recover uncollected Phase-In Costs;

(2) The imposition, charging, and collection of Phase-In­ Recovery Charges, in accordance with the adjustment mechanism approved by the Commission under Section 4928.232, Revised Code, and consistent with the Commission’s authority regarding governmental aggregation as provided in division (I) of Section 4928.20, Revised Code, to recover both of the following:

(a) Uncollected Phase-In Costs;

(b) Financing costs.

12-1465-EL-ATS -3

(3) The creation of Phase-In Recovery Property under the Financing Order.

Pursuant to Section 4928.231, Revised Code, the application must include the following:

(1) A description of the uncollected Phase-In Costs that the EDU seeks to recover through the issuance of PIR Bonds;

(2) An estimate of the date each series of PIR Bonds are expected to be issued;

(3) The expected term during which the Phase-In Costs associated with the issuance of each series of PIR Bonds are expected to be recovered;

(4) An estimate of the financing costs, as described in Section 4928.23, Revised Code, associated with the issuance of each series of PIR Bonds;

(5) An estimate of the amount of Phase-In-Recovery Charges necessary to recover the Phase-In Costs and financing costs set forth in the application and the calculation for that estimate, which calculation shall take into account the estimated date or dates of issuance and the estimated principal amount of each series of PIR Bonds;

(6) For Phase-In-Recovery Charges not subject to allocation according to an existing order, a proposed methodology for allocating Phase-In-Recovery Charges among customer classes, including a proposed methodology for allocating such charges to government aggregation customers based upon the proportionate benefit determination made under division (I) of Section 4928.20, Revised Code;

(7) A description of a proposed adjustment mechanism for use as described in division (A)(2) of this Section 4928.31, Revised Code;

12-1465-EL-ATS -4

(8) A description and valuation of how the issuance of PIR Bonds, including financing costs, will both result in cost savings to customers and mitigate rate impacts to customers when compared to the use of other financing mechanisms or cost-recovery methods available to the EOU;and

(9) Any other information required by the Commission.

Consistent with Section 4928.232(0)(1), Revised Code, the Commission shall not issue a Financing Order under Section 4928.232(C), Revised Code, unless the Commission determines that the Financing Order is consistent with Section 4928.02, Revised Code. Pursuant to Section 4928.232(0)(2), Revised Code, in order to issue a financing order, the Commission must find that the issuance of the PIR Bonds and the Phase-In Recovery Charges authorized by the order results in, consistent with market conditions, both measurably enhancing cost savings to customers and mitigating impacts to customer as compared with traditional financing mechanisms or traditional cost recovery methods available to the EDU or, if the Commission previously approved a recovery method, as compared with that recovery method.

III. APPLICATION OVERVIEW AND PROCEDURAL HISTORY

On May 3, 2012, as amended on August 16, 2012, Applicants filed a joint application (application) and exhibits, pursuant to Section 4928.231, Revised Code, seeking authority to recover Phase-In Costs and financing costs, issue PIR Bonds, and impose and collect Phase-In-Recovery Charges. Additionally, Applicants seek the requested tariff and bill format approvals. Further, Applicants request that the Commission consider the application on an expedited basis.

Applicants represent that they are Ohio corporations engaged in the distribution of electricity for sale to retail customers in the state of Ohio under rates and tariffs approved by this Commission and are EDUs, pursuant to Section 4928.0l(A)(6), Revised Code (Application at 3).

According to Applicants, the Act provides for EOUs to securitize certain previously approved costs (Phase-In Costs) through the issuance of PIR Bonds pursuant to a Financing Order issued by the Commission. As contemplated by the application, Applicants request that the Commission authorize the issuance of the PIR Bonds if such issuances result in, consistent with market conditions, measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with the Commission’s previously-approved recovery methods, and are consistent with Section 4928.02, Revised Code (Id.). Applicants represent that these

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benefits to customers are reflected in a reduction in the expected amount payable by the customers on both a nominal and a net present value basis as compared with existing recovery mechanisms (Id.).

Applicants request that the Commission issue a Financing Order pursuant to the provisions of Section 4928.232(C) and (D)(2) authorizing the issuance of PIR Bonds up to an aggregate principal amount of $555 million in one or more series and in one or more classes/tranches. Specifically, Applicants request that the Commission approve the issuance of PIR Bonds in amounts of $280 million for CEI, $220 million for Ohio Edison and $55 million for Toledo Edison as described in the application. (Application at 3-5.)

Through their application, Applicants propose to establish a new Phase-In­ Recovery Rider (Rider PIR) in order to recover securitized costs associated with Applicants’ existing riders (i.e., DFC, DGC, and RERl). Once the Rider PIR is approved and effective, Riders RERl, DGC, and DFC will be withdrawn (Staff Comments at 29). All of these existing riders for which there are uncollected balances constitute Phase-In Costs to be financed through the proposed securitization in this case (Application at 3). Applicants propose to develop a revenue requirement for Rider PIR based on the securitization costs of each Applicant’s special purpose entity (SPE). The allocated revenue requirement is to be divided by the expected kWh sales in order to arrive at proposed Rider PIR rates. Once approved, the rates will be. Included in the EDUs tariff and will remain in effect until the next scheduled update (Id.).

Applicants state that the proceeds from the PIR Bonds will: (i) allow full collection of the associated financing costs, and (ii) compensate the Applicants for Phase-In Costs at an effective interest rate (after taking into account upfront and ongoing financing costs) that is lower than each Applicant’s Commission authorized rate of return for such regulatory assets (Id.). Each Applicant intends to use a portion of the proceeds from the issuance of the PIR Bonds to repay existing long-term debt, pay financing costs, and to assist with other corporate purposes (Id. at 4). The current and pro forma capitalization in connection with the issuance of PIR Bonds is presented in Exhibit D to the application (Id.).

Applicants submit that the proposed securitization will benefit customers by providing both cost savings and rate mitigation through reducing the overall cost of the deferred regulatory assets and by reducing the rates customers are currently paying toward their recovery of the deferred assets (Id. at 2). Specifically, Applicants aver the issuance of the PIR Bonds is expected to significantly reduce the carrying charges over the recovery period for these Phase-In Costs, resulting in estimated nominal costs savings to customers of approximately $104 million in the aggregate as

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shown on Exhibit B to the application (Id.). According to the application, rate mitigation will occur by flowing the cost savings through to customers annually in a manner that yields lower associated rates compared to the traditional cost recovery mechanisms previously approved by the Commission (Id.)

The PIR Bonds are expected to be recorded in accordance with Generally Accepted Accounting Principles (GAAP) primarily as long term debt on the balance sheet of each Applicant’s SPE for financial reporting purposes. Such SPE’s PIR Bonds will also appear on the consolidated balance sheet of the respective parent company in its GAAP financial statements (Id. at 5). Applicants note that the repayment of existing long-term debt by the Applicants may result in improved credit metrics for each of the Applicants as the PIR bonds are not expected to be classified as debt of the Applicants by rating agencies because they will not be supported by the general revenue streams or collateralized by assets of any Applicant (Id. at 4).

Regarding implementation of the proposed securitization, each individual Applicant will form a SPE, a separate, wholly-owned limited liability company expected to be organized in Delaware, for the purposes of the securitization transaction. Each individual Applicant will then transfer, sell or assign its Phase-In­ Recovery Property to its respective SPE. A structure/transaction flow chart has been provided as Exhibit J to the application. Applicants request that the Financing Order confirm the formation of each SPE, the sale of Phase-In-Recovery Property to each SPE, and the issuance by each SPE of PIR Bonds secured by the Phase-In-Recovery Property and other assets and property (subject to possible limited exceptions described in the application) owned by such SPE. (Id. at 16-21.)

In order to accomplish the securitization, each individual Applicant will enter into several agreements with its respective SPE subsidiary, as more fully described in the application. Such agreements will be substantially similar among each Applicant and its respective subsidiary (Id. at 26-28).

Applicants’ estimated deferral balances subject to securitization are provided in Exhibit A to the application. Applicants intend .that the PIR Bonds overall scheduled recovery period will not exceed the remaining recovery period under the existing riders (Id. at 7). Applicants explain that different tranches (classes) of bonds with different maturity dates will be issued in order to reduce the average interest costs (Id.).

The expected issuance date for the PIR Bonds, assuming no material changes in market conditions, will be within 120 days of the Financing Order becoming the Final Financing Order (Id. at 8). For illustrative purposes of the application, the assumed issuance date for the PIR Bonds is December 31, 2012. The indicative transaction

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structure, including the recommended tranches with initial principal amounts, first scheduled principal payment dates, expected maturity dates, final legal maturity dates, and average lives are provided in Exhibit E to the application (Id.). According to Applicants, at the time of the issuance of the PIR Bonds, certain of these Financing Costs are likely to vary from such estimated amounts reflected in the application as a result of the market conditions and other factors (e.g., the actual costs of redeeming or otherwise retiring existing long-term debt) (Id.).

Exhibit C to the application reflects an estimate of the corresponding upfront and ongoing financing costs. Applicants currently estimate that the finance costs will be $8.4 million exclusive of debt retirement costs. Applicants recognize that actual financing costs will vary from these estimates due to market conditions. Applicants represent that, promptly upon final determination, a statement setting forth the final upfront financing costs will be provided. (Id. at 8, 9.)

While recognizing that the debt retirement costs may vary significantly in response to market conditions and as a result of the terms of the various debt securities to be retired, each Applicant agrees to retire debt only in a manner that will permit the securitization transaction to· achieve enhanced cost savings to customers and mitigate rate impacts for customers (Id. at 9).

Applicants opine that, as reflected in Exhibit B to the application, the issuance of the PIR Bonds measurably enhances cost savings to customers relative to the uncollected Phase-In Recovery Charges under the existing riders (Id. at 10).

In support of the assertions set forth in the application regarding the alleged savings, Applicants represent that:

(1) Ohio Edison customers will have an estimated initial Phase-In-Recovery Charge of 0.3198 cents/kWh resulting in a monthly cost of $3.20 for the typical residential bill (1,000 kWh). If the existing riders continued as approved, a 1,000 kWh customer would pay on average for Rider DFC, and the Rider RER1, a total monthly charge of 0.3476 cents/kWh resulting in a monthly cost of $3.48.

(2) CEI customers would have an estimated initial Phase-In­ Recovery Charge of 0.3851 cents/kWh resulting in a monthly cost of $3.85 for a typical residential bill (1,000 kWh). If the existing riders continued as approved, a 1,000 kWh customer would pay on average for the Deferred Generation Cost Rider, DFC, and RER1, a total monthly charge of 0.4303 cents/kWh resulting in a monthly cost of $4.30.

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(3) Toledo Edison customers would have an estimated initial Phase-In-Recovery Charge of 0.0250 cents/kWh resulting in a monthly cost of $0.25 for the typical residential bill (1,000 kWh). If the existing riders continued as approved, a 1,000 kWh customer will pay an average for Riders DFC, and RERl, a total monthly charge of 0.0257 cents/kWh resulting in a monthly cost of $0.26.

(See Application, Ex. G). Additionally, Applicants note that the Phase-In-Recovery Charges are nonbypassable and that all customers, including those participating in government aggregation will be responsible for repayment of the PIR Bonds (Id. at 4, 14).

As reflected in Exhibit F to the application, Applicants propose a formula-based adjustment mechanism PIR reconciliation process whereby an initial update to each applicant’s PIR rider will occur sometime within in the first 12 months of the issuance date for the PIR bond. Thereafter, each company’s PIR rider will be updated semiannually with the exception of the last year that may require monthly case updates for each series of outstanding PIR Bonds (Id. at 12, 35).

Specifically, pursuant to Applicants’ proposal, no later than May 1 and November 1 of each year, the companies will file a request for approval of the adjusted PIR charges. The adjustments are to be based on mathematical errors in the application of the formula-based mechanism relating to the appropriate amount of any over- or under-collection of PIR charges (Id. at 27). Adjustments may also occur to address increases or decreases in trustee and servicing costs, rating agency surveillance fees, and legal and accounting fees and other ongoing financial costs. Adjustments may also occur related to the difference between estimated and actual costs. These adjustments will take into account revised projections of electricity consumption and customer payment information (Id.).

