first energy lehman con9/03/08

NYSE:FE

Lehman Brothers 2008 CEO Energy/Power Conference

New York City, NY • September 2-4, 2008

September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 2

Safe Harbor Statement under the Private SecuritiesLitigation Reform Act of 1995This presentation includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding our, or our management’s, intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” “believe,” “estimate” and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results may differ materially due to the speed and nature of increased competition in the electric utility industry and legislative and regulatory changes affecting how generation rates will be determined following the expiration of existing rate plans in Ohio and Pennsylvania, the impact of the PUCO’s rulemaking process on the Ohio Companies’ ESP and MRO filings, economic or weather conditions affecting future sales and margins, changes in markets for energy services, changing energy and commodity market prices and availability, replacement power costs being higher than anticipated or inadequately hedged, the continued ability of FirstEnergy’s regulated utilities to collect transition and other charges or to recover increased transmission costs, maintenance costs being higher than anticipated, other legislative and regulatory changes including revised environmental requirements and possible greenhouse gas emissions regulation, the impact of the U.S. Court of Appeals July 11, 2008 decision to vacate the CAIR rules and the scope of any laws, rules or regulations that may ultimately take their place, the uncertainty of the timing and amounts of the capital expenditures needed to, among other things, implement the Air Quality Compliance Plan (including that such amounts could be higher than anticipated) or levels of emission reductions related to the Consent Decree resolving the New Source Review litigation or other potential regulatory initiatives, adverse regulatory or legal decisions and outcomes (including, but not limited to, the revocation of necessary licenses or operating permits and oversight by the Nuclear Regulatory Commission including, but not limited to, the Demand for Information issued to FENOC on May 14, 2007) as disclosed in our SEC filings, the timing and outcome of various proceedings before the PUCO (including, but not limited to, the Distribution Rate Cases and the generation supply plan filing for the Ohio Companies and the successful resolution of the issues remanded to the PUCO by the Supreme Court of Ohio regarding the Rate Stabilization Plan and the Rate Certainty Plan, including the deferral of fuel costs) and Met-Ed’s and Penelec’s transmission service charge filings with the PPUC as well as the resolution of the Petitions for Review filed with the Commonwealth Court of Pennsylvania with respect to the transition rate plan for Met-Ed and Penelec, the continuing availability of generating units and their ability to continue to operate at or near full capacity, the ability to comply with applicable state and federal reliability standards, the ability to accomplish or realize anticipated benefits from strategic goals (including employee workforce initiatives), the ability to improve electric commodity margins and to experience growth in the distribution business, changing market conditions that could affect the value of assets held in our nuclear decommissioning trust fund, pension fund and other trust funds, the ability to access the public securities and other capital markets and the cost of such capital, the risks and other factors discussed from time to time in our SEC filings, and other similar factors. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for us to predict all such factors, nor can we assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. Dividends declared from time to time on FirstEnergy's common stock during any annual period may in aggregate vary from the indicated amounts due to circumstances considered by FirstEnergy's Board of Directors at the time of the actual declarations. Also, a security rating is not a recommendation to buy, sell or hold securities, and it may be subject to revision or withdrawal at any time and each such rating should be evaluated independently of any other rating. We expressly disclaim any current intention to update any forward-looking statements contained herein as a result of new information, future events, or otherwise.


Agenda

FirstEnergy Overview

Transition to Market-Based Rates

Maximize Generation Value

Hedging Commodity Exposures

Financial Flexibility


FirstEnergy Overview

7 Regulated Utilities– Fifth largest U.S. investor-owned electric

utility with 4.5 million customers in OH, PA & NJ

– Geographic and regulatory diversity

Focus on Fundamentals– Enhance reliability and customer service– Invest in infrastructure – Pursue timely cost recovery – Control expenditures through continuous

improvement culture

Regulated

Balanced Integrated Approach

Objective: Maximize margins from each business

FirstEnergy Solutions (FES), an unregulated subsidiary:

– Controls 14,000+ MW of generation capacity

– Separate SEC Registrant

Focus on Fundamentals– Transition to market-based rates– Expand generation output– Effectively hedge commodity exposures– Leverage proven skills to succeed in

competitive markets

Competitive


Transition to Market-Based Generation Rates

Our goals in this process– Offer achievable path toward a competitive generation market– Meet both financial and public policy objectives

Electric Security Plan (ESP)– Comprehensive: covering generation, distribution and transmission– Predictable rates and customer benefits– Provides Public Utilities Commission of Ohio (PUCO) with flexibility

– 3-year generation offer; PUCO option to terminate after 2 years– Commits to energy efficiency, economic development and infrastructure

improvements– More favorable in the aggregate than expected MRO outcome

Market Rate Offer (MRO) – If ESP not approved by PUCO – Competitive supply of generation

Ohio – 2009



Comprehensive Plan– Transition toward market pricing for generation

ESP Benefits

$9.5/MWh$8.5/MWh$7.5/MWhPhase-in Credit

$553M$488M$429MGeneration Price Deferrals

$85/MWh$80/MWh$75/MWhGeneration Price

5.99%4.01%5.32%Predictable Customer Price Increases

201120102009ESP Effects



Comprehensive Plan– CEI Regulatory Transition Charge write-off – $485M– Resolves pending Distribution rate case– Increased distribution revenue for system and reliability improvements– Recovers prior deferrals and establishes new deferrals– Generation supply arrangement with FirstEnergy Solutions (FES)

– Generation prices fixed with limited exceptions– FES commitment to add 1,000 MW of generation capacity– Environmental remediation and reclamation up to $45M

ESP Benefits (continued)

PUCO Order Requested ESP Rates Effective

Jan. 1, 2009Dec. 10, 2008

PUCO Order Required

Dec. 26, 2008



Alternative to ESP to secure competitively priced power supply– Competitive Bidding Process (CBP)– Slice-of-system approach– Independent manager to ensure transparency of bidding process– Affiliates (FirstEnergy Solutions) may bid

Power supply is a pass through for utilities

Mitigates wholesale market volatility– Initial supply periods staggered – Subsequent to initial bid, 1/3 of total load bid annually via two solicitations

