EX-99.2 3 ex99_2.htm CONSOLIDATED REPORT TO THE FINANCIAL COMMUNITY, DATED AUGUST 1, 2006 Consolidated Report to the Financial Community, dated August 1, 2006
Consolidated Report to the Financial Community                                                                                                     EXHIBIT 99.2
Second Quarter 2006    
(Released August 1, 2006) (Unaudited)                                                        
 
           
   HIGHLIGHTS    After-Tax EPS Variance Analysis
 2nd Qtr.
  
      2Q 2005 Basic EPS - GAAP Basis
 $0.54 
 
 n 
Normalized  non-GAAP*   earnings,  excluding  unusual
       Unusual Items - 2005 
       0.17 
  
 
Items,  were $0.95 per share for  the second  quarter of 
   2Q 2005 Normalized Earnings - non-GAAP Basis 
 $0.71 
 
  2006, compared  with  $0.71 per share  for  the  second       Distribution Deliveries 
 (0.03)
  
  quarter of 2005.  GAAP  earnings  were $0.92 per share      Generation Revenues    
 (0.03)
  
  compared with $0.54 per  share in  the  second  quarter        Fuel & Purchased Power 
 (0.05)
  
  of 2005.       Nuclear O&M Expenses                        
 0.02 
  
     
   Postretirement Benefit Costs
 0.01 
 
   2Q 2006 Results vs. 2Q 2005      JCP&L Rate Increase
 0.02 
 
         Ohio Regulatory Changes
 
  
     n   Electric  distribution  deliveries  declined  2%,  primarily            - Transition Cost Amortization 
 0.20 
 
  due  to  unseasonably  mild  weather.  Heating-degree-            - Distribution Deferred Costs 
 0.07 
 
  days were 17% lower than in the same period last year   
 - Deferred Fuel Costs            
 0.05 
 
  and  14%   below  normal,   while  cooling-degree-days            - Rate Stabilization Charge Discount 
 (0.07)
  
  were  24%  lower  than  the  same  period last year and       Deferred Transmission Costs - PA (1Q06)
     0.05 
 
  17%  below normal.   Residential distribution deliveries       Deferred Transmission Costs - PA (2Q06)            0.05  
  decreased   5%,   commercial  deliveries  declined 1%,       Financing Costs 
 (0.03)
 
  while   industrial  deliveries  were  up  slightly.      Lower   
Investment Income
 (0.03)
  
  distribution deliveries  reduced  earnings by  $0.03  per         Other 
    0.01 
  
  share.     2Q 2006 Normalized Earnings - Non-GAAP Basis    
 $0.95 
 
     
Unusual Items - 2006        
 (0.03)
  
      2Q 2006 Basic EPS - GAAP Basis  
 $0.92 
 
           
 
n    
Total electric generation sales rose 4%, as an 8% increase in retail sales more than offset an 8% decrease in wholesale sales. The increase in retail generation sales resulted from returning Ohio shopping customers. Despite the net increase in generation sales, generation revenues decreased by $0.03 per share, driven by lower wholesale market prices.
 
n    
Higher fuel expense reduced earnings by $0.04 per share due to higher generation output and increased coal prices, while purchased power, excluding JCP&L, reduced earnings by $0.01 per share.
 
n    
Lower nuclear O&M expenses increased earnings by $0.02 per share as a result of fewer refueling outage days during the second quarter this year.
 
 n    
Postretirement benefit costs other than pensions increased earnings by $0.01 per share largely due to changes in health care benefits.
 
 n    
The JCP&L rate increase, approved in May 2005, improved earnings by $0.02 per share.
 
 
 
 

 
 n     
The impact of several elements of the Ohio rate plans that became effective in 2006 increased earnings by $0.25 per share. The major driver of this improvement was a $0.20 per share reduction in transition cost amortization. Other changes included the deferral of $0.07 per share of certain distribution costs related to reliability spending and $0.05 per share of incremental fuel expense, partially offset by a $0.07 per share earnings reduction related to the Rate Stabilization Charge discount provided to shopping customers.
 
  n     
A May 4, 2006, Pennsylvania Public Utility Commission (PPUC) order, authorizing Metropolitan Edison and Pennsylvania Electric to defer incremental transmission charges retroactive to January 1, 2006, increased earnings by $0.10 per share during the second quarter. This included a $0.05 per share benefit for deferral of first quarter transmission charges. Consistent with the Companies’ petition, the order does not grant rate recovery of these costs, but allows Met-Ed and Penelec an opportunity to seek recovery in the pending Rate Transition Plan filing.
 
 n     
Total financing costs increased by $0.03 per share. The increase was primarily due to the absence of gains on reacquired debt that were realized in the second quarter of 2005 and a $3 million after-tax charge during the second quarter of 2006 related to the early redemption of $61 million of subsidiary preferred stock.
 
n     
Investment income decreased $0.03 per share primarily due to lower nuclear decommissioning trust income.
 
n     
During the quarter, we recognized net after-tax charges of $9 million, or $0.03 per share, from the sale and impairment of non-core assets.
 
Revised 2006 Earnings Guidance*
 
n     
Normalized non-GAAP earnings guidance for 2006 has been increased to $3.65 to $3.85 per share, an improvement of $0.20 per share over our previous normalized non-GAAP guidance of $3.45 to $3.65 per share. This increase reflects the impact of the May 2006 PPUC order authorizing Metropolitan Edison and Pennsylvania Electric to defer incremental transmission charges, partially offset by lower revenues resulting from the unseasonably mild weather in the first half of 2006 and lower forecasted wholesale market prices in the second half of the year. Year-to-date normalized non-GAAP earnings now stand at $1.62 per share. We anticipate that earnings for the remainder of the year, exclusive of any unusual items, will be allocated approximately 56% to the third quarter and 44% to the fourth quarter.
 
n     
Total non-GAAP cash generation guidance for 2006 remains at $460 million, after capital expenditures and common dividends.
 
* The 2006 GAAP to non-GAAP reconciliation statements are attached and available on the Investor Information section of FirstEnergy Corp.'s website at www.firstenergycorp.com/ir. The 2005 GAAP to non-GAAP reconciliation statements are available on FirstEnergy Corp.'s Web-site.
 