Proposed tariff sheets reflecting Phase-In-Recovery Charges that are expected to approximate the final tariff charges are included in Exhibit H to the application. According to the application, following the issuance of the Financing Order and upon pricing of the PIR Bonds, the proposed tariff sheets will be updated in accordance with the Commission approved adjustment mechanism to reflect the actual costs and any either revised assumptions and filed with the Commission. The existing riders will be reduced to zero on the effective date of the final initial tariff sheets subject to final reconciliation of the remaining deferral balances, if any, which will be maintained on the Applicants’ books subject to carrying charges until full cost recovery occurs.

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Finally, Applicants seek approval of a modified bill format that includes language relating to cost recovery charges in the notes section of the bill as provided in Exhibit I to the application.

In order to afford all interested persons the opportunity to provide comments on the application filed by Ohio Edison, CEI, and Toledo Edison, a comment cycle for the filing of initial and reply comments was established pursuant to the attorney examiner Entry of May 25, 2012. ·

Pursuant to the attorney examiner Entry of June 8, 2012, the automatic approval time frames set forth in Rule 4901:1-10-22(C), Ohio Administrative Code (O.A.C.), were suspended. On June 7, 2012, the office of the Ohio Consumers’ Counsel (OCC) filed a motion to intervene in this case. In support of its motion, OCC points out that, if the requested Phase-In Costs and financing costs are approved, they will be charged to the residential utility customers of the applicants, who are represented by OCC. Therefore, OCC submits that the interests of Ohio residential customers may be adversely affected by this case. As a result, OCC avers that intervention should be granted inasmuch as it satisfies the criteria set forth in Section 4903.221, Revised Code, and Rules 4901-1-ll(A) and (B), O.A.C. OCC’s motion to intervene is reasonable and should be granted.

N. COMMENT SUMMARIES

On June 25, 2012, the Commission Staff (Staff) filed its comments and recommendations. Also on June 25, 2012, OCC filed its comments relative to the application. On July 9, 2012, reply comments were submitted by both Applicants and OCC.

Staff reviewed Applicants’ securitization application and concurs that the financing terms and costs projected by the Applicants appear to be in conformance with general market conditions and are, therefore, reasonable. In particular, Staff states that it applied the following tests and reviews in order to verify whether the proposed securitization transaction satisfied certain conditions: (1) the total revenue test, (2) the present value test, (3) the proceeds test, (4) the debt retirement review, and (5) the bond structuring and pricing review (Staff Comments at 12).

Staff believes that the proposed securitization meets the total revenue test based on the conclusion that total revenue from the Phase-In-Recovery Charges will be less than the total revenue requirements under conventional utility financing methods in

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the expected case scenarios (Id. at 12, 13). Specifically, Staff opines that in the expected case scenario, securitization will result in revenues of about $52 million less for CEI, $44 million less for Ohio Edison, and $8 million less for Tofedo Edison than the revenues under the Commission’s previously-approved recovery methods/ conventional financing methods (Id. at 12).

Using the present value test, Staff also concludes that, under the expected case scenario, the securitization will result in tangible and quantifiable benefits to consumers due to the fact that they will pay less than if the same balances were recovered through previously-approved recovery methods/conventional financing methods. In particular, Staff states that CEI retail consumers will pay $27 million less, Ohio Edison retail consumers will pay $17 million less, and Toledo Edison retail consumers will pay $2 million less on a present value basis. (Id. at 12, 15.)

Staff believes that the proceeds test will be satisfied when Applicants primarily use the proceeds they receive from the issuance of PIR Bonds, in exchange for the sale of the Phase-In-Recovery Property to retire their existing debt securities (Id. at 13, 15, 16). Staff notes that in the case of Toledo Edison, in addition to using a portion of the PIR Bonds proceeds for retiring certain PIR debt securities, the company proposes to use $11 million for other corporate purposes (Id. at 13). In regard to this $11 million, Staff recommends that Toledo Edison consider investing this sum of money for other corporate purposes, including investment in the FirstEnergy Utility Money Pool on a short-term basis, or in other types of short-term investments comparable to the Money Pool, if the interest rates for such investment alternatives are greater than the interest rate that it would realize by investment in the Money Pool (Id. at 22).

Staff has verified the deferral balances as of May 2012, associated with Deferred Generation Costs, Deferred Fuel Costs, and Residential All Electric Credits (Id. at 23). Upon comparing the debt retirement costs as a percentage of the total debt retired by each company (debt retirement review), Staff opines that the debt retirement of CEI and Ohio Edison appears to be reasonable (Id. at 16). With respect to Toledo Edison, Staff notes that the company will be incurring debt retirement cost of about $8 million to retire about $25 million of its existing long-term debt. This equates to 33 percent of the debt proposed to be retired. Despite this high percentage, Staff concludes that, to the extent that Toledo Edison is part of a combined large issuance of the PIR Bonds, it will still be able to realize certain cost savings (Id. at 16, 17). In particular, Staff identifies that the estimated cost savings of the proposed securitization as a result of the reduction in carrying charges over the recovery period for the Phase-In Costs will be $52 million, $44 million, and $8 million for the customers of CEI, Ohio Edison, and Toledo Edison, respectively (Id. at 17).

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Regarding the bond structuring and pricing review, Staff points out that this test is intended to ensure that the structuring and pricing of the PIR Bonds results in the lowest PIR charges consistent with market conditions and the terms of the Financing Order. Specific to the current application, Staff notes that Applicants have structured the proposed securitization financing to ensure that the PIR Bonds receive the highest bond rating reasonably possible and at the same time obtaining the lowest overall cost of financing through securitized PIR Bonds (Id. at 17, 18). According to Staff, the actual investor market—dearing interest rates for PIR Bonds will be determined through the marketing and price discovery process (Id. at 18).

Based on the comparison set forth in the application of the effects of the proposed securitization relative to the existing rate-making mechanisms, Staff believes that customers will benefit due to an estimated nominal savings of $104 million in the aggregate (Id. at 25). Staff notes that the recovery period will not exceed the overall recovery period under the existing recovery methodologies approved by the Commission for such regulatory assets. Staff points out that the proposed securitization is expected to mitigate rate impacts to customers by flowing the cost savings through to customers annually in a manner that yields lower associated rates compared to the traditional cost recovery mechanisms previously approved by the Commission (Id.).

For the purpose of ensuring that the actual financing terms and costs incurred by the Applicants reflect the projected financing terms and costs, Staff recommends that the Commission condition its approval of the securitization financing costs of the PIR Bonds at an amount not to exceed 105 percent of the projections provided in the application (Id. at 18). To the extent that the up-front financing costs and/ or the ongoing financing costs at the time of pricing the bonds exceed the estimated cost reflected in the application by 105 percent, Staff recommends that Applicants seek specific Commission approval (Id. at 26).

Additionally, Staff believes that fixed interest rates for PIR Bonds, rather than floating interest rates, are necessary in order to ensure that consumers benefit from the proposed securitization (Id. at 21). Further, while recognizing that Applicants require certain flexibility in establishing the terms and conditions for the PIR Bonds, Staff recommends that this flexibility exist only up until the time of issuance and not be available after bond issuance in order to guarantee cost savings to customers and the mitigation of rate impacts (Id. at 23).

Staff proposes that the Commission require Applicants to file an Issuance Advice Letter, including certification from the individual affected company for each series of PIR Bonds following the determination of the final terms of the bonds and prior to their issuance. Staff recommends that the Issuance Advice Letter be filed with the Commission no later than the end of the first business day after the pricing date for that series of PIR Bonds (Id. at 19).

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Staff provided a draft of its proposed Issuance Advice Letter, which incorporates several supporting schedules. According to Staff, through an Issuance Advice Letter, each of the companies will provide a confirmation to the Commission that the PIR Bonds have been priced to be sold at the lowest market-clearing rates consistent with the market conditions on the day of pricing (Id. at 18). Staff recommends that the Issuance Advice Letter for each series of PIR Bonds should reflect the final structure of the PIR Bonds including the best estimate of the total ongoing financing costs and actual dollar amount of the initial Phase-In-Recovery Charges and other information specific to the PIR Bonds to be issued (Id. at 19). Staff opines that the initial PIR charges and the final terms of the PIR Bonds set forth in the Issuance Advice Letters should become effective on the date of the issuance of the PIR Bonds unless prior to noon on the fourth business day after pricing, the Commission issues a Supplemental Financing Order finding that the proposed issuance does not comply with the requirements of the Financing Order (Id. at 20).

Staff agrees with the Applicants’ proposal that each company be authorized to recover its average long-term debt, without reduction for accumulated deferred income taxes on its respective SPE’s capitalization amount, as an ongoing finance cost (Id. at 24). Staff also agrees with the proposed PIR reconciliation mechanism process (Id. at 26).

Staff responds to Applicants’ request for the Commission to consider allowing third parties to bill and/ or collect any PIR charges. In particular, Staff submits that under the current law, PIR charges can only be collected by EDUs. Therefore, Staff believes that Applicants’ request premature and unnecessary at this time inasmuch as it is not permitted under the existing statutes (Id. at 30).

Applicants respond to Staff’s recommendation that the companies seek Commission approval if, after the pricing of the PIR bonds, the upfront financing costs and/ or the ongoing financing costs are in excess of 105 percent of the estimated costs. Specifically, Applicants reject Staff’s supposition that relative to the debt retirement portion of the financing costs, an increase in financing costs means that customer savings will be impacted (Applicants’ Reply Comments at 3.) Rather, Applicants submit that an increase in debt retirement costs may be offset by lower interest rates on the PIR Bonds. Under this scenario, Applicants state that debt retirement costs should not adversely impact customer savings in any meaningful way (Id. at 4). Therefore, to the extent that the Commission believes that some form of a cap for debt retirement is necessary Applicants propose a formula that attempts to tie the actual debt retirement costs and interest rates to the estimated debt retirement costs and

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interest rates set forth in the application and then provides for a 15-percent adjustment interest rates set forth in the application and then provides for a 15-percent adjustment range. Under the Applicants’ proposal, if the customer savings are impacted by more than 15 percent, the Applicants would be obligated to provide Staff with revised exhibits explaining the difference (Id. at 5, 6.)

Regarding Staff’s concerns related to third-party billing agent parameters, Applicants believe that it is important that minimum standards be specified in the Financing Order simply because third-party billing and/or collection could potentially be authorized in the future during the life of the PIR Bonds. As a result of this potentiality, Applicants believe that third-party billing must be addressed in order for the bonds to be considered the highest credit quality instrument and correspondingly bear a low rate of interest and deliver the expected savings.

In support of their position, Applicants note that the PIR Bonds may have an expected maturity in excess of 20 years and that there is no guarantee that third-party billing and/ or collection will not be implemented during this time frame. While the Commission may take necessary steps to address third-party billing and/ or collection in the future, Applicants do not believe that such an approach will be sufficient for the purposes of the bonds that are the subject of this proceeding. Additionally, Applicants posit that the proposed minimum standards are similar to those typically in Financing Orders issued in jurisdictions where third-party billing and/ or collection have been permitted. To the extent that the state of Ohio or the Commission ultimately permits third-party billing and/ or collection in the future, Applicants opine that standards similar to that proposed would be incorporated (Id. at 6-9.)

Applicants also respond to Staff’s proposed requirement that the Issuance Advice Letter include a certification to be made by the companies that the structuring and pricing of the PIR Bonds will result in the lowest PIR bond charges consistent with market conditions and the terms of the Financing Order. In particular, Applicants believe that the imposition of such a standard is not required by the applicable statute and is beyond the scope of the Commission’s designated authority and may serve to undermine the viability of securitization (Id. at 10).

Applicants have provided revisions to the Issuance Advice Letter drafted by Staff in order to resolve any discrepancies between such letter and either the requirements of the Act or the companies modeling. Applicants assert that the submission of Issuance Advice Letter to the Commission subsequent to pricing should only be used to confirm consistency with the form of the Issuance Advice Letter approved in the Final Financing Order and to confirm the arithmetical accuracy of the information included therein (Id. at 13, 14.)