MRO Overview

PUCO MRO Order Required MRO Rates Effective

Jan. 1, 2009Oct. 29, 2008



Transition periods– Transition to market-based pricing partially implemented

– Penn Power transitioned to market-based pricing in Jan. 2007

– Met-Ed (ME) and Penelec (PN) maintain POLR obligations at fixed rates through year-end 2010

– ME and PN scheduled to transition to market-based pricing in Jan. 2011

Pennsylvania legislation– Alternative Energy Investment Act enacted – $650M alternative energy fund– Other pending legislation addresses

– Generation procurement – Expiration of rate caps– Conservation and renewable energy

Pennsylvania


Expand Generation Output

“Mining our Assets” Initiatives*– No new planned baseload additions– Low-cost, internally funded– Proven technology, quick to market– 2005-2007: 447 MW additions– 2008-2011: 322 MW forecast

Fremont Natural Gas Plant– 544 MW load-following capacity; 163 MW peaking capacity– Expected to be in-service late 2009

Renewable Opportunities– Wind energy

– 145 MW currently on-line– Additional 70 MW scheduled to be completed 4Q 2008

*includes efficiency and capacity factor improvements (see slide 9 in the Appendix)


Maximize Generation Value

Appropriate hedging – Coal, coal transportation, nuclear fuel, and emission allowance positions

significantly closed for 2008-2010 forecasted generation– Rising total fuel costs of approx. $200M in 2008

– Primarily coal transportation and surcharges

– Similar increase projected in 2009 – Eastern coal, other non-coal fossil, nuclear fuel

“Fuel Flex” expands margins and fuel choices– Blend coal to match market conditions on near real-time basis

– Maximize revenues when power prices are high– Minimize fuel costs when power prices are low


Effectively Hedge Commodity Exposures

Strategic investment in Bull Mountain mine operation located in eastern Montana

Estimated annual output of 12 million to 14 million tons and reserves of approximately 440 million tons

Equity investment of $125M; 45% interest in joint venture

15-year coal agreement

Concurrent rail agreements


Effectively Hedge Commodity Exposures

FES secures long-term coal supply– Delivery of up to 10M tons annually at

competitive prices (starting in late 2009)– Closes FirstEnergy coal position through 2013 – Increased fuel optionality

Higher heat content vs. Powder River Basin– 10,300 BTU vs. 8,800 BTU, resulting in higher

production at FirstEnergy generating facilities– Avoided derates of approximately 170 to 200 MW

Environmental advantages– 50% lower sulfur and ash content than eastern coal– Lower mercury content – Lower CO2 emissions per MW

Opportunity to resell tonnage not used at FirstEnergy facilitiesTotal FirstEnergy annual coal requirement = 22-25 million tons

Bull Mountain Strategic Advantages


FirstEnergy is an Attractive Risk/Reward Opportunity

Managing transition to competitive markets (OH & PA)

Maximizing generation value

Earnings and cash flow growth from competitive business

Rigorous focus on fundamentals, execution and operational excellence

Strong and stable utilities

Financial flexibility for the future

Bottom Line: Maximize benefits to shareholders

2009 20112010

NYSE:FE

Appendix


Corporate Profile


FirstEnergy Corporate Profile

Diversified energy company headquartered in Akron, Ohio

Involved in generation, transmission and distribution of electricity, as well as other energy-related services

Fifth largest investor-owned electric utility in U.S.– 4.5 million customers in Ohio, Pennsylvania and New Jersey

Controls over 14,000 MW of generating capacity – 37% nuclear; 63% fossil/other (2007 output MWh)

Approx. $13B in annual revenues and more than $33B in assets

Approx. $22B market capitalization

Investment grade credit ratingsOH

PA

NJ


FirstEnergy Service Areas

Toledo Edison 313,000 2,300

Ohio Edison 1,040,000 7,000

The Illuminating Company 756,000 1,600

Penelec 589,000 17,600

Penn Power 159,000 1,100

Met-Ed 546,000 3,300

Jersey Central Power & Light 1,087,000 3,200

Total 4,490,000 36,100

Customers* Square Miles*

* Per 2007 10-K


Generation


Akron

Toledo

Reading

Beaver Valley1,779 MW

Davis-Besse893 MW

Perry1,273 MW

R. E. Burger413 MW

W. H. Sammis2,233 MW

Bruce Mansfield2,490 MW

Eastlake1,262 MW

Ashtabula244 MW

Seneca451 MW

Edgewater48 MW

Richland432 MW

Stryker18 MW Yards Creek

200 MW

Mad River60 MW

West Lorain545 MW

Lake Shore249 MW

Sumpter340 MW

Erie

Ohio

Pennsylvania

NewJersey

Harrisburg

MorristownNewark

Allenhurst

Trenton

Bay Shore648 MW

Columbus

New Castle

Cleveland

Johnstown

Michigan

Baseload Load Following Peaking Units

Unit Mission Strategy

Towanda

MW MWMW

FirstEnergy Generation – Diversity & Scale

West Lorain 545Seneca 451Richland 432Sumpter 340Yards Creek 200Burger 3 & EMDs 101Mad River 60Edgewater 48Stryker 18Other 63

Total Peaking Units 2,258

Mansfield 1-3 2,490Beaver Valley 1,2 1,779Perry 1,273Sammis 6,7 1,200Davis-Besse 893Eastlake 5 597Bay Shore 1 136

Total Baseload 8,368

Sammis 1-5 1,020Eastlake 1-4 636Bay Shore 2-4 495Burger 4 -5 312Lake Shore 245Ashtabula 244

Total Load Following 2,952

OVEC 463Wind 145

Total 608

Other MW

FirstEnergy Power Sources*

C Coal 7,469 MWN Nuclear 3,945H Hydro 651 G Gas & O Oil 1,599

Other 522Total 14,186 MW

* As of April 18, 2008. Does not reflect the Fremont plant


FES Generation Fleet OverviewDiversified and cost-effective generating fleet

– Balanced fuel mix – Participates in both MISO and PJM markets

Mission-driven strategy– Each unit plays a specific role in fleet: baseload, load-following, or peaking– Strategy optimizes performance and reliability

Well-positioned for environmental regulations– CO2 control over 35% of generation output is non-emitting

