SEC File No. 70-10122
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
CERTIFICATE PURSUANT TO
RULE 24
OF PARTIAL COMPLETION OF
TRANSACTIONS
FirstEnergy Corp.
------------------------------------:
In the matter of :
FirstEnergy Corp. : Certificate Pursuant
: to Rule 24 of Partial
: Completion of
: Transactions
:
SEC File No. 70-10122 :
(Public Utility Holding Company Act :
of 1935) :
------------------------------------
TO THE MEMBERS OF THE SECURITIES AND EXCHANGE COMMISSION:
The undersigned, FirstEnergy Corp. (FirstEnergy) hereby certifies
pursuant to Rule 24 of the Rules and Regulations under the Public Utility
Holding Company Act of 1935 (the Act), that certain of the transactions proposed
in the Applications, as amended, filed in SEC File No. 70-10122 have been
carried out in accordance with the Commission's Order dated June 30, 2003 as
follows:
(1) During the period January 1, 2004 through March 31, 2004, there were no
sales of common stock or preferred securities by FirstEnergy.
(2) During the first quarter of 2004, 3,614,249 shares of common stock were
issuable pursuant to options granted under employee benefit plans and dividend
reinvestment plans.
(3) During the period January 1, 2004 through March 31, 2004, no FirstEnergy
common stock was transferred to a seller of securities of a company being
acquired.
(4) During the period January 1, 2004 through March 31, 2004, there were no
Long-term Debt and Preferred Securities issued by FirstEnergy. FirstEnergy
issued the following Short-term Debt during the first quarter of 2004:
Transaction Maturity Transaction
Date Date Rate Amount Loan Balance
----------- -------- ---- ------------ ------------
CitiBank (FirstEnergy Revolver - 375mm 364 Day Facility)
--------------------------------------------------------
FirstEnergy 1/20/2004 1/21/2004 3.00% $80,000,000.00 $250,000,000.00
CitiBank (FirstEnergy Revolver - 500mm 3 Year Facility)
-------------------------------------------------------
FirstEnergy 1/20/2004 1/27/2004 2.58% $25,000,000.00 $295,000,000.00
FirstEnergy 1/30/2004 2/6/2004 2.58% $50,000,000.00 $295,000,000.00
FirstEnergy 3/1/2004 3/5/2004 2.58% $40,000,000.00 $215,000,000.00
FirstEnergy 3/19/2004 3/22/2004 2.58% $40,000,000.00 $185,000,000.00
FirstEnergy 3/22/2004 3/29/2004 2.58% $110,000,000.00 $295,000,000.00
CitiBank (FirstEnergy Revolver - 375mm 3 year Facility)
-------------------------------------------------------
FirstEnergy 3/25/2004 4/1/2004 2.84% $75,000,000.00 $75,000,000.00
(5) During the period January 1, 2004 through March 31, 2004, the following
short-term debt was issued by the Utility Subsidiaries:
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Transaction Maturity Transaction
Date Date Rate Amount Loan Balance
----------- -------- ---- ------------ ------------
CitiBank (Ohio Edison Company (OE) Revolver)
--------------------------------------------
OE 3/1/2004 3/15/2004 2.18% $60,000,000.00 $60,000,000.00
OE 3/15/2004 3/25/2004 2.30% $70,000,000.00 $130,000,000.00
FirstMerit (OE Bi-Lateral Facility)
-----------------------------------
OE 1/12/2004 1/13/2004 1.75% $14,000,000.00 $14,000,000.00
OE 1/20/2004 1/23/2004 1.75% $14,000,000.00 $14,000,000.00
OE 2/27/2004 3/3/2004 1.81% $7,000,000.00 $7,000,000.00
OE 3/1/2004 3/3/2004 1.81% $7,000,000.00 $7,000,000.00
OE 3/15/2004 3/16/2004 1.81% 14,000,000.00 14,000,000.00
KeyBank (OE Bi-Lateral Facility)
--------------------------------
OE 12/31/2003 1/6/2004 2.00% $3,000,000.00 $3,000,000.00
