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 April 1, 2004 through June 30, 2004, there were no sales
of common stock or preferred securities by FirstEnergy.
(2) During the second quarter of 2004, 315,332 shares of common stock were
issuable pursuant to options granted under employee benefit plans and dividend
reinvestment plans.
(3) During the period April 1, 2004 through June 30, 2004, no FirstEnergy
common stock was transferred to a seller of securities of a company being
acquired.
(4) During the period April 1, 2004 through June 30, 2004, there were no
Long-term Debt and Preferred Securities issued by FirstEnergy. FirstEnergy
issued the following Short-term Debt during the second quarter of 2004:
Transaction Maturity Transaction
Date Date Rate Amount Loan Balance
-------- -------- ---- ------------ ------------
CitiBank (FirstEnergy Revolver - 500mm 3 Year Facility)
-------------------------------------------------------
FirstEnergy 4/16/2004 4/23/2004 2.58% $100,000,000.00 $200,000,000.00
FirstEnergy 4/20/2004 4/27/2004 2.58% $50,000,000.00 $250,000,000.00
(5) During the period April 1, 2004 through June 30, 2004, the following
short-term debt was issued by the Utility Subsidiaries:
Transaction Maturity Transaction
Date Date Rate Amount Loan Balance
-------- -------- ---- ------------ ------------
CitiBank (Ohio Edison Company (OE) Revolver)
--------------------------------------------
OE 6/2/2004 6/9/2004 2.25% $50,000,000.00 $50,000,000.00
OE 6/21/2004 6/22/2004 4.13% $20,000,000.00 $20,000,000.00
OE 6/22/2004 6/23/2004 4.13% $5,000,000.00 $5,000,000.00
1
FirstMerit (OE Bi-Lateral Facility)
-----------------------------------
OE 4/2/2004 4/5/2004 1.75 $14,000,000.00 $14,000,000.00
OE 4/9/2004 4/13/2004 1.75 $7,500,000.00 $14,000,000.00
OE 6/21/2004 6/23/2004 1.75 $14,000,000.00 $14,000,000.00
KeyBank (OE Bi-Lateral Facility)
--------------------------------
OE 6/3/2004 6/4/2004 2.00 $2,000,000.00 $2,000,000.00
OE 6/21/2004 6/24/2004 2.00 $20,000,000.00 $20,000,000.00
Under the Utility Money Pool, the principal balance of borrowings at the end of
the second quarter of 2004 and average interest rate during the second quarter
of 2004 are as follows:
Regulated Money Pool Average Principal
Loan to/(Borrowing from): Interest Rate Balance
----------------------------------- ------------- ----------------
OE 1.3862% $ 98,194,725
Pennsylvania Power Company (Penn) 1.3862% (33,710,464)
The Cleveland Electric Illuminating
Company (CEI) 1.3862% (97,417,896)
The Toledo Edison Company (TE) 1.3862% (238,893,199)
American Transmission Systems,
Incorporated (ATSI) 1.3862% 111,509,053
Jersey Central Power & Light
Company (JCP&L) 1.3862% (158,793,303)
Metropolitan Edison Company (Met-Ed) 1.3862% 27,477,270
Pennsylvania Electric Company
(Penelec) 1.3862% (87,916,243)
York Haven Power Company 1.3862% 12,060,565
(6) During the second quarter of 2004, there were no financings consummated by
any Non-Utility subsidiary that were not exempt under rule 52.
(7) During the second 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)
------------------------------------------------------
The Energy Authority $1,000,000 (a) (b)
FES (Trading - Gas)
-------------------
Columbia Gas of Ohio 7,000,000 (a) (b)
(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
2
The following Letters of Credits (LOC) were issued during the second quarter of
2004:
Purpose of
Beneficiary Amount LOC
----------- ------ -----------
Penn
----
US Department of Labor $ 250,000 (a)
Pennsylvania Dept of Environmental
Protection Bureau of Land Recycling &
Waste Management 210,000 (b)
FirstEnergy
-----------
PJM Interconnection, LLC 19,900,000 (c)
Deutsche Bank Trust Company Americas 400,000 (d)
(a) Collateral held for the Pennsylvania employees' Workers Compensation
Program.