2007 Output Mix (MWh)

Fossil and Other

63%

Fossil and Other

63%

Nuclear37%

Nuclear37%

Generation Capacity (MW)*

Baseload 61%

Baseload 61%

Load-Following

22%

Load-Following

22%

Peaking17%

Peaking17%

* Based on May 2008 NDC


Generation Output*

0

20

40

60

80

100

(mill

ion

MW

h)

Nuclear 29.9 28.7 29.0 30.3 32.0 31.0 32.2 32.0Fossil 46.5 51.5 53.0 50.7 52.7 52.4 53.7 54.6

2004 2005 2006 2007 2008F 2009F 2010F 2011F

Realizing Full Potential of Generating Fleet

Significant scale: FirstEnergy Solutions (FES) controls over 14,000 MW

Fleet strategy optimizes performance and reliability– Each unit has a specific mission (baseload, load-following or peaking) – Increases efficiency and reduces wear and tear on baseload units

Nuclear fleet produced a record 30.3 million MWh in 2007

Fleet Characteristics and Mission-Driven Strategy

* Does not reflect the Fremont plant.



Mining Our Assets benefits:– ~$700/kW average capital cost is competitive vs. current market price of new capacity– Lower risk than large, long lead-time projects– Quicker to market

Factors impacting future generation asset decisions:– Capacity and ancillary services market structure– Technological advances– Environmental regulations

*Reflects elimination of seasonal reductions in output due to summer temperatures on peaking units** Reflects 45 MW baseload unit and 84 MW load-following unit efficiency and capacity factor improvements

16016Peaking unit uprates

769322447Total MW additions

278129**149* Efficiency and capacity factor improvements

24593152Nuclear baseload uprates

230100130Fossil baseload uprates

Cumulative MW2008F–2011F2005–2007Type of MW Addition

Mining Our Assets – incremental, low-risk investment approach to fleet expansion


564 GWh215 MWTotal:

180 GWh70 MWForecastedIn-service 2008

384 GWh145 MWIn-service 2007

RECs/YearCapacityStatus

FES Wind Energy Portfolio

Represents small portion of total renewable requirements

Will impact renewable strategy

Drives renewable strategy today

Overview

22.5% by 2020NJ

12.5% by 2025OH

18% by 2020PA

Renewable MandateState

Leading the Way in Procuring Renewable Energy to Meet Growing Demand

Leading wind energy supplier in PA

Evaluating expansion of current wind portfolio

Considering other renewable technologies:– Solar– Compressed air– Biomass– Land fill gas– Anaerobic digestion



Reinvesting in the Business

FirstEnergy Generation Corp. acquired partially complete 707-MW natural gas, combined-cycle generating plant in Fremont, Ohio

– Includes two combined-cycle combustion turbines and a steam turbine– 544 MW of load-following capacity and 163 MW of peaking capacity

– Purchased in bankruptcy auction from Calpine Corporation for $253.6M– Calpine construction costs exceeded $300M– FirstEnergy estimated cost to complete is approximately $208M

Key benefits to FirstEnergy:– Plant is connected to two RTOs – MISO & PJM – Expands fleet capacity and further diversifies generation mix– Low-emitting characteristics will further reduce our average CO2

emission rate

Enhancing Our Generation Portfolio for the Future


90.787.280.4Capacity Factor (Baseload %)

54.652.750.7Total Generation (million MWh)

0.801.121.04OSHA Incident Rate (per 100 employees)

2011 Target*2008F2007Fossil

Fossil Operating Performance2007 Highlights

– Top-quartile safety performance – New monthly all time generation record

set Aug. 2007 (4.6 million MWh)– Environmental projects (AQC) on track– Outage performance improving– Implemented Fossil Excellence at

Bay Shore and Sammis (continuous improvement)

– On track for workforce replenishment– Improved performance accountability– Mansfield Unit 3 uprate (30 MW)

2008 Highlights and Look Ahead– Achieve top-decile safety performance – Drive continuous improvement through

fleet standardization of best practices, benchmarking and Fossil Excellence annual diagnostics

– Continue to focus on transitioning workforce knowledge and skills to a new generation of employees

– Execute Mining Our Assets strategies– Develop and implement a full start-up

testing, training and operation strategy for AQC



Nuclear Operating Performance2007 Highlights

– Top-quartile safety performance– DB worked > 7.6 million hours without

a Lost Time Accident– Record Fleet Generation (30.3 million MWh) – BV1 uprate (43 MW); BV2 uprate (24 MW)– No forced losses at BV1; BV2 top quartile

(0.05%)– NRC accepted BV license renewal application– Successful NRC Security drills at PY and BV– Lowest BV dose during fall outage

2008 Highlights and Look Ahead– Maintain top-quartile safety performance– Targeting record generation

(32.0 million MWh) – Two outages – DB (Completed 2/14/08)

and BV2 (Completed 5/22/08)– 15 MW uprate at PY effective 1/1/08– Additional 12 MW from DB Caldon

modification– Additional 45 MW from BV power uprate– NRC Emergency Preparedness

Evaluated Exercises at BV and PY – Dry Cask Fuel Storage underway at PY

92.492.988.8Capacity Factor (%)

32.032.030.3Total Generation (million MWh)

0.250.250.29OSHA Incident Rate (per 100 employees)

2011 Target2008F2007Nuclear


Top-Tier Operational Capability

Garnered significant nuclear reliability improvements during 2006–2007 outages

Fossil fleet expected to return to top-quartile performance in 2008 – AQC-related outages will lower capacity factors in 2009 and 2010– Expect to reach top-decile performance levels by 2011

Baseload Capability/Capacity Factors

75%

80%

85%

90%

95%

100%

Fact

ors

(%)

Fossil baseload 84.6% 86.9% 88.5% 80.4% 87.2% 90.7%

Nuclear 89.5% 86.2% 86.8% 88.8% 92.9% 92.4%

2004 2005 2006 2007 2008F 2011 Target

Continued Improvement of Asset Utilization


Operational Performance Targets

92.492.988.886.886.289.5Capability Factor %

Nuclear Reliability

90.787.280.488.586.984.6Capacity Factor (Baseload %)

Fossil Reliability

86.684.781.082.080.276.4Total Generation (million MWh)