OE 1/2/2004 1/6/2004 2.03% $5,000,000.00 $5,000,000.00
OE 1/5/2004 1/6/2004 2.02% $12,000,000.00 $12,000,000.00
OE 1/16/2004 1/21/2004 2.00% $4,000,000.00 $4,000,000.00
OE 1/20/2004 1/23/2004 2.03% $18,000,000.00 $18,000,000.00
OE 2/2/2004 2/3/2004 2.02% $18,000,000.00 $18,000,000.00
OE 3/1/2004 3/2/2004 2.06% $10,500,000.00 $10,500,000.00
OE 3/15/2004 3/16/2004 2.05% $6,000,000.00 $6,000,000.00
Under the Utility Money Pool, the principal balance of borrowings at the end of
the first quarter of 2004 and average interest rate during the first quarter of
2004 are as follows:
Regulated Money Pool Average Principal
Loan to/(Borrowing from): Interest Rate Balance
------------------------- ------------- ----------
OE 1.3041% $ 453,365,926
Pennsylvania Power Company (Penn) 1.3041% (40,418,244)
The Cleveland Electric Illuminating
Company (CEI) 1.3041% 2,410,192
The Toledo Edison Company (TE) 1.3041% (262,654,074)
American Transmission Systems,
Incorporated (ATSI) 1.3041% 97,885,223
Jersey Central Power & Light
Company (JCP&L) 1.3041% (151,241,254)
Metropolitan Edison Company (Met-Ed) 1.3041% 114,879,557
Pennsylvania Electric Company
(Penelec) 1.3041% (17,184,644)
York Haven Power Company 1.3041% 11,645,943
(6) During the first quarter of 2004, there were no financings consummated by
any Non-Utility subsidiary that were not exempt under rule 52.
(7) During the first quarter of 2004, the following guarantees were made by
FirstEnergy to support activities of its subsidiaries:
Purpose of
Beneficiary Amount Terms Guarantee
----------- ------ ----- ----------
FirstEnergy Solutions Corp. (FES) (Trading - Electric)
------------------------------------------------------
ACES Power Marketing $50,000 (a) (b)
FES (Trading - Gas)
--------------------
BG LNG Services, LLC 3,000,000 (a) (b)
2
FirstEnergy Generation Corp. (Fuel Marketing / Coal)
----------------------------------------------------
Ceredo Synfuel, LLC 10,000,000 (a) (c)
Peabody Coal Trade 1,000,000 (a) (c)
Met-Ed (Long-term Power Supply)
-------------------------------
Constellation Power Source 7,500,000 (d) (e)
Penelec (Long-term Power Supply)
-------------------------------
Constellation Power Source 7,500,000 (d) (f)
Elliott Lewis Corp.- HVAC
-------------------------
Dept of Housing & Urban Dev. 5,000,000 5 years (g)
(a) Such guarantees are issued for a one-year term, with a ten-day
termination right by FirstEnergy
(b) Parental guarantees issued by FirstEnergy to provide credit support
for electric power and natural gas purchases by subsidiary
(c) Credit backstop to support coal purchases and emission trading
(d) Expires on December 31, 2010.
(e) Parental guaranty issued by FirstEnergy to support the long-term
power purchase by Metropolitan Edison Company from Constellation.
(f) Parental guaranty issued by FirstEnergy to support the long-term
power purchase by Pennsylvania Electric Company from Constellation.
(g) Credit backstop to support Elliott Lewis in a commercial facilities
management services contract.
The following Letters of Credits (LOC) were issued during the first quarter of
2004:
Purpose of
Beneficiary Amount LOC
----------- ------ -----------
FES
---
Nicor Gas $ 100,000 (a)
FirstEnergy
-----------
Travels Casualty and Surety Co.
of America 18,000,000 (b)
(a) Pledge security for participation in the Nicor Gas transportation
territory. Amount reduced from $720,000 to $100,000 in the first
quarter of 2004.
(b) Replaces Surety Bonds on self-insurance coverage due to rating
agency changes.
