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FirstEnergy Solutions Supplied Nearly 81% of Sales in Affiliated Ohio Territories in Third Quarter

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October 27, 2010

FirstEnergy Solutions supplied nearly 81% of retail sales in its affiliated franchised utility territories in Ohio during the third quarter, parent FirstEnergy Corp. announced in reporting third quarter earnings.

That compares to FirstEnergy Solutions serving 78% of sales in its affiliated Ohio territories during the second quarter of 2010, and 65% of such sales a year ago.

Through a combination of POLR, opt-out government aggregation, and direct sales to end users, FirstEnergy Solutions supplied 11,622 GWh of the total 14,395 GWh used by customers at its affiliated Ohio distribution companies. The breakdown was 3,665 GWh POLR sales, 3,714 aggregation sales, and 4,243 GWh direct retail sales.

Non-affiliated third parties accounted for only 2,773 GWh of supply at the FirstEnergy Ohio distribution companies, with such third-party supply split almost evenly between POLR sales and competitive retail sales.

FirstEnergy Solutions also reported that it served 931 GWh of non-aggregation, non-POLR retail sales in Ohio outside of its affiliated service areas. In Pennsylvania, FirstEnergy Solutions served 487 GWh of direct retail sales in its affiliated service areas, and 670 GWh of direct retail sales outside of its affiliated service areas.

A breakdown of FirstEnergy Solutions sales by state and type can be found in FirstEnergy's quarterly report to investors on pages 14-15 of the report. The report, on pages 18-19, also provides a forecast of 2011 sales by type (e.g. POLR, direct) broken out by RTO and affiliated/non-affiliated areas.

"[T]he biggest driver of our strong quarter was the success of our retail strategy, as we continued to move competitive customers away from POLR and into direct sales and government aggregation channels. We are not just selling more megawatt-hours but reducing shopping risk, as well as enhancing our flexibility to structure favorable contracts, and our opportunity to maximize our margins," said Mark Clark, FirstEnergy Corp. CFO.

FirstEnergy Solutions' total retail sales increased by 6,300 GWh, or 45%, versus the year-ago period. This increase contributed $234 million in earnings to parent FirstEnergy Corp.

Clark said that about one-third of the growth in the third quarter came from sales outside of FirstEnergy Solutions' affiliated service territories, with nearly half of direct retail sales coming from outside of the FirstEnergy Ohio franchise area.

Currently, FirstEnergy Solutions has 1.2 million retail customers.

FirstEnergy Solutions disclosed that, in the recent auction for Standard Service Offer supplies at its affiliated Ohio utilities, it won 10 tranches of the one-year product; 7 tranches of the two-year product; and 3 tranches of the three-year product.

A total of 50 tranches were available.

FirstEnergy said that it does not, at this point, contemplate taking any action to acquire SSO tranches from any of the third-party winners.

Overall, FirstEnergy Solutions Corp. reported a net loss of $36.7 million for the quarter, versus net income of $199.7 million a year ago, primarily due to a $292 million impairment charge related to operational changes at certain smaller coal-fired units in response to the continued slow economy, lower demand for electricity, and uncertainty related to proposed new federal environmental regulations.

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