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interest rates set forth in the application and then provides for a 15-percent adjustment Advice Letter be shortened from four days to the next business day after submission (Id. at 14). Applicants request that the Financing Order state that if the Commission does not act within the prescribed time frame, the Issuance Advice Letter will be deemed accepted (Id.). Finally, Applicants concur ‘with Staff’s recommendation that the PIR Bonds be issued with fixed rates and not rely upon floating rates (Id. at 15).

OCC submits that pursuant to Section 4928.232(D)(l), Revised Code, the Commission must find that the issuance of a Financing Order is consistent with the state of Ohio’s electric services policies as set forth in Section 4928.02, Revised Code. Specifically, OCC advocates that when considering the issue of consistency with the state policies, the following factors should be liberally applied when reviewing and approving the terms and conditions of the financing order in this proceeding:

(1) The availability of adequate, reliable, safe, efficient, nondiscriminatory, and reasonably priced electric service;

(2) The protection of at-risk populations; and

(3) The facilitation of the state’s effectiveness in the global economy.

(OCC Initial Comments at 10).

To the extent that a Financing Order is consistent with the state of Ohio’s electric services policies, OCC asserts that, in accordance ‘with Section 4928.232(D)(2), Revised Code, the Commission must next determine whether the issuance of the PIR Bonds and the authorization of the Phase-In-Recovery Charges are consistent with market conditions, and will result in both measurably enhancing cost savings to customers and mitigate customer rate impacts as compared with traditional financing mechanisms or traditional cost-recovery methods available to the EDU. (Id. at 9-11.)

As part of the Commission’s review process, OCC notes that, currently, there are no guidelines in place regarding the initial and ongoing financial costs, the hiring and use of an investment banking firm, and the marketing and pricing of PIR Bonds. In regard to this concern, OCC recommends that the Commission establish certain guidelines and/ or benchmarks, such as the hiring of an independent financial advisor, in order to ensure that the securitization measurably enhances savings for customers. (Id. at 11.)

With respect to the issue of the selection of an investment banking firm to provide advice and service regarding the issuance of the PIR Bonds, OCC considers this selection to be a key component of the securitization process since the banking

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firm will be the primary financial advisor to the companies throughout the securitization process. Despite this important function, OCC submits that the application provides no information regarding the identity and expertise of the selected firm, the process used in the selection process, the tasks to be performed, or the compensation structure for the services provided. (Id. at 20.) Additionally, OCC seeks information in order to determine if the fees to be charged by the selected firm and the other upfront financing costs are reasonable and comparable to the industry norm (Id.). OCC believes that such information is necessary in order to determine if the application meets the statutory requirements of advancing state electric policies and whether the proposed securitization will measurably enhance cost savings to customers and mitigate customer rate impact (Id.).

OCC also asserts that the Commission should retain its own independent financial advisor in order to review the reasonableness of the Applicants’ proposal, including the financing costs that customers will be asked to pay. OCC also believes that the Commission should hire and independent financial advisor in order to review whether the estimated debt retirement costs are reasonable and if the costs conform to terms and conditions of debt securities commonly accepted in the financial industry (OCC Initial Comments at 24.)

OCC expresses concern regarding the proposed use of a private negotiated sale of the PIR Bonds rather than via an open auction or other type of competitive bid process (Id.). OCC believes that the use of a competitive process to price and sell PIR Bonds may be desirable for the purpose of attracting more buyers and a lower interest rate. (Id. at 21, 22.)

OCC questions the proposed transaction structure for the PIR Bonds. Citing to the application, OCC notes that in order to reduce the average interest cost, the PIR Bonds will likely be issued in the following three classes (tranches):

(1) $122,000,000 initial principal amount with a three-year maturity and projected interest rate of 0.62 percent.

{2) $92,400,000 initial principal amount with a seven-year maturity and projected interest rate of 1.4 percent.

{3) $270,397,439 initial principal amount with a 20.5-year maturity and projected interest rate of 3.22 percent.

Specifically, OCC raises concern regarding the third proposed issuance, which constitutes 55.78 percent of the total bonds to be issued. OCC asserts that Applicants have not provided a rationale for this particular transaction structure. OCC believes that Applicants should be required to present alternative transaction structures for

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review and comparison of the projected impacts on customers. In particular, OCC recommends that Applicants consider relying less on PIR Bonds with long expected maturity and, instead, focus on bonds with a shorter maturity in order to reduce the interest costs for customers. (Id. at 22, 23.)

OCC expresses concern regarding the upfront financing costs related to the application. Specifically, OCC notes that the upfront financing costs of approximately $48.5 million are even more than the estimated net present value of total savings in the amount of $46.9 million. In its opinion, OCC believes that, while providing little detailed supporting information, Applicants are requesting customers to pay a very substantial prepayment penalty to retire existing debt securities that were used to finance the deferred costs. OCC notes that, since this is the first securitization case to come before the Commission, there is little benchmark information for the Commission to rely upon other than the information included in the application. (Id. at 23.)

Regarding debt retirement expenses, OCC recommends that the Commission order the submission of additional information in support of the estimated costs (OCC Initial Comments at 24). Specifically, OCC disagrees with Staff’s determination that the debt retirement costs are reasonable for Ohio Edison and Toledo Edison. To illustrate its concern, OCC highlights the fact that there are significant variations in the percentage of debt retirement costs as a percentage of debt retired (i.e., 5 percent for CEI, 12 percent for Ohio Edison, and 33 percent for Toledo Edison) and that Applicants have failed to provide a valid explanation for the differences (Id. at 8, 9).

OCC opines that the same percentage should be utilized as the applicable cap since the debt retirement of the three EDUs will taking place during the same time period and the debt securities should have similar conditions related to debt retirement since they were all issued by the three EDUs with similar financial ratings and controlled by the same parent (OCC Reply Comments at 8, 9). In particular, OCC believes that a cap of 8 percent should be utilized for the purpose of this proceeding due to the fact that it represents a 60 percent additional allowance on the baseline number of 5 percent (Id. at 9). Based on this percentage, OCC proposes that the debt retirement costs for Ohio Edison should be capped at $13,221,169, instead of the estimated $19,910,070 in the application. Additionally, OCC recommends that the debt retirement costs for Toledo Edison should be capped at $2,038,9971 instead of the $8,410,757 estimated in the application (Id.).

While OCC agrees with Staff that the Applicants should seek Commission approval of the se=itization structure if the up-front financing cost and the ongoing financial costs exceed a threshold of the estimated costs by 105 percent, it does not agree that the amount of the estimated financing costs provided in Exhibit C to the

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application should be used as the baseline since Applicants failed to provide supporting documents, reports, or studies to validate these estimated costs (OCC Reply Comments at 7). Additionally, OCC questions whether Staff is proposing a threshold of 105 percent or a threshold of 205 percent which is based on the 100 percent of the baseline plus an allowed variance of 105 percent. In support of its position, OCC notes that 205 percent of the estimated financing cost of $48,465,099 is $99,5353,453, which would potentially diminish the net savings of $46.9 million resulting from the proposed securitization (Id. at 6, 7).

OCC recommends that the Commission establish caps on certain upfront expense items (i.e., Accountant’sA! uditor Fees, Fee for Applicants’ Structure Advisor, Legal Fees and Expenses for Applicants’/Issuer’s Counsel, Legal Fees and Expenses for Trustee’s Counsel, Legal Fees and Expenses for Underwriter’s Counsel, Service Set­ up Costs, and Miscellaneous Costs) based on the typical or average expenses incurred by Applicants for debt securities over the past five to ten years. OCC suggests that the Commission also take into consideration caps established in similar securitization transactions in other states. (Id. at 24.) To the extent that expenses exceed the established caps, OCC recommends that Applicants be responsible for the additional amounts due to the fact that they receive many benefits from the securitization of the regulatory assets (ld.).

OCC does not object to Toledo Edison’s decision to issue PIR Bonds in an amount greater than sum of the amount retired, debt retirement costs and insurance expense and using the funds for general corporate purposes. However, OCC does object to Staff’s proposal that Toledo Edison consider investing the estimated $11 million in “extra proceeds” from the PIR Bonds into other types of short-term investments comparable to First Energy Money Pool if the interest rates for such investment alternatives are greater than the interest that would be realized by investment in the Money Pool (Id. at 10).

Additionally, OCC asserts that since only part of the funds obtained through the securitization is for refinancing of deferred costs and the remainder are “extra proceeds,” it is only reasonable that just a portion of the issuance expense and debt retirement costs associated with the securitization be recovered through a PIR Charge to Toledo Edison’s customers (Id. at 10). Based on its contention that that Toledo Edison will be utilizing 70 percent of the bond proceeds for debt retirement purposes and 30 percent for other corporate purposes, OCC believes that an issuance expense of $941,755 and a debt retirement cost of $8,410,757 should be allocated to Toledo Edison. Notwithstanding these determinations, OCC then recommends that Toledo Edison’s debt retirement cost be capped at $2,038,971, as discussed supra. (Id.at 10, 11.)

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OCC supports Staff’s recommendation that the PIR Bonds should only be issued with fixed interest rates. In support of its position, OCC notes that “the purposes of PIR bonds are to ensure that customers achieve a guaranteed level of savings in financing costs, to permit EDUs to collect the deferred costs immediately, and to assure that bond investors are not exposed to any risks greater than those associated with the highest-rated bonds” (OCC Reply Comments at 5). Since there is no guarantee that Applicants will save interest costs by issuing bonds with floating interest rates, OCC believes that PIR Bonds should only be issued with fixed interest rates (Id.). Similarly, OCC concurs with Staff’s recommendation that flexibility in establishing the terms and conditions for the PIR Bonds to accommodate changes in market conditions should only be permitted prior to the issuance of the bonds. According to OCC, such a condition will help ensure a guarantee of measurably enhanced savings to customers (Id. at 6).

Applicants note that, despite filing comments in opposition to the request in this case, OCC never asserts that customers will not realize measurably enhanced cost savings under the proposed securitization or that the statutory standards have not been met. In response to OCC’s concerns regarding upfront financing costs, Applicants represent that the estimated fees included in the application are reasonable estimated levels for the proposed securitization transactions and that the fees to be actually included in the Rider PIR will reflect the actual financing costs incurred by the companies for services needed to accomplish the issuance and administration of the bonds (Applicants’ Reply Comments at 16).

Applicants explain that the calculation of debt retirement costs will be based on: (I) the current interest rates on U.S. Treasury securities with a similar remaining maturity as the debt to be redeemed, (2) interest rates on existing debt to be redeemed, and (3) the maturity period remaining on the existing debt to be redeemed. They may also seek to utilize a public tender offer for the purposes of retiring existing debt (Id. at 17). While OCC believes that the Applicants should absorb part of the costs incurred to undertake the securitization transaction, Applicants contend that such an approach is not consistent with the Act. Therefore, Applicants assert that they should not be forced to absorb any the financing costs, especially in light of the fact that the proposed transaction is projected to save customers in excess of $100 million in the aggregate (Id. at 18). Applicants note that by retiring existing debt, both the companies and their customers benefit due the reduction in borrowing costs (Id. at 18).

Applicant’s reject OCC’s proposal that the Commission consider the use of a competitive bid process to market and price PIR Bonds rather than relying on negotiated sales to investors, coordinated through underwriters, initial purchasers or placement agents. In particular, Applicants contend that negotiated sales are preferred and the most frequent due to the very fact that it involves issuers and

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underwriters, and investors in order to price the transaction at a level where there is expected to be adequate demand for the bonds to be fully distributed to investors. (Id. at 19.) In support of its position, Applicants represent that the selected structuring advisor in connection with this securitization transaction has represented that “obtaining the lowest interest rate is more likely to be obtained through a broad, transparent marketing process to a broad range of institutional investors, with the full cooperation and support of the companies in explaining the securities, rather than a competitive bid process where bids will be based upon underwriters’ subjective judgments on market dearing price” (Id. at 20).

Applicants note that the underwriters, initial purchasers or placement agents have not yet been selected with respect to this securitization transaction (Id.). Regarding OCC’s concerns regarding the identity of the structuring advisor selected for this securitization transaction, Applicants state that Goldman Sachs, a recognized leader in the field of securitization transactions, has been selected (Id. at 21). Applicants represent that Goldman Sachs has served as an underwriter on over $24 billion worth of electric utility securitizations and advised on the structuring of several such transactions, including two completed by a utility company affiliated with the Applicants (Id. at 21).