For additional information, please contact:
 
Ronald E. Seeholzer
Kurt E. Turosky
Rey Y. Jimenez
Vice President, Investor Relations
 Director, Investor Relations
Principal, Investor Relations
(330) 384-5783
(330) 384-5500
(330) 761-4239
 
 
Consolidated Report to the Financial Community - 2nd Quarter 2006                                     2
 
 

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


 
  
 
  
Three Months Ended June 30,
  
Six Months Ended June 30,
  
 
  
 
  
2006
  
2005
  
Change
  
2006
  
2005
  
Change
  
 
  
Revenues
  
 
  
 
  
 
  
 
  
 
  
 
  
(1)
    
Electric sales
  
$
2,553
  
$
2,478
  
$
75
  
$
5,064
  
$
4,915
  
$
149
  
(2)
    
FE Facilities
    
58
   
59
   
(1
)
  
104
   
102
   
2
 
(3)
    
MYR
    
-
   
130
   
(130
)
  
109
   
222
   
(113
)
(4)
    
Other
    
175
   
176
   
(1
)
  
354
   
354
   
-
 
(5)
    Total Revenues    
2,786
   
2,843
   
(57
)
  
5,631
   
5,593
   
38
 
 
                              
 
   Expenses                           
(6)
    
Fuel
    
304
   
280
   
24
   
586
   
513
   
73
 
(7)
    
Purchased power
    
688
   
653
   
35
   
1,404
   
1,315
   
89
 
(8)
    
Other operating expenses
    
693
   
689
   
4
   
1,434
   
1,433
   
1
 
(9)
    
FE Facilities
    
67
   
56
   
11
   
114
   
104
   
10
 
(10)
    
MYR
    
-
   
128
   
(128
)
  
105
   
220
   
(115
)
(11)
    
Provision for depreciation
    
144
   
149
   
(5
)
  
292
   
292
   
-
 
(12)
    
Amortization of regulatory assets
    
199
   
306
   
(107
)
  
421
   
617
   
(196
)
(13)
    
Deferral of new regulatory assets
    
(145
)
  
(120
)
  
(25
)
  
(226
)
  
(180
)
  
(46
)
(14)
    
General taxes
    
173
   
168
   
5
   
366
   
353
   
13
 
(15)
   Total Expenses    
2,123
   
2,309
   
(186
)
  
4,496
   
4,667
   
(171
)
(16)
   Operating Income     
663
   
534
   
129
   
1,135
   
926
   
209
 
 
                              
 
   Other Income (Expense)                          
(17)
    
Investment income
    
31
   
47
   
(16
)
  
74
   
88
   
(14
)
(18)
    
Interest expense
    
(178
)
  
(162
)
  
(16
)
  
(343
)
  
(326
)
  
(17
)
(19)
    
Capitalized interest
    
7
   
5
   
2
   
14
   
4
   
10
 
(20)
    
Subsidiaries' preferred stock dividends
    
(2
)
  
(4
)
  
2
   
(4
)
  
(10
)
  
6
 
(21)
    Total Other Income (Expense)    
(142
)
  
(114
)
  
(28
)
  
(259
)
  
(244
)
  
(15
)
(22)
    
Income taxes
    
217
   
241
   
(24
)
  
351
   
362
   
(11
)
(23)
    Income Before Discontinued Operations    
304
   
179
   
125
   
525
   
320
   
205
 
(24)
    
Discontinued operations
    
-
   
(1
)
  
1
   
-
   
18
   
(18
)
(25)
    Net Income  
$
304
  
$
178
  
$
126
  
$
525
  
$
338
  
$
187
  
 
                              
 
   Basic Earnings Per Common Share:                          
(26)
    
Before discontinued operations
  
$
0.92
  
$
0.54
  
$
0.38
  
$
1.59
  
$
0.98
  
$
0.61
  
(27)
    
Discontinued operations
    
-
   
-
   
-
   
-
   
0.05
   
(0.05
)
(28)
    Basic Earnings Per Common Share  
$
0.92
  
$
0.54
  
$
0.38
  
$
1.59
  
$
1.03
  
$
0.56
  
 
    Weighted Average Number of    
   
   
   
   
   
 
(29)
    Basic Shares Outstanding    
328
   
328
   
-
   
328
   
328
   
-
 
 
                              
 
   Diluted Earnings Per Common Share:                           
(30)
    
Before discontinued operations
  
$
0.91
  
$
0.54
  
$
0.37
  
$
1.58
  
$
0.97
  
$
0.61
  
(31)
    
Discontinued operations
    
-
   
-
   
-
   
-
   
0.05
   
(0.05
)
(32)
   Diluted Earnings Per Common Share   
$
0.91
  
$
0.54
  
$
0.37
  
$
1.58
  
$
1.02
  
$
0.56
  
 
   Weighted Average Number of     
   
   
   
   
   
 
(33)
    Diluted Shares Outstanding    
330
   
330
   
-
   
330
   
330
   
-
 
 
    
                         

 
Consolidated Report to the Financial Community - 2nd Quarter 2006                                                                3
 
FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)
 

 
  
Three Months Ended June 30, 2006
  
 
 
 
  
Power
 
 
  
 
  
 
  
 
  
 
 
 
  
Supply
 
 
  
 
  
 
  
 
  
 
 
Regulated
  
Management
  
Facilities
 
 
  
Reconciling
 
 
  
 
 
Services
  
Services
  
Services
  
Other (a)
  
Adjustments (b)
  
Consolidated
  
 
Revenues
 
  
 
  
 
  
 
  
 
  
 
  
 (1)
Electric sales
$
913
  
$
1,640
  
$
-
  
$
-
  
$
-
  
$
2,553
  
 (2)
FE Facilities
  
-
   
-
   
58
   
-
   
-
   
58
 
 (3)
MYR
  
-
   
-
   
-
   
-
   
-
   
-
 
 (4)
Other
  
132
   
38
   
-
   
16
   
(11
)
  
175
 
 (5)
Internal revenues
  
-
   
-
   
-
   
-
   
-
   
-
 
 (6)
Total Revenues
  
1,045
   
1,678
   
58
   
16
   
(11
)
  
2,786
 
 
 
                        
 
Expenses
                        
 (7)
Fuel
  
-
   
304
   
-
   
-
   
-
   
304
 
 (8)
Purchased power
  
-
   
688
   
-
   
-
   
-
   
688
 
 (9)
Other operating expenses
  
283
   
406
   
-
   
17
   
(13
)
  
693
 
 (10)
FE Facilities
  
-
   
-
   
67
   
-
   
-
   
67
 
 (11)
MYR
  
-
   
-
   
-
   
-
   
-
   
-
 
 (12)
Provision for depreciation
  
88
   
50
   
-
   
1
   
5
   
144
 
 (13)
Amortization of regulatory assets
  
195
   
4
   
-
   
-
   
-
   
199
 
 (14)
Deferral of new regulatory assets
  
(55
)
  
