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FirstEnergy's Ohio Utility Customers To Receive Competitive Supply For Generation Service

Posted on: Tuesday, 10 July 2007, 15:15 CDT

AKRON, Ohio, July 10 /PRNewswire-FirstCall/ -- FirstEnergy Corp. subsidiaries Ohio Edison, The Cleveland Electric Illuminating Company and Toledo Edison today filed a comprehensive generation supply plan with the Public Utilities Commission of Ohio (PUCO) that supports the goals outlined in Ohio's deregulation law and reflects the key priorities of current state energy policies and initiatives. The plan is designed to help protect customers from generation price fluctuations, promote energy efficiency and demand response, and support advancement of renewable resources and economic development when price caps end in 2009. Under the companies' current rate plans, generation prices are capped through December 31, 2008.

Today's filing outlines a bidding process for providing competitively priced generation service to customers who do not purchase electricity from alternative suppliers. The process would minimize customers' exposure to price volatility in the electricity market by averaging the results of multiple bidding sessions conducted at different times during the year. And, if the residential customer class would experience a change in the average total price of 15 percent or more, the plan would provide the PUCO with an option to phase in the increase over time.

The competitive bidding process also is designed to encourage lower prices by minimizing supplier risk through the use of seasonal rates that better align suppliers' revenues with their costs and a process to address unanticipated new regulatory or regional transmission organization charges. In addition, customers would be offered time-of-day and hourly pricing to help encourage innovation and energy efficiency -- particularly during periods of high demand -- further reducing supplier risk and prices for customers.

The proposal also would help support the development of renewable resources by designating that a portion of the generation supply come from sources such as solar, wind and hydroelectric power in the region. And, the plan provides for continuation of the companies' proposed program that would offer customers renewable energy certificates.

Under the proposal, suppliers would bid for portions of customers' supply needs -- called tranches -- equaling approximately 100 megawatts. A descending clock format would be used with the bid price per tranche declining until there are just enough bids to supply all customers. Individual bidders would be limited to no more than 75 percent of the total customer load to encourage supplier participation.

In order to smooth out potential wholesale market price fluctuations, multiple bids would be held in 2008. The final price per kilowatt-hour included in rates would reflect an average of the prices resulting from all bids. The companies offered two alternatives for structuring the bids -- either by customer class, with residential, small business and large business customers being bid separately, or by combining all classes for tranches that represent a portion of the total customer load. In either case, rates would be established by customer class, based on the bidding results. Bidding would be conducted by an independent manager to ensure that the process is conducted in an open, transparent manner.

Following the 2008 bidding process, multiple bids would be held annually for one-third of the total amount of customer supply for a 36-month period, with resulting prices being averaged with existing prices, further insulating customers from volatility.

To provide sufficient time to conduct the bidding process, the companies requested that the PUCO issue an order by November 1, 2007.

FirstEnergy is a diversified energy company headquartered in Akron, Ohio. Its subsidiaries and affiliates are involved in the generation, transmission and distribution of electricity, as well as energy management and other energy-related services. Its seven electric utility operating companies comprise the nation's fifth largest investor-owned electric system based on serving 4.5 million customers in Ohio, Pennsylvania and New Jersey; and its generation subsidiaries control more than 14,000 megawatts of capacity. Its Ohio utilities - Ohio Edison, The Cleveland Electric Illuminating Company and Toledo Edison - serve 2.1 million customers in northern and central Ohio.

Forward-Looking Statements: This news release includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements typically contain, but are not limited to, the terms "anticipate,""potential,""expect,""believe,""estimate" and similar words. Actual results may differ materially due to the speed and nature of increased competition and deregulation in the electric utility industry, economic or weather conditions affecting future sales and margins, changes in markets for energy services, changing energy and commodity market prices, replacement power costs being higher than anticipated or inadequately hedged, the continued ability of FirstEnergy's 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 and oversight) by the NRC (including, but not limited to, the Demand For Information issued to FENOC on May 14, 2007) and the various state public utility commissions 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 Ohio Supreme Court regarding the Rate Stabilization Plan) and the PPUC (including the transition rate plan filings for Met-Ed and Penelec and the Pennsylvania Power Company Default Service Plan filing), 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 structuring and completion of a potential sale and leaseback transaction for Bruce Mansfield Unit 1 currently under consideration by management, any final adjustment in the purchase price per share under the accelerated share repurchase program announced March 2, 2007, the risks and other factors discussed from time to time in our SEC filings, 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.

FirstEnergy Corp.

CONTACT: News Media Contact: Ellen Raines, +1-330-384-5808, or InvestorContact: Ron Seeholzer, +1-330-384-5783, both of FirstEnergy Corp.

Web site: http://www.firstenergycorp.com/

Source: PRNewswire-FirstCall

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