V. DISCUSSION AND CONCLUSIONS

This case represents the first time that the Commission is considering an application filed by an EDU pursuant to the Act, seeking a financing order for the issuance of PIR Bonds and to recover uncollected Phase-In Costs. Applicants are EDUs pursuant to Section 4928.0l(A)(6), Revised Code, and, therefore, have the proper standing to have their application in this proceeding considered by the Commission. Prior to setting forth the actual statutorily required provisions of the Financing Order pursuant to Section 4928.232, Revised Code, the Commission will first resolve the disputed issues as raised in the context of the parties’ comments in this case.

Based on the comment summaries supra, the first issue in dispute between the parties relates to the Staff’s recommendation that the Commission condition its approval of the Applicants’ securitization financing costs of the PIR Bonds at an amount not to exceed 105 percent of the projections provided in the application (Staff Comments at 18).

As noted above, Applicants focus on the issue of debt retirement costs and assert that while an increase in debt retirement costs may occur, it will be offSet by the lower interest rates on the PIR Bonds. Applicants then propose a formula that attempts to tie the actual debt retirement costs and interest rates to the estimated debt retirement costs and interest rates set forth in the application. Under the Applicants’

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proposal, if the customer savings are impacted by more than 15 percent, Applicants would be obligated to provide Staff with revised exhibits (Applicants’ Reply Comments at 3-6).

OCC is unclear as to the actual threshold being proposed by Staff. Additionally, regardless of the threshold to be utilized, OCC does not believe that the estimated financing costs provided in Exhibit C of the application should be relied upon as the applicable baseline (OCC Reply Comments at 6, 7).

While the Commission agrees with the conceptual framework proposed by Staff, we recognize the confusion identified by OCC regarding the intended manner by which the threshold is to be implemented. Therefore, the Commission clarifies that the actual financing costs (both up front and ongoing) of the PIR Bonds, excluding debt retirement costs, cannot exceed the estimated financing costs identified in the application by more than 5 percent. With respect to the issue of debt retirement costs, the Commission agrees with Applicants that these costs should be afforded more flexibility. Therefore, the actual costs related to debt retirement cannot exceed the estimated retirement costs identified in the application by more than 15 percent. While OCC questions the reasonableness of the estimated financing costs identified on Exhibit C to the application, the Commission agrees with the Staffs determination that the financing costs projected by the Applicants appear to be in conformance with general market conditions and, therefore, are reasonable.

The next dispute between the parties relates to the Applicants’ request that the Commission consider allowing third parties to bill and/or collect any PIR bond charges. As discussed supra, Applicants believe that it is important that minimum standards be specified in the Financing Order due to the fact that third-party billing and/ or collection could be potentially authorized in the future during the life of the PIR Bonds. Based on this potentiality, Applicants assert that third-party billing must be addressed in order for the bonds to be considered the highest credit quality instrument and correspondingly bear a low rate of interest and deliver the expected savings (Applicants’ Comments at 6-9).

Applicants also explain that the establishment of nurumum standards is important in order .to minimize the potential risk to customers of any defaults by third parties that may in the future bill and collect the PIR charges. Specifically, Applicants opine that, in the absence of minimum standards, if a third party failed to properly remit collected charges due to a bankruptcy, the bondholders could suffer a shortfall and the shortfall would be recovered from all customers through an adjustment to future PIR charges in the true-up mechanism. (Id. at 8.)

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In response to Applicants’ desire for the inclusion of language pertaining to the billing and/or collecting of PIR charges by third parties, Staff points out that currently PIR charges can only be collected by EDUs. Therefore, Staff believes that Applicants’ request premature and unnecessary (Staff Comments at 30).

The Commission notes that there is no dispute that competitive third-party billing/collection is not currently permitted by the Commission’s rules. However, if the Commission, in the future, establishes rules relating to competitive third-party billing/ collection, Applicants should be allowed to implement such features subject to the terms and conditions of competitive third-party billing set forth by the Commission at that time. Such billing/collection must not result in additional financial burden on Applicants’ customers on a going-forward-basis. In other words, such third-party billing/collection costs should not be included as part of the recoverable, ongoing costs as contemplated by the application and the Act, or as part of any other rates and charges.

The next issue in dispute concerns Staff’s proposed requirement that the Issuance Advice Letter include a certification by the companies that the structuring and pricing of the PIR Bonds will result in the lowest PIR bond charges consistent with market conditions and the terms of the Financing Order. In particular, Applicants believe that the imposition of such a standard is not required by the applicable statute and is beyond the scope of the Commission’s designated authority and may serve to undermine the viability of securitization (Id. at 10).

Based on their reading of Section 4928.232(D)(2), Revised Code, Applicants assert that the relevant statutory standard does not focus on whether the PIR charges are the lowest possible but, rather, relates to whether cost savings are measurably enhanced as compared to existing recovery methods. (Id. at 10, 11.) Applicants submit that the “lowest cost” standard advocated by Staff is an impossible standard to satisfy inasmuch as there may always be something else out there that theoretically could have been less expensive (Id. at 12).

The Commission agrees with Applicants that, consistent with the criteria forth in Section 4928.32(D)(2), Revised Code, the Commission must determine whether

the issuance of the phase-in-recovery bonds and the phase­ in-recovery charges authorized by the order results in, . consistent with market conditions, both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost-recovery methods available to the electric distribution utility or, if the Commission previously approved a recovery method, as compared with that recovery method.

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[Section 4928.32(D)(2), Revised Code]

A review of this statutory language reflects the absence of a specific required demonstration that Applicants certify that they have obtained the lowest PIR bond charges. Rather, the focus is on whether the issuance of the PIR Bonds will result in both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost­ recovery methods available to the EDU. Specifically, as part of this showing, the Commission expects that the EDU establish that the PIR Bonds reflect a market price of most recently issued comparable securities that demonstrates both measurably enhancing cost savings and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost-recovery methods available to the EDU. Therefore, the requisite terms of the certification shall be amended consistent with this determination.

Another disputed issue related to the filing of the Issuance Advice Letter concerns the effective date of the initial PIR charges and the final terms of the PIR Bonds as set forth in the Issuance Advice Letter. Staff proposes that the terms and charges in the Issuance Advice Letter will become effective on the date of issuance of the PIR Bonds unless prior to noon on the fourth business day after pricing, the Commission issues a Supplemental Financing Order finding that the proposed issuance does not comply with the requirements of the Financing Order. (Staff Comments at 19, 20.)

Applicants request that the Staff’s proposed time frame for review of the Issuance Advice Letter be shortened from four days to the next business day. Applicants contend that the shortened time frame substantially reduces the risk of an unexpected obstacle in the closing process and allows the parties to focus on getting the transaction consummated. (Applicants’ Reply Comments at 14.) Further, Applicants assert that the submission of Issuance Advice Letter to the Commission subsequent to pricing should only be used to confirm consistency with the form of the Issuance Advice Letter approved in the final Financing Order and to confirm the arithmetical accuracy of the information included therein. Applicants highlight that the Commission’s review of the Issuance Advice Letter should not extend beyond these parameters in order avoid introducing a level of risk and uncertainty to the bond pricing process that would be difficult for the Applicants, the underwriters and prospective investors to manage. (Id. at 13, 14.)

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The Commission determines that for each series of PIR Bonds, each Applicant shall be file the attached Issuance Advice Letter no later than the first business day following the pricing date for that series of PIR Bonds. The Commission will be provided four complete business days following the filing of the Issuance Advice Letter to issue a Supplemental Financing Order in response to the proposed issuance addressed in the Issuance Advice Letter. Through its Supplemental Financing Order, the Commission may stop the issuance of the PIR Bonds if the Applicants fail to make the requisite demonstration pursuant to its Issuance Advice Letter. If the Commission does not act within this specified time frame, the terms and charges will become effective at the end of the fourth business day following the filing of the Issuance Advice Letter. This time frame will provide an adequate amount of time for the Commission to complete its review of the Issuance Advice Letter for both form and substance and take the appropriate action if necessary consistent with the Act. This determination is reasonable especially in light of the irrevocability of the Financing Order once it becomes final in accordance with Section 4928.235(B), Revised Code.

Regarding OCC’s concerns regarding the lack of information related to the identity and the expertise of investment banking firm selected by Applicants to provide advice and service regarding the issuance of the PIR Bonds, the Commission notes that Applicants have now identified Goldman Sachs as the selected structuring advisor. The Commission finds that this selection is reasonable based on Goldman Sachs’ experience in the field of securitization as described in the application. With respect to OCC’s request that the Commission hire an independent financial advisor to assist in the review of the reasonableness of the Applicants’ proposal, including a determination of whether the estimated debt retirement costs are reasonable and if the costs conform to terms and conditions of debt securities commonly accepted in the financial industry, the Commission finds that such upfront action is not appropriate at this time.

The Commission next considers OCC’s stated concern that over 55 percent of the total amount of the proposed bonds to be issued are included in one of the three tranches and that no alternative bond issuance scenario has been offered for the Commission’s consideration. The Commission highlights that all of the transactions contemplated by the Act are to be market driven. Applicants have set forth an actual proposal containing terms which they believe the market will currently bear. The Commission has analyzed the application to ensure that, based on the underlying terms and provisions, it satisfies the Act.

Regarding OCC’s concerns the proposed upfront financing costs of $48.5 million, the Commission first notes that this amount simply represents the estimated upfront financing costs. The actual dollar amount may actually be less than the estimated level. The Commission also points out that the estimated financing costs

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include approximately $40 million debt retirement costs. Although, on their face, these are significant dollar amounts, the Commission’s primary focus is on the ultimate net savings that will be experienced as a result of the proposed securitization and on determining whether this savings constitutes measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost-recovery methods available to the EDU or, if the Commission previously approved a recovery method, as compared with that recovery method.

In order to provide measurably enhanced savings, Applicants will undertake the retirement of a portion of their existing long-term obligations. By the very terms of these existing financial instruments, early retirement costs must be incurred. Based on a review of the upfront financing costs set forth in the application, the Commission finds that these costs are reasonable and allow for measurably enhancing cost savings to customers and mitigating rate impacts to customers.

As discussed supra, OCC’s requests either the establishment of benchmarks and/or guidelines relative to the expenses and fees associated with the securitization process or in the absence of such reference points, the establishment of caps on certain expenses. In regard to this request, the Commission finds that the review of each securitization application requires its own independent analysis based on the existing market conditions and costs at a specific point and time. Therefore, the use of established benchmarks/ guidelines and caps as proposed by OCC does not appear to be very conducive to the requisite review needed to be performed by the Commission. Additionally, in lieu of the caps proposed by OCC, the Commission, as noted supra, has adopted a five-percent adjustment factor to serve as the cap on the approved costs.

As noted supra, OCC believes that a cap of 8 percent should be used as the percentage of debt retirement costs to the amount of debt retired for this proceeding for all three Applicants (OCC Reply Comments at 9). OCC believes that this amount is appropriate since it reflects a 60 percent additional allowance on the lowest percentage of the three companies (i.e., CEI’s 5 percent compared with Ohio Edison’s 12 percent and Toledo Edison’s 33 percent). In support of its position, OCC focuses on the fact that the debt securities for the three Applicants are expected to be retired at the same time and should have similar terms and conditions regarding debt retirement because they are issued with similar financial ratings and are controlled by the same parent company.

Upon a review of OCC’s arguments, the Commission finds that OCC’s request to establish a cap of 8 percent for each of the Applicants should be denied. As discussed supra, regarding the issued of establishing benchmarks and caps, the Commission will review each request on a company-specific basis and will not

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establish generic levels to be applied across the three companies in this case. Additionally, while OCC opines that the debt securities should have similar terms and conditions; this is simply a general hypothesis with no company-specific analysis provided. Rather, based on the company-specific information provided in the application and considering the benefits of the application in its entirety, the Commission finds the indicated retirement costs for each Applicant to be reasonable.