(90
)
  
-
   
-
   
-
   
(145
)
 (15)
General taxes
  
129
   
39
   
-
   
-
   
5
   
173
 
 (16)
Total Expenses
  
640
   
1,401
   
67
   
18
   
(3
)
  
2,123
 
 
 
  
   
   
   
   
   
 
 (17)
Operating Income
  
405
   
277
   
(9
)
  
(2
)
  
(8
)
  
663
 
 
 
                        
 
Other Income (Expense)
                        
 (18)
Investment income
  
75
   
2
   
-
   
1
   
(47
)
  
31
 
 (19)
Interest expense
  
(96
)
  
(56
)
  
(1
)
  
(1
)
  
(24
)
  
(178
)
 (20)
Capitalized interest
  
5
   
2
   
-
   
-
   
-
   
7
 
 (21)
Subsidiaries' preferred stock dividends
  
(5
)
  
-
   
-
   
-
   
3
   
(2
)
 (22)
Total Other Income (Expense)
  
(21
)
  
(52
)
  
(1
)
  
-
   
(68
)
  
(142
)
 
 
  
   
   
   
   
   
 
 (23)
Income taxes
  
155
   
90
   
1
   
2
   
(31
)
  
217
 
 
 
                        
 (24)
Income Before Discontinued Operations
  
229
   
135
   
(11
)
  
(4
)
  
(45
)
  
304
 
 (25)
Discontinued operations
  
-
   
-
   
-
   
-
   
-
   
-
 
 (26)
Net Income
$
229
  
$
135
  
$
(11
)
$
(4
)
$
(45
)
$
304
  

(a)
Primarily consists of telecommunications services. 
(b)   
Reconciling adjustments to segment operating results from internal management reporting to consolidated external financial reporting primarily  
consists of interest expense related to holding company debt, corporate support services revenues and expenses, fuel marketing revenues
which are reflected as reductions to expenses for internal management reporting purposes and elimination of intersegment transactions.
 
 
Consolidated Report to the Financial Community - 2nd Quarter 2006                                                                4
 
FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)
 

 
 
Three Months Ended June 30, 2005
  
 
 
 
  
Power
 
 
  
 
  
 
  
 
  
 
 
 
  
Supply
 
 
  
 
  
 
  
 
  
 
 
Regulated
  
Management
  
Facilities
 
 
  
Reconciling
 
 
  
 
 
Services
  
Services
  
Services
  
Other (a)
  
Adjustments (b)
  
Consolidated
  
 
Revenues
 
  
 
  
 
  
 
  
 
  
 
  
 (1)
Electric sales
$
1,087
  
$
1,391
  
$
-
  
$
-
  
$
-
  
$
2,478
  
 (2)
FE Facilities
  
-
   
-
   
59
   
-
   
-
   
59
 
 (3)
MYR
  
-
   
-
   
-
   
130
   
-
   
130
 
 (4)
Other
  
139
   
25
   
-
   
5
   
7
   
176
 
 (5)
Internal revenues
  
80
   
-
   
-
   
-
   
(80
)
  
-
 
 (6)
Total Revenues
  
1,306
   
1,416
   
59
   
135
   
(73
)
  
2,843
 
 
 
                        
 
Expenses
                        
 (7)
Fuel
  
-
   
280
   
-
   
-
   
-
   
280
 
 (8)
Purchased power
  
-
   
653
   
-
   
-
   
-
   
653
 
 (9)
Other operating expenses
  
297
   
469
   
-
   
(3
)
  
(74
)
  
689
 
 (10)
FE Facilities
  
-
   
-
   
56
   
-
   
-
   
56
 
 (11)
MYR
  
-
   
-
   
-
   
128
   
-
   
128
 
 (12)
Provision for depreciation
  
138
   
4
   
-
   
-
   
7
   
149
 
 (13)
Amortization of regulatory assets
  
306
   
-
   
-
   
-
   
-
   
306
 
 (14)
Deferral of new regulatory assets
  
(100
)
  
(20
)
  
-
   
-
   
-
   
(120
)
 (16)
General taxes
  
132
   
31
   
-
   
1
   
4
   
168
 
 (17)
Total Expenses
  
773
   
1,417
   
56
   
126
   
(63
)
  
2,309
 
 
 
                        
 
Operating Income
  
533
   
(1
)
  
3
   
9
   
(10
)
  
534
 
 
 
                        
 
Other Income (Expense)
                        
 (18)
Investment income
  
47
   
-
   
-
   
-
   
-
   
47
 
 (19)
Interest expense
  
(99
)
  
(10
)
  
-
   
(2
)
  
(51
)
  
(162
)
 (20)
Capitalized interest
  
4
   
1
   
-
   
-
   
-
   
5
 
 (21)
Subsidiaries' preferred stock dividends
  
(4
)
  
-
   
-
   
-
   
-
   
(4
)
 (22)
Total Other Income (Expense)
  
(52
)
  
(9
)
  
-
   
(2
)
  
(51
)
  
(114
)
 
 
                        
 (23)
Income taxes
  
193
   
(5
)
  
5
   
1
   
47
   
241
 
 
 
  
   
   
   
   
   
 
 (24)
Income Before Discontinued Operations
  
288
   
(5
)
  
(2
)
  
6
   
(108
)
  
179
 
 (25)
Discontinued operations
  
-
   
-
   
-
   
(1
)
  
-
   
(1
)
 (26)
Net Income
$
288
  
$
(5
)
$
(2
)
$
5
  
$
(108
)
$
178
  
    
 (a)
Other consisted of MYR (a construction service company) and telecommunications services. 
 (b)      
Reconciling adjustments to segment operating results from internal management reporting to consolidated external financial reporting primarily
consists of interest expense related to holding company debt, corporate support services revenues and expenses, fuel marketing revenues
which are reflected as reductions to expenses for internal management reporting purposes and elimination of intersegment transactions.

