Good afternoon ladies and gentlemen. My name is Natasha, and I will be your conference facilitator today. At this time I would like to welcome everyone to FirstEnergy Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer period. If you would like to ask a question during this time, please press “*” then the number “1” on your telephone keypad. If you would like to withdraw your question press the “#" key, thank you. It is now my pleasure to turn the floor over to your host, Kurt Turosky, Director of Investor Relations. Sir, you may begin your conference.

Thank you, Natasha. During this conference call, we will make various forward-looking statements within the meaning of the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements with respect to revenues, earnings, performance, strategies, prospects and other aspects of the business of FirstEnergy Corp are based on current expectations that are subject to risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. Please read the Safe Harbor statement contained in a consolidated report to the financial community, which was released earlier today and is also available on our website under the earnings release link. Reconciliation for GAAP for various non-GAAP financial measures you need to refer today or also contained in that report as well on the investor relation section of our website. Participating in today's call are Tony Alexander, President and Chief Executive Officer; Rich Marsh, Senior Vice President and Chief Financial Officer; Harvey Wagner, Vice President and Controller, and Jim Pearson, Treasurer. Perkins Alvin, Vice President of Investor Relations. I will now turn the call over to Tony Alexander.

Thanks Kurt and good afternoon everyone. Thanks for joining us today. I am pleased with our performance in 2005, we made significant progress in executing our plans and everyone at FirstEnergy work hard to achieve these results and enhance shareholder value. I will start by reviewing our progress and highlighting our 2006 objectives and then Rich will discuss our fourth quarter financial results. Our financial results during the year either meet or exceed the expectations we established in our financial guidance. Our 2005 earnings guidance was initially established that $2.70 to $2.85 per share, we then raised this by $0.15 per share in July to $2.85 to $3 per share. Our normalized non-GAAP earnings for 2005 were $3 per share at the top of our revised guidance range. On a GAAP basis earnings were $2.62 per share for the year. In a similar fashion we initially established our 2005 non-GAAP cash generation guidance at $560 million and then raised that to $620 million in July, excluding the December voluntary pension plan contribution, our non-GAAP cash generation for 2005 was $688 million exceeding our guidance by $68 million. We ended the year with our debt capital ratio within our target range and successfully concluded our debt retirement program. During his initiatives four year term, we reduced outstanding debt and prepared securities by nearly $4 billion. Due to our strong performance and confidence in our outlook, our board raised our common stock dividend twice last year for a cumulative increase of 14.7%, additionally on November on 15th the board declared a 4.7% increase in the dividend payable March 1st 2006. Combined these three actions represented overall dividend increase of 20%. In addition to favorable financial results we also produced solid operational performance. Our possible nuclear generation groups establish in annual output record…

At this time I would like to remind everyone if you would like to ask a question press "*" then the number "1" on your telephone keypad. Will pause for just a moment to compile the q&a roster. Your first question is coming from Gregg Orrill of Citigroup.

Thanks good afternoon gentlemen

Hi Gregg

Couple of quick questions, what the aggregate equity investment and what was the average equity return on your Pennsylvania investments in 2005?

We are pulling against together right at this point. We can get in this specifics as we say all the things filing our and notice of impact the market state of timeframe so there would it all filing in that April to May timeframe so can get under specifics at this point.

Okay looking at page 10 of your release the non-GAAP reconciliation of cash flows that number that’s $347 million at the bottom line is a little bit wider than what you guys are projected in November. It looks like that there were some positives in operating cash flow related to non-operating items and then is this negative other in that of $280 million which is of additions to modestly higher CapEx so can you walk us through what those, what those positives and negatives are and why you came out modestly below the target

Of a big driver there was pension contribution that we made in December Gregg and that after tax basis that's $341 million paid on that you are seeing now so, part of that would have been you know $688 million approximately so that was really the difference.

