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 July 1, 2003 through September 30, 2003, there were
32,200,000 common shares issued and no Preferred Securities issued by
FirstEnergy.
(2) FirstEnergy issued 430,969 shares of common stock pursuant to options
granted under employee benefit plans and dividend reinvestment plans during the
third quarter of 2003.
(3) During the period July 1, 2003 through September 30, 2003, no FirstEnergy
common stock was transferred to a seller of securities of a company being
acquired.
(4) During the period July 1, 2003 through September 30, 2003, there were no
Long-term Debt and Preferred Securities issued by FirstEnergy. FirstEnergy
issued the following Short-term Debt during the third quarter of 2003:
Transaction Maturity Transaction
Date Date Rate Amount Loan Balance
-------- -------- ---- ------------ ------------
CitiBank (FirstEnergy Revolver)
-------------------------------
FirstEnergy 6/17/2003 7/1/2003 2.38 $130,000,000.00 $130,120,069.44
FirstEnergy 6/5/2003 7/7/2003 2.55 $335,000,000.00 $335,759,333.33
FirstEnergy 6/30/2003 7/7/2003 2.31 $185,000,000.00 $185,083,185.76
FirstEnergy 7/2/2003 7/3/2003 4.18 $12,000,000.00 $12,001,372.60
FirstEnergy 7/3/2003 7/7/2003 4.18 $36,000,000.00 $36,016,471.23
FirstEnergy 7/1/2003 7/8/2003 2.31 $130,000,000.00 $130,058,454.86
FirstEnergy 7/7/2003 7/8/2003 4.18 $22,000,000.00 $22,002,516.44
FirstEnergy 6/27/2003 7/11/2003 2.24 $405,000,000.00 $405,352,406.25
FirstEnergy 7/2/2003 7/14/2003 2.30 $45,000,000.00 $45,034,500.00
FirstEnergy 7/11/2003 7/18/2003 2.30 $405,000,000.00 $405,181,125.00
FirstEnergy 7/7/2003 7/21/2003 2.30 $335,000,000.00 $335,299,638.89
FirstEnergy 6/23/2003 7/23/2003 2.19 $110,000,000.00 $110,200,520.83
FirstEnergy 6/30/2003 7/23/2003 2.30 $65,000,000.00 $65,095,513.89
FirstEnergy 6/25/2003 7/25/2003 2.24 $50,000,000.00 $50,093,229.17
FirstEnergy 7/7/2003 7/28/2003 2.25 $185,000,000.00 $185,242,812.50
FirstEnergy 7/18/2003 8/1/2003 2.30 $405,000,000.00 $405,362,250.00
FirstEnergy 7/23/2003 8/6/2003 2.25 $95,000,000.00 $95,083,125.00
FirstEnergy 7/8/2003 8/7/2003 2.25 $130,000,000.00 $130,243,750.00
FirstEnergy 7/28/2003 8/11/2003 2.25 $185,000,000.00 $185,161,875.00
FirstEnergy 7/23/2003 8/13/2003 2.30 $65,000,000.00 $65,087,208.33
FirstEnergy 7/21/2003 8/20/2003 2.30 $420,000,000.00 $420,805,000.00
FirstEnergy 8/1/2003 9/2/2003 2.30 $355,000,000.00 $355,725,777.78
FirstEnergy 8/6/2003 9/12/2003 2.38 $95,000,000.00 $95,231,892.36
FirstEnergy 8/7/2003 9/19/2003 2.38 $130,000,000.00 $130,368,784.72
FirstEnergy 8/13/2003 9/19/2003 2.30 $65,000,000.00 $65,153,652.78
FirstEnergy 8/20/2003 9/19/2003 2.30 $420,000,000.00 $420,805,000.00
FirstEnergy 9/2/2003 9/19/2003 2.30 $355,000,000.00 $355,385,569.44
1
(5) During the period July 1, 2003 through September 30, 2003, 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 8/1/2003 9/2/2003 2.30 $250,000,000.00 $250,511,111.11
OE 9/2/2003 10/2/2003 2.30 $250,000,000.00 $250,479,166.67
CitiBank (The Toledo Edison Company (TE) Revolver)
--------------------------------------------------
TE 7/18/2003 8/18/2003 2.48 $70,000,000.00 $70,149,187.50
TE 8/18/2003 11/18/2003 2.56 $70,000,000.00 $70,458,402.78
Under the Utility Money Pool, the principal balance of borrowings at the end of
the third quarter of 2003 and average interest rate during the third quarter of
2003 are as follows:
Regulated Money Pool Average Principal
Loan to/(from): Interest Rate Balance
-------------------- ------------- ---------
OE 1.4064% $1,020,012,662
Pennsylvania Power Company (Penn) 1.4064% (2,619,352)
The Cleveland Electric Illuminating
Company (CEI) 1.4064% (82,639,233)
TE 1.4064% (263,008 755)
American Transmission Systems,
Incorporated (ATSI) 1.4064% 62,020,420
Jersey Central Power & Light
Company (JCP&L) 1.4064% (228,832,128)
Metropolitan Edison Company (Met-Ed) 1.4064% (25,501,458)
Pennsylvania Electric Company
(Penelec) 1.4064% (41,846,993)
York Haven Power Company 1.4064% 9,959,740
(6) During the third quarter of 2003, there were no financings consummated by
any Non-Utility subsidiary that were not exempt under rule 52.
(7) During the third quarter of 2003, the following guarantees were made by
FirstEnergy to support activities of its subsidiary including FirstEnergy
Solutions Corp. (FES):
2
Purpose of
Beneficiary Amount Terms Guarantee
----------- ------ ----- ----------
FES (Trading - Electric)
------------------------
Energy USA -TPC Corp. 1,000,000 (a) (b)
J. Aron & Company 7,500,000 (a) (b)
TransAlta Energy Marketing 2,000,000 (a) (b)
WPS Energy Services 1,000,000 (a) (b)
FES (Trading - Gas)
-------------------
Atlas Resources 5,000,000 (a) (b)
Columbia Gas Transmission 1,500,000 (a) (b)
Connective Energy Supply 1,000,000 (a) (b)
Michigan Consolidated Gas 3,000,000 (a) (b)
Paribas Bank 5,000,000 (a) (b)
PSEG Energy Resources 5,000,000 (a) (b)
FES - Retail
------------
American Electric Power 2,400,000 (a) (c)
Detroit Edison 1,000,000 (a) (c)
Public Service Electric & Gas 895,000 (a) (c)
FirstEnergy - Supply Chain
--------------------------
AT&T 730,000 (a) (d)
(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 requirement in non-FirstEnergy service territories
(d) Credit backstop for vendor agreement with AT&T
The following Letters of Credits (LOC) were issued during the third quarter of
2003:
Purpose of
Beneficiary Amount LOC
----------- ------ --------
FES
---
Cincinnati Gas & Electric Company $ 5,500,000 (a)
FirstEnergy Facilities Services Group, LLC
------------------------------------------
Old Republic Insurance Company 11,653,434 (b)
Penn
----
Pennsylvania Dept. of Environmental
Protection Bureau of Land Recycling &
Waste Management 11,454,222 (c)
FirstEnergy
-----------
PJM Interconnection, LLC 55,400,000 (d)
3
a) Collateral for entering into purchase power agreements with
incinnati Gas & Electric Company.
b) Collateral of FirstEnergy Facilities Services Group, LLC
nsurance.
c) Collateral bond for PA Dept. of EPA for waste management
acility in Green Township, Beaver County, PA.
d) Collateral for entering into purchase power agreements with PJM.
(8) During the Third Quarter of 2003, 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 rates of the
bond being hedged, and pay floating rate payments based on the 6-month London
Interbank Offering Rate (LIBOR) plus an applicable spread. The notional amount,
counterparty, and principal terms of the fair value hedge is filed pursuant to
request for confidential treatment.
(9) Investments made during the third quarter of 2003 in any intermediate
subsidiary or financing subsidiary are as follows:
Company Investment
------- ----------
(In Thousands $)
GPU Diversified Holdings LLC $400
(10) There were no U-6B-2 filed during the third quarter of 2003.
(11) There were no jurisdictional financing transactions during the third
quarter of 2003.
(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 third quarter 2003.