Consolidated Report to the Financial Community - 2nd Quarter 2006                                                                5
 
FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)


 
 
  
Three Months Ended June 30, 2006 vs. Three Months Ended June 30, 2005
  
 
 
  
 
  
Power
 
 
  
 
  
 
  
 
  
 
 
  
 
  
Supply
 
 
  
 
  
 
  
 
  
 
 
  
Regulated
  
Management
  
Facilities
 
 
  
Reconciling
 
 
  
 
 
  
Services
  
Services
  
Services
  
Other (a)
  
Adjustments (b)
  
Consolidated
  
 
Revenues
  
 
  
 
  
 
  
 
  
 
  
 
  
 (1)
Electric sales
  
$
(174
)
$
249
  
$
-
  
$
-
  
$
-
  
$
75
  
 (2)
FE Facilities
    
-
   
-
   
(1
)
  
-
   
-
   
(1
)
 (3)
MYR
    
-
   
-
   
-
   
(130
)
  
-
   
(130
)
 (4)
Other
    
(7
)
  
13
   
-
   
11
   
(18
)
  
(1
)
 (5)
Internal revenues
    
(80
)
  
-
   
-
   
-
   
80
   
-
 
 (6)
Total Revenues
    
(261
)
  
262
   
(1
)
  
(119
)
  
62
   
(57
)
 
 
                          
 
Expenses
                          
 (7)
Fuel
    
-
   
24
   
-
   
-
   
-
   
24
 
 (8)
Purchased power
    
-
   
35
   
-
   
-
   
-
   
35
 
 (9)
Other operating expenses
    
(14
)
  
(63
)
  
-
   
20
   
61
   
4
 
 (10)
FE Facilities
    
-
   
-
   
11
   
-
   
-
   
11
 
 (11)
MYR
    
-
   
-
   
-
   
(128
)
  
-
   
(128
)
 (12)
Provision for depreciation
    
(50
)
  
46
   
-
   
1
   
(2
)
  
(5
)
 (13)
Amortization of regulatory assets
    
(111
)
  
4
   
-
   
-
   
-
   
(107
)
 (14)
Deferral of new regulatory assets
    
45
   
(70
)
  
-
   
-
   
-
   
(25
)
 (15)
General taxes
    
(3
)
  
8
   
-
   
(1
)
  
1
   
5
 
 (16)
Total Expenses
    
(133
)
  
(16
)
  
11
   
(108
)
  
60
   
(186
)
 
 
                          
 (17)
Operating Income
    
(128
)
  
278
   
(12
)
  
(11
)
  
2
   
129
 
 
 
                          
 
Other Income (Expense)
                          
 (18)
Investment income
    
28
   
2
   
-
   
1
   
(47
)
  
(16
)
 (19)
Interest expense
    
3
   
(46
)
  
(1
)
  
1
   
27
   
(16
)
 (20)
Capitalized interest
    
1
   
1
   
-
   
-
   
-
   
2
 
 (21)
Subsidiaries' preferred stock dividends
    
(1
)
  
-
   
-
   
-
   
3
   
2
 
 (22)
Total Other Income (Expense)
    
31
   
(43
)
  
- -
   
2
   
(17
)
  
(28
)
 
 
                          
  (23)
Income taxes
    
(38
)
  
95
   
(4
)
  
1
   
(78
)
  
(24
)
 
 
                          
  (24)
Income Before Discontinued Operations
    
(59
)
  
140
   
(9
)
  
(10
)
  
63
   
125
 
  (25)
Discontinued operations
    
-
   
-
   
-
   
1
   
-
   
1
 
  (26)
Net Income
  
$
(59
)
$
140
  
$
(9
)
$
(9
)
$
63
  
$
126
  

(a)  
Other consisted of MYR (a construction service company) and telecommunications services. 
(b)  
Reconciling adjustments to segment operating results from internal management reporting to consolidated external financial reporting primarily
consists of interest expense related to holding company debt, corporate support services revenues and expenses, fuel marketing revenues
which are reflected as reductions to expenses for internal management reporting purposes and elimination of intersegment transactions. 

Consolidated Report to the Financial Community - 2nd Quarter 2006                                                                6
 
FirstEnergy Corp.
Financial Statements
(Unaudited)
(In millions)
 

Condensed Consolidated Balance Sheet
  
 
  
 
  
 
  
 
  
 
  
 
  
As of June 30, 2006
  
As of
Dec 31, 2005
  
Assets
  
 
  
 
  
Current Assets:
  
 
  
 
  
Cash and cash equivalents
  
$
583
  
$
64
  
Receivables
    
1,346
   
1,498
 
Other
    
883
   
755
 
Total Current Assets
    
2,812
   
2,317
 
 
          
Property, Plant, and Equipment
    
14,420
   
13,998
 
Investments
    
3,371
   
3,351
 
Deferred Charges and Other Assets
    
11,975
   
12,175
 
Total Assets
  
$
32,578
  
$
31,841
  
 
          
Liabilities and Capitalization
          
Current Liabilities:
          
Currently payable long-term debt.
  
$
2,004
  
$
2,043
  
Short-term borrowings
    
1,101
   
731
 
Accounts payable
    
682
   
727
 
Other
    
1,602
   
1,952
 
Total Current Liabilities
    
5,389
   
5,453
 
 
          
Capitalization:
          
Common stockholders' equity
    
9,488
   
9,188
 
Preferred stock
    
154
   
184
 
Long-term debt and other long-term obligations
    
8,729
   
8,155
 
Total Capitalization
    
18,371
   
17,527
 
Noncurrent Liabilities
    
8,818
   
8,861
 
Total Liabilities and Capitalization
  
$
32,578
  
$
31,841
  
 

Adjusted Capitalization (Including Off-Balance Sheet Items) - Rating Agency View
  
 
  
As of June 30,
  
 
  
2006
  
% Total
  
2005
  
% Total
  
Total common equity
  
$
9,488
    
43
%
$
8,640
    
41
%
Preferred stock
   
154
   
1
%
  
214
   
1
%
Long-term debt*
    
10,477
   
48
%
  
10,240
   
49
%
Short-term debt**
    
557
   
3
%
  
555
   
3
%
Off-balance sheet debt equivalents:
                  
Sale-leaseback net debt equivalents
    
1,236
   
5
%
  
1,294
   
6
%
Total
 
$
21,912
    
100
%
$
20,943
    
100
%
 
 

GENERAL INFORMATION
  
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
  
2006
  
2005
  
2006
  
2005
  
Long-term debt and preferred stock redemptions
  
$
(423
)
$
(495
)
$
(517
)
$
(829
)
New long-term debt issues
  
$
1,053
  
$
245
  
$
1,053
  
$
245
  
Short-term debt increase (decrease)
  
$
(374
)
$
246
  
$
(174
)
$
386
  
Capital expenditures
  
$
332
  
$
233
  
$
779
  
$
462
  
 
 
*
Includes amounts due to be paid within one year and excludes JCP&L securitization debt of $256 million and $273 million in 2006
and 2005 respectively.
**
Short-term debt balance at June 30, 2006 is net of $544 million of cash investments subsequently used to redeem preferred stock,
long- and short-term debt in July 2006.

 
Consolidated Report to the Financial Community - 2nd Quarter 2006                                                                7
 
FirstEnergy Corp.
Financial Statements
(Unaudited)
(In millions)
 
Condensed Consolidated Statements of Cash Flows
  
 
  
 
  
 
  
 
  
 
  
Three Months Ended June 30,
  
Six Months Ended June 30,
  
 
  
2006
  
2005
  
2006
  
2005
  
Cash flows from operating activities:
                  
Net income
  
$
304
  
$
178
  
$
525
  
$
338
  
Adjustments to reconcile net income to net cash from operating activities:
            
Depreciation, amortization, and deferral of regulatory assets
    
198
   
335
   
487
   
729
 
Deferred purchased power and other costs
    
(136
)
  
(92
)
  
(239
)
  
(210
)
Deferred income taxes and investment tax credits
    
26
   
76
   
32
   
62
 
Deferred rents and lease market valuation liability
    
(67
)
  
(65
)
  
(105
)
  
(101
)
Electric service prepayment programs
    
(15
)
  
231
   
(29
)
  
226
 
Cash collateral
    
51
   
20
   
(55
)
  
22
 
Change in working capital and other
    
(217
)
  
(360
)
  
(65
)
  
(145
)
Cash flows provided from operating activities
    
144
   
323
   
551
   
921
 
 
                  
Cash flows provided from (used for) financing activities
    
666
   
(109
)
  
616
   
(468
)
 
                  
Cash flows used for investing activities
    
(255
)
  
(245
)
  
(648
)
  
(456
)
Net increase (decrease) in cash and cash equivalents
  
$
555
  
$
(31
)
$
519
  
$
(3
)
 
 

 
  
Three Months Ended June 30,
  
Six Months Ended June 30,
  
 
  
2006
  
2005
  
Change
  
2006
  
2005
  
Change
  
Ohio Regulatory Assets
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
Beginning balance
  
$
1,891
  
$
2,296
      
$
1,924
  
$
2,450
      
 
                          
Deferral of shopping incentives
    
-
   
58
 
$
(58
)
  
3
   
103
 
$
(100
)
Interest on shopping incentives
    
11
   
11
   
-
   
21
   
22
   
(1
)
Deferral of MISO costs and interest
    
4
   
20
   
(16
)
  
7
   
20
   
(13
)
Deferral of RCP distribution reliability costs
    
41
   
-
   
41
   
81
   
-
   
81
 
Deferral of RCP fuel costs
    
30
   
-
   
30
   
51
   
-
   
51
 
Deferral of other regulatory assets
    
2
   
3
   
(1
)
  
5
   
7
   
(2
)
Current period deferrals
  
$
88
  
$
92
  
$
(4
)
$
168
  
$
152
  
$
16
  
 
                          
Ohio transition costs amortization
  
$
(62
)
$
(200
)
$
138
  
$
(134
)
$
(403
)
$
269
  
Shopping incentives amortization
    
(29
)
  
-
   
(29
)
  
(59
)
  
-
   
(59
)
MISO costs amortization
    
(5
)
  
-
   
(5
)
  
(9
)
  
-
   
(9
)
Other
    
(1
)
  
(21
)
  
20
   
(8
)
  
(32
)
  
24
 
Current period amortization
  
$
(97
)
$
(221
)
$
124
  
$
(210
)
$
(435
)
$
225
  
 
                          
Ending Balance
 
$
1,882
  
$
2,167
      
$
1,882
  
$
2,167
      
 
                          
Deferred PJM Costs - Pennsylvania
                          
Beginning balance
  
$
-
  
$
-
      
$
-
  
$
-
      
Deferral of PJM transmission costs
    
57
   
-
 
$
57
    
57
   
-
 
$
57
  
Ending Balance
  
$
57
  
$
-
      
$
57
  
$
-
      
 
                          
Deferred Energy Costs - New Jersey
                          
Beginning balance
  
$
558
  
$
473
      
$
541
  
$
446
      
Deferral (recovery) of energy costs
    
80
   
45
 
$
35
    
97
   
72
 
$
25
  
Ending Balance
  
$
638
  
$
518
      
$
638
  
$
518
      
 
 

UNUSUAL ITEMS
  
Three Months Ended June 30,
  
Six Months Ended June 30,
  
 
  
2006
  
2005
  
Change
  
2006
  
2005
  
Change
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
Gain (Loss) on Non-Core Asset Sales of:
 
 
  
 
  
 
  
 
  
 
  
 
  
Amounts included in discontinued operations (a)(b)
  
$
-
  
$
-
  
$
-
  
$
-
  
$
8
  
$
(8
)
All Other, net (c)(d)
    
6 
    
-
   
6 
    
1 
    
9
   
(8
)
Total Gain (Loss) on Non-Core Asset Sales
    
6 
    
-
   
6 
    
1 
    
17
   
(16
)
FE Facilities impairment (c)(e)
    
(12
)
  
-
   
(12
)
  
(12
)
  
-
   
(12
)
EPA settlement (c)
    
-
   
-
   
-
   
-
   
(19
)
  
19
 
NRC fine (c) (e)
    
-
   
-
   
-
   
-
   
(3
)
  
3
 
JCP&L Rate Settlement (f)
    
-
   
28
   
(28
)
  
-
   
28
   
(28
)
Total-Pretax Items
    
(6
)
  
28
   
(34
)
  
(11
)
  
23
   
(34
)
Ohio Tax Write-off (g)
    
-
   
(71
)
  
71
   
-
   
(71
)
  
71
 
 
                          
EPS Effect
  
$
(0.03
)
$
(0.17
)
$
0.14
  
$
(0.03
)
$
(0.15
)
$
0.12
  
 
                    
(a) Primarily FE Facilities subs and natural
gas operations
    (d) Before 1st quarter 2006 tax benefit of  
$2.5 million 
(g)  Included in "Income taxes"
(b) Before income tax benefit of $12.2 million
(e) Non-tax deductible 
(c) Included in "Other operating expenses"
(f) Included in "Deferral of New Regulatory Assets"
  

 
Consolidated Report to the Financial Community - 2nd Quarter 2006                                                                8
 

FirstEnergy Corp.
Statistical Summary
(Unaudited)
 


