first energy AnnualAnalystMtg2-01-07

Analyst Meeting
New York, NY • Feb. 1, 2007

Safe Harbor Statement
These presentations include 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 Nuclear Regulatory Commission and the various state public utility
commissions as disclosed in our Securities and Exchange Commission filings, generally, 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 Rate Stabilization Plan) 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 structuring and completion of a potential sale and leaseback transaction for Bruce Mansfield Unit 1 currently under
consideration by management, the successful implementation of the newly-approved share repurchase program announced
today, 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.
Safe Harbor Statement
Analyst Meeting • New York, NY • February 1, 2007

Today’s Agenda
Performance Overview – Tony Alexander
Regulatory Update – Leila Vespoli
Operations Overview – Dick Grigg
Fossil Operations – Charlie Lasky
Environmental Compliance – Guy Pipitone
Nuclear Operations – Gary Leidich
– Break –
Energy Delivery & Customer Service – Chuck Jones
Commodity Operations – Ali Jamshidi
Financial Outlook – Rich Marsh
Closing Remarks – Tony Alexander
Panel Q & A

Today’s Agenda

Analyst Meeting

Performance Overview
Tony Alexander
President & CEO

Delivering Strong Results
Our focus continues to be on the
fundamentals…
Improve operating performance
Strengthen financial performance
Enhance shareholder value
Ensure a safe working environment for employees
We delivered on these goals

We’re in the best financial position I’ve seen
in my 34 years with the company…
…and delivering top-decile performance
in key measures across our operations

2

Delivering Improved Operating Performance
T&D Reliability:
Distribution SAIDI* improved 20% across operating
companies… more than 40% in some areas
Transmission Outage Frequency per circuit is at 0.35
— top-decile performance in our industry
* SAIDI (System Average Interruption Duration Index)

3

Delivering Improved Operating Performance
Record Generation
Fossil Generation
(million MWh)
Nuclear Generation
100
82
80
77
80
68
60
Record
Output
40

20

0
2003 2004 2005 2006

4

Delivering Strong Financial Results

2006 Non-GAAP Earnings Guidance:*
Original (July ’05) $3.40 – $3.60**
Final (Oct ’06) $3.75 – $3.85***

Preliminary Unaudited 2006
Non-GAAP Earnings Per Share $3.87 – $3.89***

* Three adjustments were made to the original guidance.
** Also reflected GAAP earnings guidance.
*** See GAAP to Non-GAAP reconciliations in the Financial Outlook Appendix.

5

Delivering Enhanced Shareholder Value
Four dividend increases over past 2 years
Two programs to repurchase up to 26.5 million shares
2006 total shareholder return of 27.2%
3-year annualized TSR of 24.0%
– Ranks 8/63 in EEI Index

6

Delivering World-Class Safety Results
OSHA Incident Rate *

1.59
1.44
1.23

0.97

2003 2004 2005 2006

* Per 100 employees.

Overall OSHA rate of 0.97 in 2006 – best ever
for FirstEnergy, and one of best in industry

7

Building Long-Term Shareholder Value
Enhance financial strength and flexibility
Continue to deliver consistent and predictable
financial results
– 2007 Non-GAAP Earnings Guidance: $4.05 – $4.25*
– Compelling long-term earnings growth potential
– Transition to market-based generation rates
– Phase out of transition cost amortization

* See GAAP to Non-GAAP reconciliation in the Financial Outlook Appendix.

8

Strategic Vision: 2007 and Beyond
Strategic Goals:
Manage transition to competitive markets —
Ohio/Pennsylvania
Realize full potential of asset base
Control commodity costs and risks
Enhance financial strength and flexibility

9

10

Analyst Meeting

Regulatory Update
Leila Vespoli
Sr. Vice President & General Counsel

Regulatory Objectives

Generation
Manage transition to market-based rates

Delivery
Full and timely recovery of costs
Transmission: Recover volatile RTO costs
Distribution: Maximize long-run equity return
Transition: Full and timely stranded cost recovery

Regulatory Update
2

FERC Strategy
Principles for Wholesale Power Markets
Operational excellence
Leader in regulatory compliance
Support development of electricity markets
Encourage infrastructure development
Timely cost recovery

Active engagement and advocacy
at FERC, PJM and MISO

Regulatory Update
3

Regulatory Strategy
Managing the Transition to Competitive Markets
New Jersey

Jersey Central Power & Light
Completed projects:
– $182M in transition bonds issued
– BPU approved framework for full recovery of
deferred costs — $110M annual increase [“NGC case”]
BGS auction process as a model for
successful transition to markets