The last item is in November was a $10 million positive from other net and you came in at $280 million negative so that was like a $230 million swing which, either to some of the positive items on the cash from operating activities lines so what was that item or what are those series of items.

Gregg this is Harvey Wagner, one of the items that was not included before what’s the return of the cash collateral one item, credit ratings were upgraded by us in peak and you see that up in the net cash from operating activity. So to keep things on a comparable basis that was removed as part of the other net down below to get through the non-GAAP number

Okay, thanks the another item that’s the you distribute critical plants perform very, very well and you highlighted that in your comments Tony, yes I think your goal on a overall fossil performance for the year that was 66% CapEx was came in about 200 basis points below that would have employed some of your other plans didn’t operate up to your targets is that in fact correct or is that something wrong from this thing.

Gregg, I think all of plans operated pretty close to plan might sense is that there is, if there is if there were any slight deviation from that it's probably related to utilization in terms whether after power can replaced in the market

Okay if you want that for I just want to make sure there weren’t any operating issues

No they were not

Okay final question a little bit on the release, I can see a -- back a couple of years ago when FirstEnergy solutions were still, getting in to other markets outside your jurisdiction you want to 11 trenches of the BGS there are 56 around $55.5 those contracts were often in May '06 and one of items that impact your earnings in the fourth quarter was higher congested I am wondering if that’s directly related to those Load-Serving obligations and when those will are you making money or losing money on those contracts right now when they roll off, is the impact of that roll off fully reflected in your current '06 guidance

We are making money on those transactions now and the impact of those really now is reflected in our earnings guidance.

Okay thank you guys

Sure, thank you Gregg

Your next question is coming from Charles Fishman of AG Edward

Wholesale generating revenues for fourth quarter and full year wholesale.

Sorry, I miss the first part of your question Charles.

Of the generating revenues, could you break a damp in wholesale and retail

Sure

That will corresponds the sales the actual kilowatt hour sales, megawatt hour sales

not the kilo but the actual revenues are correspond that was a wholesale kilowatt hour sales just want I am looking for

And this is Kurt Turosky, in the fourth quarter the wholesale, our sales revenue are about $360 million

360

Yes

And for the full year do you have plan that

I can get back to offline on that.

That will be fine thank you.

It’s about the $1.4 billion for the year, can you hear that Charles

Yes $1.4 billion

It's correct

Thank you

Thank you.

The next question is coming from Bill Benjamin of Morgan Stanley.

Hi, good morning

Hi Tason

Could you talk about any data points receiving in Pennsylvania regarding Penn power, RFP process proposal, I guess it in Mike of the archive results that a small utility there had.

Where we question RFP process solid with the where we see there is a lot of discussion how about what market rates are until four, we’ve not get any specific kind its back in our proposal which is, and now the mechanism behind that is suppose toward final result would be so, when we have with that we now expect to receive the decision from the sort of in the first week of March and probably with the machine about probably around the beginning of the April.

Great thanks and as far as uses of cash is that basically stand as what you have said at the analyst meeting by last year possible stock buyback in the second half of this year.

Yes there is really but no change in our views and use of cash flow

Great thanks very much

Thank you.

Your next question is coming from Steve Fleishman of Merrill Lynch

Hi guys

I got you Steve

In your commentary on the Pennsylvania rate filing you said you are going to file for a change in transmission distribution and generation, could you just clarify on the generation piece since I thought that was frozen with the polar contracts.

Again Steve, that our cases being prepared right now and we have more to talk about what is actually noticed towards the end of March or April.

Okay, but you are going to address generation, is what you said

As Rich indicated that we believe when you conclude transmission, distribution and generation, the returns are in adequate.

Okay and your refries on T&D expire allow those, is that correct, new Pennsylvania

That’s correct

Okay and then you never receive that the full accounting order

That’s correct is that out there?

Okay, thank you

Thank you Steve

Your next question is coming from David Frank of Peacock Capital

Hi good afternoon

Hi David

I guess obviously the recent, the result for the recent New Jersey BGS auction we are currently profound, is the main purpose of the upcoming Pennsylvania regulatory filings that litigate future increases in un-recover purchase power expense?

