FirstEnergy Corp. Financings for the 3rd Quarter of 2005
 

 


SEC File No. 70-10122





UNITED STATES

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, 2005 through September 30, 2005, there were no sales of common stock or preferred securities by FirstEnergy.

(2)  FirstEnergy purchased on the open market 246,763 shares of common stock pursuant to its dividend reinvestment plans and 2,000 shares of restricted stock and zero shares of restricted stock units were granted under employee benefit plans during the third quarter of 2005. The restrictions on restricted stock units lapse over a defined period of time or based on performance. Dividends are received on the restricted stock units and are reinvested in additional shares.

(3)  During the period July 1, 2005 through September 30, 2005, no FirstEnergy common stock was transferred to a seller of securities of a company being acquired.

(4)  During the period July 1, 2005 through September 30, 2005, there was no long-term Debt and Preferred Securities issued by FirstEnergy. FirstEnergy issued the following short-term Debt during the third quarter of 2005:

   
Transaction
Date   
  
Maturity
Date   
  
Rate 
  
Transaction
Amount    
  
KeyBank (FirstEnergy Revolver - $2 Billion 5-Year Facility)
                  
FirstEnergy
   
7/1/2005
    
7/6/2005
7/7/2005
    
3.83
%
$
44,000,000
  
FirstEnergy
   
7/8/2005
    
7/12/2005
    
3.80
%
$
20,000,000
  
FirstEnergy
   
7/11/2005
    
7/12/2005
    
3.83
%
$
18,000,000
  
FirstEnergy
   
7/15/2005
    
7/18/2005
    
3.92
%
$
32,000,000
  
FirstEnergy
   
7/18/2005
    
7/19/2005
    
3.84
%
$
2,000,000
  
FirstEnergy
   
7/20/2005
    
7/21/2005
7/25/2005
7/26/2005
    
3.76
%
$
73,000,000
  
FirstEnergy
   
7/29/2005
    
8/2/2005
    
3.91
%
$
46,000,000
  
FirstEnergy
   
8/1/2005
    
8/2/2005
8/3/2005
    
3.88
%
$
17,500,000
  
FirstEnergy
   
9/1/2005
    
9/2/2005
9/6/2005
    
4.17
%
$
15,000,000
  
FirstEnergy
   
9/20/2005
    
9/21/2005
    
4.22
%
$
32,000,000
  

1
 
(5)  During the period July 1, 2005 through September 30, 2005, the following short-term debt was issued by the Utility Subsidiaries:

   
   Transaction
      Date   
  
   Maturity
     Date   
  
Rate 
  
    Transaction
Amount
  
CitiBank (FirstEnergy Revolver - $2 Billion 5-Year Facility)
                  
Ohio Edison Company (OE)
    
7/1/2005
    
7/11/2005
    
3.80
%
$
30,000,000
  
                           
Union Bank of California (Pennsylvania Electric Company (Penelec) $100 Million Term Loan Facility)
                          
Penelec
    
7/15/2005
    
8/15/2005
    
3.81
%
$
75,000,000
  
Penelec
    
8/15/2005
    
9/15/2005
    
4.00
%
$
75,000,000
  
Penelec
    
9/15/2005
    
10/7/2005
    
4.19
%
$
75,000,000
  

Under the Utility Money Pool, the principal balance of borrowings at the end of the third quarter of 2005 and average interest rate during the third quarter of 2005 are as follows:

Regulated Money Pool
Loan to/(Borrowing from):    
  
Average
Interest Rate
  
Principal     
Balance     
  
           
OE
    
3.5021
%
$
793,126,314
  
Pennsylvania Power Company (Penn)
    
3.5021
%
  
(34,821,229
)
The Cleveland Electric Illuminating Company (CEI)
    
3.5021
%
  
(466,432,871
)
The Toledo Edison Company (TE)
    
3.5021
%
  
(378,072,481
)
American Transmission Systems, Incorporated (ATSI)
    
3.5021
%
  
22,160,179
  
Jersey Central Power & Light Company (JCP&L)
    
3.5021
%
  
(114,932,142
)
Metropolitan Edison Company (Met-Ed)
    
3.5021
%
  
(76,755,046
)
Penelec
    
3.5021
%
  
(114,748,754
)
York Haven Power Company
    
3.5021
%
  
15,792,901
  

(6)  During the third quarter of 2005, there were no financings consummated by any Non-Utility subsidiary that were not exempt under rule 52.