(b) Renewed collateral for the Harborcreek Ash Disposal site in Erie,
PA. Original LOC was issued in the fourth quarter 2002.
(c) Collateral for entering into purchase power agreements with PJM.
(d) Renewed collateral for the sale of the Termobarranquilla, S.A.
facilities. Original LOC was issued in the fourth quarter 2003.
(8) During the Second Quarter of 2004, FirstEnergy Corp. entered into seven
(7) transactions designed to hedge the fair value of a portion of its fixed-rate
long-term debt portfolio against decreases in interest rates. The hedge
structures are fixed - for - floating interest rate swaps, 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 and
6-month London Interbank Offering Rates (LIBOR) plus or minus an applicable
spread. The debt instruments being hedged, notional amounts, counterparties, and
principal terms of the fair value hedges are filed pursuant to request for
confidential treatment.
(9) Investments made during the second quarter of 2004 in any intermediate
subsidiary or financing subsidiary are as follows:
Company Investment
------- ----------
(In Thousands $)
Centerior Funding Corp. $53,309
GPU Power, Inc. $16,032*
* Non cash goodwill adjustment relating to income tax reserves.
(10) During the second quarter of 2004 FirstEnergy filed the following U-6B-2
forms:
Company Filling Date
------- ------------
Penelec April 9, 2004
JCP&L April 27, 2004
(11) JCP&L engaged in jurisdictional financing transactions during the second
quarter of 2004. Consolidated balance sheets of JCP&L for the quarter ended June
30, 2004 are incorporated by reference to JCP&L's Form 10-Q Quarterly Report to
SEC for the quarter ended June 30, 2004 (File No. 1-3141).
(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 second quarter 2004.
3
FirstEnergy Amount Ratio
----------- ---------- ------
Common Equity $8,432,963 41.67%
Preferred Stock 335,123 1.66%
Long-Term Debt 11,393,700 56.30%
Short-Term Debt 74,436 0.37%
---------- ------
Total Capitalization $20,236,222 100.00%
---------- ------
OE
--
Common Equity $2,576,620 59.35%
Preferred Stock 100,070 2.30%
Long-Term Debt 1,559,754 35.93%
Short-Term Debt 105,061 2.42%
---------- ------
Total Capitalization $4,341,505 100.00%
---------- ------
CEI
---
Common Equity $1,727,160 40.40%
Preferred Stock 96,404 2.26%
Long-Term Debt 2,333,664 54.59%
Short-Term Debt 117,458 2.75%
---------- ------
Total Capitalization $4,274,686 100.00%
---------- ------
TE
--
Common Equity $773,445 44.24%
Preferred Stock 126,000 7.21%
Long-Term Debt 610,083 34.89%
Short-Term Debt 238,893 13.66%
---------- ------
Total Capitalization $1,748,421 100.00%
---------- ------
Penn
----
Common Equity $244,120 48.93%
Preferred Stock 39,105 7.84%
Long-Term Debt 182,141 36.51%
Short-Term Debt 33,537 6.72%
---------- ------
Total Capitalization $498,903 100.00%
---------- ------
JCP&L
-----
Common Equity $3,176,438 68.81%
Preferred Stock 12,649 0.27%
Long-Term Debt 1,268,408 27.48%
Short-Term Debt 158,793 3.44%
---------- ------
Total Capitalization $4,616,288 100.00%
---------- ------
Met-Ed
------
Common Equity $1,285,212 62.28%
Preferred Stock - - %
Long-Term Debt 778,427 37.72%
Short-Term Debt - - %
---------- ------
Total Capitalization $2,063,639 100.00%
---------- ------
Penelec
-------
Common Equity $1,295,799 65.75%
Preferred Stock - - %
Long-Term Debt 588,867 29.88%
Short-Term Debt 86,146 4.37%
---------- ------
Total Capitalization $1,970,812 100.00%
---------- ------
4
(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 second quarter 2004.