4
FirstEnergy Amount Ratio
----------- ---------- -----
Common Equity $8,111,432 38.69%
Preferred Stock 335,123 1.60%
Long-Term Debt 12,275,850 58.54%
Short-Term Debt 246,084 1.17%
---------- -----
Total Capitalization $20,968,489 100.00%
---------- ------
OE
--
Common Equity $2,634,042 54.58%
Preferred Stock 100,070 2.07%
Long-Term Debt 1,908,246 39.53%
Short-Term Debt 184,525 3.82%
---------- -----
Total Capitalization $4,826,883 100.00%
---------- ------
CEI
---
Common Equity $1,359,063 34.08%
Preferred Stock 96,404 2.42%
Long-Term Debt 2,316,102 58.10%
Short-Term Debt 215,093 5.40%
---------- -----
Total Capitalization $3,986,662 100.00%
---------- ------
TE
--
Common Equity $720,315 38.38%
Preferred Stock 126,000 6.71%
Long-Term Debt 627,215 33.41%
Short-Term Debt 403,695 21.50%
---------- -----
Total Capitalization $1,877,225 100.00%
---------- ------
Penn
----
Common Equity $204,260 42.85%
Preferred Stock 39,105 8.20%
Long-Term Debt 225,062 47.21%
Short-Term Debt 8,290 1.74%
---------- -----
Total Capitalization $476,717 100.00%
---------- ------
JCP&L
-----
Common Equity $3,156,832 66.67%
Preferred Stock 12,649 0.27%
Long-Term Debt 1,277,290 26.98%
Short-Term Debt 287,867 6.08%
---------- -----
Total Capitalization $4,734,638 100.00%
---------- ------
Met-Ed
------
Common Equity $1,295,781 63.08%
Preferred Stock - - %
Long-Term Debt 702,140 34.18%
Short-Term Debt 56,256 2.74%
---------- -----
Total Capitalization $2,054,177 100.00%
---------- ------
Penelec
-------
Common Equity $1,291,461 67.29%
Preferred Stock - - %
Long-Term Debt 562,055 29.29%
Short-Term Debt 65,720 3.42%
---------- -----
Total Capitalization $1,919,236 100.00%
---------- ------
5
(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 third quarter 2003.
FirstEnergy OE CEI TE
----------- ------ ------- --------
Balance, December 31, 2002
(Restated) $1,634,981 $800,021 $262,323 76,978
Net Income 313,333 214,907 134,806 30,189
Cash Dividends on Preferred Stock - (1,977 (5,589) (6,633)
Cash Dividends on Common Stock (330,815) (379,000 - -
Other - - 2,622 5
--------- ------- ------- -------
Balance, September 30, 2003 $1,617,499 $633,951 $394,162 100,539
--------- ------- ------- -------
Penn JCP&L Met-Ed Penelec
---- ----- ------ -------
Balance, December 31, 2002 $50,916 $92,003 $17,841 $32,705
Net Income 26,947 74,401 43,571 17,569
Cash Dividends on Preferred Stock (2,734) (375 - -
Cash Dividends on Common Stock (37,000) (128,000 (27,000) (26,000)
Other - 612 (1) -
------- ------- ------ -------
Balance, September 30, 2003 $ 38,129 $ 38,641 $34,411 $24,274
------- ------- ------ -------
(14) On September 30, 2003, Fitch Ratings lowered the senior unsecured ratings
of FirstEnergy to `BBB-' from `BBB' and lowered or affirmed many of the ratings
of its subsidiary electric utility companies. A complete list of the ratings
actions follows:
FirstEnergy
-----------
--Senior unsecured debt lowered to 'BBB-' from 'BBB'
OE
--
--First mortgage bonds affirmed at 'BBB+'
--Secured notes 'BBB+' (new rating)
--Unsecured notes 'BBB' (new rating)
--Preferred affirmed at 'BBB-'
--Short term debt affirmed at 'F2'
Ohio Water Development Authority (OEC project)
----------------------------------------------
--Secured pollution control revenue bonds affirmed at 'BBB+'
BVPS Funding Corp.
------------------
--Lease obligation bonds (OEC as lessee) affirmed at 'BBB'
PNPP II Funding Corp.
---------------------
--Lease obligation bonds (OEC as lessee) affirmed at 'BBB'
Penn
----
--First mortgage bonds affirmed at 'BBB+'
--Preferred stock affirmed at 'BBB-'
Ohio Air Quality Development Authority (PPC project)
----------------------------------------------------
--Unsecured pollution control revenue bonds affirmed at 'BBB'
CEI
---
--First mortgage bonds lowered to 'BBB-' from 'BBB'
--Secured medium term notes lowered to 'BBB-' from 'BBB'
--Preferred lowered to 'BB-' from 'BB+'
6
Ohio Air Quality Development Authority (CEI project)
----------------------------------------------------
--Unsecured pollution control revenue bonds lowered to 'BB' from 'BBB-'
BV II Funding Corp
------------------
--Lease obligation bonds (CEI and TEC as lessees) lowered to 'BB' from 'BB+'
TE
--
--First mortgage bonds affirmed at 'BBB-'
--Secured medium term notes affirmed at 'BBB-'
--Unsecured notes affirmed at 'BB'
--Preferred lowered to 'BB-' from 'BB'
Ohio Water Development Authority (TEC project)
----------------------------------------------
--Secured pollution control revenue bonds affirmed at 'BBB-'
Met-Ed
------
--First mortgage bonds lowered to 'BBB+ from 'A-'
--Secured notes lowered to 'BBB+ from 'A-'
--Preferred lowered to 'BBB' from 'BBB+'
--Short-term rating lowered to 'F3' from 'F2'
Penelec
-------
--First mortgage bonds lowered to 'BBB+' from 'A-'
--Secured pollution control bonds lowered to 'BBB+' from 'A-'
--Senior unsecured lowered to 'BBB' from 'BBB+'
--Preferred stock lowered to 'BBB-' from 'BBB+'
--Trust preferred lowered to 'BBB-' from 'BBB+'
--Short-term rating lowered to 'F3' from 'F2'
JCP&L
-----
--First mortgage bonds affirmed at 'BBB+'
--Secured medium term notes affirmed at 'BBB+'
--Senior secured notes affirmed at 'BBB+'
--Preferred stock affirmed at 'BBB'
--Short-term debt lowered to 'F3' from 'F2'
The Rating Outlook for all the above securities is Stable.
(15) FirstEnergy's aggregate investment includes all amounts invested, or
commitments to be invested, in foreign utility companies (FUCOs) and exempt
wholesale generators (EWGs), for which there is recourse, directly or
indirectly, to the registered holding company. Accordingly, FirstEnergy's
aggregate investment as of September 30, 2003 is as follows:
7
(In Thousands)
--------------
FUCOs
-----
Midlands Electricity plc $ 64,200
--------
Subtotal 64,200
---------
EWGs
----
FE Generation Corp. $ 851,666
GPU Power, Inc. 145,882
---------
Subtotal 997,548
---------
Aggregate Investment in FUCOs and EWGs $ 1,061,748
=========
Aggregate Investment as a Percentage of FirstEnergy and Subsidiary Companies:
-----------------------------------------------------------------------------
Total capitalization $ 20,968,489 5.1%
Net utility plant $ 12,910,655 8.2%
Total consolidated assets $ 33,494,991 3.2%
Market value of common equity $ 10,521,777 10.1%
(16) Set forth below is a summary of the direct or indirect investments as
defined in SEC Rule 53(a) by FirstEnergy, as of September 30, 2003 in EWGs and
FUCOs, as well as the percentage of equity ownership.
First First Owners not affiliated with
Energy's Energy's % FirstEnergy
FUCO Investment Equity ----------------------------
Associate or at 9/30/03 Owner- Type of
Company EWG ($000)** ship Name of Entity Entity
--------- ---- ----------- ------- --------------- ------
Empresa EWG 39,439* 50.001% AFP Prevision BBV Foreign
Guaracachi S.A. AFP Futuro de Bolivia Foreign
Guaracachi EWG 53,108* 100% Not Applicable N/A
America, Inc.
