Good afternoon, ladies and gentlemen. My name is Tiara and Iwill be your conference operator today. At this time, I would like to welcomeeveryone to the FirstEnergy third quarter earnings conference call. (OperatorInstructions) 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 very much. During this conference call, we willmake various forward-looking statements within the meaning of the Safe Harborprovisions of the United States Private Securities Litigation Reform Act of1995. Investors are cautioned that such forward-looking statements with respectto revenues, earnings, performance, strategies, prospects, and other aspects ofthe business of FirstEnergy Corp. Are based on current expectations that aresubject to risks and uncertainties. A number of factors could cause actualresults or outcomes to differ materially from those indicated by suchforward-looking statements. Please read the Safe Harbor statement contained in theconsolidated report to the financial community, which was released earliertoday and is also available on our website under the earnings release link. Reconciliations to GAAP for the non-GAAP measures we will bereferring to today are also contained in that report, as well as on theinvestor information section of our website at www.firstenergycorp.com/ir. Participating in today’s call are Tony Alexander, Presidentand Chief Executive Officer; Rich Marsh, Senior Vice President and ChiefFinancial Officer; Harvey Wagner, Vice President and Controller; Jim Pearson,Vice President and Treasurer; and Ron Seeholzer, Vice President of InvestorRelations. I will now turn the call over to Rich Marsh.

Thank you, Kurt. Good afternoon, everyone. Thanks for beingwith us today. I’ll start our call this afternoon with an overview of thirdquarter financial results and operational performance. I will then turn thecall over to Tony to discuss recent Ohio and Pennsylvania legislativedevelopments and our financial outlook for the remainder of the year. As I review our third quarter results, it might be helpfulfor you to refer to our consolidated report to the financial community that weissued this morning. Earnings on a GAAP basis in the third quarter were $1.36per share, compared to GAAP earnings of $1.41 per share in the same period lastyear. Excluding special items, normalized non-GAAP earnings were$1.32 per share compared to $1.42 per share in the third quarter of last year.This year’s normalized, non-GAAP earnings exclude gains of $0.04 per sharerelated to the sale of a portion of our 32% ownership interest in FirstCommunications. The primary reason for the $0.10 per share decline innormalized, non-GAAP earnings compared to the third quarter of the previousyear relate to two items that benefited last year’s quarterly results, andthese were: first, a $0.06 per share contribution from the sale of [admissionallowances]; and second, a $0.05 per share contribution related to the 2005estimated manufacturing deduction in connection with the filing of our 2005federal income tax return in September of 2006. Kilowatt-hour deliveries through our distribution systemduring the quarter were slightly behind the levels of the prior year, due tothe milder weather experienced in the eastern portion of our system, wherecooling degree days were 6% below the same period last year. Although total system cooling degree days were comparable tothe third quarter of last year, we experienced a mild July, which is normally apeak air conditioning month for us. The key drivers for this quarter’s financial resultsincluded: a $0.20 per share improvement related…

Thanks, Rich. There has been a significant amount ofactivity recently on new energy legislation in both Ohio and Pennsylvania. InOhio, Senate Bill 221 was introduced at the request of Governor Strickland. TheGovernor’s plan has significant issues, primary of which was it lacked theclarity necessary to effectively determine generation pricing. Hearings were held on the bill. A substitute bill has beenintroduced and later today, we expect the Senate Energy and Public UtilitiesCommittee to consider the substitute bill and additional amendments. Thatsubstitute bill, as amended, is expected to be considered by the full senatetomorrow. While the substitute bill addresses some of the shortcomingsidentified in the Governor’s plan, it still allows the PUCO to subjectivelydetermine whether a competitive market exists and in addition, continues tolack sufficient clarity on key provisions. Essentially, the Senate’s version has helped frame theissues in the bill for consideration in the House. Yesterday, the House Speakerannounced plans to refer the bill to the House Public Utilities Committee onceit has cleared the Senate. He has also outlined a topic-based schedule forhearings that would begin in early November and extend to January 23rd of 2008. As to FirstEnergy, remember our utilities do not owngeneration, so their generation prices to customers will be based upon thecompetitive market for generation, essentially purchase power. However, the substitute bill would not foreclose our abilityto negotiate an electric security plan if doing so would provide advantages tothe company and its customers. There is still considerable work to be done on thislegislation, so it will likely be some time before we can fully evaluate itsimpact, including those from the mandates for renewable and advanced energyresources and energy efficiency. FirstEnergy will remain very active in the hearing andlegislative process in the House and we hope to continue to improve thelegislation so that it offers a real opportunity for…