Now the main purpose is to deal with fundamentally and what we believe to be in adequate returns and how those are shape will be a part of the case that there will be talking about later half on in the filing

Okay, and Tony no respect in queue most queue that FE has changed its wholesale power agreement with channel like to provided I guess a option over the next year to terminate the agreement at any time with 60 days notice. Are you even in fastest to bring sensitive Firstenergy from that had internal act and it’s so what’s that’s for able to taken.

I don’t think we are going to process that doing that we just made a business decision there.

Yes, what’s part of as specific length strategy, David I wouldn’t for that way I mean it’s a decision because of flexibility but its not part of this specific Ring-fencing approach.

Okay well I guess you had agreement before which allows you to break it once a year

Right

Why the necessity over the next 12 months where I guess next year to have it to be able to be broken on 60 days notice.

Well I think it large for David, its because there is, at this point there is essentially no shopping Ohio also that load is coming back to the Ohio Companies and it’s a question how we are going to deal with that kind of issue going forward.

To the Ohio, I am sorry the shopping, the agreement was with the Pennsylvania utilities so.

I understand that for primarily supported by generation that was, that’s used to support the higher loads but the shopping in Ohio. There was move free more to ship into the Pennsylvania markets. That’s being work through right now.

I see, and your blended polar price in Pennsylvania is I want to say somewhere in the 40's

Yes its right 46, about

Okay, thank you

Thanks David.

Your next question is coming from Hugh Wynne of Sanford Bernstein

Hi Harvey

Hi Hugh

A couple of quick questions on the chart on page 6, which compares the fourth quarter of ’04 and ’05. On the first line the increase in regulatory services revenues and the decrease on power supply management revenues, I think it thus related to the shift in consumption of power from competing retailers in Ohio and Pennsylvania to FirstEnergies power supply and therefore an increase in a year to regulated sales versus year. On regulated sales, am I wrong about that?

Hugh, this is Harvey Wagner, on the regulated segments that’s all strictly increases in deliveries on our distribution side of our business under the Power supply management I don’t if you recall, we adopted a new reporting methodology for wholesale transactions in the PJM market in 2005.

Right

And doing so, there was a reduction of wholesale sales comp comparatively for the prior year in the quarter of about $240 million

Okay, so that’s why it reflects in that due accounting.

That’s correct

Now going down on this line 4 other have actually get should interrupt in other revenues, regulator services that been increase by the revenues at Power supply management services.

It’s a primarily transmission related

Why would it increase the revenues on one side and reduce the money other

The transactions on wholesale side by the power supply managements services segment were increased

And then this was, I am sorry, could you just give me any more color on that I am not understanding.

Just a volume of transactions going through the system for the unregulated side of our business have collecting more transmission revenue.

Alright, and reason why down on the regulated side

Again leverages is be a function of the transactions. We can get through a more detail on that you, I believe the, on the regulated side about half of that differences due to a reduction in transmission revenue.

Right, may be I call it occurred afterwards

That could find, we will walk in to that

Then the going down to the expenses level we have a major change in the amount of fuel consume, in the amount of purchase power, at the Power supply managements services, I think is this just a reflection of the reduction and outages that your nuclear flee, that’s right?

Oh, again the purchase power is also affected by that PJM netting transaction so, that’s $240 million on that, and the difference in the fuel cost, differences in the fuel mix and increased fuel prices.

Okay.

For as this quarter is the last time I’ll see that, PJM netting issue that will now to half a way beginning with the first quarter of ’06, so it will make the comparison be there.

Okay, and the final quick question, if I could, we have a $27 million, increase in operating expenses of the regulated, I’m sorry, decrease operating expenses of the regulated services segment, those but they are from 448 in ’04 to 421 in ’05. Yet on the first periods of the released you talked about significant increase of $22 million and Energy delivery expenses, what accounts then for the large decline in other operating expenses for the regulated services?

Which specific line when you

Look at line 9, on page 6.

Okay. I don’t know if he gets the answer in your fingertips.

Out of it would be the reduction in our employee benefit cost, pension and other falls retirement benefits.

That’s related to the funding of the hedged plan I suppose.

Well that’s a part of it, that we’ve also had changes in our Health care plans that have must going forward as well.

This were obviously more than enough that’s a increase in your deliveries side.

That would be part of that, that’s okay.

Okay. Alright thank you very much.

Thank you.

Yours next question is coming from Paul Ridzon of Key McDonald.

Hi Paul.

Hi how are you.

How are you doing?

How much of your prior and combat loaded is currently shopping?

Well outside of our FAS regulated subsidiary very little. Everybody is already left.

Everybody is already, well everybody has come, basically all the customers had come back to First energy.

That’s Okay, have a lots of competitors suppliers?

Yes.

And then, with the return of the high or low outage in which I’d mean ,so Pennsylvania, how does that, how do you thinking about maybe getting longer, either at acquisitions or otherwise?

Paul, I don’t think it has any effect on our near term strategy, in terms of how we intended deploy cash. But what we have said in the past, I mean we are incrementally upgrading our facilities at the maximum planned as an example over the next, including what we did in ’05 and over the next two years we’re add about a 150 Megawatts to the system. We are in the process of upgrading some of our nuclear facilities so that they able to produce additional kilowatts force, that’s the near term plan at this point.

And the types of annual rate case, also mitigate some of the pressures?

In terms of the power supply, Paul is that what you are saying?

If anyone can address the generation side, when you are going to Pennsylvania, that was a kind of a strategy that as well.

Again Paul, we said we haven’t talk specifically about the components of that case as just being developed right now.

Okay, thank you.

And the next question is coming from Ashar Khan of SAC Capital.

Good afternoon. Most of the question answers just going back to, you said JCPL, the timing of that case in the decision on that case in terms and, could you just repeat the cash flow amount if you get a positive decision?

Above 155 I share.

When do you file and when do you expect the decision?

We’ve already filed, and you know what we expect the decisions specifically, but.

Okay.

Okay we filed on December, there is no statutory time limit on.

Okay, but.

Sorry, we are not talking about the securitization, are you talking about–

No, I’m talking about the separately what you mention. But that is not in your cash flow guidance is that correct?

That is correct.

Okay, and when do you expect that the nuclear at back on line is it May?

You are talking about nuclear Beaver Valley?

So that I would just, started this week actually, really Monday morning and its going to be a 2, 3 month outage.

Okay, thank you.

Thank you.

The next question is coming from Paul Patterson of Glenrock Associates.

Good afternoon guys, how are you?

Hi Paul

Just wanted to touch if you on the total hedge position you guys with respect to your pole in Pennsylvania, and so high yield with the returning customers and everything else, what are we talking about in terms of exposure, to your purchase power obligation with here, you guys have send some operate do you guys have, if you are move in pieces here, what are we looking at in terms of how hedged you are from, 2006 through I guess if we end of the board.

Looking at 6 and 7, first I think we’re affectively net move in both PJM and MISO, for that timeframe, now, when you talk about different periods of time obviously its going to change after 2008 and when the call is expected to go way in the half, do that point of time, where well covered for in each in both stage, clearly, 2008 at the end of the year to our callers expected to go away and then we’re much longer in both markets as well.

Okay, so in generally speaking, there should be a big increase in purchase power expenses, for ’06 through ’08, right, in system wide, you guys are pretty well covered, am I correct on that?

Yes.

Okay, so, I know you guys also want to talk about the Pennsylvania case in detail, but, we are now looking at you guys being exposed to the substantial way in terms of getting recovery at purchase power expenses out there, is that correct?

We’ve talked that the past about our hedging strategy so far as, lets take the so the details about what the PA case, well around you, but now we’ve been affective it trying to make sure that we have to supply 12 folder application runs, and I know how I think we’ve as affective in doing that.

Okay, and then we are also want to ask you guys was, in 2006, we are not expecting any impact in the Pennsylvania cases in your guidance, is that correct?

That’s correct.

Okay, and then finally, with respect to the Bankruptcy, law and the impact on the other, the uncollectible which sounds likes an unusual item to a certain degree, can you break out what happened there and we’d be faced to assume that probably was unusual more shall up in ’06?

Yes, I think that was a one kind of that, driven by the new bankruptcy laws, were a lot of people wanted to file with the advents of the scripter laws, so that’s should not be a recurring t kind in that.

But how much was that I guess, it’s you mentioned in the $22 million per delivery expenses, but how much of that I guess was, from the bankruptcy thing?

About $8 million.

Okay, and then finally, would you expect the PJM and MISO expenses, when you guys are in November, you guys saw that’s giving the 2006, and you felt RTO came from losing calls, hurting by about $0.05 of share, is there any change, or you can elaborate a little bit of what’s you guys are seeing when we expected the PJM and this, yeah, this high can just in entry service cost, and how you see them spending going forward and what have you, and what is not that’s up $0.05 number still hold?

We have the mechanism is so high, to recover those forms or regulated service area, so the issue really becomes PJM cost. In the fourth quarter the net increase in PJM cost was about $37 million dollars as resulted in the congest in the service cost, but I think probably trending and expectation with our earlier thoughts, we are obviously take a number into our ’06 expect in terms of what those cost will be, we don’t see anything, we just believe that’s going to be grows with different than that. But may obviously, now it is that right under was very focus on this big number for us.

Okay, great, thanks a lot.

Thank you.

And the next question is coming from Gregg Orrill of Lehman Brothers

Thanks my question has been answered.

Thanks Gregg.

Thanks Gregg.

Your next question is coming from Paul Fremont of Jeffries.

Thanks just a clarification in terms of one of our Patterson questions, through the '06 mail 7 timeframe your net long based on the generation that you all in plus the hedges that you haven’t place for Pennsylvania is that sort of correct?

Yes

And the hedges I assume end in '07 so, in '08 why you still are obligated to cervical higher customers I think through the end of 2008, right. Would you actually be next short in '08?

Your presumption that the hedges end in the end of '07 is not correct so far, so much still hedges continue many of them continue on over time.

Okay, so I guess just looking at '08 independently, would you characterize yourself as still net long in '08 describe the fact you still have an ongoing obligation to serve the all higher puller customers?

That’s not specifically, yes can't tell you specifically, don’t know the answer at this point it close to probably neutral.

I guess the other question that I have is, with respect to your plus for differed accounting figure in Pennsylvania I trust from your answer Rich, that it was not that you are you didn’t get sanative yes or no out of the commission, the commission simply fail to act on that request?

It is not acted on our request, there is an intervention in that case and, nothing is been scheduled.

Okay, thank you very much.

Thank you Paul.

Your next question is coming from Margaret Brown of Citigroup

My question is been answered, thank you.

Thanks Maggie

Your next question is coming from Vens Bunk of Womerns Management.

Hello Ven

Hi. With respect to the potential times of being the filing, would you take as it as sort of very standard rating as of return were, is this the situation where you've been able to where, the calculations or there is the trustworthy or the methodologies a little bit unusual and therefore you've been able to discuss the potential structures with commission before hand?

Ven, I'm not going to characterize this case at all.

Okay. Thank you.

Thanks Ben.

And next question is coming from Ban Venken of State of this conference

Hi good afternoon. I have a few things here. First on the, nuclear plate, I was wondering that you may said the overall capacity factor in '05 was 87.2, you have left the capacity factor less had to tune in?

Yeah we didn’t get you that. I will give you that offline.

Okay and then among the outages, I didn’t catch what outages you are going to add to other besides the beaver valley I unit, that’s gone on right now what is the other outages in '06.

Sure, the other outages in '06 is of there is two others Ban, we have which is going down in the March time frame and that will be one to two months type of outages involves refilling at some of the reacted property replacement, so it’s a more involved then this typical straight we feel in, and then also we have Beaver Valley 2 which will be conventional refilling average in the October timeframe that to be about one month outage.

Or else, by the way we also have may have main scale unit II, to upgrade the environmental equipment and to install the gents factor is better we talk about, and I'll take place this call.

How long will be that advanced for that outages be about?

My guess is again that’s probably 2 to 3 months outage.

Okay it's probably reasonable run given the number and length as some of these strategies that might be lower in '06 and then in you where in '05 or '07.

No actually the average days will be less than '06 and then '05. If the numbers gained you to ask for full year 2005 capacity factors, beaver valley I was actually a 101.4% beaver valley II was 91.8 they Davis-Besse was 92.3 and that was 69.3 obviously impacted by the first outage at the beginning of the year than the expected fueling outage.

Okay, so would expect those capacity factors then it will be higher in ’06, you thought response to would the expenses related to that probably be lower than as well.

Last year was unusual year, and we did have the extended outage in the first outage periods so these outages this year will be more conventional outages, so that’s why we are staying at the nuclear generation here the Nuclear generation outage will be last in '06, and then '05.

Okay.

We are obviously the stream replacement that’s a big unit for our sale, significant cost component some of which is already been expanded with capital going outside, well we have an on going benefit towards in the future since future outages will be shorter and will have less inspection on that.

Okay then you mentioned in your press release that you completed the transfer of units to non regulated, that kind of little bit about your capital structure management, do you anticipate to talk about pushing some dept down property against you despite assuming that was particular twinkles.

Well long-term, our over urging view to be able to position our regulated business and investment great entity, so obviously that by certain levels of capitalization, well we are really focusing on as making sure that we are going regulated operating company that level that are appropriate in a right making contacts. So you don’t want those to be over advertise as the beginning of regulatory cycle, that’s were we want to focus is.

So when do you refinance that to spend you got it some likely to be operating, its was regulated operating.

That’s right.

I think I had one more question. And also in the fourth quarter the interest expense was up versus a year ago over downs that due to higher interest rates.

Yeah, part of that if the interest on the accrued tax recognized related to New Jersey

Okay, so without that would have been lower.

If would been pretty flat actually.

Okay do your expect even lot of rates have down and your balances what do you expect interest to be above flat and higher lower end of ’06 and then ’05.

Still be lowered ’06 and then 05.

Okay and that's all of have been thank you

Well, I appreciate Ban thank you right only in the interest of time take one more caller and then if there is any follow up question we can handle those offline

Your last question is coming from Glen Wynne of Glenrock

Good afternoon

How are you

I am good thanks. Could you just remind me what you’re targeting for credit rating so parent company and the new GENCO.

That the parent company were targeting strong it will ratings, regulated business is we are looking to have it be investment grade.

Investment grade at the GENCO

One of the entities where you should likely be FTS which is the, if you are holding Company for the GENCO

This is sure related to the last caller's question you depending transferring from the crucial control of that, and offset to the GENCO I'm wondering what happen to that plan.

Yes that will happen we are not obligated transfer that underwriting certain time constraint of we will do that opportunistically over time when it makes second of extends to that. It’s the longer eventually that conclusion will migrate over to the generating company from the operating company.

Thank you very much.

Thank you very much and we appreciated everybody time and attention today is there any further follow up question that we didn’t get to please gets various protocol, we appreciate everybody times today and appreciate your continued interest in Firstenergy, so I hope everybody has a great day, thank you very much. Rich Marsh - SVP & CFO: Thanks everyone, bye now.

This concludes todays Firstenenrgy's fourth quarter earnings conference call, you may now disconnect.