As discussed supra, while OCC does not object to Toledo Edison’s request to issue PIR Bonds in an amount greater than the sum of the amounts of debt retired, debt retirement and issuance expense, it does not support Staff’s recommendation that Applicants be permitted to invest the additional $11 million in other types of short­ term investments comparable to the· FirstEnergy Money Pool. Additionally, OCC submits that since only a portion of the funds obtained through the proposed securitization is for the refinancing of Toledo Edison’s deferred costs, only a portion of the issuance expense and debt retirement costs associated with the securitization should be recovered through the PIR charges to customers. (OCC Reply Comments at 10.)

The Commission determines that OCC’s objections regarding this issue should be denied. First, the Commission notes that OCC has failed to provide any rationale regarding its objection to the Applicant investment of the additional $11 million. Additionally, while OCC is correct that only a portion of the funds obtained through the proposed securitization is for the refinancing of Toledo Edison’s deferred costs, this fact does not preclude the Applicant’s ability to fully recover for the related issuance and debt retirement expenses. In support of this conclusion, the Commission notes that the company would be entitled to the recovery of the $11 million in deferred assets regardless of whether the PIR Bonds are issued or not. Based on the record, the required recovery amount will be reduced through the securitization even when taking into account the issuance and debt retirement expense for the $11 million (See Application, Exhibit C). Consistent with market conditions, this reduction results in both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional recovery methods. Finally, the Commission notes that the inclusion of the $11 million as part of the securitization will provide volumetric benefit for the purpose of bringing the proposed offering to market.

Finally, the Commission addresses OCC’s request that the Commission consider the use. of an open and competitive process for the sale of the PIR Bonds rather than through a negotiated sale to investors. As discussed supra, according to Applicants, the selected structuring advisor (Goldman Sachs) in connection with this securitization transaction has represented that “obtaining the lowest interest rate is more likely to be obtained through a broad, transparent marketing process to a broad range of institutional investors, with the full cooperation and support of the

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companies in explaining the securities, rather than a competitive bid process where bids will be based upon underwriters’ subjective judgments on market clearing price.” (Id. at 20.)

In regard to this issue, the Commission notes that it expects Applicants to rely on Goldman Sachs, as the structuring advisor, to structure the PIR Bond offering in such a manner in order to obtain the most optimal rates, terms and conditions for the purpose of satisfying the requisite conditions set forth in the Act. Additionally, the Commission notes that upon the filing of the Issuance Advice Letter and Certification, and consistent with the Financing Order, it will ultimately have the ability to review the reasonableness of the results from this approach.

VI. TERMS AND CONDffiONS

Pursuant to Section 4928.232(E)(1)-(7), Revised Code, the Commission must include the following components in a Financing Order:

(1) A determination of the maximum amount and a description of the Phase-In Costs that may be recovered through PIR Bonds issued under the Financing Order;

(2) A description of Phase-In-Recovery Property, the creation of which is authorized by the Financing Order;

(3) A description of the financing costs that may be recovered through Phase-In-Recovery Charges and the period over which those costs may be recovered;

(4) For Phase-In-Recovery Charges not subject to allocation according to an existing order, a description of the methodology and calculation for allocating Phase-In­ Recovery Charges among customer classes, including the allocation of such charges, if any, to governmental aggregation customers based upon the proportionate benefit determination made under division (I) of Section 4928.20, Revised Code;

(5) A description of the adjustment mechanism for use in the imposition, charging, and collection of the Phase-In­ Recovery Charges;

(6) The maximum term of the PIR Bonds; and

(7) Any other prov1s1ons the Commission considers appropriate to ensure the full and timely imposition, charging, collection, and adjustment, pursuant to an approved adjustment mechanism, of the Phase-In­ Recovery Charges described in divisions (E)(3) to (5) of this section.

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Additionally, the Commission recognizes that in order for investors to be willing to accept a relatively lower interest rate for the PIR Bonds, the bonds must have relatively low associated credit risk. In order to accomplish this objective and satisfy specific statutory requirements, there are a number expressed regulatory authorizations that must be incorporated in the Financing Order, including those related (a) Irrevocability; (b) State pledge; (c) True sale; (d) Successor utility; (e) Security interest; (f) Bankruptcy of the electric distribution utility; (g) Non­ bYPassability; and (i) Validity of the Financing Order; and (j) Treatment of Phase-In­ Recovery Charges.

Subject to the determinations set forth above, the Commission finds that the proposed securitization transactions are consistent with Section 4928.02, Revised Code, and result in, consistent with market conditions, both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost-recovery methods available to EDUs or compared with previously approved recovery methods. In support of these determinations, the Commission finds that a review of Exhibits A, B, and E to the application reflects that the proposed securitization will result in a reduction in the reimbursement period for the deferred expenses and at the same time reduce the applicable interest rate; eventually netting a cost savings of approximately $104,000,000. Additionally, the Commission relies upon the Applicants’ representation that pursuant to the proposed securitization, it is expected that the following should occur:

(1) CEI customers will have an estimated Phase-In-Recovery Charge of 0.3851 cents/kWh resulting in a monthly cost of $3.85 for the typical residential bill compared a monthly cost of $4.30 under the existing riders.

(2) Ohio Edison customers will have an estimated Phase-In­ Recovery Charge of .3198 cents/kWh resulting in a monthly cost of $3.20 for the typical residential bill compared to a monthly cost of $3.48 under the existing riders.

(3) Toledo Edison customers will have an estimated Phase-In­ Recovery Charge of .0250 cents/kWh resulting in a monthly cost of $.25 for the typical residential bill compared to the monthly cost of $.26 under the existing riders.

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(Application at 11.)

Specifically, in accordance with the application, and together with the determinations set forth in this Financing Order, the Commission authorizes the following:

A. Formation of SPEs and Creation and Transfer of Phase-In-Recovery Property.

(1) Each Applicant is authorized to form a separate, wholly-owned limited liability company as a SPE for the purposes of effectuating the respective securitization transactions described in the application. Each SPE is expected to be organized in Delaware. Upon formation of its respective SPE, each Applicant is then authorized to then transfer, sell, or assign its Phase-In-Recovery Property to such entity. Each SPE will be an “Assignee” of Phase-In­ Recovery Property as defined in Section 4928.23(B), Revised Code, and as provided for in Section 4928.234(A), Revised Code.

(2) Consistent with the representations set forth in the application, each SPE will be a bankruptcy remote, special purpose limited liability company, in that its activities generally will be limited to (i) purchasing, owning, administering and servicing the Phase-In­ Recovery Property transferred, sold or assigned to it, (ii) issuing and, if applicable, registering the PIR Bonds, (iii) making payments on the PIR Bonds, (iv) managing, selling, assigning, pledging, collecting amounts due on, and otherwise dealing with the Phase-In-Recovery Property and (v) granting a statutory first priority security interest in the Phase­ In-Recovery Property to secure such PIR Bonds.

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(3) The LLC Agreement for each SPE should reflect that each SPE is not permitted to engage in any activity not related to its restricted purposes and should contain provisions regarding separateness, independent mangers and restrictions on commencing bankruptcy and insolvency proceedings.

(4) Each Applicant will capitalize its respective SPE in an amount anticipated to be approximately 0.50 percent of its initial principal balance of the PIR Bonds, as may be adjusted at the time of issuance based on rating agency requirements.· Each Applicant will be authorized to receive a return on its respective SPE’s capitalization amount as an ongoing financing cost based on its average long­ term debt rate without reduction for accumulated deferred income taxes. Upon the full repayment of the PIR Bonds, the capitalization amount will be returned to each Applicant to the extent of the available funds.

(5) Each SPE will have no employees and will engage with other parties to undertake the activities necessary to issue the PIR Bonds and perform other functions in connection with each issuance.

(6) Upon the sale of the Phase-In-Recovery Property by each Applicant to its SPE subsidiary, there will arise and constitute an existing present property right and interest in such Phase-In-Recovery Property, which shall continue to exist until the PIR Bonds and all applicable financing costs are paid in full. Consistent with Section 4928.232(G), Revised Code, the creation of each Applicant’s Phase-In-Recovery Property is confirmed and shall be simultaneous with the sale of that property to its respective SPE and the grant of a security interest therein, among other assets and property of such SPE to secure the payment of such SPE’s PIR Bonds.

(7) Consistent with Section 4928.2312, Revised Code, a valid and binding security interest in the Phase-In-

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Recovery Property, among other SPE assets and property, will be created, perfected and enforced to secure the repayment of the principal of and interest on the PIR Bonds, amounts payable under any ancillary agreement, and other financing costs. Such security interest is to be a continuously perfected security interest of the bondholder with priority over any other lien that may subsequently attach to the Phase-In-Recovery Property unless the holder of such lien otherwise agrees in writing.

(8) All Phase-In-Recovery Property shall continue to exist regardless of whether the Phase-In-Recovery Charges have been billed, have accrued, or have been collected, and notwithstanding any requirement that the value or amount of the property is dependent on the future provision of service to customers by the EDU. Further, all such Phase-In-Recovery Property shall continue to exist until the PIR Bonds are paid in full and all financing costs relating to the bonds have been paid in full.

(9) Each SPE will acquire the Phase-In-Recovery Property from the applicable Applicant with the proceeds from the FIR Bonds, the repayment of which will be secured by a first priority pledge and security interest in all right, title, and interest of the SPE in (i) the Phase-In-Recovery Property, (ii) the transaction documents, (iii) the collection account and all subaccounts established in the bond indentures under which the PIR Bonds will be issued; (iv) the cash used to capitalize the SPE;(v) all other property owned by the SPE (with limited exceptions as may be appropriate); and (vi) all proceeds of each of the foregoing.

(10) Consistent with Section 4928.2313, Revised Code, any sale of the Phase-In-Recovery Property under this Financing Order shall be a true sale of, and not a pledge of or secured transaction relating to, the sellers right, title and interest in, to, and under the Phase-In-Recovery Property. This characterization of the sale as a true sale shall be effective and

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perfected against all third parties and shall not be affected or impaired by the occurrences set forth in Section 4928.2313(B), Revised Code.

B. PIRBonds

(1) CEI, through its SPE, is authorized to issue in one or more series and in one or more classes/tranches PIR Bonds in an amount up to $280 million in the aggregate. The actual amount of issuance cannot exceed the aggregate amount of the deferral balances and associated costs for the Riders DFC, DGC, and RER1 at the time of issuance. The proceeds of these bonds are to be used to recover, finance or refinance CEI’s portion of the estimated financing costs and the following Phase-In Costs:

(a) The remaining uncollected balances of the deferred costs with carrying charges, associated with the actual fuel costs incurred that exceeded the fuel recovery mechanism revenues collected from January 1, 2006, through December 31, 2007, which currently are being recovered through a separate rider mechanism, namely the Rider DFC;

(b) The remaining uncollected balances of its deferred costs, with carrying charges, associated purchase power costs incurred that exceeded the purchase power recovery mechanism revenue from January 1, 2009, through May 31, 2009, which currently are being recovered through a separate rider mechanism, namely the Rider DGC.

(c) The remaining uncollected balances of its deferred costs, with carrying charges, associated with purchase power costs incurred from March 17,

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2010, through June 30, 2011, that exceeded the associated purchase power recovery mechanism revenue due to the implementation of the Residential Generation Credit Rider (Rider RGC), which currently are being recovered through a separate rider mechanism, namely Rider RERl.

(2) Ohio Edison, through its SPE, is authorized to issue in one or more series and one or more classes/tranches PIR Bonds in an amount up to $220 million in the aggregate. The actual amount of issuance cannot exceed the aggregate amount of the deferral balances and associated costs for the Riders DFC, DGC, and RER1 at the time of issuance. The proceeds of these bonds are to be used to recover, finance or refinance Ohio Edison’s portion of the estimated Financing Costs and the following Phase­ In Costs:

(a) The remaining uncollected balances of its deferred costs, with carrying charges, associated with the actual fuel costs incurred that exceeded the fuel recovery mechanisms collected from January 1, 2006, through December 31, 2007, which currently are being recovered through a separate rider mechanism, namely Rider DFC; and

(b) The remaining uncollected balances of its deferred costs, with carrying charges, associated with purchase power costs incurred from March 17, 2010, through June 30, 2011, that exceeded the associated purchase power recovery mechanism revenue due to implementation of the Rider RGC, which currently are being recovered through a separate rider mechanism, RER1.

