Counterbalancing Rising Rates: Managing the Customer Impact – Ohio and Pennsylvania Tom Clark Vice President, Customer Service & Service Area Development 2008 Marketing Executives Conference October 11-14, 2008 Meeting Ohio’s New Energy Efficiency Mandates 2008

Meeting Ohio’s New Energy Efficiency Mandates FirstEnergy Corp. Headquartered in Akron, Ohio Seven electric utility operating companies 5th largest investor-owned electric system in the U.S.based on 4.5 million customers served 18 generating plants; approx. 14,200 MW ATSI: FirstEnergy subsidiary that owns transmission assets within utilities’ service area 14,500 employees Ranked 209 among Fortune 500 companies in 2008 2008 Marketing Executives Conference October 11-14, 2008 Meeting Ohio’s New Energy Efficiency Mandates 2008

FirstEnergy Summary Profile Toledo Edison 313,000 2,300 Ohio Edison 1,040,000 7,000 The Illuminating Co 755,000 1,600 Penelec 589,000 17,600 Penn Power 159,000 1,100 Met-Ed 546,000 3,300 JCP&L 1,087,000 3,200 Total 4,490,000 36,100 Customers* Sq. Miles * As of Dec. 31, 2007 FirstEnergy Service Areas 2008 Marketing Executives Conference October 11-14, 2008 Meeting Ohio’s New Energy Efficiency Mandates 2008

Stable Rates for Illuminating Company, Toledo Edison & Ohio Edison Customers Since 1996 Toledo Edison Since 1996 Ohio Edison Since 1990 2008 Marketing Executives Conference October 11-14, 2008

Electricity Use Increasing for CEI, TE & OE Customers 21% 41% 2008 Marketing Executives Conference October 11-14, 2008

Cost Increases – Last Five Years 107% 109% 176% The cost of the materials utilities must use to deliver the electricity provided customers has skyrocketed during the past five years. * Sources: Handy-Whitman Index of Electric Utility Equipment; Bureau of Labor Statistics Producer Price Index for select components. 2008 Marketing Executives Conference October 11-14, 2008

Ohio Legislation Background Under Ohio’s restructuring law (SB 3), generation rates fixed from 1999-2005 Fixed rates were scheduled to end December 31, 2005, but extended through 2008 under Rate Stabilization Plan SB 221 was a legislative response to: Concerns about sharp increases in electric generation prices seen in states with expiring price caps Desire to encourage alternative energy and energy efficiency Includes mandates for: Renewable Energy: At least 12.5% of total portfolio by 2025, with at least half generated by facilities in Ohio 0.5% from solar by 2025 Energy Efficiency: 0.3% of utility’s average annual kWh sales, increasing to 22.2% by end of 2025 Demand Reduction: 7.75% by 2018 2008 Marketing Executives Conference October 11-14, 2008

Electric Security Plan Customer Benefits Overall averages – differs by rate schedule and customer usage All-electric customers Industrials High / low use residential customers Managed price increases 5.32% in 2009 4.01% in 2010 5.99% in 2011 Modest, managed price increases for most residential customers For OH customers using 750 kWh per month: $0.51 in 2009 – Decrease $3.17 in 2010 – Increase $2.77 in 2011 – Increase 2008 Marketing Executives Conference October 11-14, 2008

Ohio’s New Energy Efficiency Mandate Total Reduction in Electricity Use: From 0.3% in 2009 to 22.2% in 2025 22.2% reduction in current demand is equivalent to Beaver Valley units 1 and 2 2008 Marketing Executives Conference October 11-14, 2008 Meeting Ohio’s New Energy Efficiency Mandates 2008

Energy Efficiency and FirstEnergy: An Overview Objective Adopt cost-effective strategies that enable customers to better manage their energy use while providing the company opportunities to further improve the efficiency of its operations Key Strategies Provide solutions to customers – from controlling energy costs to helping customers better understand billing and payment issues Change customer usage behavior to help achieve sustained energy savings and peak load reduction Design programs so results can be accurately and reliably tracked 2008 Marketing Executives Conference October 11-14, 2008 Meeting Ohio’s New Energy Efficiency Mandates 2008

Win-Win for Customers and Company Benefit through the more efficient use of electricity Company Encourage more efficient use of system by shifting customer demand to off-peak periods and improving operating efficiencies on energy delivery systems 2008 Marketing Executives Conference October 11-14, 2008 Meeting Ohio’s New Energy Efficiency Mandates 2008

Overview of Energy Efficiency Potential Significant efficiency opportunities – from generation to end-use Generation Transmission Distribution End-Use Utilization ~70% loss National Average ~3% loss ~5% loss ~88% loss (incandescent light example) Renewables Fuel Electricity Electricity Electricity 100 ~30 ~29 ~28 Nuclear Coal Source: EPRI 2008 Marketing Executives Conference October 11-14, 2008 Meeting Ohio’s New Energy Efficiency Mandates 2008

Meeting Ohio’s New Energy Efficiency Mandates Load Control Programs Programmable thermostats Installed free to residential customers in Ohio; 10,000 customers by end of 2008 Remote temperature adjustment during periods of high demand 2008 Marketing Executives Conference October 11-14, 2008 Meeting Ohio’s New Energy Efficiency Mandates 2008

Meeting Ohio’s New Energy Efficiency Mandates Customer Education Sustainable energy savings start with customer education Change behaviors through: Energy-saving tips: online and print Energy efficiency seminars Customer energy inventory audits Weatherization for low-income households Online Energy Calculator and other Web-based tools Feedback through customer research 2008 Marketing Executives Conference October 11-14, 2008 Meeting Ohio’s New Energy Efficiency Mandates 2008

Pennsylvania: Met-Ed/Penelec Voluntary Pre-Payment Plan Up to 9.6% of bill Pre-payments would earn 7.5% interest Set to begin in 2009, would reduce 2011-2012 bills 2008 Marketing Executives Conference October 11-14, 2008

It All Comes Back to the Customer Offering moderate price increases Promoting the wise use of our product Serving as a trusted source of information 2008 Marketing Executives Conference October 11-14, 2008