Regulatory Update
4

Regulatory Strategy
Pennsylvania

Penn Power
Successful transition to market-based generation rates
RFP process for 900 MW from Jan. 2007 – May 2008
Average retail price of $85/MWh replaced $55/MWh

Met-Ed and Penelec
Granted deferral of PJM transmission charges
starting Jan. 2006
PUC Order on transition rate plan issued Jan. 11, 2007
NUG accounting case to be heard in Feb. 2007

Regulatory Update
5

Regulatory Strategy
Pennsylvania
Summary: Met-Ed and Penelec
Transition Plan Decision
Overall: $109M increase effective Jan. 12, 2007
Transmission recovery granted in full ($193M increase)
– Ongoing costs recoverable using a reconcilable rider
– 10-year recovery of 2006 deferral with carrying charges
Generation increase of $219M and NUG deferral
of $92M denied
Distribution decrease of $84M; ROE set at 10.1%
Restated FES Partial Requirements Agreement
effective Jan. 1, 2007

Regulatory Update
6

Regulatory Strategy

Ohio Senate Bill 3 – Ohio Restructuring Legislation
(July 1999)
Generation Asset Transfer completed (4Q 2005)
Rate Certainty Plan approved (Jan. 2006)
– Stable transition for customers/companies through 2008
– Provides for synchronization of the following in 2009:
– Distribution rate increase, including recovery of
RCP deferrals
– Market-based generation rates
– Elimination/Reduction of transition cost recovery

Regulatory Update
7

Regulatory Strategy

Ohio
Illustrative Market Price Impact – 2009
Average Unbundled FirstEnergy Ohio Rates

($ / MWh) $88.00 $88.00
90.00

75.00 Gen
Break-even
Gen
60.00 Retail Price
RSC approx. $61/ MWh
45.00
Trans
Trans
30.00
RTC RTC
15.00
Dist
Dist
0.00
12/31/2008* 01/01/2009

* Represents Non-Shopping Customers.

Regulatory Update
8

Regulatory Strategy

Ohio
Rate shock experienced in other states not likely
for FirstEnergy
Termination/reduction of transition cost recovery
(average of $15/MWh in 2008) will substantially
mitigate any price increases to customers

Well positioned to participate in development
of the post-2008 market structure in Ohio

Regulatory Update
9

appendix

Regulatory Update
App-1

Retail Regulatory Structure
Generation Transmission Distribution Transition Cost
Generation Transmission Distribution Transition Cost
Ohio Edison
RTC thru
Stable rates
Pass thru Fixed rates
thru 2008 2008 – OE, TE
CEI
thru 20081
MISO costs
“g + RSC” 2010 – CEI
Toledo Edison
Market in No CTC ended
In
Penn Power
2007 restriction Jan. 2006
Generation
CTC thru 20102
Met-Ed
POLR rates Pass thru No
thru 2010 PJM costs restriction CTC thru 20092
Penelec

JCP&L BGS Supply No restriction MTC thru 2018
1 CEI fixed through April 2009.
2 NUG recovery thru 2020.

Regulatory Update
App-2

Transition Case Detail – Pennsylvania
Requested Granted
($ millions)

Revenue Increase (Decrease)
Distribution $ (21) $ (84)
Transmission 193 193
Generation 219 0
Total Rate Increase $ 391 $ 109
Deferral Request
CTC $ 1 $ 0
NUG Cost Recovery 92 0
Total Deferral $ 93 $ 0

Regulatory Update
App-3

Transition Case Detail – Met-Ed
Requested Granted
($ millions)

Distribution $ (39) $ (75)
Transmission 133 133
Generation 131 0
Deferral Request
CTC $ 1 $ 0

Regulatory Update
App-4

Transition Case Detail – Penelec
Requested Granted
($ millions)

Distribution $ 18 $ (9)
Transmission 60 60
Generation 88 0
Deferral Request
CTC $ 0 $ 0

Regulatory Update
App-5

Analyst Meeting

Operations Overview
Dick Grigg
Executive Vice President & COO

7

Operations Strategy: Leveraging assets and maximizing
opportunities is our focus across all business units.

Energy
Fossil
Delivery

Commodity
Operations

Environmental
Nuclear
Compliance

The key to our success will be:
DRIVING PERFORMANCE & DELIVERING RESULTS

Operations Overview
2

FirstEnergy Generation Sources
Michigan Ashtabula
Perry 244 MW
Seneca
1,258 MW
Eastlake
Sumpter 443 MW
1,262 MW
340 MW Bay Shore
Stryker Erie
648 MW Lake Shore
18 MW Towanda Yards Creek
249 MW
Toledo
200 MW
Cleveland

Pennsylvania
New Castle
Akron
Davis-Besse Edgewater Morristown
Richland Newark
898 MW 48 MW
432 MW
West Lorain Johnstown Reading
Harrisburg
545 MW Allenhurst

Trenton

W. H. Sammis
2,233 MW
New
Columbus Beaver Valley Bruce Mansfield York Haven
Jersey
R. E. Burger 1,712 MW 2,460 MW 19 MW
413 MW
Mad River Forked River
60 MW
Ohio 86 MW
Plant Load Strategy
Baseload Peaking Units Other
Load Following
MW MW MW MW

Mansfield 1-3 2,460 Sammis 1-5 1,020 West Lorain 545 OVEC 463
Wind 30
Beaver Valley 1,2 1,712 Eastlake 1-4 636 Seneca 443
Perry 1,258 Bay Shore 2-4 495 Richland 432 Total 493
FirstEnergy Power Plants
Sammis 6,7 1,200 Burger 4 -5 312 Sumpter 340
C Coal 7,439 MW Davis-Besse 898 Lake Shore 245 Yards Creek 200
N Nuclear 3,868 Eastlake 5 597 Ashtabula 244 Burger 3 & EMDs 101
H Hydro Bay Shore 1 136 Forked River 86
662 Total Load Following 2,952
G Gas & O Oil 1,599 York Haven 19 Mad River 60
Other 129
Total Baseload 8,280
Other 493
Total Peaking Units 2,336
Total 14,061MW
Operations Overview
3

Diverse Generation Portfolio

2006 Actual
14,061 MW
Generation Output
Net Capacity
82.0 million MWh *
Other
CTs
Hydro / CTs
3%
11%
Hydro 2%
Nuclear
5% 35%

Nuclear
28% Coal Coal
53% 63%
* Excluding Wind and OVEC Generation

Operations Overview
4

Diverse Generation Portfolio

2007 Projected
Generation Output
82.7 million MWh

Hydro / CTs
2%
Nuclear
38%

Coal
60%
* Excluding Wind and OVEC Generation

Operations Overview
5

Operations Strategy
Generation

Drive continuous improvement
– Increased reliability – Benchmark analysis
– Outage execution – Controlling costs
– Excellence standards

Explore opportunities to mine existing assets for
cost-effective capacity additions
Effectively implement environmental compliance strategy

WELL-POSITIONED TO SUCCEED
IN A COMPETITIVE GENERATION MARKET

Operations Overview
6

Operations Strategy
Commodity Operations
Manage commodity value chain
Effectively deploy generation to capture market opportunities
Enhance fuel supply/logistics
Efficiently manage purchased power requirements
Employ strict risk management controls and oversight
– Volume and price risks
– Generation availability risks
– Transmission congestion risks

COMMODITY OPERATIONS IS MAXIMIZING MARGINS
BY MITIGATING RISKS AND MINIMIZING SUPPLY COSTS

Operations Overview
7

Operations Strategy
Energy Delivery
Continued focus on enhancing reliability and customer service
– Targeted reinvestment in T & D infrastructure
– Leveraging technology
Implement “Energy Delivery Excellence Program”
– Top-to-bottom review of entire operations
– Identify operational, organizational, and technological
opportunities for improvement
– Enhance construction budgeting, planning, scheduling
and oversight process
Achieve timely rate recovery of regulated capital spend

ENERGY DELIVERY IS WORKING THE PLAN
AND ACHIEVING RESULTS
Operations Overview
8

Operations Strategy
Employees
Unwavering commitment to safety
Underlying all of our strategies is the recruitment and
retention of a talented workforce
To address an aging workforce, partnered with colleges
across OH, PA and NJ to recruit and develop new talent:
– Energy Delivery implemented a Power Systems Institute
(PSI) Program offering degrees in line and substation work
– Fossil Group initiated a 2-year Power Plant Technology
program in 2003
– Nuclear Group started a 2-year associate’s degree program
in nuclear engineering technology

Operations Overview
9

Operations Strategy

There are numerous opportunities to leverage our
assets and build upon our strengths. Our team will
discuss how we plan to execute and capture these
opportunities.

BUILDING LONG-TERM SHAREHOLDER VALUE

Operations Overview
10

Analyst Meeting

Fossil Operations
Charlie Lasky
Vice President, Fossil Operations

Agenda
Fossil Operations Overview
2006 Results
Fossil Excellence Standards

Fossil Operations
2

Fossil Excellence

Standard Operating Systems

Drive Consistent Performance in Critical Metrics

Fossil Operations
3

Fossil continues top quartile safety performance

Unwavering commitment
OSHA Incident Rate to Safety
3.0
Continue drive towards
consistent top decile
2.5
performance
Focus Safety training on
2.0 Top Quartile
2.12 personal performance
2.16
improvements
1.71
1.5
Drive personal employee
Top Decile
1.40
1.55
engagement in Safety
1.0
initiatives
1.02
Standardize fleet-wide
0.5
performance metrics
that drive accountability
0.0
and engagement
2001 2002 2003 2004 2005 2006

Top quartile and decile performance
2005 Industry Performance
is based on EEI’s Annual Safety Surveys.
Top 10% = 1.17 or better
Top 25% = 1.80 or better

Fossil Operations
4

Maximizing fleet utilization key to driving improved
generation margin.
(million MWH)
Fossil Generation
55

50

45

40

35
2001 2002 2003 2004 2005 2006 2007E

2006 record generation output with over 52.98 million MWh from Fossil Fleet
Mansfield Plant record generation output with over 18.63 million MWh
Steady growth of baseload generation with step improvement in load following generation
Sustained generation levels demonstrate strong linkage between plants and market dispatch

Fossil Operations
5

Baseload units demonstrate consistent improvement.
Baseload Capacity Factor Baseload Eq. Availability
Baseload Capacity Factor Baseload Eq. Availability
90% 94%
88.6%
88%
91.4%
92% 90.7%
85.9%
86%
84.5%
90%
Top Decile 88.8%
Top Decile
84%
82.2%
82% 88%
Top Quartile Top Quartile
80%
86%
79.6%
84.3%
84.2%
78%
84%
76.0% 82.7%
76%
82%
74%

72% 80%
70%
78%
68%
2002 2003 2004 2005 2006 2007E
2002 2003 2004 2005 2006 2007E
•Top performance came from Navigant benchmarking study
•Top performance came from Navigant benchmarking study

Top decile base load capacity factor in 2006 compared to Navigant benchmark database
Increased capacity factors and reliability initiatives drive baseload units towards top decile
in 2006 Equivalent Availability
Fossil Operations
6

Focus on total fleet output has positive impact on load
following utilization.
M NMWh Capacity Factor
20 100%

15 75%

10 50%

5 25%

0 0%
2001 2002 2003 2004 2005 2006 2007E
15.2 18.2 16.6 14.4 19.5 19.1 19.8
Load Following
54% 64% 59% 51% 69% 69% 70%
Capacity Factor
*Excludes the peaking units.

2006 generation reflects sustaining generation increase of close to 5M MWH over 2004
Maximize operational flexibility for regulation, minimum loads and system ramping
Dispatch strategies focused on maximizing utilization in profitable markets

Fossil Operations
7

2006 Fossil incremental Non-Fuel Costs declined 29%
since 2003.
($ millions) ($/NMWh)
Non-Fuel O&M Expense
800 12

600 9

400 6

$443.8 $425.5
200 3
$396.4 $374.4
$357.9 $357.8 $355.1

- -
2001 2002 2003 2004 2005 2006 2007E

$/Net MWh $9.01 $7.50 $9.47 $8.53 $7.27 $6.70 $8.26
3% Inflated $9.09 $9.35 $9.63 $9.92 $10.27 $10.59

Delivering value by driving down incremental costs and increasing generation output
2006 incremental operating costs are 34% below 2001 inflated levels
2007 Incremental costs reflect impact of scheduled outage cycle for units and emissions
Fossil Operations
8

Bay Shore Plant pilots Fossil Excellence (FEx) to drive
self-critical culture.
Pilot at Bay Shore set clear path to achieve top level performance
Industry-leading
Performance Demonstrated significant improvement in key management areas

Developed key elements of the FEx Standards
– Continuous improvement approach including employee engagement
Common – FEx tools demonstrated successfully; equipment strategy, standard operating
responses, planning and scheduling, SMED
Operating System
Develop standard approach on embedding one common operating
system at all FirstEnergy Fossil plants

Integrate plant diagnostic and annual Business Plan development
Continuous
to define a 18- to 24-month roadmap for Bay Shore to achieve
Improvement significant performance improvements
Culture Set up performance dialogs to enable continuous improvement

Successfully engaged multiple frontline personnel in defining plant
Engaged
vision and leading improvement initiatives
& Motivated – 23 led initiatives and over 70 participated (out of ~200 employees at Plant)
Workforce Trained and building FEx skills in more than 70 frontline employees

Fossil Operations
9

Generation Strategy
Committed to grow generation through base load up-rates

(Cumulative MW)
300 279
Nuclear
Fossil 222
149
200
92
149

49
100
130 130
100
50
0
2005 2006 2007E 2008E

Fossil Operations
10

Generation strategy focused at growing earnings through
potential opportunities linked to our existing asset base.

Incremental Projects Potential enhancements
to sustain or improve capacity and
1% 2%
generation output
16%
Leverage and grow a diverse gen-
eration base to maximize earnings
potential and meet load growth
Create a strategy that supports
18% incremental generation growth while
63% minimizing environmental regulatory
and capital recovery risks
Auxiliary services markets and
capacity revenues will impact gen-
Coal Oil
eration asset decisions in the future
Gas Opportunistic Fuel
Nuclear
Technology enhancements will shape
future fleet design and diversity

Fossil Operations
11

Grouping of Incremental Projects
Low cost capacity improvement “quick hits”
Twelve projects supporting 197 MW of capacity improvements at an
estimated capital cost of $12M ($61/kW)
Projects focused largely around strengthening peak summer generation
capacity from combustion turbines and continued operation of
Burger Unit 3

Quick Hits
Cumulative MW
200

150

100

50

0
2007 2008 2009 2010
CAPEX $M 6 6 0 0
Cumulative MW 175 197 197 197

Fossil Operations
12

Environmental considerations impact
day-to-day as well as strategic decisions.
Tactical Operation
Managed compliance with environmental operating standards to achieve 100%
compliance
Optimized emission rates to maximize contribution to generation margin

Strategic Operation
Comprehensive environmental compliance and economic analysis for
Fossil Fleet ready for implementation
– Clean Air Interstate Rule and Clean Air Mercury Rule – effective March 2005
– New Source Review – effective July 1, 2005
– Clean Water Act, Section 316(b) Phase II – effective July 9, 2004

Air Quality Control Group focused to address environmental compliance
implementation plans across the fleet with $1.8 billion investment through 2010

Long-Term Operation
Actively partner with government agencies, EPRI, and equipment manufacturers
to R&D new control technologies and system efficiency improvements to address
potential future emissions regulations
Fossil Operations
13

In Summary … Focus on Consistent Execution
Fossil Excellence

Unwavering commitment to achieve
top decile in safety
Drive for enhanced operational margin
through higher capacity utilization,
improved reliability, and thorough
Fossil Operations
equipment maintenance
continues to drive
$
Execute long-term environmental
bottom-line
compliance plan to ensure reliable EPS
contribution for
operation of fleet
FirstEnergy…
Drive continuous improvement
in competitive operation through
increased reliability, Fossil Excellence
Standards and benchmark analysis
Focus on building the next generation
of our workforce

Fossil Operations
14

appendix

Fossil Operations
App-1

Fossil Excellence
Environmental
Safety

Title V
Awareness
Reliability NPDES
Accountability
Initiatives CEMS Workforce
Prevention
SPCC
Benchmarking
Development
Pred. Maintenance
RCA/BTF/Water Chem.
Workforce Manual
Outage Execution
Tech. Rotation Program
Equipment Reliability
Coop Program
Oper. Procedures
Core Skills Training
Heat Rate
Foreman’s Academy
Continuous
Substation Maint.
Talent Talks
Improvement
Alarms Response
360 Development
Protective Devices

Employee Business Plan
Engagement Performance
Maintenance
Generation Margin
Business Plans
PM Compliance
SPOT System
Schedule Compliance
Budget Reports
Backlog Management
Materials Commitment Reports
Tactical
Outage Plans
Asset Utilization
Management
Material Staging Operations “8760” Tool
Planning
Bill of Materials Fuel Strategies
PM Compliance
Staging Base load Strategy
Operating Rounds
Reverse Auctions Operating Availability
Equip. Performance
Stocking Environmental
Central Warehouse Outage Support
Contract Models Work Prioritization

Fossil Operations
App-2

Analyst Meeting

Environmental Compliance
Guy Pipitone
Sr. Vice President,
Operations Strategy & Development

Our Current Fleet Is Well Positioned
Fleet Emission Control Status

Capacity (MW) Fleet %
Non-Emitting 4,530 33%
Coal Controlled 2,569 19%
(SO2/NOx – full control)
Natural Gas Peaking 1,269 10%
8,368 62%

Excellent emission rate vs. competitors
Excellent mix of nuclear, coal and natural gas
NSR Consent Decree in place since March 2005

2

Construction Overview
Sammis Plant (2,220 MW)
– SO2 control (scrubbers) all units
– NOx control (SCRs) Units 6 & 7 (1,200 MW)
– NOx control (SNCR) Units 1–5 (1,020 MW)
Mansfield Plant (2,460 MW)
– SO2 control (scrubber) upgrades all units
– complete 2007
NOx Controls (SNCR)
– Eastlake Unit 5 (600 MW)
– Burger Units 4 & 5 (300 MW)
Bay Shore Plant
– NOx and SO2 control Unit 4 (215 MW)