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(3) Toledo Edison, through its SPE, is authorized to issue in one or more series and one or more classes/tranches PIR Bonds in an amount up to $55 million in the aggregate. The actual amount of issuance cannot exceed the aggregate amount of the deferral balances and associated costs for the Rider DFC at the time of issuance. The proceeds of these bonds are to be used to recover, finance or refinance Toledo Edison’s portion of the estimated financing costs and the Phase-In Costs related to the remaining uncollected balances of its deferred costs, with carrying charges, associated with the actual fuel costs incurred that exceeded the fuel recovery mechanism revenues collected from January 1, 2006, through December 31, 2007, which are correctly being recovered through a separate rider mechanism, Rider DFC.

(4) Each SPE’s PIR Bonds will be non-recourse to the respective Applicant and its assets provided; however, that each Applicant could be liable to holders of PIR Bonds in the event that it breached representations, warranties, or covenants made by it in connection with its Sales Agreement or otherwise to such holders in connection with securitization.

(5) The PIR Bonds may be issued and sold through either (i) registered public offering under the U.S. Securities Act of 1933, as amended (the Securities Act), or (ii) an unregistered offering exempt from the registration pursuant to Section 4 (2) of the Securities Act (A) with subsequent resales to institutional purchasers and/ or purchases outside the United States pursuant to Rule 144A and Regulation S, respectively, under the Securities Act or (B) as a negotiated private placement.

(6) The PIR Bonds should receive a AAA (or equivalent) credit rating from applicable rating agencies.

(7) Applicants shall have flexibility in establishing the terms and conditions for the PIR Bonds to accommodate changes market conditions,

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including repayment reschedules, interest rates, financing costs, collateral requirements, required debt service, and other reserves provided such changes are performed consistent with this Financing Order. Each Applicant, at its option, will also have the ability to affect a series of issuances of PIR Bonds and correlated assignments, sales, pledges, or other transfers of Phase-In-Recovery Property within the parameters set forth in the application and this Financing Order.

(8) Notwithstanding the preceding provision, the PIR Bonds shall be issued only with fixed interest rates that are at or below those referenced in the application (i.e. a weighted average yield, exclusive of upfront and ongoing costs, of less than 3 percent) in order to ensure that the securitization results in both measurably enhancing cost savings and mitigating rate impacts to customers consistent with Section 4928.232, Revised Code. Additionally, the recovery period for the Phase-In-Recovery Charges will not exceed the overall recovery period authorized under the existing riders.

(9) In the case of a registered public offering: (i) material agreements will generally be filed as exhibits to a registration statement filed with the U.S. Securities and Exchange Commission (SEC); and (ii) the material terms of each agreement will also be summarized in the related prospectus included in any such registration statement and used in the offer and sale of the PIR Bonds. In the case of an unregistered offering, the material terms of each agreement will typically be summarized in an offering memorandum (or private placement memorandum) used in connection with the marketing of the securities, and are generally made available to current or prospective security holders.

(10) In order to accomplish securitization, each Applicant is authorized to enter into the necessary agreements with its respective SPE subsidiary. Applicants must file copies of the agreements with their respective SPEs in this docket.

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(11) Consistent with Section 4928.2313, Revised Code, each Applicant is authorized to enter into Sales Agreements with its respective SPE. Each Sales Agreement shall provide the terms and conditions of the absolute transfer and true sale of the appropriate Applicant’s right, title and interest in, to, and under its Phase-In-Recovery Property to its SPE.

(12) Each Applicant is authorized to enter into Administrative Agreements with its respective SPE for administrptive functions including services related to the preparation of financial statements, required filings with the SEC (if any), any tax return required to be filed under applicable law, qualification to do business and minutes of managers’ meetings. Each Applicant (or any successor administrator thereof) will receive a periodic administration fee, expected to be $50,000 annually, for performing these services, which, together with costs and expenses incurred by the administrator, will be recovered through Phase-In­ Recovery Charges, as financing costs.

(13) Each Applicant is authorized to enter into a Servicing Agreement with its respective SPE detailing the services that the Applicant will provide to its SPE principally with respect to calculating, billing and collecting the Phase-In-Recovery Charges. Each servicer under the Applicable Servicing Agreement will be responsible for, among other things: (i) posting of collections, (ii) responding to inquiries by customers, competitive retail electric suppliers (if any), the Commission or others regarding Phase-In-Recovery Charges, (iii) calculating historical electricity usage and customer payment information (e.g., uncollectibles, typical lags between billing and collection charges), (iv) projecting future electricity usage and customer payment information, (v) accounting for collections, (vi) furnishing periodic reports and statements, (vii)

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making certain filings as necessary to perfect the trustee’s lien on the Phase-In-Recovery Property, and (viii) taking all necessary action in connection with adjustments.

(14) Each Applicant (or any successor EDU) is authorized to receive a periodic servicing fee, which will be recovered through Phase-In-Recovery Charges as a financing cost. Based upon both estimated costs of performing the servicing function and market precedent for such fees, the annual servicing fee to be paid to the respective Applicant or its successor EDU shall be 0.10 percent of the initial principal amounts of the PIR Bonds issued by the SPE of such Applicant.

(15) The PIR Bonds will not be included in the regulatory capital structure of the Applicants going forward. The PIR Bonds shall be recorded in accordance with GAAP as long-term debt on the balance sheet of each Applicant’s SPE to which the Phase-In-· Recovery Property is sold in connection with the securitization for financial reporting purposes. Each SPE’s PIR Bonds will also appear on the consolidated balance sheet of the respective Applicant, as the parent company, in its GAAP financial statements.

C. Phase-In-Recovery Trusts (PIR Trust)

(1) As an alternative to directly issuing and marketing the PIR Bonds to unaffiliated investors through either a registered public offering or unregistered exempt offering, each SPE may issue the PIR Bonds to a single purpose trust established jointly by the Applicants.

(2) Notes or other pas-through certificates or similar instruments (the PIR Certificates) may be issued by the PIR Trust to investors representing undivided beneficial interests in the SPE’s PIR Bonds held by · the PIR Trust. The PIR Trust shall engage in no activities other than the holding of the PIR Bonds, issuing the PIR Certificates and engaging in other related activities.

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(3) The PIR Certificates issued by the PIR Trust shall be sold either through a registered public offering or an unregistered exempt offering.

(4) None of the SPEs shall be obligated with respect to any other SPE’s PIR Bonds. Therefore, the customers of the respective Applicants will not be affected by the actions of any other Applicant or the adequacy of the Phase-In-Recovery Property of such other Applicant.

(5) The PIR Trust will transfer an allocable portion of the net proceeds from the sale of the PIR Certificates to the applicable SPE and each such SPE will in turn transfer the proceeds to the applicable Applicant in consideration for the Phase-In-Recovery Property sold to such SPE by the respective Applicant.

(6) In deciding whether to directly issue and market the PIR Bonds to unaffiliated investors through a registered public offering, an unregistered exempt offering or a PIR Trust, Applicants must negotiate and obtain terms that result in both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost­ recovery methods available to the EDU.

D. Phase-In-Recovery Charges

(1) Phase-In-Recovery Charges consist of all costs associated with the issuance of or use of proceeds from the Phase-In-Recovery Bonds approved in this proceeding. These charges include all Phase-In Costs and Financing Costs as described in this Financing Order.

(2) Consistent with Section 4928.239(8)(1), Revised Code, all of the Applicants’ customers will be responsible for the repayment of PIR Bonds through the imposition of separate, nonbypassable Phase-In­ Recovery Charges.

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(3) Consistent with Section 4928.238(B), Revised Code, there may be an allocation of proportionate charges to government aggregation customers.

(4) Phase-In-Recovery Charges will be included on each Applicant’s customer bills which will incorporate a notation reflecting that the right to impose, charge, and collect Phase-In-Recovery Charges is owned by the SPE formed by the respective Applicant. Applicants are authorized to modify their bill format to include the language proposed in the application. As requested in the application, similar language may be included in billing insets or other communications to customers. Applicants must provide customers with a one-time notification regarding the change to allow for the inclusion of the Rider FIR as part of the charges recovered on the bill.

(5) If a customer of the EDU purchases electric generation service from a competitive retail electric service provider, the EDU shall collect the Phase-In­ Recovery Charges directly from that customer. If a customer of the EDU subsequently receives retail electric distribution service from another EDU operating in the same service area, including by succession, assignment, transfer, or merger, the Phase-In-Recovery Charges shall continue to apply to the customer.

(6) Each Applicant is authorized to estimate the amount of revenue otherwise collected from each rate schedule under the existing riders identified. These estimated revenues, by rate schedule, will then be used to determine allocation ratios representing the proportion of the total revenue collected from each rate schedule under the existing recovery methodology on a monthly basis. These allocation ratios will then be applied to the estimated amounts to be recovered under the Phase-In-Recovery

12-1465-EL-ATS -39

Charges in order that in essence, each rate schedule will be paying approximately the same proportion of the Phase-In-Recovery Charges as they are currently paying for each applicable rider under the existing recovery methodology. This same methodology should be utilized for governmental aggregation customers.

In the event that, for any reason, any Phase-In­ Recovery Charges cannot be allocated to a given customer class, such charges shall be allocated to the remaining customer classes, using the same ratable allocation to the customer classes excluding the customer classes where allocation is not feasible.

(7) Each SPE shall, pursuant to its indenture or organizational documents, have a priority of payments that shall establish how collection of Phase-In-Recovery Charges and any other amounts are applied to pay principal, interest on, and other costs related to PIR Bonds. The right to impose, charge and collect Phase-In-Recovery Charges, although owned by the applicable SPE, will be considered EDU charges for the purpose of priority of customer payments and termination/reconnection of service will be considered charges of the respective Applicant and will be accorded similar treatment with the Applicant’s own charges under applicable statutes, the Commission’s rules, and tariffs of the respective tariffs.

(8) The determination of Phase-in-Recovery Charges for each Applicant will take into account (a) the timing and amounts of principal, interest, and other ongoing costs related to the Phase-In-Recovery Bonds, (b) the expected monthly electricity consumption by customers of the Applicant, (c) the expected delays between the billing and collection of the Phase-In-Recovery Charges, and (d) the expected uncollectibles related to Phase-In-Recovery Charges.

12-1465-EL-ATS -40

(9) To ensure the full and timely collection of Phase-In­ Recovery Charges, including minimizing the likelihood that customer defaults in the payment of Phase-In-Recovery Charges result in additional charges being borne by other nondefaulting customers, Applicants may terminate any customer who defaults payment of the Phase-In-Recovery Charges. This disconnection shall occur in accordance with applicable statutes, Commission rules and orders and the Applicants’ rules, tariffs, and practices applicable to other charges owed directly to an Applicant.

(10) Applicants represent that their current estimate of upfront financing costs is approximately $8.4 million in the aggregate, exclusive of debt retirement costs. Through the filing of their Issuance Advice Letter, Applicants are required to provide the Commission with their actual upfront and ongoing financing costs. The upfront and ongoing financing costs for the issuance of the PIR Bonds, under the single combined issuance, and the debt retirement costs should not exceed 5 percent of the amounts reflected in columns B-D on Exhibit C of the application, Pages 1, 2 and the financial advisor expenses discussed infra.

(11) In the context of this proceeding, consistent with Section 4928.23(K), Revised Code, Phase-In­ Recovery Property is comprised of the property, rights, the interests of the EDU, under a Final Financing Order, including the right to impose, charge and collect the Phase-In-Recovery Charges that shall be used to pay and secure the payment of PIR Bonds and financing costs, and including the right to obtain adjustments to charges, and any revenues, receipts, collections, rights to payment, payments, moneys, claims, or other proceeds arising from the rights and interests created under the Final Financing Order.

(12) Each Applicant is authorized to create its respective Phase-In-Recovery Property.

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(13) Applicants are authorized to recover their upfront and ongoing financing costs through the Phase-In­ Recovery Charges. The right to recover financing costs constitutes Phase-In-Recovery Property consistent with Section 4928.23(K), Revised Code.