ELECTRIC SALES STATISTICS
  
Three Months Ended June 30,
  
Six Months Ended June 30,
  
(kWh in millions)
  
2006
  
2005
  
Change
  
2006
  
2005
  
Change
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
Electric Generation Sales
  
 
  
 
  
 
  
 
  
 
  
 
  
Retail - Regulated
    
22,591
   
20,073
   
12.5
%
  
46,597
   
41,719
   
11.7
%
Retail - Competitive
    
2,740
   
3,444
   
-20.4
%
  
5,459
   
6,858
   
-20.4
%
Total Retail
    
25,331
   
23,517
   
7.7
%
  
52,056
   
48,577
   
7.2
%
Wholesale
    
6,561
   
7,164
   
-8.4
%
  
11,983
   
13,595
   
-11.9
%
Total Electric Generation Sales
    
31,892
   
30,681
   
3.9
%
  
64,039
   
62,172
   
3.0
%
 
                          
Electric Distribution Deliveries
                          
Ohio         - Residential
    
3,583
   
3,811
   
-6.0
%
  
8,026
   
8,334
   
-3.7
%
                                  - Commercial
    
3,516
   
3,616
   
-2.8
%
  
7,160
   
7,377
   
-2.9
%
                                  - Industrial
    
5,902
   
5,842
   
1.0
%
  
11,561
   
11,656
   
-0.8
%
                                  - Other
    
95
   
95
   
0.0
%
  
186
   
193
   
-3.6
%
                                 Total Ohio
    
13,096
   
13,364
   
-2.0
%
  
26,933
   
27,560
   
-2.3
%
 
                          
Pennsylvania      - Residential
    
2,365
   
2,426
   
-2.5
%
  
5,457
   
5,600
   
-2.6
%
                                  - Commercial
    
2,602
   
2,593
   
0.3
%
  
5,252
   
5,287
   
-0.7
%
                                  - Industrial
    
2,611
   
2,585
   
1.0
%
  
5,175
   
5,205
   
-0.6
%
                                  - Other
    
21
   
20
   
5.0
%
  
41
   
42
   
-2.4
%
                                 Total Pennsylvania
    
7,599
   
7,624
   
-0.3
%
  
15,925
   
16,134
   
-1.3
%
 
                          
New Jersey- Residential
    
2,100
   
2,216
   
-5.2
%
  
4,354
   
4,570
   
-4.7
%
                                  - Commercial
    
2,292
   
2,297
   
-0.2
%
  
4,496
   
4,526
   
-0.7
%
                                  - Industrial
    
703
   
751
   
-6.4
%
  
1,393
   
1,495
   
-6.8
%
                                  - Other
    
21
   
22
   
-4.5
%
  
43
   
43
   
0.0
%
                                  Total New Jersey
    
5,116
   
5,286
   
-3.2
%
  
10,286
   
10,634
   
-3.3
%
 
                          
Total Residential
    
8,048
   
8,453
   
-4.8
%
  
17,837
   
18,504
   
-3.6
%
Total Commercial
    
8,410
   
8,506
   
-1.1
%
  
16,908
   
17,190
   
-1.6
%
Total Industrial
    
9,216
   
9,178
   
0.4
%
  
18,129
   
18,356
   
-1.2
%
Total Other
    
137
   
137
   
0.0
%
  
270
   
278
   
-2.9
%
 
                          
Total Distribution Deliveries
    
25,811
   
26,274
   
-1.8
%
  
53,144
   
54,328
   
-2.2
%
 
                          
Electric Sales Shopped
                          
Ohio                                 - Residential
    
497
   
1,725
   
-71.2
%
  
1,093
   
3,608
   
-69.7
%
                                  - Commercial
    
910
   
1,789
   
-49.1
%
  
1,866
   
3,564
   
-47.6
%
                                  - Industrial
    
709
   
1,235
   
-42.6
%
  
1,444
   
2,402
   
-39.9
%
                                  Total Ohio
    
2,116
   
4,749
   
-55.4
%
  
4,403
   
9,574
   
-54.0
%
 
                        
 
Pennsylvania                  - Residential
    
-
   
5
   
-100.0
%
  
1
   
11
   
-90.9
%
                                  - Commercial
    
94
   
22
   
327.3
%
  
1
   
46
   
-97.8
%
                                  - Industrial
    
-
   
383
   
-100.0
%
  
225
   
830
   
-72.9
%
                                  Total Pennsylvania
    
94
   
410
   
-77.1
%
  
227
   
887
   
-74.4
%
 
                          
New Jersey                     - Residential
    
-
   
1
   
-100.0
%
  
-
   
2
   
-100.0
%
                                  - Commercial
    
491
   
490
   
0.2
%
  
894
   
1,032
   
-13.4
%
                                  - Industrial
    
519
   
551
   
-5.8
%
  
1,023
   
1,114
   
-8.2
%
                                  Total New Jersey
    
1,010
   
1,042
   
-3.1
%
  
1,917
   
2,148
   
-10.8
%
 
                          
Total Electric Sales Shopped
    
3,220
   
6,201
   
-48.1
%
  
6,547
   
12,609
   
-48.1
%
 

OPERATING STATISTICS
  
As of June 30,
  
For 12 Months Ended
  
2006
  
 
  
2005
  
 
  
 
  
 
  
 
  
Capacity Factors:
              
Fossil - Baseload
    
88.9
%
      
86.9
%
   Fossil - Other
     43.6
%
         36.9  %
Nuclear
    
91.9
%
      
84.8
%
Generation Output:
              
Fossil
   
63
%
      
63
%
Nuclear
    
37
%
      
37
%
 
              
WEATHER
    
2006
    
Normal
    
2005
  
Composite Heating-Degree-Days
              
2nd Quarter
    
569
   
664
   
684
 
Year-to-Date
    
3,093
   
3,482
   
3,663
 
Composite Cooling-Degree-Days
              
2nd Quarter
    
208
   
251
   
275
 
Year-to-Date
    
208
   
252
   
275
 
 
 
Consolidated Report to the Financial Community - 2nd Quarter 2006                                                                9


FirstEnergy Corp.
2006 EPS and Cash Flow
(Unaudited)

 
2006 Earnings Per Share (EPS)
  
(Reconciliation of GAAP to Non-GAAP)
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
Three Months
 
Six Months
 
Revised
  
 
  
Ended June 30
  
Ended June 30
  
Guidance
  
 
  
 
  
 
  
 
  
Basic EPS (GAAP basis)
  