2011 Targets*2008F2007200620052004Operational Performance



Nuclear Generation

Refueling *In-vessel visual inspection (IVVI)Rewind Main GeneratorReinforce welds on plant equipment

CompleteDavis-Besse1R15

2008

Refueling*25Beaver Valley 2R14

Replace Low Pressure Turbines (2)*Reactor Coolant System Loop Stop Valves (2)Reactor Vessel Head Inspection

30Beaver Valley 1R19

Refueling*10-year IVVI / Bioshield In-service InspectionRecirc Pump Motor Replacement

35Perry 1R12

2009F

Split Pins*Low Pressre-2 Turbine Inspection*Reactor Vessel Head InspectionMain Cond Tube Replacement, Expansion Joints*Replace High Pressure Turbine*Type A Containment Pressurization Test

Complete Beaver Valley 2R13

Scope Driving Duration(Items with asterisk* denote duration drivers)

ExpectedOutage Duration

(days)PlantYear

Future Refueling Outages Focus on Reliability


Generation – Implementing Plans for the Future

Nuclear license renewal

Nuclear steam generator replacements– Davis-Besse in 2014– Beaver Valley Unit 2 in 2017

20472009Submitted 2007*2027Beaver Valley Unit 2

2037201220102017Davis-Besse

2046

2036

New Expiration

201520132026Perry

Submitted 2007*

Submit Request (NRC Docket)

20092016Beaver Valley Unit 1

Approval Expected

Current Expiration

* The NRC accepted the application for review.


Generation – Implementing Plans for the Future

Nuclear spent fuel storage– At the federal level, Yucca Mountain has been proposed as a site for

long-term storage and may be available as early as 2017 to receive used fuel, but this is not likely. If Yucca Mountain is available in 2017, FirstEnergy will be eligible to ship fuel starting in 2021.

Current ongoing criticality analysis will increase storage spaceRe-rack before 2011 to provide capacity through 2025 Dry storage could then be implemented

Beaver ValleyUnit 2

Continue with wet storage until 2021Switch back to dry storage in 2022

Davis-Besse

Implement dry storage before 2011Perry

Implement dry storage by the end of 2014Beaver ValleyUnit 1


Environmental Strategy


Longer-term environmental considerations:CO2 control – Over 35% of annual fleet output (MWh) is non-emitting

– Involved in CO2 capture and sequestration R&D

Mercury control – Excellent reduction through “co-benefits”– Participating in future mercury regulatory developments


2010FAugust 2008

81%62%13%9%

36%19%

32%34%

Fleet %Fleet %

Fleet Emission Control Status

11,8508,4191,9041,197Natural Gas

5,2932,626Coal Controlled(SO2/NOx – full control)

4,6534,596Non-Emitting

Capacity (MW)Capacity (MW)

Our Generation Fleet is Well-Positioned for the Future


AQC Construction OverviewReinvesting in the Business

Sammis Plant (2,233 MW) – $1.65B– SO2 control (scrubbers) all units– NOx control (SCRs) Units 6 & 7 (1,200 MW)

NOx control (SNCR) Units 1–5 (1,033 MW) completed

Mansfield Plant (2,490 MW) – $50MSO2 control (scrubber) upgrades completed

Burger Plant – $180M– NOx control (SNCR) and SO2 control

Electro-Catalytic Oxidation (ECO) Units 4 & 5 (312 MW)

Eastlake Plant – $6MNOx control (SNCR) Unit 5 (597 MW) completed


Sammis Plant with computer overlay of Wet Flue Gas Desulphurization (WFGD) equipment

AQC Upgrades – Sammis Plant

Flue Duct Work – 9,000 tons (9,000 ft.)

Electrical Cable – 9,120 circuits (530 miles)

Foundation Piles – 5,600 piles (445,000 LF)

Concrete – 51,000 cubic yards

Tons of Steel – 17,200 tons

DCS I/O Points – 8,200

Large Bore Pipe – 88,300 ft. (17 miles)

Small Bore Pipe – 13,000 ft. (2.5 miles)

Overland “Pipe” Conveyor – 3.0 miles long


Participating in Global Climate Change Policy• Global Roundtable on Climate Change• EPRI Global Climate Policy Costs & Benefits Research• EEI Climate Change Policy Subcommittee• NEI Climate Change Policy Subcommittee

GHG Reduction Technologies & Voluntary Actions• Asia-Pacific Partnership• EPA SF6 Reduction Partnership• EPRI GHG Reduction and Electric Transportation Research• Climate Vision• DOE 1605(b) Voluntary Reporting of GHGs Program• Powertree Carbon Company

Generation Initiatives• Fossil plant efficiencies • Nuclear plant uprates

CO2 Capture and Storage Technologies• MRCSP – R.E. Burger Plant Sequestration test well• ECO2 Carbon Capture – Powerspan• EPRI research• Power Partners• Oxy Fuel – B&W

End-user Energy Management• NJ Clean Energy Program• PA Sustainable Energy Fund• Ohio Energy-efficiency Programs

Renewables• 650 MWs Hydro• >200 MWs Wind Purchase Agreements

Renewal of Nuclear and Hydro Plant Operating Licenses

• Continued operation of non-emitting generation

Environmental StrategyFirstEnergy’s Climate Activities


FirstEnergy’s Position on Global Climate Change

Climate change is a global issue ultimately requiring a global solution

Technology development is key – Energy efficiency and demand-side management– Clean coal technologies– Carbon capture and sequestration

Significant future impact on price of electricity whether states are regulated or deregulated

– Be consistent over broad geographic region– Include reasonable compliance timeframes – Encourage new cost-effective technologies


Commodity Operations


Coal Commodity Position

Continue working to secure long-term fuel supply contracts

Actively testing alternate fuel blends at various plants to optimize plant economics and flexibility

Engaged in fuel flexibility initiative to expand margins and fuel choices

FirstEnergy is well positioned with respect to its total coal supply

Securing Open Coal Commodity Positions

0 5,000 10,000 15,000 20,000 25,000

2010

2009

2008

Total Needed Tons Total Covered Tons

98%

100%

100%

As of June 30, 2008


Coal Transportation Position

All transportation positions including both rail and barge are closed thru 2010 year end

Continuing to evaluate additional delivery options to increase both capabilities and flexibility