The authorized estimated, upfront financing costs include without limitation, the estimated costs associated with the retiring or refunding of existing long-term debt of the Applicants, counsel fees, structural advisory fees, underwriting fees, rating agency fees, independent auditors’ fees, and filing and printing expenses. The estimated ongoing financing costs include servicing fees, other administrative fees, the cost of any overcollateralization or other reserves (if required) for the PIR Bonds, the periodic costs for servicing the PIR Bonds and the Phase-In-Recovery Charges, SPE administrative costs and, if the PIR Bonds are issued in a registered public offering, ongoing Securities and Exchange Commission (SEC) compliance costs. Finance costs also include the recovery of all tax liabilities associated with the collection of the Phase-In-Recovery Charges or otherwise arising due to the securitization.

(14) Applicants propose tariff sheets reflecting Phase-In­ Recovery Charges that are expected to approximate the final tariff charges based upon currently available information related to the terms of the proposed issuance of .the PIR Bonds. These tariff sheets are approved in form only. Consistent with Section 4928.322(H), Revised Code, Applicants are directed to file updated tariff sheets to reflect the final initial Phase-In-Recovery Charges based upon actual costs and any other revised assumptions. The actual costs to be utilized must be consistent with the criteria discussed in this Financing Order. The final initial Phase-In-Recovery Charges to be included in the final initial tariff sheets are to reflect the terms and conditions of the Final Financing Order including all Phase-In Costs and financing

12-1465-EL-ATS -42-

costs. Unless suspended by the Commission, these updated tariff sheets shall be considered approved and effective upon the issuance of the PIR Bonds.

(15) The existing riders will be reduced to zero on the effective date of the Final Initial Tariff Sheets subject to final reconciliation of the remaining deferral balances, if any, which will be maintained on the Applicants’ books subject to carrying charges until the full cost recovery occurs. Any final reconciliation that reduces deferral balances below zero shall similarly produce a customer credit and will not affect the Phase-In-Recovery Charges, which are irrevocable. The existing riders shall cease to exist upon the issuance of the PIR Bonds and approval of the corresponding tariff sheets.

E. Adjustment Mechanism

(1) Consistent with the methodology set forth in the application (Exhibit F), each Applicant is authorized to make periodic adjustments to the Phase-In­ Recovery Charges to be paid by its customers pursuant to this Order.

(2) The initial update to each Applicant’s Rider PIR will be up to 12 months after the issuance date of the PIR Bonds. Subsequently, each Applicant’s Rider PIR shall be updated semiannually with the exception of the last year each series of PIR Bonds is expected to be outstanding. Specifically, no later than November 1st and May 1st of each year, each Applicant must file a request for approval of the adjusted Phase-In-Recovery Charges and the corresponding amended tariff sheets.

(3) Unless otherwise ordered by the Commission, these adjusted charges and the associated tariff amendments shall become automatically effective on a service rendered basis sixty days after the filing of the request. Consistent with Section 4928.238, Revised Code, the Commission’s review of this request shall be limited to a determination of

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whether there is any mathematical error the application of the adjustment mechanism to the Phase-In-Recovery Charges.

(4) With respect to the last year that each series of PIR Bonds are expected to be outstanding, updates as frequently as monthly may be necessary.

(5) No adjustment approved under Section 4928.238, Revised Code, shall in any way effect the irrevocability of the Final Financing Order as specified in Section 4928.235, Revised Code.

(6) Consistent with Section 4928.2312, Revised Code, no application for an adjustment mechanism, pursuant to Section 4928.238, Revised Code, shall affect the validity, perfection, or priority of a secured interest in or the transfer of Phase-In-Recovery Property under the Final Financing Order.

F. Additional Requirements

(1) The Commission directs Applicants to retain an independent financial advisor selected by the Commission Staff for the purpose of engaging in its review of the final terms of the proposed transaction consistent with Section (F) infra, including, but not limited to the attestation that the final terms and conditions of the transaction are consistent with this Financing Order and the requisite statutory provisions.

(2) In order to ensure, as required by Section 4928.32(D)(2), Revised Code, that the structuring and pricing of the PIR Bonds result in the charges consistent with market conditions and the terms of this Financing Order, it is necessary for the Commission, acting through its designated representative or financial advisor, to have a decision making role co-equal with Applicants with respect to the structuring and pricing of the PIR Bonds and that all matters relating to the structuring and pricing of the PIR Bonds shall be determined

12-1465-EL-ATS -44

through a joint decision of Applicant and the Commission’s designated representative or financing advisor. The primary responsibilities of the Commission’s financial advisor are to ensure that the structuring and pricing of the PIR Bonds result in charges consistent with market conditions and the terms of this Financing Order and that it protects the competitiveness of the retail electric market in this state. To fulfill its obligations under this Financing Order, the Commission’s financial advisor must give effect to the Commission’s directive that the PIR Bonds reflect a market price of most recently issued comparable securities that demonstrates both measurably enhancing cost savings and mitigating rate impacts to customers as compared with traditional financing mechanisms or traditional cost-recovery.

(3) To properly advise the Commission, the Commission’s financial advisor must not participate in the underwriting of the PIR Bonds and its fee should not be based upon a percentage of the transition-bond issuance. Its role should be limited to advising the Commission or acting on behalf of the Commission regarding the structure and pricing of the transition bonds. The financial advisor must, however, have an integral role in the pricing, marketing and structuring of the transition bonds in order to provide competent advice to the Commission. This requires the financial advisor to participate fully in all plans and decisions related to the pricing, marketing, and structuring of the transition bonds and that it be provided timely information as necessary to fulfill its obligation to advise the Commission in a timely manner. In addition, the financial advisor’s fee should be capped at an amount not to exceed $1,500,000; $500,000 of which will be funded out of the underwriter’s spread and $1,000,000 of which will be included as part of the upfront financing costs.

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(4) For each PIR Bond tranche, upon the determination of the final structure of the bonds but prior to the actual issuance, the Applicants shall file the Issuance Advice Letter and Certification, attached to this Financing Order, no later than the end of the first business day after the pricing date for that series of PIR Bonds. The issuance advice letter should include the actual dollar amount of the initial Phase­ In-Recovery Charges and other information specific to the PIR Bonds to be issued.

(5) The Commission has four complete business days following the filing of the Issuance Advice Letter to complete its review for both format and substance. If the Commission does not act within this specified time frame, terms and charges will become effective at the end of the fourth business day following the filing of the Issuance Advice Letter. Additionally, if the Commission does not act, its Financing Order, as amended by any Entry on Rehearing, shall be considered as the Final Financing Order.

(6) Consistent with Section 4928.2315, the Commission, on behalf of the state of Ohio, pledges to and agrees with bondholders, any assignee, and any financing parties under a Final Financing Order that the state will not take or permit any action that impairs the value of the Phase-In-Recovery Property under the Final Financing Order or revises the Phase-In Costs for which recovery is authorized under the Final Financing Order or, except as allowed under Section 4928.238, Revised Code, reduce, alter, or impair Phase-In-Recovery Charges that are imposed, charged, collected, or remitted for the benefit of the bondholders, any assignee, and any financing parties, until any principal, interest, and redemption premium in respect of PIR Bonds, all financing costs, and all amounts to be paid to an assignee or financing party under an ancillary agreement are paid performed in full.

(7) Consistent with Section 4928.2311, Revised Code, any successor to any Applicant, shall be bound to

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the requirements of Sections 4928.23, Revised Code, to 4928.317, Revised Code, and shall be obliged to perform and satisfy all obligations of the EDU under the Final Financing Order, including those related to the servicing of the bonds.

(8) Consistent with Section 4928.2310, Revised Code, if any Applicant subject to this Financing Order defaults on any required payment of a Phase-In­ Recovery Revenues, a court, upon application by an interested party and without limiting any other remedies available to the Applicant, shall order the sequestration and payment of the revenues for the benefit of bondholders, any assignee, and any financing parties. The court order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to any Applicant or its affiliate. Customers of any Applicant shall be held harmless for the failure of the Applicant to remit any required payment of Phase-In-Recovery Revenues, and such failure shall in no way affect the Phase-In­ Recovery Property or the rights to impose, collect, and adjust the Phase-In-Recovery Charges.

Phase-In-Recovery Property under a Final Financing Order and the interests of an assignee, bondholder, or financing party in that property under a financing agreement are not subject to setoff, counterclaim, surcharge, or defense by the Applicant, including as a result of its failure to provide, past, present, or future services, or in connection with the bankruptcy reorganization, or other insolvency proceeding of an Applicant, any affiliate, or any other entity.

(9) Consistent with Section 4928.235, a Final Financing Order in this proceeding shall:

(a) remain in effect until the Phase-In­ Recovery Bonds issued under the Order and all financing costs related to the bonds have been paid in full;

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(b) remain m effect and unabated notwithstanding the bankruptcy, reorganization, or insolvency of any Applicant or its affiliate or the commencement of any judicial or nonjudicial proceeding on the · Final Financing Order;

(c) be considered irrevocable and the Commission may not reduce, impair, postpone, or terminate the Phase-In­ Recovery Charges authorized in the Final Financing Order or impair the property or the collection or recovery of the Phase-In Costs.

(10) Consistent with Section 4928.235, Revised Code, subsequent to a Financing Order being issued or becoming final and taking effect, but before PIR Bonds have been issued, if marketing conditions are such that customers will not realize cost savings from the issuance of the PIR Bonds, Applicants shall not proceed with securitization under the Final Financing Order.

(11) If and to the extent that the Commission subsequently allows third parties to bill and/ or collect any Phase-In-Recovery Charges, such billing and/ or collection costs should not be included as part of the recoverable, ongoing Phase-In Costs or any other rates or charges.

FINDINGS OF FACT AND CONCLUSIONS OF LAW:

(1) Applicants are EDUs, as defined in Section 4928.02(A)(6), Revised Code.

(2) Sections 4928.23 through 4928.2318, Revised Code, provide EDUs with the mechanism to securitize, through the Issuance of PIR Bonds previously approved deferred assets.

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(3) On May 3, 2012, as amended on August 16, 2012, Applicants filed a joint application requesting authority, pursuant to Sections 4928.23 through 4928.2318, Revised Code, to recover certain specified Phase-In Costs through the issuance of PIR Bonds.

(4) On June 25, 2012, initial comments were filed by Staff and OCC. On July 9, 2012, reply comments were filed by Applicants and OCC.

(5) The proposed securitization transactions, as discussed and amended by this Financing Order, results in, consistent with market conditions, both measurably enhancing cost savings to customers and mitigating rate impacts to customers as compared with previously approved recovery methods.

(6) The proposed securitization transactions, as set forth in this Financing Order, are consistent with Section 4928.02, Revised Code.

ORDER:

It is, therefore,

ORDERED, That the application be approved consistent with the conditions set forth in this Financing Order. It is, further,

ORDERED, That CEI, Toledo Edison, and Ohio Edison be authorized to enter into transactions for the issuance of PIR Bonds and to assess and collect Phase-In­ Recovery Charges, as set forth in this Financing Order. It is, further,

ORDERED, That Applicants file the applicable SPE agreements in accordance with the terms of this Financing Order. It is, further,

ORDERED, That Applicants file their respective Issuance Advice Letters with the accompanying certification consistent with this Financing Order. It is, further,

ORDERED, That Applicants retain a financial advisor on behalf of the Commission consistent with this Order. It is, further,

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ORDERED, That concurrent with the filing of the Issuance Advice Letter, the Commission’s financial advisor shall file its attestation consistent with this Order. It is, further,

ORDERED, That all reports issued by the Commission’s financial advisor shall be docketed in this proceeding. It is, further,

ORDERED, That Applicants file a confirmation upon the final issuance of the PIR Bonds consistent with this Financing Order. It is, further,

ORDERED, That Applicants file their revised tariff sheets consistent with this Financing Order. It is, further,

ORDERED, That the revised tariff sheets be considered approved and upon the issuance of the PIR Bonds. It is, further,

ORDERED, That Applicants modify their bill formats consistent with this Financing Order. It is, further,

ORDERED, That, consistent with this Financing Order, Applicants provide customer notice of the Rider PIR charges. It is, further,

ORDERED, That Applicants comply with the adjustment mechanism set forth in this Financing Order. It is, further,

ORDERED, That OCC’s motion to intervene be granted. It is further, ORDERED, That Applicants’ request that the Commission consider the application on an expedited basis is denied. It is, further,

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ORDERED, That a copy of this Financing Order be served upon all parties and interested persons of record in this case.