GPU Power, Inc. EWG 145,882 100% Not Applicable N/A
EI International EWG 1,672* 100% Not Applicable N/A
GPUI Colombia, EWG 1,739* 100% Not Applicable N/A
Ltda.
Midlands FUCO 64,200 20.1% Aquila Sterling Domestic
Holdings LLC
Electricity plc
(Midlands)
Termobarranquilla EWG 74,656* 28.67% ABB Energy Ventures, Foreign
S.A. Inc.
Lancaster Steel Foreign
Distral Group Foreign
Corp. Electrica Foreign
De la Costa
Atlantica
8
First First Owners not affiliated with
Energy's Energy's % FirstEnergy
FUCO Investment Equity ----------------------------
Associate or at 9/30/03 Owner- Type of
Company EWG ($000)** ship Name of Entity Entity
--------- ---- ----------- ------- --------------- ------
EI Barranquilla, EWG 47,370* 100% Not Applicable N/A
Inc.
Barranquilla EWG 48,379* 100% Not Applicable N/A
Lease Holdings,
Inc.
Los Amigos EWG 12* 100% Not Applicable N/A
Leasing Company,
Ltd.
International
Power Advisors,
Inc. EWG 3,962* 100% Not Applicable N/A
FE Generation
Corp. EWG 851,666 100% Not Applicable N/A
----------
Total Aggregate
Investment in
EWGs & FUCOs * $1,061,748
=========
(*) FirstEnergy's aggregate investment does not include the items shown with
asterisks in order to avoid duplication.
(**) Aggregate investment amounts reflected here do not include any goodwill or
other fair value adjustments.
As of September 30, 2003, FirstEnergy also owned, directly or indirectly,
a 100% interest in each of the following EWGs, in which its aggregate investment
did not exceed $10,000: GPU Power Philippines, Inc.
(17) FirstEnergy and Subsidiary Companies Consolidated Capitalization Ratios as
of September 30, 2003:
Amount (000's) %
-------------- -
Common equity $ 8,111,432 38.7
Preferred stock not subject to 335,123 1.6
mandatory redemption
Long-term debt-
Preferred stock subject to
mandatory redemption * 19,266 0.1
Subsidiary-obligated mandatorily
redeemable preferred securities * 284,940 1.3
Other 11,971,644 57.1
Notes payable 246,084 1.2
----------- -----
Total capitalization $ 20,968,489 100.0%
=========== =====
(*) 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 and mandatorily redeemable
preferred securities were reclassified as long-term debt.
9
(18) Market-to-book ratio of FirstEnergy and Subsidiary Companies common stock
at September 30, 2003:
Closing Market Price per Share $ 31.90
Book Value per Share $ 24.78
Market-to Book Ratio of Common Stock 128.7%
(19) No new EWG/FUCO project covered by the Modified Rule 53 Test in which
Firstenergy has invested or committed to invest during the third quarter of
2003.
(20) Analysis of Growth in Retained Earnings for FirstEnergy and Subsidiary
Companies:
(In Thousands)
--------------
Retained Earnings as of 09/30/03 $1,617,499
Retained Earnings as of 12/31/02 * 1,634,981
---------
Decrease in Retained Earnings $ (17,482)
=========
Analysis of Decrease in Retained Earnings:
------------------------------------------
Income contribution from regulated utility companies $ 522,465
Loss from FUCOs/EWGs (34,659)
Income contribution from all other companies (56,160)
FirstEnergy Holding and Service companies (118,312)
Cash dividends declared on common stock (330,816)
--------
Decrease in Retained Earnings $ (17,482)
=========
* Retained Earnings as of 12/31/02 restated per Amendment No. 2 of
FirstEnergy 2002 Form 10-K/A.
(21) Statements of Operations for the period ended September 30, 2003 for the
following Project Parents and Exempt Entities will be filed separately under a
request for confidential treatment under Rule 104 (b):
Termobarranquilla, S.A.
GPUI Colombia, Ltda.
Empresa Guaracachi, S.A.
FirstEnergy Generation Corp.
10
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.
November 25, 2003
By: /s/ Harvey L. Wagner
-------------------------------------
Harvey L. Wagner
Vice President, Controller
and Chief Accounting Officer
(Principal Accounting Officer)
11