$
0.92
  
$
1.59
  
$
3.62 - $3.82
  
Excluding Unusual Items:
                
Non-Core Asset Sales/Impairments
    
0.03
   
0.03
   
0.03
 
Basic EPS (Non-GAAP basis)
  
$
0.95
  
$
1.62
  
$
3.65 - $3.85
  
 
 

Reconciliation of June 2006 Year-to-Date Cash From Operating Activities (GAAP) to
  
Free Cash Flow (Non-GAAP) and Cash Generation (Non-GAAP)
  
(In millions)
  
 
  
 
  
 
  
 
  
Net Cash from Operating Activities:
  
 
  
 
  
 
  
Net Income
  
$
525
  
Adjustments:
      
Depreciation
    
292
 
Amortization of regulatory assets
    
421
 
Deferral of new regulatory assets
    
(169
)
   Deferral of PJM transmission costs
      (57
)
Deferred purchased power and other costs
    
(239
)
Deferred income taxes and ITC, net
    
32
 
Deferred rents and lease market valuation liability
    
(105
)
Cash collateral
    
(55
)
Other, including changes in working capital
    
(94
)
Net Cash from Operating Activities (GAAP)
  
$
551
  
 
      
Other Items:
      
Capital expenditures
    
(683
)
Nuclear fuel fabrication
    
(83
)
Contributions to nuclear decommissioning trusts
    
(7
)
Common stock dividends
    
(296
)
Other, net
    
(26
)
Free Cash Flow (Non-GAAP)
   $
(544
 )
 
      
Non-core asset sales and other
    
73
 
Cash generation (Non-GAAP)
    $
(471
 )
 
      
The GAAP to Non-GAAP reconciliation statements are available on the investor information section of FirstEnergy Corp.'s website at www.firstenergycorp.com/ir.
 
 
Consolidated Report to the Financial Community - 2nd Quarter 2006                                                                10
 
FirstEnergy Corp.
2006 Cash Generation Guidance*
(Unaudited)
 

Reconciliation of 2006 Estimated Cash from Operating Activities (GAAP) to
  
Estimated Free Cash Flow (Non-GAAP) and Estimated Cash Generation (Non-GAAP)
  
(In millions)
  
 
  
 
  
 
  
 
  
Net Cash from Operating Activities:
  
 
  
 
  
 
  
GAAP Earnings Guidance
  
$
1,200 - $1,270
  
Adjustments:
      
Depreciation
    
605
 
Amortization of regulatory assets
    
910
  
Deferral of new regulatory assets
    
(105
)
RCP reliability deferrals
    
(150
)
         Deferral of PJM transmission costs     (168 )
Deferred purchased power costs
    
(360
)
Deferred income taxes and ITC, net
    
75
 
            Deferred rents and lease market valuation liability
     (103  ) 
Cash Collateral
    
60
 
Other, including changes in working capital
    
81
  
Net Cash from Operating Activities (GAAP)
  
$
2,080
  
 
      
Other Items:
      
 
      
Capital expenditures
    
(1,156
)
Nuclear fuel fabrication
    
(165
)
Common stock dividends
    
(593
)
Other, net
    
32
 
Free Cash Flow (Non-GAAP)
  
$
198
  
 
      
Non-core asset sales
   
82
  
JCP&L securitization
    
180
 
Cash Generation (Non-GAAP)
  
$
460
  
 
      
*Does not include any potential impact of a share repurchase program announced on June 20, 2006.  
The GAAP to Non-GAAP reconciliation statements are available on the Investor Information section of FirstEnergy Corp.'s website at 
ww.firstenergycorp.com/ir.

Consolidated Report to the Financial Community - 2nd Quarter 2006                                                                11
 
RECENT DEVELOPMENTS
 
Record Generation Output
FirstEnergy set new second quarter and year-to-date generation output records of 20.3 million and 40.4 million megawatt-hours, respectively. The second quarter output represented a 6.3% increase over the prior record established in the second quarter of 2005, while the year-to-date output represented a 6.7% increase over the record established in the same period last year.
 
NRC Approves Power Uprates for Beaver Valley Power Station
On July 20, the Nuclear Regulatory Commission (NRC) approved a request by FirstEnergy Nuclear Operating Company (FENOC) to increase the generating capacity of Beaver Valley Power Station by approximately 8%. The power uprates for Beaver Valley Unit 1 will increase generating capacity from approximately 821 to 889 megawatts and Unit 2's capacity from 821 to 886 megawatts. FENOC intends to operate Unit 1 at the higher power level no later than completion of its fall 2007 refueling outage and Unit 2 at the higher power level no later than its spring 2008 refueling outage.
 
Environmental Update
In June, FirstEnergy finalized its Air Quality Compliance (AQC) strategy for 2006 through 2011. The program, which is expected to cost approximately $1.7 billion, is consistent with previous estimates and assumptions reflected in the company’s long-term financial planning for air and water quality and other environmental matters. The majority of the expenditures will occur between 2007 and 2009.
 
Share Repurchase Program
On June 20, following the finalization of the AQC strategy, FirstEnergy's Board of Directors authorized a share repurchase program for up to 12 million shares of common stock. At management’s discretion, shares may be acquired on the open market or through privately negotiated transactions, subject to market conditions and other factors. The Board’s authorization of the repurchase program does not require the company to purchase any shares and the program may be terminated at any time. The 12 million shares represent 3.6% of the approximately 330 million shares of common stock currently outstanding.
 
Met-Ed and Penelec Rate Transition Plan Filing
On May 31, the Administrative Law Judge (ALJ) assigned to the Metropolitan Edison Company (Met-Ed) and Pennsylvania Electric Company (Penelec) Rate Transition Plan case established a new litigation schedule to support an ALJ Recommended Decision in this proceeding by November 8, 2006. In accordance with this revised schedule, intervening parties submitted their written testimonies on July 10. In addition, ten public hearings were held in various locations throughout the Met-Ed and Penelec service territories between June 20 and July 20. Other key dates in the procedural schedule include: rebuttal testimony by August 8, second pre-hearing conference on August 14, surrebuttal testimony by August 18, evidentiary hearings beginning on August 24, main briefs by September 22, and reply briefs by October 6.
 