(7)  During the third quarter of 2005, the following guarantees were made by FirstEnergy to support activities of the corporation and its subsidiaries:

Beneficiary
  
Amount
  
Terms
  
Purpose of
Guarantee
  
               
FirstEnergy Solutions Corp. (FES) (Trading - Electric)
              
CMS Energy Resource Mgmt Co.
  
$
7,500,000
    
(a)
 
  
(b)
 
Midwest ISO
    
10,000,000
    
(a)
 
  
(b)
 
PJM Interconnection
    
10,000,000
    
(a)
 
  
(b)
 
                   
FES (Trading - Gas)
                    
Columbia Gulf Transmission Corp
    
2,000,000
    
(a)
 
  
(c)
 
                     
FirstEnergy Generation Corp. (Fuel Marketing / Coal)
                    
Koch Carbon LLC
    
5,000,000
    
(a)
 
  
(d)
 
Ohio Valley Electric Corp.
    
300,000,000
    
(e)
 
  
(f)
 
                     
 
 
2
 
FirstEnergy
      
McKinley Aircraft Holdings Inc.
10,167,137
(g)
(h)
McKinley Aircraft Holdings Inc.
25,100,000
(i)
(h)
McKinley Aircraft Holdings Inc.
6,096,606
(j)
(h)

(a)  
This is a continuing guaranty, with a ten-day termination right by FirstEnergy.
(b)  
Parental guarantees issued by FirstEnergy to provide credit support for electric power purchases by subsidiary.
(c)  
Parental guarantees issued by FirstEnergy to provide credit support for natural gas purchases by subsidiary.
(d)  
Credit backstop to support coal purchases and/or emission trading
(e)  
This guaranty expires December 31, 2026.
(f)  
Credit backstop to support FirstEnergy Generation Corp.’s ownership share in Ohio Valley Electric Corp.
(g)  
This guaranty expires July 10, 2010.
(h)  
Credit backstop for FirstEnergy Corp. airplane lease.
(i)  
This guaranty expires June 30, 2008.
(j)  
This guaranty expires January 5, 2008.

The following Letters of Credits (LOC) were issued during the third quarter of 2005:

Beneficiary
  
Amount   
  
Purpose of
LOC     
  
           
FirstEnergy (on behalf of GPU Service Company)
          
Cologne Reinsurance Company (Dublin) Ltd.
  
$
6,008,976
    
(a)
 
               
GPU Service Company
              
Genesis Insurance Co.
    
3,873,554
    
(a)
 
               
FirstEnergy Facilities Services Group, LLC
              
Old Republic Insurance Company
    
6,876,385
    
(b)
 

(a)  
Renewed Surety Bonds for self-insurance claims. Original LOC was issued in the fourth quarter of 2003.
(b)  
Renewed collateral of FirstEnergy Facilities Services Group, LLC insurance. Original LOC was issued in the third quarter of 2003.

(8)  During the third quarter of 2005, FirstEnergy entered into five forward starting swap agreements in order to hedge a portion of the consolidated interest rate risk associated with the planned issuance of fixed-rate, long-term debt securities for one or more of its consolidated entities in the third and fourth quarters of 2006. These derivatives are treated as cash flow hedges, protecting against the risk of changes in the future interest payments resulting from changes in benchmark U.S. Treasury rates between the date of hedge inception and the date of the debt issuance. The notional amounts, counterparties, and principal terms of the forward starting swap agreements are filed pursuant to request for confidential treatment.

(9)  There were no investments made in any intermediate subsidiary or financing subsidiary during the third quarter of 2005.