(8) During the First Quarter of 2004, FirstEnergy Corp. entered into one (1)
transaction designed to hedge the fair value of a portion of its fixed-rate
long-term debt portfolio against decreases in interest rates. The hedge
structure is a fixed - for - floating interest rate swap, whereby FirstEnergy
Corp. will receive fixed payments equivalent to the fixed coupon rate of the
bond being hedged, and pay floating rate payments based on the 3-month London
Interbank Offering Rate (LIBOR) plus or minus an applicable spread. The debt
instrument being hedged, notional amount, counterparty, and principal terms of
the fair value hedge are filed pursuant to request for confidential treatment.
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(9) There were no investments made during the first quarter of 2004 in any
intermediate subsidiary or financing subsidiary.
(10) There were no U-6B-2 filed during the first quarter of 2004.
(11) Met-Ed and Penelec engaged in jurisdictional financing transactions during
the first quarter of 2004. Consolidated balance sheets of Met-Ed and Penelec for
the quarter ended March 31, 2004 are incorporated by reference to Met-Ed's and
Penelec's Form 10-Q Quarterly Report to SEC for the quarter ended March 31, 2004
(File No. 1-446 and 1-3522, respectively).
(12) The following table presented in thousands, provides the capital structure
of FirstEnergy on a consolidated basis and each Utility Subsidiary as of the end
of the first quarter 2004.
FirstEnergy Amount Ratio
----------- ---------- -----
Common Equity $8,344,723 40.31%
Preferred Stock 335,123 1.62%
Long-Term Debt 11,886,804 57.42%
Short-Term Debt 133,999 0.65%
---------- ------
Total Capitalization $20,700,649 100.00%
---------- ------
OE
--
Common Equity $2,607,538 58.00%
Preferred Stock 100,070 2.23%
Long-Term Debt 1,588,890 35.34%
Short-Term Debt 199,216 4.43%
---------- ------
Total Capitalization $4,495,714 100.00%
---------- ------
CEI
---
Common Equity $1,775,311 42.05%
Preferred Stock 96,404 2.28%
Long-Term Debt 2,334,493 55.29%
Short-Term Debt 16,203 0.38%
---------- ------
Total Capitalization $4,222,411 100.00%
---------- ------
TE
--
Common Equity $758,192 43.14%
Preferred Stock 126,000 7.17%
Long-Term Debt 610,545 34.74%
Short-Term Debt 262,654 14.95%
---------- ------
Total Capitalization $1,757,391 100.00%
---------- ------
Penn
----
Common Equity $241,816 47.98%
Preferred Stock 39,105 7.76%
Long-Term Debt 182,621 36.24%
Short-Term Debt 40,418 8.02%
---------- ------
Total Capitalization $503,960 100.00%
---------- ------
4
JCP&L
-----
Common Equity $3,162,229 68.84%
Preferred Stock 12,649 0.28%
Long-Term Debt 1,267,345 27.59%
Short-Term Debt 151,241 3.29%
---------- ------
Total Capitalization $4,593,464 100.00%
---------- ------
Met-Ed
------
Common Equity $1,302,464 59.83%
Preferred Stock - - %
Long-Term Debt 874,515 40.17%
Short-Term Debt - - %
---------- ------
Total Capitalization $2,176,979 100.00%
---------- ------
Penelec
-------
Common Equity $1,302,996 64.06%
Preferred Stock - - %
Long-Term Debt 713,860 35.10%
Short-Term Debt 17,185 0.84%
---------- ------
Total Capitalization $2,034,041 100.00%
---------- ------
(13) The following table presented in thousands provides retained earnings
analysis of FirstEnergy on a consolidated basis and each Utility Subsidiary as
of the end of the first quarter 2004.