Deferral of Incremental Met-Ed and Penelec Transmission Charges
On May 4, the Pennsylvania Public Utility Commission (PPUC) granted accounting authority for Met-Ed and Penelec to defer certain incremental transmission charges during 2006. The order allows the Companies to defer, commencing January 1, 2006, FERC-approved charges from the PJM Interconnection that are incremental to levels currently reflected in the transmission component of the Companies’ base rate tariffs. Consistent with the Companies’ petition, the order does not grant rate recovery of these costs, but allows Met-Ed and Penelec an opportunity to seek recovery in the pending Rate Transition Plan filing.
 
Competitive Electricity Supply for Penn Power  
Following the PPUC’s approval of Pennsylvania Power Company’s (Penn Power) provider of last resort supply plan on April 20, 2006, a request for proposal (RFP) bidding process was conducted by the PPUC to secure competitively priced electricity from third-party suppliers for the period January 1, 2007 through May 31, 2008. Two rounds of bids were conducted for the approximate 900 megawatts of electricity (18 tranches of approximately 50 megawatts each). The round one and two bid results were subsequently approved by the PPUC and a residual bid is scheduled for mid-August for two remaining unfilled tranches. The results of the bidding process will be made public by the PPUC later this year. 
 

Consolidated Report to the Financial Community - 2nd Quarter 2006                                                                12
 
Ohio Supreme Court Decision
On May 3, the Ohio Supreme Court affirmed all but one aspect of the provisions of FirstEnergy's Rate Stabilization Plan (RSP) for customers of its Ohio electric utility companies (Ohio Companies). The one issue, related to customer pricing options, was remanded to the Public Utilities Commission of Ohio (PUCO) for further consideration. The Court found that the Ohio restructuring law requires FirstEnergy to provide an alternative market-based offering to customers, even if the alternative is at a higher price than that offered through the RSP. On July 20, the Ohio Companies filed a request with the PUCO proposing a framework for conducting an RFP program under which suppliers could submit prices to serve a portion of each Ohio Company’s customer load. If adopted, customers would have the opportunity to switch to alternative generation suppliers at prices established through the RFP program. While the filing is designed to maintain the RSP by resolving the Court’s issue, the Ohio Companies also provided notice of termination of those portions of the RSP that are subject to termination in the event that the issue is not satisfactorily resolved. The companies reserved the right to withdraw the notice of termination. On July 26, the PUCO directed the Ohio Companies to file their plans for a competitive retail electric service option within 45 days.
 
Ohio Edison $600M Unsecured Senior Note Issuance
On June 26, Ohio Edison (OE) issued $600 million of unsecured Senior Notes, comprised of $250 million of 6.4%, 10-year Senior Notes due 2016 and $350 million of 6.875%, 30-year Senior Notes due 2036. In July, OE utilized the proceeds from its Senior Note offering to repurchase $500 million of its common stock from FirstEnergy Corp. and redeem all of its outstanding preferred stock at a total redemption price of approximately $64 million.
 
Partial Early Redemption of FirstEnergy Corp. 5.5% Senior Notes
On July 31, FirstEnergy redeemed, via a make-whole call provision, $400 million principal amount of its $1 billion, 5.50% Notes, Series A, in advance of the November 15, 2006 maturity date.
 
JCP&L Securitization
On June 8, the New Jersey Board of Public Utilities approved Jersey Central Power & Light’s (JCP&L) request to securitize approximately $180 million of Basic Generation Service-related transition costs through the issuance of transition bonds pursuant to New Jersey’s electric utility restructuring legislation. The amount financed would include up to $3.5 million in upfront transaction costs associated with the bond issuance. Yesterday, JCP&L Transition Funding II LLC, wholly owned by JCP&L, announced the issuance of $182.4 million of transition bonds.
 
New Coal Supply Agreement
On June 22, FirstEnergy Generation Corp. entered into a new coal supply agreement with CONSOL Energy, under which CONSOL will supply a total of more than 128 million tons of high-Btu coal to FirstEnergy for a 20-year period beginning in 2009. The new agreement will replace an existing coal supply agreement that took effect in 2003 and ran through 2020. Under the new agreement, CONSOL Energy will increase its coal shipments by approximately 2 million tons per year to provide coal for the Bruce Mansfield Plant and other power plants.

Forward-looking Statements. This Consolidated Report to the Financial Community includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements typically contain, but are not limited to, the terms "anticipate," "potential," "expect," "believe," "estimate" and similar words. Actual results may differ materially due to the speed and nature of increased competition and deregulation in the electric utility industry, economic or weather conditions affecting future sales and margins, changes in markets for energy services, changing energy and commodity market prices, replacement power costs being higher than anticipated or inadequately hedged, the continued ability of our regulated utilities to collect transition and other charges or to recover increased transmission costs, maintenance costs being higher than anticipated, legislative and regulatory changes (including revised environmental requirements), and the legal and regulatory changes resulting from the implementation of the Energy Policy Act of 2005 (including, but not limited to, the repeal of the Public Utility Holding Company Act of 1935), the uncertainty of the timing and amounts of the capital expenditures 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, adverse regulatory or legal decisions and outcomes (including, but not limited to, the revocation of necessary licenses or operating permits, fines or other enforcement actions and remedies) of governmental investigations and oversight, including by the Securities and Exchange Commission, the United States Attorney's Office, the Nuclear Regulatory Commission and the various state public utility commissions as disclosed in our Securities and Exchange Commission filings, generally, and with respect to the Davis-Besse Nuclear Power Station outage and heightened scrutiny at the Perry Nuclear Power Plant in particular, the timing and outcome of various proceedings before the Public Utilities Commission of Ohio (including, but not limited to, the successful resolution of the issues remanded to the PUCO by the Ohio Supreme Court regarding the RSP) and the Pennsylvania Public Utility Commission, including the transition rate plan filings for Met-Ed and Penelec, the continuing availability and operation of generating units, the ability of generating units to continue to operate at, or near full capacity, the inability to accomplish or realize anticipated benefits from strategic goals (including employee workforce initiatives), the anticipated benefits from voluntary pension plan contributions, the ability to improve electric commodity margins and to experience growth in the distribution business, the ability to access the public securities and other capital markets and the cost of such capital, the outcome, cost and other effects of present and potential legal and administrative proceedings and claims related to the August 14, 2003 regional power outage, the successful implementation of the share repurchase program approved by the Board of Directors in June 2006, the risks and other factors discussed from time to time in our Securities and Exchange Commission filings, including our annual report on Form 10-K for the year ended December 31, 2005, and other similar factors. We expressly disclaim any current intention to update any forward- looking statements contained herein as a result of new information, future events, or otherwise.
 
Consolidated Report to the Financial Community - 2nd Quarter 2006                                                                13