(10)  During the third quarter of 2005, FirstEnergy filed the following U-6B-2 Forms:
 
              Company                                                   Filing Date    
  CEI                                                            July 12, 2005
 
3
 
(11)       CEI engaged in jurisdictional financing transactions during the third quarter of 2005. Consolidated balance sheets of CEI for the quarter ended September 30, 2005 are incorporated by reference to CEI’s Form 10-Q Quarterly Report to SEC for the quarter ended September 30, 2005 (File No. 1-2323).
 
(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 of 2005.

FirstEnergy
  
  Amount   
  
  Ratio  
  
Common Equity
  
$
8,827,959
    
44.91
%
Preferred Stock
    
183,719
    
0.93
%
Long-Term Debt
    
10,402,146
    
52.91
%
Short-Term Debt
    
246,505
    
1.25
%
Total Capitalization
  
$
19,660,329
    
100.00
%
               
OE
              
Common Equity
  
$
2,475,088
    
59.39
%
Preferred Stock
    
75,070
    
1.80
%
Long-Term Debt
    
1,372,803
    
32.94
%
Short-Term Debt
    
244,555
    
5.87
%
Total Capitalization
  
$
4,167,516
    
100.00
%
               
CEI
              
Common Equity
  
$
1,943,540
    
43.07
%
Preferred Stock
    
-
    
-
%
Long-Term Debt
    
2,015,436
    
44.66
%
Short-Term Debt
    
553,784
    
12.27
%
Total Capitalization
  
$
4,512,760
    
100.00
%
               
TE
              
Common Equity
  
$
865,338
    
51.22
%
Preferred Stock
    
96,000
    
5.68
%
Long-Term Debt
    
350,023
    
20.72
%
Short-Term Debt
    
378,190
    
22.38
%
Total Capitalization
  
$
1,689,551
    
100.00
%
               
Penn
              
Common Equity
  
$
371,943
    
65.51
%
Preferred Stock
    
14,105
    
2.48
%
Long-Term Debt
    
146,944
    
25.88
%
Short-Term Debt
    
34,821
    
6.13
%
Total Capitalization
  
$
567,813
    
100.00
%
               
JCP&L
              
Common Equity
  
$
3,217,806
    
71.03
%
Preferred Stock
    
12,649
    
0.28
%
Long-Term Debt
    
1,184,523
    
26.15
%
Short-Term Debt
    
114,932
    
2.54
%
Total Capitalization
  
$
4,529,910
    
100.00
%
               
Met-Ed
              
Common Equity
  
$
1,275,103
    
62.32
%
Preferred Stock
    
-
    
-
%
Long-Term Debt
    
694,116
    
33.93
%
Short-Term Debt
    
76,755
    
3.75
%
Total Capitalization
  
$
2,045,974
    
100.00
%
               
Penelec
              
Common Equity
  
$
1,298,303
    
66.00
%
Preferred Stock
    
-
    
-
%
Long-Term Debt
    
478,958
    
24.35
%
Short-Term Debt
    
189,749
    
9.65
%
Total Capitalization
  
$
1,967,010
    
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 third quarter of 2005.

   
FirstEnergy
  
OE     
  
CEI    
  
TE     
  
Balance, December 31, 2004
  
$
1,856,863
  
$
442,198
  
$
553,740
  
$
191,059
  
Net Income
    
670,078
    
235,251
    
164,578
    
50,268
  
Cash Dividends on Preferred Stock
    
-
    
(1,976
)
  
(1,429
)
  
(6,109
)
Cash Dividends on Common Stock
    
(411,507
)
  
(241,000
)
  
(141,000
)
  
(10,000
)
Other
    
-
    
-
    
(1,495
)
  
-
  
Balance, September 30, 2005
  
$
2,115,434
  
$
434,473
  
$
574,394
  
$
225,218
  
                           
   
    
Penn  
    
JCP&L
   
Met-Ed
   
Penelec
 
Balance, December 31, 2004
  
$
87,695
  
$
43,271
  
$
38,966
  
$
46,068
  
Net Income
    
53,753
    
145,008
    
33,144
    
24,852
  
Cash Dividends on Preferred Stock
    
(1,534
)
  