Enhanced rail unloading capabilities in process at Ashtabula, Bay Shore and Lake Shore

In 2008, FES is managing PRB rail logistics previously outsourced

Securing Open Coal Transportation Positions

0 5,000 10,000 15,000 20,000 25,000

2010

2009

2008

Total Needed Tons Total Covered Tons

100%

100%

100%

As of June 30, 2008


Fuel Flexibility Creates Margin & Fuel Choices

Enhanced systems, tools and processes providing the ability to react and adjust blends quickly to match power prices

“Fuel Flex” creates value by continuously increasing fuel blend choices– Maximize revenues when real-time power prices are favorable– Minimize costs when power prices are low

The Right Fuel at the

Right Time


Energy Delivery


FirstEnergy Utilities

Large and balanced sales mix – Approximately 1/3 residential, 1/3 commercial, 1/3 industrial

T&D infrastructure being upgraded to enhance system reliability and customer service

Distribution outage duration reduced by 31% over past two years

Constructive regulatory environments– Achieve timely and full recovery of costs– Distribution rate case pending for all three Ohio utilities

– Ohio utilities requested resolution of distribution rates in ESP

Strong and Stable Cash Flows


Financial Performance

$277$272$273Total Cost Per CustomerAchieve top-quartile total spend per customer

0.630.690.72 TOF (per circuit) *

107 128 131 Distribution SAIDI (minutes)Top-quartile performance SAIDI and TOF

Reliability

2011 Target2008F2007Key MetricsFocus Area

* TOF has been revised to include all circuits 69KV and above (previously 230KV and above)


Total Direct Cost per Customer

$150$180$210$240$270$300

2005 2006 2007 2008 2009 2010 2011 2012

Tota

l Dire

ct C

PC

ED&CS Top Quartile

Energy Delivery – Striving to Achieve Top-Quartile Performance

SAIDI Performance

104070

100130160190220

2005 2006 2007 2008 2009 2010 2011 2012

SAID

I (M

inut

es)

ED&CS Top Quartile


Capital Planning Enhancements

Benchmarked leading performers in the area of capital allocation

Selected Navigant to help develop capital allocation tool based on fundamental engineering economics (quantified benefits)

E-CAT provides the granularity which drives our ability to prioritize thousands of projects based on predicted benefits

Energy Delivery Capital Allocation Tool (E-CAT)

Game Plan:

Target spend with an emphasis on improving reliability

Continued focus on operational improvements

Capital planning has undergone a fundamental change to enhance our financial discipline


Workforce Management

Power Systems Institute (PSI)– Started in 2000; partnered with two colleges in Ohio to offer

lineworker training– Currently, partnerships with 11 local community colleges

and universities across OH, PA and NJ

296323386Total

8287110Substation Electricians

214236276Line Workers

HiredGraduatedStarted Program

Enrollment/Hires 2000–2007

237154

6031

177123

2009F2008F


Regulatory / Legislative Matters


Retail Regulatory Structure

1 CEI fixed through April 2009.2 Proposed waiver of CEI’s RTC beginning Jan. 1, 2009 as part of ESP.3 NUG recovery thru 2020.

CEI

MTC thru 2018No restrictionBGS SupplyJCP&L

CTC thru 20093

Pass thruPJM costsPenelec

CTC thru 20103

No restrictionPOLR ratesthru 2010

Met-Ed

CTC endedJan. 2006No restrictionIn

GenerationMarket in

2007Penn Power

Toledo Edison

RTC thru:2008 – OE, TE

2010 – CEI2Fixed ratesthru 20081

Pass thru MISO costs

Stable rates thru 2008 “g + RSC”

Ohio Edison

Transition CostsDistributionTransmissionGeneration


Transitioning Generation to Market Prices

New Jersey– Competitive generation service with market-based pricing in effect

(Basic Generation Service auction process began in 2002)

Pennsylvania– Transition to market-based pricing partially implemented

– Penn Power transitioned to market-based pricing in Jan. 2007– Met-Ed (ME) and Penelec (PN) maintain POLR obligations at fixed rates

through year-end 2010– ME and PN scheduled to transition to market-based pricing in Jan. 2011

Ohio– Utilities transferred generation assets to competitive affiliate FES in 2005– Utilities maintain POLR obligations at fixed rates through year-end 2008– Utilities filed ESP and MRO with the PUCO for generation pricing effective

Jan. 2009

Restructuring Status


Transitioning Generation to Market Prices

Existing S.B. 3 – Enacted 1999– Generation rates to be market-based on Jan. 1, 2009

Amended Sub. S.B. 221 – Signed by Governor on May 1, 2008; effective July 31, 2008

– Requires all utilities to file an electric security plan (ESP)– Could also file a market rate offer (MRO) with the following criteria:

– Belongs to a FERC-approved RTO – RTO has a market-monitor function and the ability to mitigate market power– A published source exists that identifies information for traded electricity and energy

products scheduled for delivery two years into the future– The Commission may only approve the ESP if it finds it is more favorable in the

aggregate as compared to the expected results from an MRO.– Bill also contains advanced and renewable energy standards and energy efficiency

– Requires annual progress toward 2025 goal for renewable energy resources– Requires energy efficiency programs to achieve annual progress toward 2025 goal of

cumulative energy usage reduction of 22%– On July 31, 2008 the Ohio utilities simultaneously filed an ESP and MRO with

the PUCO

Ohio Legislative Update


Ohio Regulatory Update

Year Generation Charge Phase In Credit Deferral*2009 $75.00/MWh ($7.50)/MWh $429M2010 $80.00/MWh ($8.50)/MWh $488M2011 $85.00/MWh ($9.50)/MWh $553M

ESP Components (as filed)

Component AmountDeferred Fuel Cost Rider $0.34/MWh Not to exceed 25 yrs, eff. 1/1/09

Non-Distribution Uncollectible Rider $0.40/MWh Effective 1/1/09

FES Commitment/Capacity Additions 1,000 MW Between 1/1/07 and 12/31/11

Environmental Remediation/Reclamation $15M/yr $15M per yr. for 3 yrs.