THE PUBLIC UTILITIES COMMISSION OF OHIO

Todd A. Snitcher, Chairman

/s/ Steven D. Lesser
Steven D. Lesser	Andre T. Porter

Cheryl L. Roberto	Lynn Slaby

JSA/vrrn/sc

Entered in the Journal

OCT 10 2012.

Barcy F. McNeal

Secretary

Case No. 12-1465-EL-ATS

Page 1 of 12

ATTACHMENT 1

FORM OF ISSUANCE ADVICE LETTER

                     day             , 201    

Case No. 12-1465-EL-ATS

The Public Utilities Commission of Ohio

SUBJECT: ISSUANCE ADVICE LETTER FOR PHASE-IN RECOVERY BONDS

Pursuant to the Financing Order issued In the Matter of the Joint Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Issue Phase-In-Recovery Bonds and Impose, Charge and Collect Phase-In-Recovery Charges and for Approvals of Tariff and Bill Format Changes in Case No. 12-I465-EL-ATS, each Applicant hereby submits, no later than the end of the fourth business day after the pricing of this series of PIR Bonds, the information referenced below. The issuance Advice Letter is for the PIR Bonds series                     , tranches                      Any capitalized terms not defined in this letter shall have the meanings ascribed to them in the Financing Order.

PURPOSE:

This filing establishes the following:

(a) The total amount of Phase-In Recovery Charges being securitized;

(b) Confirmation of compliance with issuance standards;

(c) The actual terms and structure of the PIR Bonds being issued;

(d) The initial Phase-In-Recovery Charges for retail users; and

(e) The identification of the SPE

PHASE-IN RECOVERY CHARGES BEING SECURITIZED:

The total amount of Phase-In Recovery Charges being securitized (the Securitized Phase­ In Recovery Charges) is presented in Attachment-!.

Case No. 12-1465-EL-ATS

Page 2 of 12

COMPLIANCE WITH ISSUANCE STANDARDS

The Financing Order requires Applicants to confirm, using the methodology approved therein, that the actual terms of the Phase-In Recovery (PIR) Bonds result in compliance with the standards set forth in the Financing Order. These standards are:

1. The total amount of revenues to be collected under the Financing Order is less than the revenue requirement that would be recovered using traditional cost recovery mechanisms (See Exhibit-A, Attachment 2, Schedule C and D);

2. The amount securitized will not exceed the present value of traditional cost recovery mechanisms revenue requirement over the life of the proposed PIR Bonds associated with the Securitized PIR; (See Exhibit-A, Attachment 2, Schedule D);

3. The PIR Bonds will be issued in one or more series comprised of one or more tranches having final maturities of              years and legal final maturities not exceeding              years from the date of issuance of such series (See Exhibit-A, Attachment 2, Schedule A).

The structuring and pricing of the PIR Bonds is certified by the Applicants to result in the PIR Bond charges as of the date of issuance consistent with market conditions and the terms set out in this Financing Order (See Exhibit-A, Attachment 3) that demonstrates both measurably enhanced cost savings to customers and mitigates rate impacts to customers as compared with traditional cost recovery methods available to the Applicants.

Case No. 12-1465-EL-ATS

Page 3 of 12

ACTUAL TERMS OF ISSUANCE

PIR Bond Series:                     

PIR Bond Issuer: [SPE}

Trustee:

Closing date:                 , 201    

Bond ratings: S&P AAA, Fitch AAA, Moody’s Aaa

Amount Issued: $            

PIR Bond Issuance Costs: See Attachment.              Schedule             

PIR Bond Support and Serving: See Attachment              Schedule            

Tranche	Coupon Rate	Expected Final Maturity	Legal Final Maturity
A-1		/    /	/    /
A-2		/    /	/    /
A-3		/    /	/    /

Effective Annual Weighted Average Interest Rate of the PIR Bonds	%
Life of Series:	years
Weighted Average Life of Series:	years
Call Provisions (including premium, if any):
Target Amortization Schedule:
Target Final Maturity Dates:
Legal final Maturity Dates:
Payments to Investors:	Semiannually Beginning                  , 201
Initial annual Servicing Fee as a percent of original PIR Bond principal balance:	%

Case No. 12-1465-EL-ATS

Page 4 of 12

INITIAL PHASE-IN RECOVERY CHARGES

Table I below shows the current assumptions for each of the variables used in the calculation of the initial Phase-In Recovery Charges.

TABLE I
Input Values For Initial Phase-In Recovery Charges
Applicable period: from                     ,                     to                     ,
Forecasted retail kWh!kW sales for the applicable period:
PIR Bond debt service for the applicable period:	$
Percent of billed amounts expected to be charged-off			%
Forecasted % of Billing Paid in the Applicable Period:			%
Forecasted retail kWh!Kw sales billed and collected for the applicable period:
Current PIR Bond outstanding balance:	$	—
Target PIR Bond outstanding balance as of             /    /	$
Total Periodic Billing Requirement for applicable period:	$

Case No. 12-1465-EL-ATS

Page 5 of 12

ATTACHMENT-!

SCHEDULE A

CALCULATION OF SECURITIZED PHASE-IN RECOVERY CHARGES

	OE	CEI	TE	Total
Amount permitted to be securitized by Financing Order	$	$	$	$
TOTAL SECURITIZED PHASE-IN RECOVERY CHARGES	$	$	$	$

Case No. 12-1465-EL-ATS

Page 6 of 12

ATTACHMENT-I

SCHEDULE B

ESTIMATED UP-FRONT FINANCING COSTS

		AMOUNT1
1	Accountant’s / Auditor’s Fees
2	Fee for Applicants’ Structuring Advisor
3	Legal Fees and Expenses for Applicants/lssuer’s Counsel
4	Legal Fees and Expenses for Trustee’s Counsel
5	Legal Fees and Expenses for Underwriter’s Counsel
6	Printing and Filing Fees
7	Rating Agency Fee2
8	SEC Registration Fees3
9	Servicer Set-up Costs4
10	Trustee Payments
11	Underwriting Costs5
12	Miscellaneous6
13	Subtotal Issuance Expenses (Sum Lines 1-12)
14	Debt Retirement Costs7
15	TOTAL ESTIMATED UP-FRONT FINANCING COSTS (Lines 13 + Line 14)

¹  Up-front financing costs expected to be allocated based upon Phase-in Cost amounts assuming a SEC-registered single combined offering, unless otherwise noted.

²  Based upon current fee schedules applied to issuance amounts which change from time to time.

³  Based upon current fee level of $0.0000393 applied to issuance amounts

⁴  Assumes $100,000 per utility.

⁵ Based upon fee level of 0.50% applied to issuance amounts.

⁶ Unforeseen expenses, if any, will be descried in the Final Financing Order following the issuance of the Phase-in Recovery Bonds.

⁷ Will vary depending upon market conditions and timing method of debt retirement.

Case No. 12-1465-EL-ATS

Page 7 of 12

ATTACHMENT-2

SCHEDULE-A

PHASE-IN RECOVERY BOND REVENUE REQUIREMENT INFORMATION

SERIES                      TRANCHE
Payment Date	Principal Balance	Interest	Principal	Total Payment

SERIES                      TRANCHE
Payment Date	Principal Balance	Interest	Principal	Total Payment

SERIES                      TRANCHE
Payment Date	Principal Balance	Interest	Principal	Total Payment

Case No. 12-1465-EL-ATS

Page 8 of 12

ATTACHMENT-2

SCHEDULE-B

ONGOING FINANCING COSTS

	ANNUAL AMOUNT1
Ongoing Servicer Fee (The Companies as Servicer)” (0.10% of issuance amount) OR Ongoing Servicer Fee (Third Party as Servicer) (    % of issuance amount)
Administration Fees and Expenses
Trustee Fees and Expenses
Legal Fees
Accounting Fees
SPE Independent Manager’s Fees
Rating Agency Fees3
Reporting and SEC Filing Fees
Miscellaneous
Return on Capital Account4
Dealers in Intangible Tax5
TOTAL ONGOING FINANCING COSTS

Note: The amounts shown for each category of operating expense on this attachment are the expected expenses for the first year of the transition bonds. Phase-In Recovery Charges will be adjusted at least semi-annually to reflect any changes on Ongoing Financing Costs through the true-up process described in the financing Order.

¹  Ongoing financing costs expected to be allocated rateably based upon issuance amount assuming a SEC-registered single combined offering.

²  Assumes each Applicant acts as servicer and earns annual servicing fees equal to 0.10% of issuance amount.

³  Based upon current scheduled fee levels.

⁴  Assumes each Applicant funds reserve account equal to 0.50% of issuance amount and earns an annual rate of return of 6.85% thereon.

⁵  Assumes each securitization SPE is required to pay a 0.8% annual tax on amounts funded in capital account.

Case No. 12-1465-EL-ATS

Page 9 of 12

ATTACHMENT-2

SCHEDULE-C

CALCULATION OF PHASE-IN RECOVERY CHARGES

Year (a) Transition
Bond
Payments¹
(b) Ongoing
Costs²
(c) Total
nominal
Phase-In
Recovery
Charge
Requirement
(b)+(c) (d) Present
Value of
Phase-In
Recovery
Charges⁴
(e)

¹  From Attachment 2, Schedule A.

²  From Attachment 2, Schedule B.

³  Sum of PIR Bond payments and ongoing costs

⁴  The discount rate used is the weighted average effective annual interest rate of the PIR bonds.

Case No. 12-1465-EL-ATS

Page 10 of 12

ATTACHMENT-2

SCHEDULE-D

COMPLIANCE WITH THE PRESENT VALUE STANDARD¹

	Conventional Financing Through2	Securitization Financing3	Savings!(Cost) of Securitization Financing
Nominal	$	$	$
Present Value	$	$	$

¹  Calculated in accordance with the methodology used in the Joint Application.

²  Carrying Costs at 6.85%.

³  From Attachment 2, Schedule C.

Case No. 12-1465-EL-ATS

Page 11 of 12

ATTACHMENT-3

CERTIFICATION OF COMPLIANCE

[FE Companies Letterhead]

Date:                 , 201    

Re: Joint Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company, Case No. 12-1465-EL-ATS

Applicants, Ohio Edison, Cleveland Electric, and Toledo Edison submit this Certification pursuant to the Financing Order In the Matter of the Joint Application of Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company for Authority to Issue Phase-In-Recovery Bonds and Impose, Charge and Collect Phase-In-Recovery Charges and for Approvals of Tariff and Bill Format Changes in Case No. 12-1465-EL-ATS. All capitalized terms not defined in this letter shall have the meanings ascribed to them in the Financing Order.

In its issuance advice letter dated                 , 201    , the Applicant has set forth the following particulars of the PIR Bonds:

Name of PIR Bonds:                     

PIR Bond Issuer:

SPE)

Trustee:

Closing date:             , 201    

Amount Issued: $            

Expected Amortization Schedule: See Attachment 2, Schedule A to the Issuance Advice Letter

Distributions to Investors (quarterly or semi-annually):

Weighted Average Coupon Rate:     %

Weighted Average Yield:    %

The following actions were taken in connection with the design, structuring and pricing of the PIR Bonds:

<Insert actions actually taken here>

Case No. 12-1465-EL-ATS

Page 12 of 12

Based upon the information reasonably available to its officers, agents, and employees of the Applicants, the Applicants hereby certify that the structuring and pricing of the PIR Bonds, as described in the issuance advice letter, will result in the PIR Bond charges as of the date of issuance, consistent with market conditions and the terms set out in this Financing Order that demonstrates both measurably enhanced cost savings to customers and mitigates rate impacts to customers as compared with traditional cost recovery methods available to the Applicants.

The forgoing certifications do not mean that lower PIR Bond charges could not have been achieved under different market conditions, or that structuring and pricing the PIR Bonds under conditions not permitted by the financing Order could not also have achieved lower PIR Bond charges.

The Applicants are delivering this Certification to the Commission solely to assist the Commission in establishing compliance with the aforementioned standard. The Applicants specifically disclaims any responsibility to any other person for the contents of this Certification, whether such person claims rights directly or as third-party beneficiary.

Respectfully submitted,

OHIO EDISON COMPANY

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY

THE TOLEDO EDISON COMPANY

By:

Name:.

Title: