EXHIBIT 99.2
Consolidated Report to the Financial Community
Third Quarter 2006
(Released October 25, 2006) (Unaudited)
HIGHLIGHTS | After-Tax EPS Variance Analysis | 3rd Qtr. | |||
3Q 2005 Basic EPS - GAAP Basis | $1.01 | ||||
§ | Normalized non-GAAP* earnings, excluding | Unusual Items - 2005 | 0.03 | ||
unusual items, were $1.42 per share for the | 3Q 2005 Normalized Earnings - Non-GAAP* Basis | $1.04 | |||
third quarter of 2006, compared with $1.04 | Distribution Deliveries | (0.05) | |||
per share for the third quarter of 2005. | Generation Revenues | (0.09) | |||
GAAP earnings were $1.41 per share | Fuel & Purchased Power | 0.04 | |||
compared with $1.01 per share in the | Postretirement Benefit Costs | 0.01 | |||
third quarter of 2005. | Ohio Regulatory Changes | ||||
- Transition Cost Amortization | 0.24 | ||||
3Q 2006 Results vs. 3Q 2005 | - Deferred Distribution Costs | 0.07 | |||
- Deferred Fuel Costs | 0.08 | ||||
§ | Electric distribution deliveries declined 2%, | - Rate Stabilization Charge Discount | (0.09) | ||
primarily due to milder weather. | Deferred Transmission Costs - PA | 0.10 | |||
Cooling-degree-days were 20% lower than | Net MISO / PJM Transmission Costs | 0.07 | |||
the same period last year, but 4% above | Financing Costs | (0.04) | |||
normal. Residential deliveries decreased | Investment Income - NDT and COLI | (0.04) | |||
5%, while commercial and industrial | Income Tax Benefits | 0.04 | |||
deliveries each declined 1%. Lower | Reduced Common Shares | 0.02 | |||
distribution deliveries reduced earnings | Other | 0.02 | |||
by $0.05 per share. | 3Q 2006 Normalized Earnings - Non-GAAP Basis* | 1.42 | |||
Unusual Items - 2006 | (0.01) | ||||
3Q 2006 Basic EPS - GAAP Basis | $1.41 | ||||
§ | Total electric generation sales decreased 1%, as a 33% reduction in wholesale sales more than offset the 8% increase in retail sales. The change in generation sales mix resulted from returning Ohio shopping customers. Generation revenues, excluding JCP&L, reduced earnings $0.09 per share due to lower wholesale market prices and lower generation sales volume. Partially offsetting the reduction in generation revenues was a related decrease in fuel and purchased power costs. Fuel and related expense reductions increased earnings by $0.03 per share. Lower purchased power costs, excluding JCP&L, increased earnings by $0.01 per share, primarily due to a 2% decline in purchased volume and lower average wholesale prices compared to the same period last year. |
§ | Postretirement benefit costs other than pensions increased earnings by $0.01 per share largely due to program changes in health care benefits being phased in through 2008. |
§ | The impact of several elements of the Ohio rate plans that became effective in 2006 increased earnings by $0.30 per share. The major driver of this improvement was a $0.24 per share reduction in transition cost amortization. Other changes included the deferral of $0.07 per share of costs related to distribution reliability spending and the deferral of $0.08 per share of incremental fuel expense, partially offset by a $0.09 per share earnings reduction related to the Rate Stabilization Charge discount provided to shopping customers. |
§ | The deferral of incremental transmission charges at Metropolitan Edison (Met-Ed) and Pennsylvania Electric (Penelec) increased earnings by $0.10 per share during the third quarter. Consistent with the companies’ petition, the Pennsylvania Public Utility Commission (PPUC) order does not grant rate recovery of these costs, but allows Met-Ed and Penelec the opportunity to seek recovery in the pending Rate Transition Plan filing. |
§ | Net MISO/PJM transmission costs increased earnings by $0.07 per share, primarily due to lower congestion costs in the PJM market and higher MISO revenues. |
§ | Total financing costs increased by $0.04 per share, primarily attributable to higher short-term borrowings to fund the accelerated share repurchase program, higher variable interest rates, and the absence of gains on reacquired debt that were realized in the third quarter of 2005. |
§ | Lower nuclear decommissioning trust income of $0.05 per share was partially offset by higher income from corporate-owned life insurance which increased earnings by $0.01 per share. |
§ | A change in estimated taxes payable related to the recently filed 2005 income tax return and the continuing phase-out of the Ohio income tax increased earnings by $0.04 per share. |
§ | The reduction in shares outstanding, resulting from the accelerated share repurchase of 10.6 million shares in August, enhanced earnings per share by $0.02. |
§ | Other included lower energy delivery expenses and non-electric commodity transactions. |
§ | During the quarter, we recognized two unusual items. The first resulted from a PPUC order requiring Met-Ed and Penelec to discontinue an accounting methodology modification implemented in January 2006 (and effective for 2005) relating to deferred NUG purchased power costs. The pre-tax charge relating to costs deferred in 2005 under the revised methodology was $10 million, or $0.02 per share. The PPUC indicated that its order does not limit the companies' ability to petition for such an accounting modification and the companies have already filed such a petition. The second unusual item is related to a $0.01 per share benefit from the sale and impairment of non-core assets. |
Revised 2006 Earnings Guidance*
§ | Normalized non-GAAP earnings guidance for 2006, excluding unusual items, has been revised to $3.75 to $3.85 per share from our previous normalized non-GAAP guidance of $3.65 to $3.85 per share. The increase toward the top half of the prior guidance reflects the strong performance during the third quarter. With year-to-date normalized non-GAAP earnings now at $3.04 per share, our normalized non-GAAP earnings guidance for the fourth quarter is $0.71 to $0.81 per share. |
§ | Total cash generation (non-GAAP) guidance for 2006 remains at $460 million, after capital expenditures and common dividends. |
* The 2006 GAAP to non-GAAP reconciliation statements can be found on pages 10 and 11 of this report and are 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 also available on FirstEnergy Corp.'s website.
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 - 3rd Quarter 2006 2
FirstEnergy Corp.
Consolidated Statements of Income
(Unaudited)
(In millions, except for per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2006 | 2005 | Change | 2006 | 2005 | Change | |||||||||||||||
Revenues | ||||||||||||||||||||
(1) | Electric sales | $ | 3,115 | $ | 3,117 | $ | (2 | ) | $ | 8,179 | $ | 8,032 | $ | 147 | ||||||
(2) | FE Facilities | 47 | 59 | (12 | ) | 150 | 162 | (12 | ) | |||||||||||
(3) | MYR | - | 132 | (132 | ) | 108 | 354 | (246 | ) | |||||||||||
(4) | Other | 239 | 196 | 43 | 594 | 549 | 45 | |||||||||||||
(5) | Total Revenues | 3,401 | 3,504 | (103 | ) | 9,031 | 9,097 | (66 | ) | |||||||||||
Expenses | ||||||||||||||||||||
(6) | Fuel | 344 | 336 | 8 | 929 | 849 | 80 | |||||||||||||
(7) | Purchased power | 973 | 951 | 22 | 2,377 | 2,266 | 111 | |||||||||||||
(8) | Other operating expenses | 748 | 806 | (58 | ) | 2,182 | 2,239 | (57 | ) | |||||||||||
(9) | FE Facilities | 46 | 59 | (13 | ) | 159 | 163 | (4 | ) | |||||||||||
(10) | MYR | - | 128 | (128 | ) | 105 | 348 | (243 | ) | |||||||||||
(11) | Provision for depreciation | 153 | 152 | 1 | 445 | 444 | 1 | |||||||||||||
(12) | Amortization of regulatory assets | 243 | 366 | (123 | ) | 665 | 983 | (318 | ) | |||||||||||
(13) | Deferral of new regulatory assets | (153 | ) | (125 | ) | (28 | ) | (379 | ) | (305 | ) | (74 | ) | |||||||
(14) | General taxes | 187 | 188 | (1 | ) | 553 | 541 | 12 | ||||||||||||
(15) | Total Expenses | 2,541 | 2,861 | (320 | ) | 7,036 | 7,528 | (492 | ) | |||||||||||
(16) | Operating Income | 860 | 643 | 217 | 1,995 | 1,569 | 426 | |||||||||||||
Other Income (Expense) | ||||||||||||||||||||
(17) | Investment income | 46 | 83 | (37 | ) | 120 | 171 | (51 | ) | |||||||||||
(18) | Interest expense | (185 | ) | (161 | ) | (24 | ) | (528 | ) | (488 | ) | (40 | ) | |||||||
(19) | Capitalized interest | 7 | 7 | - | 21 | 12 | 9 | |||||||||||||
(20) | Subsidiaries' preferred stock dividends | (2 | ) | (3 | ) | 1 | (6 | ) | (13 | ) | 7 | |||||||||
(21) | Total Other Income (Expense) | (134 | ) | (74 | ) | (60 | ) | (393 | ) | (318 | ) | (75 | ) | |||||||
(22) | Income Before Income Taxes and | |||||||||||||||||||
Discontinued Operations | 726 | 569 | 157 | 1,602 | 1,251 | 351 | ||||||||||||||
(23) | Income taxes | 272 | 237 | 35 | 623 | 599 | 24 | |||||||||||||
(24) | Income Before Discontinued Operations | 454 | 332 | 122 | 979 | 652 | 327 | |||||||||||||
(25) | Discontinued operations | - | - | - | - | 18 | (18 | ) | ||||||||||||
(26) | Net Income | $ | 454 | $ | 332 | $ | 122 | $ | 979 | $ | 670 | $ | 309 | |||||||
Basic Earnings Per Common Share: | ||||||||||||||||||||
(27) | Before discontinued operations | $ | 1.41 | $ | 1.01 | $ | 0.40 | $ | 2.99 | $ | 1.99 | $ | 1.00 | |||||||
(28) | Discontinued operations | - | - | - | - | 0.05 | (0.05 | ) | ||||||||||||
(29) | Basic Earnings Per Common Share | $ | 1.41 | $ | 1.01 | $ | 0.40 | $ | 2.99 | $ | 2.04 | $ | 0.95 | |||||||
(30) | Weighted Average Number of | |||||||||||||||||||
Basic Shares Outstanding | 322 | 328 | (6 | ) | 326 | 328 | (2 | ) | ||||||||||||
Diluted Earnings Per Common Share: | ||||||||||||||||||||
(31) | Before discontinued operations | $ | 1.40 | $ | 1.01 | $ | 0.39 | $ | 2.97 | $ | 1.98 | $ | 0.99 | |||||||
(32) | Discontinued operations | - | - | - | - | 0.05 | (0.05 | ) | ||||||||||||
(33) | Diluted Earnings Per Common Share | $ | 1.40 | $ | 1.01 | $ | 0.39 | $ | 2.97 | $ | 2.03 | $ | 0.94 | |||||||
Weighted Average Number of | ||||||||||||||||||||
(34) | Diluted Shares Outstanding | 325 | 330 | (5 | ) | 329 | 330 | (1 | ) | |||||||||||
Consolidated Report to the Financial Community - 3rd Quarter 2006
3
FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)
Three Months Ended September 30, 2006 | ||||||||||||||||||||||||||
Power | ||||||||||||||||||||||||||
Supply | ||||||||||||||||||||||||||
Regulated | Management | Facilities | Reconciling | |||||||||||||||||||||||
Services | Services | Services | Other (a) | Adjustments (b) | Consolidated | |||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
(1 | ) | Electric sales | $ | 1,124 | $ | 1,991 | $ | - | $ | - | $ | - | $ | 3,115 | ||||||||||||
(2 | ) | FE Facilities | - | - | 47 | - | - | 47 | ||||||||||||||||||
(3 | ) | MYR | - | - | - | - | - | - | ||||||||||||||||||
(4 | ) | Other | 166 | 75 | - | 14 | (16 | ) | 239 | |||||||||||||||||
(5 | ) | Internal revenues | - | - | - | - | - | - | ||||||||||||||||||
(6 | ) | Total Revenues | 1,290 | 2,066 | 47 | 14 | (16 | ) | 3,401 | |||||||||||||||||
Expenses | ||||||||||||||||||||||||||
(7 | ) | Fuel | - | 344 | - | - | - | 344 | ||||||||||||||||||
(8 | ) | Purchased power | - | 973 | - | - | - | 973 | ||||||||||||||||||
(9 | ) | Other operating expenses | 338 | 414 | - | - | (4 | ) | 748 | |||||||||||||||||
(10 | ) | FE Facilities | - | - | 46 | - | - | 46 | ||||||||||||||||||
(11 | ) | MYR | - | - | - | - | - | - | ||||||||||||||||||
(12 | ) | Provision for depreciation | 96 | 50 | - | 1 | 6 | 153 | ||||||||||||||||||
(13 | ) | Amortization of regulatory assets | 238 | 5 | - | - | - | 243 | ||||||||||||||||||
(14 | ) | Deferral of new regulatory assets | (54 | ) | (99 | ) | - | - | - | (153 | ) | |||||||||||||||
(15 | ) | General taxes | 140 | 43 | - | - | 4 | 187 | ||||||||||||||||||
(16 | ) | Total Expenses | 758 | 1,730 | 46 | 1 | 6 | 2,541 | ||||||||||||||||||
(17 | ) | Operating Income | 532 | 336 | 1 | 13 | (22 | ) | 860 | |||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||
(18 | ) | Investment income | 67 | 19 | - | - | (40 | ) | 46 | |||||||||||||||||
(19 | ) | Interest expense | (104 | ) | (58 | ) | - | (2 | ) | (21 | ) | (185 | ) | |||||||||||||
(20 | ) | Capitalized interest | 4 | 2 | - | 1 | - | 7 | ||||||||||||||||||
(21 | ) | Subsidiaries' preferred stock dividends | (2 | ) | - | - | - | - | (2 | ) | ||||||||||||||||
(22 | ) | Total Other Income (Expense) | (35 | ) | (37 | ) | - | (1 | ) | (61 | ) | (134 | ) | |||||||||||||
(23 | ) | Income Before Income Taxes and | ||||||||||||||||||||||||
Discontinued Operations | 497 | 299 | 1 | 12 | (83 | ) | 726 | |||||||||||||||||||
(24 | ) | Income taxes | 200 | 119 | - | (15 | ) | (32 | ) | 272 | ||||||||||||||||
(25 | ) | Income Before Discontinued Operations | 297 | 180 | 1 | 27 | (51 | ) | 454 | |||||||||||||||||
(26 | ) | Discontinued Operations | - | - | - | - | - | - | ||||||||||||||||||
(27 | ) | Net Income | $ | 297 | $ | 180 | $ | 1 | $ | 27 | $ | (51 | ) | $ | 454 | |||||||||||
(a) Primarily consists of telecommunications services. 0; | ||||||||||||||||||||||||||
(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 - 3rd Quarter 2006 60; 4
FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)
Three Months Ended September 30, 2005 | |||||||||||||||||||||||
Power | |||||||||||||||||||||||
Supply | |||||||||||||||||||||||
Regulated | Management | Facilities | Reconciling | ||||||||||||||||||||
Services | Services | Services | Other (a) | Adjustments (b) | Consolidated | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
(1 | ) | Electric sales | $ | 1,340 | $ | 1,777 | $ | - | $ | - | $ | - | $ | 3,117 | |||||||||
(2 | ) | FE Facilities | - | - | 59 | - | - | 59 | |||||||||||||||
(3 | ) | MYR | - | - | - | 132 | - | 132 | |||||||||||||||
(4 | ) | Other | 141 | 47 | - | 6 | 2 | 196 | |||||||||||||||
(5 | ) | Internal revenues | 79 | - | - | - | (79 | ) | - | ||||||||||||||
(6 | ) | Total Revenues | 1,560 | 1,824 | 59 | 138 | (77 | ) | 3,504 | ||||||||||||||
Expenses | |||||||||||||||||||||||
(7 | ) | Fuel | - | 336 | - | - | - | 336 | |||||||||||||||
(8 | ) | Purchased power | - | 951 | - | - | - | 951 | |||||||||||||||
(9 | ) | Other operating expenses | 337 | 537 | - | (2 | ) | (66 | ) | 806 | |||||||||||||
(10 | ) | FE Facilities | - | - | 59 | - | - | 59 | |||||||||||||||
(11 | ) | MYR | - | - | - | 128 | - | 128 | |||||||||||||||
(12 | ) | Provision for depreciation | 137 | 9 | - | 1 | 5 | 152 | |||||||||||||||
(13 | ) | Amortization of regulatory assets | 366 | - | - | - | - | 366 | |||||||||||||||
(14 | ) | Deferral of new regulatory assets | (94 | ) | (31 | ) | - | - | - | (125 | ) | ||||||||||||
(15 | ) | General taxes | 150 | 33 | - | 1 | 4 | 188 | |||||||||||||||
(16 | ) | Total Expenses | 896 | 1,835 | 59 | 128 | (57 | ) | 2,861 | ||||||||||||||
(17 | ) | Operating Income | 664 | (11 | ) | - | 10 | (20 | ) | 643 | |||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(18 | ) | Investment income | 83 | - | - | - | - | 83 | |||||||||||||||
(19 | ) | Interest expense | (91 | ) | (12 | ) | - | (1 | ) | (57 | ) | (161 | ) | ||||||||||
(20 | ) | Capitalized interest | 6 | 1 | - | - | - | 7 | |||||||||||||||
(21 | ) | Subsidiaries' preferred stock dividends | (3 | ) | - | - | - | - | (3 | ) | |||||||||||||
(22 | ) | Total Other Income (Expense) | (5 | ) | (11 | ) | - | (1 | ) | (57 | ) | (74 | ) | ||||||||||
(23) | Income Before Income Taxes andDiscontinued Operations | 659 | (22 | ) | - | 9 | (77 | ) | 569 | ||||||||||||||
(24 | ) | Income taxes | 264 | (9 | ) | - | 3 | (21 | ) | 237 | |||||||||||||
(25 | ) | Income before discontinued operations | 395 | (13 | ) | - | 6 | (56 | ) | 332 | |||||||||||||
(26 | ) | Discontinued operations | - | - | - | - | - | - | |||||||||||||||
(27 | ) Net Income | $ | 395 | $ | (13 | ) | $ | - | $ | 6 | $ | (56 | ) | $ | 332 | ||||||||
(a) | Other consists 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 - 3rd Quarter 2006
160; 5
FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)
Three Months Ended Sept. 30, 2006 vs. Three Months Ended Sept. 30, 2005 | ||||||||||||||||||||||||||
Power | ||||||||||||||||||||||||||
Supply | ||||||||||||||||||||||||||
Regulated | Management | Facilities | Reconciling | |||||||||||||||||||||||
Services | Services | Services | Other (a) | Adjustments (b) | Consolidated | |||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
(1 | ) | Electric sales | $ | (216 | ) | $ | 214 | $ | - | $ | - | $ | - | $ | (2 | ) | ||||||||||
(2 | ) | FE Facilities | - | - | (12 | ) | - | - | (12 | ) | ||||||||||||||||
(3 | ) | MYR | - | - | - | (132 | ) | - | (132 | ) | ||||||||||||||||
(4 | ) | Other | 25 | 28 | - | 8 | (18 | ) | 43 | |||||||||||||||||
(5 | ) | Internal revenues | (79 | ) | - | - | - | 79 | - | |||||||||||||||||
(6 | ) | Total Revenues | (270 | ) | 242 | (12 | ) | (124 | ) | 61 | (103 | ) | ||||||||||||||
Expenses | ||||||||||||||||||||||||||
(7 | ) | Fuel | - | 8 | - | - | - | 8 | ||||||||||||||||||
(8 | ) | Purchased power | - | 22 | - | - | - | 22 | ||||||||||||||||||
(9 | ) | Other operating expenses | 1 | (123 | ) | - | 2 | 62 | (58 | ) | ||||||||||||||||
(10 | ) | FE Facilities | - | - | (13 | ) | - | - | (13 | ) | ||||||||||||||||
(11 | ) | MYR | - | - | - | (128 | ) | - | (128 | ) | ||||||||||||||||
(12 | ) | Provision for depreciation | (41 | ) | 41 | - | - | 1 | 1 | |||||||||||||||||
(13 | ) | Amortization of regulatory assets | (128 | ) | 5 | - | - | - | (123 | ) | ||||||||||||||||
(14 | ) | Deferral of new regulatory assets | 40 | (68 | ) | - | - | - | (28 | ) | ||||||||||||||||
(15 | ) | General taxes | (10 | ) | 10 | - | (1 | ) | - | (1 | ) | |||||||||||||||
(16 | ) | Total Expenses | (138 | ) | (105 | ) | (13 | ) | (127 | ) | 63 | (320 | ) | |||||||||||||
(17 | ) | Operating Income | (132 | ) | 347 | 1 | 3 | (2 | ) | 217 | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||
(18 | ) | Investment income | (16 | ) | 19 | - | - | (40 | ) | (37 | ) | |||||||||||||||
(19 | ) | Interest expense | (13 | ) | (46 | ) | - | (1 | ) | 36 | (24 | ) | ||||||||||||||
(20 | ) | Capitalized interest | (2 | ) | 1 | - | 1 | - | - | |||||||||||||||||
(21 | ) | Subsidiaries' preferred stock dividends | 1 | - | - | - | - | 1 | ||||||||||||||||||
(22 | ) | Total Other Income (Expense) | (30 | ) | (26 | ) | - | - | (4 | ) | (60 | ) | ||||||||||||||
(23 | ) | Income Before Income Taxes and Discontinued Operations | (162 | ) | 321 | 1 | 3 | (6 | ) | 157 | ||||||||||||||||
(24 | ) | Income taxes | (64 | ) | 128 | - | (18 | ) | (11 | ) | 35 | |||||||||||||||
(25 | ) | Income before discontinued operations | (98 | ) | 193 | 1 | 21 | 5 | 122 | |||||||||||||||||
(26 | ) | Discontinued operations | - | - | - | - | - | - | ||||||||||||||||||
(27 | ) | Net Income | $ | (98 | ) | $ | 193 | $ | 1 | $ | 21 | $ | 5 | $ | 122 | |||||||||||
(a | ) | Other consists 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 - 3rd Quarter 2006 60; 6
FirstEnergy Corp.
Financial Statements
(Unaudited)
(In millions)
Condensed Consolidated Balance Sheet | |||||||
As of Sept.30, 2006 | As of Dec. 31, 2005 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 41 | $ | 64 | |||
Receivables | 1,420 | 1,498 | |||||
Other | 753 | 755 | |||||
Total Current Assets | 2,214 | 2,317 | |||||
Property, Plant, and Equipment | 14,510 | 13,998 | |||||
Investments | 3,474 | 3,351 | |||||
Deferred Charges and Other Assets | 11,964 | 12,175 | |||||
Total Assets | $ | 32,162 | $ | 31,841 | |||
Liabilities and Capitalization | |||||||
Current Liabilities: | |||||||
Currently payable long-term debt | $ | 1,668 | $ | 2,043 | |||
Short-term borrowings | 1,213 | 731 | |||||
Accounts payable | 611 | 727 | |||||
Other | 1,773 | 1,952 | |||||
Total Current Liabilities | 5,265 | 5,453 | |||||
Capitalization: | |||||||
Common stockholders' equity | 9,208 | 9,188 | |||||
Preferred stock | 80 | 184 | |||||
Long-term debt and other long-term obligations | 8,760 | 8,155 | |||||
Total Capitalization | 18,048 | 17,527 | |||||
Noncurrent Liabilities | 8,849 | 8,861 | |||||
Total Liabilities and Capitalization | $ | 32,162 | $ | 31,841 |
Adjusted Capitalization (Including Off-Balance Sheet Items) - Rating Agency View | |||||||||||||
As of September 30, | |||||||||||||
2006 | % Total | 2005 | % Total | ||||||||||
Total common equity | $ | 9,208 | 42 | % | $ | 8,828 | 43 | % | |||||
Preferred stock | 80 | 0 | % | 184 | 1 | % | |||||||
Long-term debt* | 9,994 | 46 | % | 10,133 | 49 | % | |||||||
Short-term debt | 1,213 | 6 | % | 247 | 1 | % | |||||||
Off-balance sheet debt equivalents: | |||||||||||||
Sale-leaseback net debt equivalents | 1,255 | 6 | % | 1,321 | 6 | % | |||||||
Total | $ | 21,750 | 100 | % | $ | 20,713 | 100 | % |
GENERAL INFORMATION | Three Months Ended Sept. 30, | Nine Months Ended Sept.30, | |||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
Long-term debt; and common and | |||||||||||||
preferred stock redemptions | $ | (1,185 | ) | $ | (193 | ) | $ | (1,700 | ) | $ | (1,022 | ) | |
New long-term debt issues | $ | 182 | $ | 89 | $ | 1,235 | $ | 334 | |||||
Short-term debt increase (decrease) | $ | 111 | $ | (309 | ) | $ | 482 | $ | 77 | ||||
Capital expenditures | $ | 251 | $ | 294 | $ | 990 | $ | 756 |
* Includes amounts due to be paid within one year and excludes JCP&L securitization debt of $434 million and $269 million in 2006 and 2005 respectively.
Consolidated Report to the Financial Community - 3rd Quarter 2006 7
FirstEnergy Corp.
Financial Statements
(Unaudited)
(In millions)
Condensed Consolidated Statements of Cash Flows | |||||||||||||
Three Months Ended Sept. 30, | Nine Months Ended Sept.30, | ||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
Cash flows from operating activities: | |||||||||||||
Net income | $ | 454 | $ | 332 | $ | 979 | $ | 670 | |||||
Adjustments to reconcile net income to net cash from operating activities: | |||||||||||||
Depreciation, amortization, and deferral of regulatory assets | 244 | 393 | 731 | 1,122 | |||||||||
Deferred purchased power and other costs | (84 | ) | (48 | ) | (323 | ) | (258 | ) | |||||
Deferred income taxes and investment tax credits | 21 | (38 | ) | 53 | 24 | ||||||||
Deferred rents and lease market valuation liability | 51 | 30 | (54 | ) | (71 | ) | |||||||
Prepayment for electric service-education programs | - | - | - | 242 | |||||||||
Cash collateral | (43 | ) | 27 | (98 | ) | 49 | |||||||
Change in working capital and other | 106 | 299 | (45 | ) | 138 | ||||||||
Cash flows provided from operating activities | 749 | 995 | 1,243 | 1,916 | |||||||||
Cash flows used for financing activities | (1,062 | ) | (581 | ) | (444 | ) | (1,049 | ) | |||||
Cash flows used for investing activities | (229 | ) | (324 | ) | (822 | ) | (780 | ) | |||||
Net increase (decrease) in cash and cash equivalents | $ | (542 | ) | $ | 90 | $ | (23 | ) | $ | 87 | |||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2006 | 2005 | Change | 2006 | 2005 | Change | ||||||||||||||
Ohio Regulatory Assets | |||||||||||||||||||
Beginning balance | $ | 1,882 | $ | 2,167 | $ | 1,924 | $ | 2,450 | |||||||||||
Deferral of shopping incentives | - | 77 | $ | (77 | ) | 3 | 180 | $ | (177 | ) | |||||||||
Interest on shopping incentives | 11 | 12 | (1 | ) | 32 | 34 | (2 | ) | |||||||||||
Deferral of MISO costs and interest | 4 | 31 | (27 | ) | 11 | 52 | (41 | ) | |||||||||||
Deferral of RCP distribution reliability costs | 40 | - | 40 | 121 | - | 121 | |||||||||||||
Deferral of RCP fuel costs | 43 | - | 43 | 94 | - | 94 | |||||||||||||
Deferral of other regulatory assets | 1 | 4 | (3 | ) | 7 | 10 | (3 | ) | |||||||||||
Current period deferrals | $ | 99 | $ | 124 | $ | (25 | ) | $ | 268 | $ | 276 | $ | (8 | ) | |||||
Ohio transition costs amortization | $ | (77 | ) | $ | (239 | ) | $ | 162 | $ | (211 | ) | $ | (641 | ) | $ | 430 | |||
Shopping incentives amortization | (34 | ) | - | (34 | ) | (93 | ) | - | (93 | ) | |||||||||
MISO costs amortization | (5 | ) | - | (5 | ) | (15 | ) | - | (15 | ) | |||||||||
Other | (8 | ) | (8 | ) | - | (16 | ) | (41 | ) | 25 | |||||||||
Current period amortization | $ | (124 | ) | $ | (247 | ) | $ | 123 | $ | (335 | ) | $ | (682 | ) | $ | 347 | |||
Ending Balance | $ | 1,857 | $ | 2,044 | $ | 1,857 | $ | 2,044 | |||||||||||
Deferred PJM Costs - Pennsylvania | |||||||||||||||||||
Beginning balance | $ | 57 | $ | - | $ | - | $ | - | |||||||||||
Deferral of PJM transmission costs | 54 | - | $ | 54 | 111 | - | $ | 111 | |||||||||||
Ending Balance | $ | 111 | $ | - | $ | 111 | $ | - | |||||||||||
Deferred Energy Costs - New Jersey | |||||||||||||||||||
Beginning balance | $ | 638 | $ | 518 | $ | 541 | $ | 446 | |||||||||||
Deferral (recovery) of energy costs | (298 | ) | (10 | ) | $ | (288 | ) | (201 | ) | 62 | $ | (263 | ) | ||||||
Ending Balance | $ | 340 | $ | 508 | $ | 340 | $ | 508 |
Consolidated Report to the Financial Community - 3rd Quarter 2006 8
UNUSUAL ITEMS | Three Months Ended September 30, | Nine Months Ended September 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) | - | - | - | 1 | 9 | (8 | ) | ||||||||||||
Total Gain (Loss) on Non-Core Asset Sales | - | - | - | 1 | 17 | (16 | ) | ||||||||||||
PPUC NUG cost reserve for prior year (e) | (10 | ) | - | (10 | ) | (10 | ) | - | (10 | ) | |||||||||
FE Facilities sales/impairment (c)(f) | (1 | ) | - | (1 | ) | (13 | ) | - | (13 | ) | |||||||||
EPA settlement (c) | - | - | - | - | (19 | ) | 19 | ||||||||||||
NRC fine (c) (g) | - | - | - | - | (3 | ) | 3 | ||||||||||||
JCP&L Rate Settlement (h) | - | - | - | - | 28 | (28 | ) | ||||||||||||
JCP&L Arbitration Decision (c) | - | (16 | ) | 16 | - | (16 | ) | 16 | |||||||||||
Total-Pretax Items | (11 | ) | (16 | ) | 5 | (22 | ) | 7 | (29 | ) | |||||||||
Ohio Tax Write-off (i) | - | - | - | - | (71 | ) | 71 | ||||||||||||
EPS Effect | $ | (0.01 | ) | $ | (0.03 | ) | $ | 0.02 | $ | (0.05 | ) | $ | (0.18 | ) | $ | 0.13 | |||
(a) Primarily FE Facilities subs and retail gas operations | (d) Before 1st qtr 2006 tax benefit of $2.5 million | (g) Non-tax deductible | |||||||||||||||||
(b) Before income tax benefit of $12.2 million | (e) Included in "Purchased power expenses" | (h) Included in "Deferral of New Regulatory Assets" | |||||||||||||||||
(c) Included in "Other operating expenses" | (f) Before 3rd qtr 2006 tax benefit of $1.6 million | (i) Included in "Income taxes" |
FirstEnergy Corp.
Statistical Summary
(Unaudited)
ELECTRIC SALES STATISTICS | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
(in millions of kWhs) | 2006 | 2005 | Change | 2006 | 2005 | Change | |||||||||||||
Electric Generation Sales | |||||||||||||||||||
Retail - Regulated | 26,281 | 23,459 | 12.0 | % | 72,878 | 65,178 | 11.8 | % | |||||||||||
Retail - Competitive | 3,442 | 4,130 | -16.7 | % | 8,901 | 10,988 | -19.0 | % | |||||||||||
Total Retail | 29,723 | 27,589 | 7.7 | % | 81,779 | 76,166 | 7.4 | % | |||||||||||
Wholesale | 5,296 | 7,889 | -32.9 | % | 17,279 | 21,484 | -19.6 | % | |||||||||||
Total Electric Generation Sales | 35,019 | 35,478 | -1.3 | % | 99,058 | 97,650 | 1.4 | % | |||||||||||
Electric Distribution Deliveries | |||||||||||||||||||
Ohio - Residential | 4,642 | 4,909 | -5.4 | % | 12,666 | 13,241 | -4.3 | % | |||||||||||
- Commercial | 3,985 | 4,099 | -2.8 | % | 11,145 | 11,476 | -2.9 | % | |||||||||||
- Industrial | 6,111 | 6,094 | 0.3 | % | 17,673 | 17,750 | -0.4 | % | |||||||||||
- Other | 95 | 97 | -2.1 | % | 280 | 290 | -3.4 | % | |||||||||||
Total Ohio | 14,833 | 15,199 | -2.4 | % | 41,764 | 42,757 | -2.3 | % | |||||||||||
Pennsylvania - Residential | 2,987 | 3,055 | -2.2 | % | 8,444 | 8,656 | -2.4 | % | |||||||||||
- Commercial | 2,930 | 2,949 | -0.6 | % | 8,182 | 8,236 | -0.7 | % | |||||||||||
- Industrial | 2,671 | 2,677 | -0.2 | % | 7,845 | 7,882 | -0.5 | % | |||||||||||
- Other | 20 | 20 | 0.0 | % | 62 | 62 | 0.0 | % | |||||||||||
Total Pennsylvania | 8,608 | 8,701 | -1.1 | % | 24,533 | 24,836 | -1.2 | % | |||||||||||
New Jersey - Residential | 3,092 | 3,312 | -6.6 | % | 7,447 | 7,883 | -5.5 | % | |||||||||||
- Commercial | 2,708 | 2,670 | 1.4 | % | 7,204 | 7,196 | 0.1 | % | |||||||||||
- Industrial | 749 | 821 | -8.8 | % | 2,142 | 2,316 | -7.5 | % | |||||||||||
- Other | 22 | 22 | 0.0 | % | 65 | 65 | 0.0 | % | |||||||||||
Total New Jersey | 6,571 | 6,825 | -3.7 | % | 16,858 | 17,460 | -3.4 | % | |||||||||||
Total Residential | 10,721 | 11,276 | -4.9 | % | 28,557 | 29,780 | -4.1 | % | |||||||||||
Total Commercial | 9,623 | 9,718 | -1.0 | % | 26,531 | 26,908 | -1.4 | % | |||||||||||
Total Industrial | 9,531 | 9,592 | -0.6 | % | 27,660 | 27,948 | -1.0 | % | |||||||||||
Total Other | 137 | 139 | -1.4 | % | 407 | 417 | -2.4 | % | |||||||||||
Total Distribution Deliveries | 30,012 | 30,725 | -2.3 | % | 83,155 | 85,053 | -2.2 | % | |||||||||||
Electric Sales Shopped | |||||||||||||||||||
Ohio - Residential | 672 | 2,363 | -71.6 | % | 1,766 | 5,971 | -70.4 | % | |||||||||||
- Commercial | 1,045 | 2,068 | -49.5 | % | 2,910 | 5,634 | -48.3 | % | |||||||||||
- Industrial | 761 | 1,318 | -42.3 | % | 2,204 | 3,718 | -40.7 | % | |||||||||||
Total Ohio | 2,478 | 5,749 | -56.9 | % | 6,880 | 15,323 | -55.1 | % | |||||||||||
Pennsylvania - Residential | - | 6 | -100.0 | % | 1 | 16 | -93.8 | % | |||||||||||
- Commercial | 143 | 18 | 694.4 | % | 1 | 64 | -98.4 | % | |||||||||||
- Industrial | - | 333 | -100.0 | % | 368 | 1,164 | -68.4 | % | |||||||||||
Total Pennsylvania | 143 | 357 | -59.9 | % | 370 | 1,244 | -70.3 | % | |||||||||||
New Jersey - Residential | - | 1 | -100.0 | % | - | 3 | -100.0 | % | |||||||||||
- Commercial | 555 | 526 | 5.5 | % | 1,449 | 1,558 | -7.0 | % | |||||||||||
- Industrial | 555 | 633 | -12.3 | % | 1,578 | 1,747 | -9.7 | % | |||||||||||
Total New Jersey | 1,110 | 1,160 | -4.3 | % | 3,027 | 3,308 | -8.5 | % | |||||||||||
Total Electric Sales Shopped | 3,731 | 7,266 | -48.7 | % | 10,277 | 19,875 | -48.3 | % |
Consolidated Report to the Financial Community - 3rd Quarter 2006 9
Operating Statistics | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||||||||
Capacity Factors: | |||||||||||||||||||
Fossil - Baseload | 86 | % | 90 | % | 90 | % | 89 | % | |||||||||||
Fossil - Load Following | 72 | % | 65 | % | 69 | % | 66 | % | |||||||||||
Peaking | 4 | % | 4 | % | 1 | % | 3 | % | |||||||||||
Nuclear | 97 | % | 99 | % | 88 | % | 82 | % | |||||||||||
Generation Output: | |||||||||||||||||||
Fossil - Baseload | 39 | % | 40 | % | 42 | % | 43 | % | |||||||||||
Fossil - Load Following | 22 | % | 20 | % | 22 | % | 21 | % | |||||||||||
Peaking | 1 | % | 1 | % | 0 | % | 1 | % | |||||||||||
Nuclear | 38 | % | 39 | % | 36 | % | 35 | % | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
WEATHER | 2006 | 2005 | Normal | 2006 | 2005 | Normal | |||||||||||||
Composite Heating-Degree-Days | 92 | 23 | 89 | 3,185 | 3,686 | 3,571 | |||||||||||||
Composite Cooling-Degree-Days | 679 | 843 | 656 | 887 | 1,118 | 908 |
FirstEnergy Corp.
2006 EPS and Cash Flow
(Unaudited)
2006 Earnings Per Share (EPS) | ||||||||||
(Reconciliation of GAAP to Non-GAAP) | ||||||||||
Three Months | Nine Months | Revised | ||||||||
Ended Sept. 30 | Ended Sept. 30 | Guidance | ||||||||
Basic EPS (GAAP basis) | $ | 1.41 | $ | 2.99 | $ | 3.70 - $3.80 | ||||
Excluding Unusual Items: | ||||||||||
Non-Core Asset Sales/Impairments | (0.01 | ) | 0.03 | 0.03 | ||||||
PPUC NUG cost reserve for prior year | 0.02 | 0.02 | 0.02 | |||||||
Basic EPS (Non-GAAP basis) | $ | 1.42 | $ | 3.04 | $ | 3.75 - $3.85 |
Consolidated Report to the Financial Community - 3rd Quarter 2006 10
Reconciliation of September 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 | $ | 979 | ||
Adjustments: | ||||
Depreciation | 445 | |||
Amortization of regulatory assets | 665 | |||
Deferral of new regulatory assets | (268 | ) | ||
Deferral of PJM transmission costs | (111 | ) | ||
Deferred purchased power and other costs | (323 | ) | ||
Deferred income taxes and ITC, net | 53 | |||
Deferred rents and lease market valuation liability | (54 | ) | ||
Cash collateral | (98 | ) | ||
Other, including changes in working capital | (45 | ) | ||
Net Cash from Operating Activities (GAAP) | $ | 1,243 | ||
Other Items: | ||||
Capital expenditures | (870 | ) | ||
Nuclear fuel fabrication | (120 | ) | ||
Contributions to nuclear decommissioning trusts | (11 | ) | ||
Common stock dividends | (439 | ) | ||
Other, net | (4 | ) | ||
Free Cash Flow (Non-GAAP) | $ | (201 | ) | |
Non-core asset sales and other | 76 | |||
JCP&L securitization | 180 | |||
Cash Generation (Non-GAAP) | $ | 55 |
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 - 3rd Quarter 2006 11
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 - $1,240 | |||||
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 | 96 | ||||||
Net Cash from Operating Activities (GAAP) | $ | 2,080 | |||||
Other Items: | |||||||
Capital expenditures | (1,156 | ) | |||||
Nuclear fuel fabrication | (165 | ) | |||||
Common stock dividends | (587 | ) | |||||
Other, net | 26 | ||||||
Free Cash Flow (Non-GAAP) | $ | 198 | |||||
Non-core asset sales | 82 | ||||||
JCP&L securitization | 180 | ||||||
Cash Generation (Non-GAAP) | $ | 460 | |||||
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 - 3rd Quarter 2006 12
RECENT DEVELOPMENTS
Record Generation Output
FirstEnergy set a new year-to-date generation output record of 61.9 million megawatt-hours. The year-to-date output represented a 4.0% increase over the record established in the same period last year.
Beaver Valley Power Station Uprates
In August, Beaver Valley Unit 1 increased its net output capability from 821 megawatts to 846 megawatts. This three percent increase in output is the first phase of its overall eight percent power uprate recently approved by the NRC. The uprate was made possible by improvements to plant equipment and systems completed during its spring refueling outage. The remainder of the eight-percent power uprate is expected to be implemented by early 2007. Similar work is planned for Beaver Valley Unit 2. During its current refueling outage, which began October 2, several modifications will be completed to prepare Beaver Valley Unit 2 for its eight percent increase in generating capacity. After Beaver Valley Unit 2 returns to service, three percent of its uprate is expected to take effect. The balance of the eight percent power output increase is anticipated to be implemented during the next refueling in 2008. Beaver Valley Unit 2 is expected to return to service from its current refueling outage in early to mid-November, 2006.
Met-Ed and Penelec Rate Transition Plan Update
Evidentiary hearings in the Metropolitan Edison Company (Met-Ed) and Pennsylvania Electric Company (Penelec) Rate Transition Plan cases were held from August 24 through August 30. Parties to the proceedings filed their Main Briefs on September 22 and Reply Briefs on October 6. Met-Ed and Penelec anticipate an Administrative Law Judge Recommended Decision in these proceedings by November 8 and an Order from the Pennsylvania Public Utility Commission (PPUC) by January 12, 2007. As part of the transition of customers’ generation service toward market-based supply, Met-Ed and Penelec secured approximately 950 MW of Provider of Last Resort (POLR) supply under a competitive request for proposal (RFP) for the period December 1, 2006 through December 31, 2008. Recovery of the incremental costs of this supply is one of the components of the transition plan cases.
Competitive Electricity Supply for Penn Power
On October 19, the PPUC certified the RFP results for all customer classes reflecting the successful completion of the competitive RFP bidding process. The RFP was conducted to secure the POLR supply for the period January 1, 2007 through May 31, 2008 for those customers that do not choose alternative suppliers.
Ohio Competitive Bid Process Proposal
On September 29, FirstEnergy’s Ohio electric utility companies filed their proposal to establish a competitive bid process for market-based generation supply under which suppliers could submit prices to serve a portion of each Ohio Company’s customer load. This proposal was in response to a July 26 Public Utilities Commission of Ohio (PUCO) directive to file plans for a competitive retail electric service option. The PUCO directive resulted from a May 3 Ohio Supreme Court remand finding that 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 FirstEnergy’s Rate Stabilization Plan. If adopted, customers would have the opportunity to switch to alternative generation suppliers at prices established through the RFP program during 2007 and 2008.
JCP&L Non-Utility Generation Cost Request Case
An evidentiary hearing was held on September 20, and settlement conferences were held in October in the proceeding involving JCP&L’s request to recover $165 million of actual above-market NUG costs incurred from August 1, 2003 through December 31, 2005. If approved, this request would increase cash flow, but would be earnings neutral. Main briefs are scheduled to be filed on October 30, with reply briefs due on November 20. An order by the New Jersey Board of Public Utilities is expected in 2007.
Consolidated Report to the Financial Community - 3rd Quarter 2006 13
Share Repurchase Program
On August 10, FirstEnergy repurchased 10.6 million shares, or approximately 3.2%, of its outstanding common stock through an accelerated repurchase program with an affiliate of J.P. Morgan Securities. The initial purchase price was $56.44 per share, or a total initial purchase price of $600 million. The final purchase price will be adjusted to reflect J.P. Morgan's ultimate cost to acquire the shares over a period of up to seven months. The share repurchase was funded with short-term debt. The share repurchase was completed under a June 20 Board of Directors’ authorization to repurchase up to 12 million shares of common stock.
Renewed and Upsized Credit Facility
On August 24, FirstEnergy and certain of its subsidiaries, including all of its operating utility subsidiaries, entered into a new five-year syndicated credit facility totaling $2.75 billion. The new facility replaces FirstEnergy’s prior $2 billion credit facility and provides a 10 basis point annual savings on facility related borrowing costs. Borrowings from the new facility were used to pay off the outstanding borrowings under the old facility. FirstEnergy may request an increase in the total commitments available under the new facility to a maximum of $3.25 billion. Commitments under the new facility will be available until August 24, 2011, unless the lenders agree, at the request of the Borrowers, to two additional one-year extensions. Generally, borrowings under the facility must be repaid within 364 days. Available amounts for each borrower are subject to a specified sublimit as well as applicable regulatory and other limitations.
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 completion of the share repurchase program announced August 10, 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 - 3rd Quarter 2006 14