(375
)
  
-
    
-
  
Cash Dividends on Common Stock
    
(8,000
)
  
(83,000
)
  
(44,000
)
  
(32,000
)
Other
    
-
    
-
    
-
    
-
  
Balance, September 30, 2005
  
$
131,914
  
$
104,904
  
$
28,110
  
$
38,920
  


(14)      During the third quarter of 2005, there was no change to any of the credit ratings of FirstEnergy 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 September 30, 2005 is as follows:

   
(In Thousands
  
FirstEnergy Generation Corp.
  
$
1,045,506
  
Termobarranquilla S. A.
    
46,551
  
Aggregate Investment in EWGs
  
$
1,092,057*
  

* 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
  
$
19,660,329
    
5.6
%
Net utility plant
  
$
13,773,219
    
7.9
%
Total consolidated assets
  
$
31,373,219
    
3.5
%
Market value of common equity
  
$
17,191,067
    
6.4
%

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 September 30, 2005 in EWGs, as well as the percentage of equity ownership.
 
 
 
 
 
 
  
FirstEnergy’s Investment at
09/30/05
  
 
FirstEnergy’s
% Equity
 
 
Owners not affiliated with FirstEnergy
  
 Associate Company  
 ($000)*
 
Ownership
  
 Name of Entity
 
Type of Entity
  
                           
Termobarranquilla S.A. (a)
  
$
46,551
    
0
%
  
ABB Energy Ventures, Inc.
    
Foreign
  
               
Lancaster Steel 
    
Foreign
  
 
                
Distral Group
    
Foreign
  
 
                
Corp. Electrica
    
Foreign
  
               
Corp. Electrica
        
               
De la Costa
        
               
Atlantica
        
 
                
Darby Mazzanine
        
               
Holdings, LLC
        
                           
FirstEnergy Generation Corp.
    
1,045,506
    
100
%
  
Not Applicable
    
N/A
  
                           
Total Aggregate Investment in EWGs
  
$
1,092,057
                    
 
      (*)    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. on January 31, 2004. The remaining investment represents outstanding LOCs issued by FirstEnergy.

(17)  FirstEnergy and Subsidiary Companies Consolidated Capitalization Ratios as of September 30, 2005:

   
Amount (000’s)
  
Ratio 
  
Common equity
 
$
8,827,959
    
44.9
%
Preferred stock not subject to mandatory redemption
    
183,719
    
0.9
%
Long-term debt
    
10,402,146
    
52.9
%
Notes payable
    
246,505
    
1.3
%
               
Total capitalization
  
$
19,660,329
    
100.0
%

(18)  Market-to-book ratio of FirstEnergy and Subsidiary Companies common stock as of September 30, 2005:

Closing Market Price per Share
$52.12
Book Value per Share
$26.86
Market-to Book Ratio of Common Stock
194.1%

(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 2005.

(20)  Analysis of Growth in Retained Earnings for FirstEnergy and Subsidiary Companies:

   
(In Thousands)
  
Retained Earnings as of 09/30/05
  
$
2,115,434
  
Retained Earnings as of 12/31/04
    
1,856,863
  
Growth in Retained Earnings
  
$
258,571
  
         

 

6


Analysis of Growth in Retained Earnings:
      
Income contribution from regulated utility companies
  
$
681,458
  
Income contribution from EWGs
    
20,131
  
Income contribution from all other companies
    
85,660
  
FirstEnergy Holding and Service companies
    
(117,171
)
Cash dividends declared on common stock
    
(411,507
)
Growth in Retained Earnings
  
$
258,571
  

(21)  Statements of Operations for the period ended September 30, 2005 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.
     
     
     
November 22, 2005
    
 
By:
     /s/ Harvey L. Wagner
 
          Harvey L. Wagner
    Vice President, Controller
and Chief Accounting Officer
(Principal Accounting Officer)
 

 
8