FirstEnergy OE CEI TE
----------- ------ ------- ---------
Balance, December 31, 2003 $1,604,385 $522,934 $494,212 $113,620
Net Income 378,044 163,433 98,200 29,109
Cash Dividends on Preferred Stock - (1,220) (3,496) (4,423)
Cash Dividends on Common Stock (243,786) 171,000) (145,000) -
Other - - - -
---------- -------- -------- --------
Balance, June 30, 2004 $1,738,643 $514,147 $443,916 $138,306
---------- -------- -------- --------
Penn JCP&L Met-Ed Penelec
---- -------- --------- -------
Balance, December 31, 2003 $54,179 $ 22,132 $27,011 $18,038
Net Income 37,614 50,234 24,709 8,708
Cash Dividends on Preferred Stock (1,280) (249) - -
Cash Dividends on Common Stock (23,000) (20,000) (25,000) (5,000)
Other - - - -
------- -------- ------- -------
Balance, June 30, 2004 $67,513 $ 52,117 $26,720 $21,746
------- -------- ------- -------
(14) During the Second Quarter of 2004, there was no change to any of the
credit ratings of FirstEnergy Corp. or any of its subsidiaries by any of the
nationally recognized credit rating agencies.
(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 June 30, 2004 is as
follows:
(In Thousands)
--------------
FE Generation Corp. $ 923,167
Termobarranquilla S. A. 60,400
---------
Aggregate Investment in EWGs $ 983,567*
=========
* Aggregate investment amounts reflected here include LOCs and guarantees, but
do not include any goodwill or other fair value adjustments.
Aggregate Investment as a Percentage of FirstEnergy and Subsidiary Companies:
-----------------------------------------------------------------------------
Total capitalization $ 20,236,222 4.9%
Net utility plant $ 13,301,681 7.4%
Total consolidated assets $ 32,009,600 3.1%
Market value of common equity $ 12,339,175 8.0%
(16) Set forth below is a summary of the direct or indirect investments as
defined in SEC Rule 53(a) by FirstEnergy, as of June 30, 2004 in EWGs, as well
as the percentage of equity ownership.
5
First First Owners not affiliated with
Energy's Energy's % FirstEnergy
Investment Equity ----------------------------
Associate at 06/30/04 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. 923,167 100% Not Applicable N/A
---------
Total Aggregate
Investment in
EWGs $ 983,567
=========
(*) Aggregate investmelected here include LOCs and guarantees, but do not
include any goodwill or other fair value adjustments.
(a) FirstEnergy sold Termobarranquilla S.A. on January 31, 2004. The remaining
investment represents outstanding LOCs issued by FirstEnergy.
(17) FirstEnergy and Subsidiary Companies Consolidated Capitalization Ratios as
of June 30, 2004:
Amount (000's) %
-------------- -----
Common equity $ 8,432,963 41.7
Preferred stock not subject to 335,123 1.6
mandatory redemption
Long-term debt-
Subordinated debentures to
affiliated trusts 103,093 0.5
Other 11,290,607 55.8
Notes payable 74,436 0.4
----------- -----
Total capitalization $ 20,236,222 100.0%
=========== =====
(18) Market-to-book ratio of FirstEnergy and Subsidiary Companies common stock
at June 30, 2004:
Closing Market Price per Share $ 37.41
Book Value per Share $ 25.72
Market-to Book Ratio of Common Stock 145.5%
(19) No new EWG/FUCO project covered by the Modified Rule 53 Test in which
Firstenergy has invested or committed to invest during the second quarter of
2004.
6
(20) Analysis of Growth in Retained Earnings for FirstEnergy and Subsidiary
Companies:
(In Thousands)
--------------
Retained Earnings as of 06/30/04 $1,738,643
Retained Earnings as of 12/31/03 1,604,385
---------
Growth in Retained Earnings $ 134,258
=========
Analysis of Growth in Retained Earnings:
----------------------------------------
Income contribution from regulated utility companies $ 377,553
Income contribution from EWGs 72,078
Income contribution from all other companies 31,797
FirstEnergy Holding and Service companies (103,384)
Cash dividends declared on common stock (243,786)
---------
Growth in Retained Earnings $ 134,258
=========
(21) Statements of Operations for the period ended June 30, 2004 for FirstEnergy
Generation Corp. will be filed separately under a request for confidential
treatment under Rule 104 (b)
7
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.
August 24, 2004
By: /s/ Harvey L. Wagner
------------------------------------
Harvey L. Wagner
Vice President, Controller
and Chief Accounting Officer
(Principal Accounting Officer)
8