(Operator Instructions) Your first question is coming from Ashar Khanfrom SAC Capital.

Good afternoon. Congratulations. Tony, as you mentioned,does the Senate version of the bill to be passed, as you said, with amendmentstoday and tomorrow, would that allow you, as you said, to proceed with going tomarket or no?

Since our Ohio utilities do not own generation and do nothave any contracts for generation services as of January 1, 2009, their optionfor supplying and meeting their generation obligation will be from the marketand that price will be passed on to customers.

Okay, and then Rich, can I just ask you a question on theresults -- the $0.20 increase in the generation business, is that -- do you dohigher margins or more volume?

You’re talking about the generation revenues?

That’s correct.

It was mostly price related, as opposed to volume.

And that is because you had higher I guess prices in the [Miser]area in Ohio? Is that the way to look at it?

Yes, through the service territories, yes, that’s correct.

Okay. Thank you so very much.

Thank you. Your next question is coming from Paul Fremont from Jefferies & Company. PaulFremont - Jefferies & Company: Thanks. If I take what you said in the second quarter, whichis that you expect 56% of the remaining year to come in the third quarter,would’ve been a guidance range of about $1.14 to $1.25. You came in I think$0.07 above that in the third quarter, and I’m curious why you held the top endof your guidance range on the year stable. Is there something negative that weshould be anticipating later in the fourth quarter?

We set it there because we think that’s the appropriaterange, Paul. I mean, obviously every quarter is unique based on weather andother circumstances. We think the $4.15 to $4.25 guidance that Tony just issuedcaptures where we’ll be at year-end, so it’s our best thought of where we’llactually ultimately be, notwithstanding the third quarter results. PaulFremont - Jefferies & Company: I guess the second question that I would have is withrespect to the Ohio plan, or Ohio proposed legislation, should we think of thetiming of the passage of legislation as potentially preceding any potentialdeals that the Ohio utilities would cut with the PUC, or should we think ofthose as more or less simultaneous events?

My sense, Paul, is that they would have to wait until anynew legislation is adopted so that they could be consistent with that new law. PaulFremont - Jefferies & Company: Thank you very much.

Thank you. Your next question is coming from Gregg Orrill from Lehman Brothers.

Thanks very much. I was just wondering if you could updateus on where MISO stands with implementing ancillary services, new ancillaryservices market?

That process is continuing to move along, Gregg. I don’tknow that I’ve gotten an update recently in terms of when that would becompleted. My understanding was by 2008, probably mid-year, but I have notheard any updates on that recently.

Completed mid-’08 for mid-’09 implementation or ’09implementation?

I’m not sure. We can check on that and get back to you.We’ll talk to our guys at FES and find out.

Okay, thanks.

Thank you. Your next question is coming from John Kiani from Deutsche Bank.

Tony, what’s your view -- I know it’s probably difficult toproject at this time, but what’s your view on roughly how long it will take toiron out this post-’08 rate situation in Ohio or come to some agreement on anESP?

I think it’s going to be how complicated the bill is with respectto what has to be included in that consideration. If it’s moving in thedirection that the substitute Senate bill appeared to, which would have somesort of potential cost base analysis required, that could be time-consuming. Somuch of it is going to depend on how that legislation sets itself up for thosevery first negotiations.