*Estimate; not including carrying chargesTwo options for financing of deferral amounts and carrying charges:

• Company financing• Securitization transactions

Recovery may not exceed 10 years

Note: ESP Filing in Case No. 08-935-EL-SSO and docketed with the PUCO



Generation charge will be fixed, with limited exceptions, including:

– Fuel transportation cost surcharges in excess of $30M in 2009, $20M in 2010, $10M in 2011

– 2011 increase in fuel costs (vs. 2010), excluding certain fuel components including emission allowances, fuel handling, disposal, lime, urea and ammonia

– Planning reserve margin costs incurred annually between May 1 and Sept. 30

– Costs incurred for purchase of capacity by FES if owned generation is insufficient

– New renewable requirements, taxes, or new environmental laws or interpretations of existing laws in excess of $50M during the plan period

ESP Components (as filed)


Ohio Regulatory UpdateESP Components (as filed)

Component Amount Distribution Rate Increase $150M1 OE/TE effective 1/1/09; CEI 5/1/09

Allowed Rate of Return on Equity 10.50%

CEI Distribution Deferral $25M Costs 1/1/09 through 5/1/09

Delivery Service Improvement Rider $2.00/MWh2 1/1/09 through 12/31/11

CEI RTC Write-Off $485M 2008 GAAP earnings ($1.01/share)Deferred Transmission Rider $43.9M Effective 1/1/09 for 2 yrs.Energy Delivery Capital Investment $1B 1/1/09 through 12/31/13Energy Efficiency/DSM Commitment Up to$5M/yr 1/1/09 through 12/31/13Economic Development Commitment Up to $5M/yr 1/1/09 through 12/31/13AMI Pilot Commitment Up to $1M During Plan

1$75M OE; $34.5M CEI; $40.5M TE, rates stable until Jan. 1, 2014 2May be adjusted annually (+/- 15%) based on SAIDI performance



Transmission Rider– Recovery of all MISO, ancillary and congestion costs; reconcilable

Deferred Distribution Cost Recovery Rider– Includes Jan.-April 2009 CEI deferral, post-date certain distribution costs,

and deferred transition taxes and unrecovered balances of line extension deferrals

Storm Damage and Distribution Enhancement Rider– Storm damage expenses in excess of $13.9M annually– Line extension cost recovery– Depreciation, tax and carrying charges on capital investments to

improve reliability

Other ESP Provisions (as filed)


Economic Development Rider– Promotes gradualism, recognizes efficiency, mitigates overall bill impact to

customers through credits and charges

Reasonable Arrangements Rider– Mechanism to administer certain tariff discounts pursuant to PUCO

proposed rules for customers committing to energy efficiency improvements

Demand Side Management (DSM)/Energy Efficiency Rider– Recovers costs associated with energy efficiency, peak load reduction and

DSM programs

Delta Revenue Recovery Rider– Recovers the difference in revenues from applicable rate schedule

resulting from reasonable arrangements and special discounts

Ohio Regulatory UpdateOther ESP Provisions (as filed)



Suppliers bid to provide energy, capacity, transmission service,transmission ancillaries

Competitive Bid Process (CBP) with descending clock bidding format

Slice of system approach/100 MW tranches– Supply procured on a total basis– Voltage and seasonal factors used to convert winning bid price to

retail rates

PUCO selects least cost bid winner(s)

Required renewable resources met through an RFP separate from the CBP under the MRO

MRO Procurement Process (as filed)

Note: MRO Filing in Case No. 08-936-EL-SSO and docketed with the PUCO


Ohio Regulatory UpdateMRO Procurement Process (as filed)



Option provides flexibility and benefits– Customers obtain early price certainty for Jan. 1, 2009

– Base generation rate of 7.75 cents/kWh, with 1.0 cent/kWh phase-in credit

– PUCO gains additional time to consider longer-term ESP– Provides for more orderly CBP if the MRO is selected

Severable by the PUCO – Acceptance of the longer-term ESP or MRO– PUCO inaction on ESP by Mar. 5, 2009

Short-Term ESP Overview (as filed)

PUCO Approval Required Short-Term ESP Window

Jan. 1, 2009 – May 1, 2009Nov. 14, 2008



10/29/08 – PUCO MRO Order Required 11/14/08 – Short-Term ESP Decision12/10/08 – PUCO ESP Order Requested 12/26/08 – PUCO ESP Order Required 1/1/09 – ESP or MRO rates effective

OR1/1/09 – 5/1/09 – Short-Term ESP in effect, if implemented

ESP/MRO

8/18/08 – Technical Conference9/4/08 – Motions to Intervene9/15/08 – Intervenor Testimony9/19/08 – Discovery Due9/22/08 – PUCO Staff Testimony10/2/08 – Evidentiary Hearing(s)

PUCO ESP Procedural Schedule

Detailed Timeline

New generation prices under the ESP, MRO or Short-Term ESP effective January 1, 2009



Ohio Edison, CEI and Toledo Edison– Case detail (as filed)

– Request: $332M increase (7% on overall rates)– Distribution revenue requirements: $212M– Deferral recovery: $120M

– Case schedule– Filed June 2007, with 2008 test period and date certain of May 31, 2007– PUCO Staff report issued Dec. 4, 2007– Evidentiary hearings held Jan. 29, 2008 – Feb. 25, 2008– Public hearings held Mar. 5 – Mar. 24– Main briefs filed Mar. 28; reply briefs filed Apr. 18– Rates to be effective Jan. 2009 (CEI in May 2009)– Ohio Companies requested resolution of distribution rates in ESP

Distribution Rate Requests



* Assumes current Generation & Transmission rates

Proposed Changes in Revenues ($ millions) TotalCurrent "Distribution" Revenues $1,118Requested Increase:

Associated with RCP Fuel Expense Deferrals 34Associated with RCP Infrastructure Expense Deferrals 40Associated with RCP DSM Deferrals (through a rider) 4Associated with ETP & Ohio Line Extension Deferrals 42"Base" Revenue Requirement Increases 212

Total Requested Increase to "Distribution" Revenues $332Proposed "Distribution" Revenues $1,450Offsetting RTC Decrease ($594)Net Decrease, Including Offsets * ($262)% Decrease, Including Offsets to Total Current Revenues * -5.7%

Distribution Rate Requests (as filed)