FirstEnergy OE CEI TE
----------- ------ -------- --------
Balance, December 31, 2003 $1,604,385 $522,934 $494,212 $113,620
Net Income 173,999 76,093 48,475 7,531
Cash Dividends on Preferred Stock - (561) (1,743) (2,211)
Cash Dividends on Common Stock (122,465) (54,000) (55,000) -
Other - - - -
---------- -------- -------- --------
Balance, March 31, 2004 $1,655,919 $544,466 $485,944 $118,940
---------- -------- -------- -------
Penn JCP&L Met-Ed Penelec
------- ------- ------ --------
Balance, December 31, 2003 $54,179 $22,132 $27,011 $18,038
Net Income 19,670 13,398 18,044 5,659
Cash Dividends on Preferred Stock (640) (124) - -
Cash Dividends on Common Stock (8,000) (5,000) (5,000) -
Other - - - -
------- ------- ------- -------
Balance, March 31, 2004 $65,209 $30,406 $40,055 $23,697
------- ------- ------- -------
(14) On February 6, 2004, Moody's downgraded FirstEnergy senior unsecured debt
to Baa3 from Baa2 and downgraded the senior secured debt of JCP&L, Met-Ed and
Penelec to Baa1 from A2. Moody's also downgraded the preferred stock rating of
JCP&L to Ba1 from Baa2 and the senior unsecured rating of Penelec to Baa2 from
A2. The ratings of OE, CEI, TE and Penn were confirmed. A complete list of
Moody's ratings actions follows:
The ratings of the following issuers were downgraded:
FirstEnergy Corp - senior unsecured and Issuer Rating to Baa3 from Baa2
Jersey Central Power & Light Company - senior secured rating to Baa1
from A2, Issuer Rating to Baa2 from A3, and Preferred Stock rating to
Ba1 from Baa2
5
Metropolitan Edison Company - senior secured rating to Baa1 from A2,
Senior Secured Shelf to (P)Baa1 from (P)A2, Issuer Rating to Baa2 from
A3, and Preferred Shelf to (P)Ba1 from (P)Baa2
Pennsylvania Electric Company - senior secured rating to Baa1 from A2,
senior unsecured rating to Baa2 from A2, and Issuer Rating to Baa2 from
A3
The ratings of the following FirstEnergy subsidiaries and affiliates were
confirmed:
Ohio Edison Company - senior secured Baa1, senior secured shelf
(P)Baa1, Issuer Rating Baa2, Preferred Stock Ba1
Cleveland Electric Illuminating Company - senior secured rating Baa2,
Issuer Rating Baa3, Preferred Stock Ba2
Toledo Edison Company - Senior Secured Baa2, Issuer Rating Baa3,
Preferred Stock Ba2
Pennsylvania Power Company - senior secured Baa1, senior secured shelf
(P)Baa1, Issuer Rating Baa2, Preferred Stock Ba1
PNPP II Funding Corp. - Backed Senior Secured Baa2
BVPS II Funding Corp. - Backed Senior Secured Baa2
CTC Beaver Valley Funding Corp. - Backed Senior Secured Baa3
CTC Mansfield Funding Corp. - Backed Senior Secured Baa3
Beaver Valley II Funding Corp. - Backed Senior Secured Baa3
(15) FirstEnergy's aggregate investment includes all amounts invested,
or commitments to be invested, in exempt wholesale generators (EWGs),
for which there is recourse, directly or indirectly, to the registered
holding company. Accordingly, FirstEnergy's aggregate investment as of
March 31, 2004 is as follows:
(In Thousands)
--------------
FE Generation Corp. $ 906,184
Termobarranquilla S. A. 60,400
---------
Aggregate Investment in EWGs $ 966,584*
=========
* Aggregate investment amounts reflected here include LOCs and guarantees, but
do not include any goodwill or other fair value adjustments.
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Aggregate Investment as a Percentage of FirstEnergy and Subsidiary Companies:
----------------------------------------------------------------------------
Total capitalization $ 20,700,649 4.7%
Net utility plant $ 13,259,146 7.3%
Total consolidated assets $ 32,584,536 3.0%
Market value of common equity $ 12,890,002 7.5%
(16) Set forth below is a summary of the direct or indirect investments as
defined in SEC Rule 53(a) by FirstEnergy, as of March 31, 2004 in EWGs, as well
as the percentage of equity ownership.