3

AQCS Expenditures
Capital Expenditures
($ millions)
563
600
496
380
400

178
200 136
54
0
2005 2006 2007E 2008E 2009E 2010E

Confident in our cost estimate ($1.8B)
– Early SCR engineering (contracted in 1999)
– Detailed project development in 2005
– Early commitment by “premier” suppliers and subcontractors
– Deeply experienced and highly qualified project teams

4

Project Management
Contracts contain incentives and liquidated damages
provisions
Premier contractors whose project personnel
were selected prior to award
Highly detailed schedule (16,000 activities)
– Fully integrated
– Real-time access
– Continuously analyzed and updated
Cost control and monitoring
– Scope containment
– Performance measurement and trending
– Targeted cost-reduction initiatives

5

Managing the Construction Process
Material supply
– Shops fully loaded
– Long lead times
– Mitigation strategy includes expediting,
close interaction, and frequent updates
On-site craft labor availability
– In competition with many other projects
– Levelized labor usage
– Desirable site conditions
– Close relationships with local unions
– Labor availability is a consent decree
“force majeure” provision

6

Longer-term Environmental Considerations
CO2 control
– Approx. 40% fleet output nuclear
– Heavily involved in CO2 capture and sequestration R&D
Mercury control
– Excellent reduction through “co-benefits”
– Based on current rules and plans, will be in compliance
until 2015

7

Analyst Meeting

Nuclear Operations
Gary Leidich
President & Chief Nuclear Officer

Topics
Fulfilling Our Vision
– Safety
– Reliability
– Outage Execution
– Regulatory Status
Looking Forward
– Power Uprates
– License Renewal
– Fuel Management
– Production Costs
Summary

Analyst Meeting • New York, NY • February 1, 2007 Nuclear Operations
2


Continue to focus on:
Safe and event-free plant operations
Reliable plant operations
Improvement in outage execution

3

Best Personal Safety Record in the U.S.

Fleet OSHA Incident Rate

2005 Nuclear
Industry Best = 0.26
0.50
Top Quartile = 0.39
0.40
Top Decile = 0.32
0.30

0.20
0.10

0.00
2002 2003 2004 2005 2006 2007E 2008E 2009E
0.33 0.36 0.32 0.41 0.03 0.30 0.30 0.30
Fleet

4

Strong Safety Culture
Improving Safety Culture Assessment Scores
– In 2006, aligned with Institute of Nuclear Power
Operators Safety Culture Principles

Safety Culture Performance Index Principles
100

Everyone is personally responsible for nuclear safety
75
Leaders demonstrate commitment to safety
Trust permeates the organization
50
Decision-making reflects safety first
Nuclear technology is recognized as special and unique
25

A questioning attitude is cultivated
0
Organizational learning is embraced
Beaver Valley Davis-Besse Perry
Nuclear safety undergoes constant examination
2004 Actual 2005 Actual 2006 Actual

5

2006 Safety Conscious Work Environment Survey
Responses
Survey Questions (average/site)
Workers accepting responsibility for identifying problems
98% positive
and adverse conditions
Raising a nuclear safety or quality concern 97% positive
Accepting personal responsibility for identification of errors
96% positive
or mistakes regardless of the consequence
Not being subjected to retaliation for raising nuclear safety,
quality or compliance concerns while working here within 96% positive
the last 6 months
Not aware of instances that occurred on site within the last
6 months in which workers have been subjected to retaliation 95% positive
for raising nuclear safety, quality, or compliance concerns

6

Currently, three open Office of Investigations issues
NRC Allegations are well below industry average

Average NRC Allegations (per site)

15

10

5

0
2002 2003 2004 2005 2006
15.0 10.0 14.6 8.0 2.7
Fleet
6.3 5.4 6.2 6.9 5.9
Industry

7

Improving Reliability
2006 Nuclear Fleet Performance
Achieve top decile
– OSHA Rate
– Fuel costs
– Corrective Maintenance backlog
Recognized for on-line dose control
Summer Capacity Factor = 97.6%

Capacity Forced Loss Net Generation
Factor (% ) Rate (% ) (million MWh)
Beaver Valley Unit 1 80.4 1.16 5.8
Beaver Valley Unit 2 87.7 1.75 6.3
Davis-Besse 83.1 1.76 6.4
Perry 96.8 3.44 10.5 *
* Record
Fleet 88.0 2.27 29.0 generation
2002 – 2005 Avg 79.0 3.15 26.0