$117 – $135$332Total requested increase to "distribution" revenues46120Recovery of costs deferred under prior rate plans

$71 – $89$212Traditional distribution costs

PUCO BriefCompany Filing

Requested Increase in Revenues ($ Millions)To be effective 1/09 for OE & TE 1/09; 5/09 for CEI

FirstEnergy UtilitiesOhio Distribution Rate Cases

($65)Other issues (net)($35) – ($16)ROE @ 10 to 11% (vs. Co. @ 11.75%)

($115)*Matters to be considered in other cases

Key PUCO Brief Differences

Ohio Companies requested resolution of distribution rates in ESP

ESP also requested 10.5% ROE

* $52M related to expenses in distribution case amount, $63M related to recovery of costs deferred for fuel and post date certain



Rate Certainty Plan provided for the deferral of 2006 – 2008 incremental fuel costs

– Recovery was planned to occur in distribution rates over 25 years, but Supreme Court of Ohio remanded the recovery mechanism to PUCO

– On Jan. 9, 2008, the PUCO:– Authorized concurrent recovery of actual 2008 fuel costs via a fuel generation

rider commencing Jan. 1, 2008 (currently projected at approx. $189M)– Directed the Companies to file an alternative recovery mechanism to collect the

2006-2007 deferred fuel costs ($220M) and carrying charges ($6M)

– On Feb. 8, 2008, the Companies filed a separate fuel cost recovery rider for the 2006-2007 fuel and carrying charge deferrals

– Proposed recovery periods ranging from 5 and 25 years– Evidentiary hearing scheduled for Sept. 29, 2008

– Ohio Companies requested resolution of 2006-2007 fuel deferral issue in ESP

Supreme Court of Ohio Remand on Deferred Fuel Recovery


Pennsylvania Regulatory Update

Met-Ed (ME) and Penelec (PN)Commonwealth Court appeals of rate cases-

– $109M net increase effective Jan. 2007– Pending appeals to Commonwealth Court

– ME & PN – denial of generation relief and tax expense adjustment– Industrials & OCA – transmission recovery– Oral arguments before panel of judges scheduled for September 2008

Transmission service charge (TSC)– The Pennsylvania Public Utility Commission (PPUC) approved the annual

updates to the TSC rider for the period June 1, 2008, through May 31, 2009– PPUC investigating reasonableness of Met-Ed’s TSC; hearings scheduled in

Jan. 2009

Generation procurement filing plan– ME and PN transition to competitive generation market prices on

Jan. 1, 2011– Plan to submit generation procurement proposal in 2008

Commonwealth Court Appeals & Generation Procurement Filing


Penn Power POLR II CasePennsylvania Regulatory Update

Penn Power successfully transitioned to competitive generation market prices on Jan. 1, 2007

POLR I RFPs implemented for Jan. 2007 – May 2008

POLR II (June 2008 – May 2011)– Multiple RFPs for residential and small commercial customers– Hourly pricing for large commercial and industrial customers

0

2

2

May 08

0

2

2

Apr 08

4343431 yearSmall Commercial

0022002 yearResidential

2200001 yearResidential

Jan 10Oct 09Jan 09Oct 08Mar 08Feb 08

RFP Tranches (50 MW)TermGroup

Small Commercial■ RFPs held on Feb. 20 and Mar. 18 for June 2008 – May 2009 ■ Average price of winning bids was $80.49/ MWH (before line

losses, administration fees, and gross receipt taxes)

Residential■ RFPs held on Apr. 14 and May 14 for June 2008 – May 2010 ■ Average price of winning bids was $80.48/ MWH (before line

losses, administration fees, and gross receipt taxes)


New Jersey Regulatory Matters

Draft New Jersey Energy Master Plan (Apr. 17, 2008)– Plan goals

– Maximize energy conservation and energy efficiency– Reduce peak electricity demand– Meet 22.5% of the State’s electricity needs from renewable resources– Develop new low carbon emitting, efficient power plants to help close the gap

between supply and demand of electricity– Invest in innovative clean energy technologies and businesses to stimulate the

industry’s growth in New Jersey– Public meetings held Apr. 28 and May 1– Public roundtable discussions with state and national energy experts

held in late June– Public hearings and comment period held through July– Expect final plan in 3rd or 4th quarter of 2008

JCP&L focus: Peak demand management and cost recovery

Jersey Central Power & Light


Financial Matters


$1,265$1,430Subtotal without AQC66

210259

$730

2009F – 2012F Average

173Corporate/ Other

$2,079

395132

$730

2008F

Fossil

Total with AQC

NuclearEnergy Delivery

($ millions)

($145)$11

2011F

($7)$4

2012F

$263$649

2008F

($149)$500

2009F

($344)$156

2010F

Change from Prior YearAir Quality Control (AQC)($ millions)

Reinvesting in the BusinessProjected 2008 – 2012 Capital Expenditures*

* Per 2007 10-K plus Fremont construction expenditures


$1,433$2,079$1,496$1,170$1,144$731Total

$168**$649$386$136$54$0Compliance strategy totals - Sammis, Burger Units, Mansfield and Eastlake Unit 5

AQC

$1,265$1,430$1,110$1,034$1,090$731Sub-Total

$66$173$108$39$45$29– Information Technology, etc.Corporate

$259$132$150$229$173$141– Availability improvements– Dry fuel storage / license renewal– Materials issues

Nuclear

$210*$395*$106$116$148$106– Improve managing operating risk– Upgrade aged equipment– Environmental / fuel enhancements

Fossil

$730$730$746$650$724$445– Aged infrastructure rebuild– Pockets of load growth– Reliability improvements

Energy Delivery

2009F-2012F Average*2008F*2007200620052004

Capital Expenditures ($ millions)Project AreaBusiness

Unit

Reinvesting in the BusinessCapital Expenditure Forecast*

* Per 2007 10-K plus Fremont construction expenditures** AQC annual expenditures include $500M (2009), $156M (2010), $11M (2011), $4M (2012)


Acquired Additional Equity Interest in Beaver Valley 2 and Perry

On May 30, 2008 Nuclear Generation Corp. (NGC) purchased 56.8 MW of lessor equity interests in the Perry Plant

Between June 2, 2008, and June 9, 2008 NGC acquired ownership of an additional 202 MW of lessor equity interest in Beaver Valley Unit 2 (BV2)

NGC exercised early purchase options under certain existing leases originally entered into in 1987

The previous lessors continue to lease these MWs under the respective sale and leaseback arrangements and the related lease debt remains outstanding


2008 Non-GAAP Earnings Per Share GuidanceReconciliation of GAAP to Non-GAAP

As of Aug. 1, 2008

2008 EPS

Basic EPS (GAAP basis) $4.27 – $4.37Excluding Special Items*:Gain on Sale of Non-Core Assets (0.06)Litigation Settlement (0.03)Trust Securities Impairment 0.07

Basic EPS (Non-GAAP basis) $4.25 – $4.35

* Excludes possible write-off of $485 million of CEI’s estimated unrecoverable transition costs under the proposed ESP, which if recognized, would be categorized as a Special Item ($1.01 per share).