First First Owners not affiliated with
Energy's Energy's % FirstEnergy
Investment Equity -----------------------------
Associate at 03/31/04 Owner- Type of
Company ($000)* ship Name of Entity Entity
--------- ---------- ------- --------------- ------
Termobarranquilla 60,400 0% ABB Energy Foreign
S.A. (a) Ventures, Inc.
Lancaster Steel Foreign
Distral Group Foreign
Corp. Electrica Foreign
De la Costa
Atlantica
Darby Mazzanine
Holdings, LLC
FE Generation
Corp. 906,184 100% Not Applicable N/A
---------
Total Aggregate
Investment in
EWGs $ 966,584
=========
(*) Aggregate investment amounts reflected here include LOCs and guarantees,
but do not include any goodwill or other fair value adjustments.
(a) FirstEnergy sold Termobarranquilla S.A.; Barranquilla Lease Holding, Inc.;
Los Amigos Leasing Company, Ltd.; EI Barranquilla, Inc.; EI International
and GPUI Colombia, Ltda. to Darby Delaware Mezzanine Holdings L.L.C. on
January 31, 2004. The remaining investment represents outstanding LOCs
issued by FirstEnergy. In addition, FirstEnergy sold Midlands Domestic
Electricity plc on January 16, 2004.
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(17) FirstEnergy and Subsidiary Companies Consolidated Capitalization Ratios as
of March 31, 2004:
Amount (000's) %
-------------- ----
Common equity $ 8,344,723 40.3
Preferred stock not subject to 335,123 1.6
mandatory redemption
Long-term debt-
Preferred stock subject to
mandatory redemption * 18,513 0.1
Subordinated debentures to
affiliated trusts** 198,667 1.0
Other 11,669,624 56.3
Notes payable 133,999 0.7
----------- -----
Total capitalization $ 20,700,649 100.0%
=========== =====
* Effective July 1, 2003 with the adoption of SFAS 150 "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity",
preferred stock subject to mandatory redemptions were reclassified as long-term
debt.
** Effective in December 2003 with the adoption of FIN 46R, "Consolidation of
Variable Interest Entities, and Interpretation of ARB No. 51", certain business
trusts and their trust preferred securities previously reported by FirstEnergy
in its consolidated financial statements have been deconsolidated and
FirstEnergy began reporting the related subordinated debentures to those trusts
in its consolidated financial statements.
(18) Market-to-book ratio of FirstEnergy and Subsidiary Companies common stock
at March 31, 2004:
Closing Market Price per Share $ 39.08
Book Value per Share $ 25.46
Market-to Book Ratio of Common Stock 153.5%
(19) No new EWG/FUCO project covered by the Modified Rule 53 Test in which
Firstenergy has invested or committed to invest during the first quarter of
2004.
(20) Analysis of Growth in Retained Earnings for FirstEnergy and Subsidiary
Companies:
(In Thousands)
--------------
Retained Earnings as of 03/31/04 $1,655,919
Retained Earnings as of 12/31/03 1,604,385
----------
Growth in Retained Earnings $ 51,534
==========
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Analysis of Growth in Retained Earnings:
----------------------------------------
Income contribution from regulated utility companies $ 167,295
Income contribution from EWGs 30,298
Income contribution from all other companies 20,625
FirstEnergy Holding and Service companies (44,219)
Cash dividends declared on common stock (122,465)
---------
Growth in Retained Earnings $ 51,534
=========
(21) Statements of Operations for the period ended March 31, 2004 for
FirstEnergy Generation Corp. will be filed separately under a request for
confidential treatment under Rule 104 (b)
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SIGNATURE
The undersigned registered holding company has duly caused this quarterly
report to be signed on its behalf by the undersigned officer thereunto duly
authorized pursuant to the requirements of the Public Utility Holding Company
Act of 1935.
FIRSTENERGY CORP.
May 26, 2004
By: /s/ Harvey L. Wagner
------------------------------------
Harvey L. Wagner
Vice President, Controller
and Chief Accounting Officer
(Principal Accounting Officer)
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