8

Strong Plant Reliability
2006 Capability Factor with Planned Outages
%
99 97
94
94
100

75

50

25

0
Beaver Valley 1 Beaver Valley 2 Davis-Besse Perry

Reliability improvements during 2006 outages
BV1 – New steam generators and reactor vessel head, main generator rewind
BV2 – Weld overlay on pressurizer nozzles, enlarged containment sump
DB – Replaced two reactor coolant pumps, replaced low pressure turbine rotors
and diaphragms

9

Reduced Maintenance Backlogs
Beaver Valley 1 Beaver Valley 2 Davis-Besse Perry
140

120 Top Quartile = 10
Corrective
Corrective 100

Maintenance
Maintenance 80
Open
Work 60
Orders
40

20
0
Jan '04 Jun '04 Jan '05 Jun '05 Oct '05 Dec Dec Dec Dec Dec
'05 '06 '07 '08 '09

2000
1800
Top Quartile = 250
1600
1400
Elective Open
Elective
Work 1200
Maintenance
Maintenance Orders 1000
800
600
400
200
0
Jan '04 Jun '04 Jan '05 Jun '05 Oct '05 Dec '05 Dec '06 Dec '07 Dec '08 Dec '09
10

Outage Execution – Beaver Valley 1 Steam Generator
and Reactor Head Replacement Outage
World Class Performance
Safety: No FENOC OSHA Recordables,
under stretch dose goal by 2 rem
Duration: 65 days vs. a target of 76
Costs: Under O&M budget by $7M
Significant Scope:
– 3 new steam generators
– New simplified reactor vessel closure head
– Atmospheric containment conversion
– Main unit generator rotor and stator rewind
– Long-range plan motor, valve and breaker maintenance
– Generator exciter replacement (emergent)
Enabled 3% power uprate in
August 2006 and 5% in 2007

11

Future Outages Focus on Reliability
Outage Outage
Scope Driving Duration
Year Plant Costs Duration
Items with asterisk denote duration drivers
($ millions) (days)
Perry Refueling *
$30 30
1R11 IVVI
Split Pins *
Containment Sump Modifications*
Beaver Valley Reactor Vessel ISI *
2007 $32 28
1R18 100% Eddy Current Test
Reactor Vessel Head Inspection
Pressurizer Overlay

Davis-Besse 1R15 $30 31 Rewind Main Generator *

Split Pins *
Low Pressre-2 Turbine Inspection *
2008
Beaver Valley Reactor Vessel Head Inspection
$30 30
2R13 Main Cond Tube Replacement, Expansion Joints *
Replace High Pressure Turbine *
Type A Containment Pressurization Test
Refueling *
Perry
$30 25 10-year IVVI / Bioshield In-service Inspection
1R12
Recirc Pump Motor Replacement
Replace Low Pressure Turbines (2) *
2009 Beaver Valley
$30 30 Reactor Coolant System Loop Stop Valves (2)
1R19
Reactor Vessel Head Inspection
Beaver Valley
$30 25 Refueling *
2R14

12

Regulatory Status
Successfully completed the NRC Component Design
Basis Inspection with no findings or non-cited violations,
Beaver Valley
an industry “first” for these types of inspections
White NRC Finding in Emergency Preparedness

Successful Independent Assessments — working with
Davis-Besse
NRC Region III to modify Confirmatory Order

Additional inspections complete
Perry
Close Confirmatory Action Letter and return to
Standard Oversight

Third annual combined NRC Regional meeting held
Fleet
Fleet
January 24, 2007

13

Looking Forward
Growth Opportunities through Power Uprates
Implementing 170 new MW ahead of schedule

Power Uprates
Power Uprates

Beaver Valley Unit 1 25 MW in 2006 43 MW in 2007

Beaver Valley Unit 2 10 MW in 2006 45 MW in 2008

Davis-Besse 14 MW in 2006 12 MW in 2008

Perry 21 MW in 2011

14

Looking Forward
Increasing Generation

Fleet Generation
GWh
2004 Record
32,500
Fleet Generation
30,000

27,500

25,000

22,500

20,000
2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E
Fleet 24,455 21,093 29,907 28,758 28,982 31,215 32,001 31,296 32,197

15

Looking Forward
Continued Safe Operations through License Renewal

License Renewal Schedule
Submit
Current Approval New
Request
Expiration Expected Expiration
(NRC Docket)
Beaver Valley Unit 1 2016 2007 2009 2036
Beaver Valley Unit 2 2027 2007 2009 2047
Davis-Besse 2017 2010 2012 2037
Perry 2026 2013 2015 2046

