Challenges Facing Nuclear Operatoring Plants Today Paul Harden Sr VP & Chief Operating Officer FirstEnergy Nuclear Operating Company January 2018 EnergySolutions 16th Annual Conference & Training Session Meeting Location • Date

The Markets for Electricity EnergySolutions 16th Annual Conference & Training Session January 30, 2018

Regional Transmission Organizations (RTOs) About 60% of U.S. power supply is managed by RTOs Independent, membership-based, nonprofit organizations Ensure transmission reliability and optimize supply and demand bids for wholesale energy and capacity markets Independent Electricity System Operator Midcontinent ISO EnergySolutions 16th Annual Conference & Training Session January 30, 2018 Electricity Markets, Fuel Source Diversity and Innovation to Support Grid Reliability Case Western Reserve University • September 2, 2014

Restructuring Map EnergySolutions 16th Annual Conference & Training Session January 30, 2018

U.S Electricity Generation Fuel Sources* In April 2015, natural gas overtook coal as top fuel for electricity generation for the first time ever at U.S. generating stations with 31% gas, 30% coal and 20% nuclear** *Source: U.S. Energy Information Administration ** Source: New York Times, July 13, 2015, with data from U.S. Dept. of Energy EnergySolutions 16th Annual Conference & Training Session January 30, 2018

Available Generating Capacity Markets forecasts point to continued over supply of generation *Source: U.S. Energy Information Administration EnergySolutions 16th Annual Conference & Training Session January 30, 2018

Natural Gas Forwards (as of 1/19/18) Historical forwards always showed upward price expectations but are now relatively flat EnergySolutions 16th Annual Conference & Training Session January 30, 2018

Market Conditions 2018 - 2019 2017 - 2018 2016 - 2017 2019 - 2020 2020 - 2021 2016 - 2017 Cleared capacity prices have declined from $165/MWd in 2018/2019 to $77/MWd in 2020/2021 planning years Data: Forward energy prices are the average, AD Hub around-the-clock price forwards as of each date in the periods above EnergySolutions 16th Annual Conference & Training Session January 30, 2018 Meeting Name Location • Date

Market Conditions | Forward Energy Prices The forward trendline suggests that energy prices will remain at currently depressed levels through 2021 EnergySolutions 16th Annual Conference & Training Session January 30, 2018 Meeting Name Location • Date

Market Effects on Nuclear Operators EnergySolutions 16th Annual Conference & Training Session January 30, 2018

Nuclear Units Under Stress Nuclear facing competition from renewables, low-priced natural gas Natural gas plants or renewables setting the market price for electricity Renewables can be profitable at negative market prices due to tax subsidies Flat demand growth for electricity & rising generating capacity Suppresses electricity market prices Reactors at risk of premature shutdown despite safe and efficient operations Nuclear plants in competitive markets face the greatest near term risk exposure Some nuclear plants facing challenges in regulated markets as well EnergySolutions 16th Annual Conference & Training Session January 30, 2018

Cash Flow | Illustrative Example ($ per MWh) 1000 MWe Plant Coal Nuclear CC Gas Revenue per MWh1 $23 $33 $30.2 Fuel 26 7 24 O&M 16 21 3 CapEx 4 5 1 Costs per MWh2 $47 $34 $28 1 Assuming energy and capacity prices of $27/MWh and $77/MWd with industry average capacity factors of 60% for coal, 92% for nuclear & 87% for gas 2 Average cost data from U.S. Energy Information Administration Even ignoring market impacts from renewables, gas can set an unsustainable price for coal & nuclear EnergySolutions 16th Annual Conference & Training Session January 30, 2018 Meeting Name Location • Date

Nuclear Plants Closing in Restructured States Nuclear plant that has closed / announced closure Nuclear plant seeking / received assistance Operational nuclear plant Restructured state EnergySolutions 16th Annual Conference & Training Session January 30, 2018

Nuclear Plants Are Closing Prematurely Location MW License Expiration Premature Closing Date Reason for Closure Kewaunee Wisconsin (MISO) 556 2033 2013 PPA ended, low energy and capacity prices Vermont Yankee Vermont (ISO-NE) 620 2032 2014 Low energy and capacity prices Fort Calhoun Nebraska 478 December 2016 Cheaper to purchase elsewhere FitzPatrick New York (NYISO) 838 2034 February 2017* Ginna 610 2029 March 2017 * Clinton Illinois (MISO) 1,098 2026 May 2017** Quad Cities Illinois (PJM) 1,880 May 2018** Palisades Michigan (MISO) 800 2031 2022 Upon PPA termination; cheaper to purchase elsewhere Pilgrim Massachusetts (ISO-NE) 690 May 2019 Indian Point 2,080 2035 (renewal pending) April 2021 Low energy prices, public opposition Perry Ohio (PJM) 1,260 2026 (eligible for license renewal) TBD FirstEnergy publicly stated its intention in Nov. 2016 to be a fully regulated company; all of its competitive generation including the nuclear plants will either be placed in a regulated-like construct, sold or closed Davis-Besse 900 2037 Beaver Valley Pennsylvania (PJM) 1,800 2036 / 2047 Three Mile Island 1 803 September 2019 “U.S. Nuclear Plant Closures”, Power Magazine June 25, 2016 http://www.powermag.com/u-s-nuclear-power-plant-closures-slideshow/ Kewaunee, Vermont Yankee, Fort Calhoun, FitzPatrick, Clinton, Pilgrim, Quad Cities, Oyster Creek “Palisades Nuclear Plant Closing Shocks Many in South Haven Area”, Mlive December 9, 2016 http://www.mlive.com/news/kalamazoo/index.ssf/2016/12/palisades_reaction.html Palisades “Ginna Nuclear Power Plant Gets a Lifeline”, Power Magazine, February 18, 2015 http://www.powermag.com/ginna-nuclear-power-plant-gets-a-lifeline/ Ginna Entergy Press Release, January 9, 2017 http://www.entergynewsroom.com/latest-news/entergy-ny-officials-agree-indian-point-closure-2020-2021/ * FitzPatrick and Ginna closures were announced, however recent actions by the New York State Public Service Commission will provide additional compensation to the plants allowing for their continued operation ** Clinton and Quad Cities closures were announced, however the Illinois legislature passed SB 2814, providing additional compensation and allowing for their continued operation EnergySolutions 16th Annual Conference & Training Session January 30, 2018 Meeting Name Location • Date

What, if anything, will alter the course? Federal Policy? Unlikely in near term State Policy? Yes, so far in New York Illinois Connecticut But waiting to see in Ohio New Jersey Others? EnergySolutions 16th Annual Conference & Training Session January 30, 2018

Thank You! EnergySolutions 16th Annual Conference & Training Session January 30, 2018