Distribution rate case in OH effective 2009

Increased generation prices in OH in 2009

Market generation prices in PA in 2011

Asset mining / realizing full potential of generation assets

Further operational enhancements

Achieving Targeted GrowthMajor Earnings Drivers 2009 – 2011


Declining margin from OH transition plans

Impact of expiring Met-Ed/Penelec third-party power contract in 2009

Increasing fuel and purchased power costs

Increasing O&M costs

Higher depreciation expenses (non-cash)

Achieving Targeted Growth (continued)Major Earnings Drivers 2009 – 2011


Annualized Total Shareholder Returns(Periods Ending December 31, 2007)

23.6%26.4%

21.3%

16.6% 17.8%19.9%

0%

5%

10%

15%

20%

25%

30%

1 year 3 years 5 years

FE EEI Index

Financial Performance

Positioned for continued earnings growth

Strong operations with financial discipline

Integrated strategy that diversifies risks

Annualized Dividend Per Share

$2.00$1.80

$1.72

$1.50

$2.20

$1.00

$1.25

$1.50

$1.75

$2.00

$2.25

$2.50

YE 2004 YE 2005 YE 2006 YE 2007 Jun. 08

47% IncreaseSince End of 2004


FirstEnergy Credit Ratings

On Aug. 1, 2008, S&P revised the outlook of FE and its subsidiaries to stable from negative

On Nov. 2, 2007, Moody’s revised the outlook of FE and its subsidiaries to stable from positive

Corporate Credit Rating (S&P) / Issuer Rating

(Moody's)

Senior Secured Senior Unsecured

S&P Moodys S&P Moodys S&P MoodysFirstEnergy Corp. BBB Baa3 - - BBB- Baa3

FirstEnergy Solutions BBB Baa2 - - BBB Baa2

Ohio Edison BBB Baa2 BBB+ Baa1 BBB- Baa2

Cleveland Electric Illuminating BBB Baa3 BBB+ Baa2 BBB- Baa3

Toledo Edison BBB Baa3 BBB Baa2 BBB- Baa3

Pennsylvania Power BBB Baa2 A- Baa1 BBB- Baa2

Jersey Central Power & Light BBB Baa2 BBB+ Baa1 BBB Baa2

Metropolitan Edison BBB Baa2 BBB+ Baa1 BBB Baa2

Pennsylvania Electric BBB Baa2 BBB+ Baa1 BBB Baa2

As of December 6, 2007As of Aug. 1, 2008


Strong Liquidity Position

$ 3,720***

550

420

$ 2,750

Amount ($M)

Total

Various

Various

Aug. 2012

Maturity

1-yearA/R Fin.OH & PA Utilities

VariousBank LinesFirstEnergy Corp.**

5-yearRCA*FirstEnergy Corp.

TermTypeCompany

* Revolving Credit Agreement

** Includes $300 of Bank Lines with FirstEnergy Solutions Corp.

*** As of June 30, 2008


Deploying Cash Effectively

Potential uses of free cash following completion of AQC projects– Dividend growth– Invest for future growth– Potential for share repurchases– Ability to take advantage of strategic opportunities

Available Cash Forecast

$50

(171)***

(2,079)**

$2,300*

2008F

($53)

(76)

(583)

$606

Change

$103

(95)

(1,496)

$1,694

2007

Capital Expenditures

Nuclear Fuel Fabrication

Available Cash before Dividends

Net Cash from Operating Activities

($ millions)

* Per 2007 10-K

** Per 2007 10-K plus Fremont expenditures

*** Per June 30, 2008 10-Q


Deploying Cash Effectively

At its Dec. 18, 2007, meeting, the Board of Directors declared aquarterly dividend of $0.55 per share, payable Mar. 1, 2008

Dividend Increases:

$2.2010.00%55.00¢1Q 2008

$1.50

$1.65

$1.72

$1.80

$2.00

AnnualizedRate

–37.50¢4Q 2004

10.00%41.25¢1Q 2005

4.24%43.00¢4Q 2005

4.65%45.00¢1Q 2006

11.10%50.00¢1Q 2007

Change fromPrior Period

QuarterlyRate

PaymentDate

Common Dividend


Share Repurchase Summary

$0.35$0.22$0.13Annual EPS Benefit

$62.68$65.54$58.99Avg. Price per Share

$1,567$942$627Cost ($ millions)

7.7%4.5%3.2%% Reduction

304.8304.8319.2Ending Shares

25.014.410.6Shares Repurchased

329.8319.2329.8Beginning Shares

Cumulative20072006(Shares in millions)


Finance Plans: 2008 and Beyond

Maintain financial flexibility– Investment grade credit metrics at all entities

– Metrics maintained over near-term – Metrics improved as AQC capital spend winds down post-2009

– Maintain substantial liquidity– $3.7B total capacity

Reduce holding company debt while appropriately capitalizing operating companies and FirstEnergy Solutions

– Utility debt maturities of only $685M over 2008 – 2011 period– Opportunistically transfer remaining $263M of utility tax-exempt debt to Generating

Companies with 1.9B already transferred– $1.5B, 6.45% Series B FE Notes due Nov. 2011

Efficient funding of capital program – Capital expenditures financed largely through internal cash flow, even during peak

AQC spend– New tax-exempt financings of approximately $200M planned to support

Sammis AQC project

first energy lehman con9/03/08

Economy & Finance