16

Looking Forward
Managing Uranium Prices
Uranium Pricing – Historical Year-End U3O8 Spot Prices
($/lb U308)
Then-Current $
120
Constant 2006 $
High Forecast
100
Low Forecast

80 Range of
2006 Forecast
YE
60

40

20

0
1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Note: Value for 2006 reflects UPIS U3O8 Spot Price Indicator as of end of Dec 2006.
Conversion of Then-Current $ to Constant 2006 $ based on U.S. GNP-IPD.
Sources: 1973-1989: NUEXCO/TradeTech Exchange Value
1990-2006: Uranium Price Information System (UPIS) U3O8 Spot Price Indicator, which reflects NAC’s judgment of the spot price
at the end of each month and excludes CIS/Russian-origin uranium.
17

Looking Forward
Fuel Cost Management
FENOC Fuel Cost Projections
Current Fuel Contract Coverage (includes Letters of Intent)
Uranium: 100% coverage through 2009; 69% coverage in 2010
Enrichment: 100% coverage through 2010; 76% coverage in 2011
BV1 – 5 additional reloads under contract
Fabrication PY – life of unit contract
BV2 – 5 additional reloads under contract
DB – 1 additional reload under contract
Negotiations for extension of DB fabrication contract are ongoing.

($/MWh)
Disposal & Other Enrichment
6.00
Fabrication Uranium 5.12
4.57
5.00 4.48
4.28
4.00

3.00

2.00

1.00

0.00
2006 2007E 2008E 2009E

18

Looking Forward
Managing Our Used Fuel
Through 2006, 46 of 102 plants reached capacity in used fuel pools
49 operating plants built on-site dry cask fuel storage, 46 are under construction
Plans for federal repository for long-term storage — Yucca Mountain
Congressional proposals for interim storage and reprocessing

FENOC Plan
Implement dry storage by end of 2014
BV Unit 1
BV Unit 1

Criticality analysis frees up storage space
BV Unit 2 Rerack before 2011 to provide capacity through 2025
BV Unit 2
Dry storage could then be implemented

Continue with wet storage until 2021
Davis-Besse
Davis-Besse
Return to dry storage in 2022

Spent fuel pool campaign in 2007 ($7M)
Perry
Perry
Implement dry storage before 2011 ($26M)

19

Looking Forward
Cost-effective Operations

Fleet Production Costs
$/MWh
25

20

15

10

5

0
2002 2003 2004 2005 2006 2007E 2008E 2009E
24.88 20.88 16.73 18.94 20.43 17.57 17.16 19.29
Fleet

Production Costs includes O&M and Fuel.

20

Summary
Maintaining best in class in personal and nuclear safety
Focusing on Operational Excellence
Closing the gaps to top industry performance

21

Analyst Meeting

Energy Delivery
& Customer Service
Chuck Jones
Sr. Vice President,
Energy Delivery & Customer Service

Our future plans will help us build upon recent
success.
Employee safety record that is top decile
Across the board improvement in customer satisfaction
Significant improvement in distribution reliability
Top decile transmission reliability performance
Solid financial results

2

Four factors are driving our overall planning.

Aging Infrastructure
Aging Workforce
Reliability
Cost Recovery

3

While our plan is straightforward…

Optimize capital investment
Increase project management oversight
Fill 100% of vital positions
Transition “institutional memory”
Build regulatory “margin”
Deliver expected financial results
Timely recovery of regulatory spend

4

… each aspect of our “plan” has unique characteristics.

Operations People
Operations People

Issues: Reliability Issues: Aging Workforce
Capacity Planning “Institutional Memory”
Capacity Compliance Orderly Transition

Customer Service Financial
Customer Service Financial

Issues: Reliability Issues: Cost Recovery
Service Rate Implications
Technology Financial Management

5

Our 2007 infrastructure capital is not significantly different
than recent years — the difference is the acceleration of
selected capital projects.

2006
2005 2007E
184
Infrastructure 220
264
100 197
97
Capacity
132 131
New Business 138
109 120
122
Forced
Other 89
104 103
Total 735
650
725

6

We continue to “fine-tune” our management structure.
Two recent changes were specifically targeted to asset
management and financial oversight.
Asset Management
Develop long-term asset strategy
Asset and circuit health analysis and tracking
Integrated investment planning
Asset performance tracking and analysis

Financial Management
State and Operating Company controllers
Increased financial skills throughout ED&CS
5-year financial planning
Commitment tracking and management reporting
Regulatory focus to ensure full recovery

7

first energy AnnualAnalystMtg2-01-07

first energy AnnualAnalystMtg2-01-07

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