Right. That makes a lot of sense. Okay, and then looking outlonger term, I know you are very focused right now on the best outcome possiblein Ohio and obviously in Pennsylvania as well, but as we look out longer termand the environmental capital spending starts to come to an end, what’s yourview on monetizing more of the balance sheet?

Certainly we’ve taken advantage of opportunities that havecome our way, as you know, John, in terms of Beaver Valley or Bruce Mansfieldand some of the opportunities that have happened. We are continuing toobviously look at that but right now, most of our attention is focused onreally the 2009 transition, making sure that we focus on getting the transitionin Ohio and Pennsylvaniacorrect, so we haven’t really gone beyond that in terms of issuing anydefinitive guidance of views, if you will. I think we need to have some ofthese things clarified before we can go there.

Got it. Thanks, Rich.

Thank you. Your next question is coming from Paul Ridzon from Key Bank.

As I read the Governor’s legislation, I saw language thatspecifically addressed generation that had been divested, but you think the waythings currently stand, you can sidestep that and just pass Ohio to market atthe distribution company?

Yes. Well, the legislation as drafted, if you think aboutthis plan as discussed, it had some provision in there or discussion withrespect to assets that have been transferred, and the legislation itself reallydoesn’t deal with it in any direct way because it’s -- you simply can’t. So Ithink there is a recognition, however, that if there is an energy security planand there is a pass-through of costs, you would look through to try todetermine how those costs were incurred. But generally speaking, the point at which you start withfrom an Ohio Edison and CEI and Toledo Edison perspective is their costs tomeet the generation obligation is purchase power cost.

Thank you. And on the second quarter call, I asked why youweren’t raising guidance and you talked about Davis-Besse and weather. What wasit that came in better than expected that allowed you to do this?

I think it was weather during the quarter and just generaloverall results. I mean, obviously it’s a good quarter for us, so that’s whatgave us the confidence to limit it to the upper end of our existing range.

And then lastly, just housekeeping, your reconciliation, the$0.04 unusual, that is one and the same, the gain on first communications?

Yes, it is.

Okay. Thank you.

Thank you. Your next question comes from Jonathan Arnoldfrom Merrill Lynch.

Good afternoon. Just a couple of Ohio follow-ups, the firstone in terms of the proposal you have before the commission on thetransitioning to a competitive pricing and how that marries up with thetimetable that’s been outlined in the House, what are the next dates in thecommission process? And does that effectively have to move a long way down thetrack before the House actually ends up making a decision on this bill?

Well, when you think about the process, and I think that’sprobably the easiest way to think in terms, Jonathan, to me, since we know thatthe Ohio utilities don’t have generation and their first step is going to haveto be in the competitive market, the fact of the matter is the more time thecommission chooses not to act, the less time we will have to manage a processthat has multiple bids, as an example, instead of just one day, or givecustomers notice and adequate notice with respect to what the prices to beatare in 2009. In theory, the price can be established as of the end of theyear, because it will be effective January 1st of next year. All that means,however, is that customers will have a lot of time to respond to it, it willtake a little more time for alternatives to develop and the retail market todevelop underneath, but nevertheless, it can’t go that long. You’ve justlimited the options and the choices and your ability to mitigate perhapsvolatility that might occur on one day, if that’s the only day you have left todo an auction.

So the commission has the ability to wait and spend time onthis, if they so choose?

It has consequences, but yes, they can.

And one other related topic, there was some moving around ofthe membership of the House committee, I believe, in the last week or so. Anycomments on that, how we should think about the changes there?

I think that’s the Speaker of the House’s choice. He’sobviously selected some very good and some very good, talented Members torepresent the House and take testimony on this very important bill.

Thank you.

Thank you. Your next question is coming from Paul Pattersonfrom Glenrock Associates.

Just to follow-up here on Ohio, sort of your politicalcrystal ball here -- you guys are sort of a little bit in a different positionthan perhaps some of the other utilities. What do you think the chances are ofthis bill being exercised by the end of the year, or do you think that there ispotential for further battles over how their situation is, vis-à-vis where somepeople would like it to be, some of the other parties? Do you follow me? In other words, you guys have transferred the asset. It lookslike there is a specific situation that applies to you guys that may not applyto others, and do you see that as being a potential hang-up or problem or is ittoo hard to say?

Let me address the first part of it, Paul, and that is thatwe don’t -- given the House’s schedule at this point that’s just been -- it wasjust announced, we would not expect this legislation to be passed in 2007,because their schedule includes hearings through January 23rd of 2008. So wewould not expect action this year to close it down unless the House changes itsschedule at some point. With respect to the other issues, again, there is a lot ofissues in this legislation and a lot of parts to it that need clarity, in termsof how it will apply, particularly to utilities that continue to own generationas opposed to us, because we don’t own generation any longer. Those things need to get cleared up and I think the House isgoing to, the way their schedule looks like, they will allow for a full debateand discussion with respect to all of the issues that I think have beenidentified in this legislation and that should give everybody an opportunity totry to address them through further legislative action. Again, assuming that they are not fully addressed when theSenate deals with the bill today and tomorrow.

Finally, just a quick one on pension and OPEB. You guys havebeen pretty creative in terms of lowering the cost there, and I was justwondering whether or not going into 2008, we might see a similar -- what yourplans might be with respect to what you might be able to -- could you dosomething similar as to what you did this year? Just any thoughts on that.

Well, the change has largely been driven by the pensioncontributions we made over the last three years, Paul, and as you know, we putin about $1.3 billion within a three-year period. Right now, we are fullyfunded, even on an PBO basis. We had to plan funding in a spot that we think is attractive, so we arenot contemplating any additional funding going forward. Hopefully those assetswill continue to do well from an investment standpoint and earn a good return,but we are very happy with the funding where we are at.

And the healthcare thing, you guys don’t see any big changesin that either?

You know, we’ve announced those changes that have alreadytaken place or will be taking place shortly, so once again, I think we’ve beenpretty diligent looking at the options. So right now, I wouldn’t anticipate anyfurther significant changes.

Great. Thanks a lot.

Thank you. Your next question is coming from Daniele Seitzfrom Dahlman Rose. Daniele Seitz -Dahlman Rose & Co.: I just was wondering, when is the extension, life extensionon the -- these [inaudible] plants will be in effect? I mean, when do youanticipate the NRC to be completing the review?

The license extension? Daniele Seitz -Dahlman Rose & Co.: Yes.

Typically, it’s a fairly long process, Daniele. It typicallytakes several years. Daniele Seitz -Dahlman Rose & Co.: So you don’t expect that before two years from now?

It could be as long as four or five years. Daniele Seitz -Dahlman Rose & Co.: Oh, really? Okay.

It’s a pretty regimented process that they go through, so ittypically takes a period of time. Daniele Seitz -Dahlman Rose & Co.: And in the purchase power cost that you presented in thereconciliation, how much was for the [power outage], I mean, roughly?

I’m sorry, Daniele, could you repeat that? Daniele Seitz -Dahlman Rose & Co.: The [power outage] represented how much of that increase inpurchase power costs?

About $0.06, Daniele. Daniele Seitz -Dahlman Rose & Co.: Okay, great. Thank you.

Thank you. Your next question is coming from David Frankfrom [inaudible] Partners.

Good afternoon. Rich, a couple of quick questions; one,could you give us an update on where the ASR stands?

The ASR, from our perspective, of course, was completed theday we did it. In terms of Morgan Stanley [giving their short] position, David,that will be done in the fourth quarter. It will be completed by year-end.

And another question I had was on the basis differential inPennsylvania. When you look at your Met Ed and Penelec utilities and you lookat some of the sources of supply coming from the Dukane region, specificallyBeaver Valley. In the out years now, there’s a bit of a spread between thecapacity payments that you are obligated to pay in MAC plus APS versus what youare receiving on your generation in the rest of pool of Dukane there in 2010.How will you seek to hedge that differential, or should we just assume it’s aone-year thing and you’ll just eat it for the year?

Probably the best thing for us to do, David, would be to getback to you on that. That’s not an easy question to answer in a littlesound-bite here, so let us get back to you. We’ll take that as a homework item.

Okay, great. Thank you.

Thank you. Your next question is coming from Dan Jenkinsfrom State of Wisconsin.

Good afternoon. First, a couple of things onphilosophically, the Ohio and Pennsylvaniasituations. I guess related to the generation, how committed are you topreserving the value of that generation for the investors? Are you willing togo to the extent of potentially spinning off your Ohio utilities, or somehowseparating them to -- you know, if that becomes an issue that the State triesto go after the value of that generation for distribution customers?

Remember, Dan, I mean, obviously in Ohio, we alreadyseparated the generating assets out of the regulated distribution companies, sothose are assets that are engaged in interstate commerce regulated by FERC, notthe state commission. So as far as that issue goes, we’ve already taken thestep of separating them out. Maybe the second part of the question, you are talking aboutin terms of the ability of the regulators to somehow -- you know, I’ve heard of[inaudible] is how I usually hear the term, something through a distributioncase. Obviously, you know, that’s going to depend on how regulators view theserequests and act on these requests going forward. We continue to like the integrated business model. We thinkit makes sense. I think it makes sense for the customers in Ohio as well. Iwould have to believe the commission could very well see it that way as well,so we don’t have any other indications otherwise at this point that might leadus down the path to un-bundle those two businesses.

Okay, and then just a few items on your release, I noticedin the most recent quarter on your cash flow statement, you had a big cash flowprovided from investment activities. Is that related to wholesale leaseback?

Yes, it is, Dan.

And then, you mentioned that you were also looking to buildsome storage for spent fuel at the Perry plant. I was wondering, a number ofother utilities have sued the DOE to recover those costs related to the factthat the Yucca Mountain isn’t open yet. Have you guys gotten that sort ofrecovery put in place, or do you plan to pursue that?

We have not done that, Dan, no.

Do you plan to pursue that or is that something you arethinking about?

We’re participating in the proceedings around that issue, butat this point, we’ve not taken any action.

Okay, and then I was just wondering if you could comment onthe industrial sales into your areas. I noticed you had close to a percent downin the third quarter and most are down for the year. I was just kind ofwondering if you are seeing economically or from customers in the industrialsector.

Our industrial sales tend to bounce around a little bit fromquarter to quarter. Most of our industrial exposure is in Northeast Ohio,Western Pennsylvania. A lot of that tends to be steel, auto, glass related sortof concerns. They tend to, from an economic standpoint, generally follow alongthose trends. I haven’t seen anything very significant related tocustomers that overall have impacted. I don’t know, Harvey,do you have anything else you want to add to that?

I was just going to add that Penn Power’s industrialcustomers for the most part are shopping, and that was different from lastyear.

But you’re not seeing and trends, weaker versus -- you know,quarter versus quarter or anything like that?

Nothing out of the ordinary.

No. Generally, they’ll trend to more or less track alongwith general economic trends but I don’t see anything unusual.

Okay. Thank you.

Thanks, Dan. Why don’t we take one more call and then we’lllet everybody get back to -- if there is one more call.

There appears to be no further questions at this time.

Very good. Well, we appreciate everybody’s time and interesttoday and look forward to seeing many of you in Florida for the EEI financialconference, and I hope everybody has a great day. Thanks for your time.

Thanks, everyone.

Thank you. This concludes today’s conference call. You maynow disconnect and have a wonderful day.