Greetings and welcome to the FirstEnergy Corporation First Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today's call, Meghan Beringer, Director of Investor Relations for FirstEnergy Corporation. Thank you, Ms. Beringer. You may begin.

Thank you, Rob, and good morning. Welcome to FirstEnergy's first quarter earnings call. Today, we will make various forward-looking statements regarding revenues, earnings, performance, strategies and prospects. These statements are based on current expectations and are subject to risk and uncertainties. Factors that could cause actual results to differ materially from those indicated by such statements can be found on the Investors section of our website under the Earnings Information link and in our SEC filings. We will also discuss certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures can be found on the FirstEnergy Investor Relations website along with the PowerPoint presentation which supports today's discussion. Participants in today's call include Chuck Jones, President and Chief Executive Officer; Jim Pearson, Executive Vice President and Chief Financial Officer; Leila Vespoli, Executive Vice President, Corporate Strategy, Regulatory Affairs and Chief Legal Officer; Jon Taylor, Vice President, Controller and Chief Accounting Officer; Steve Staub, Vice President and Treasurer; and Irene Prezelj, Vice President, Investor Relations. Now, I would like to turn the call over to Jim Pearson.

Thanks, Meghan, and good morning, everyone. We are changing up the order today. I'm going to lead off with a discussion of our first quarter financial results and then I'll turn it over to Chuck for a review of recent developments and strategic updates. We are off to a very strong start in 2017 with solid first quarter results that exceeded our operating earnings guidance and were supported by excellent operational performance across the company. We continue to execute on our regulated growth initiatives and, as Chuck will discuss later, we are encouraged by recent energy policy discussions that could ultimately have a positive impact on the nation's electric system. Last night, we reported first quarter GAAP earnings of $0.46 per share, which includes a $164 million pre-tax charge related to two coal contract disputes. Chuck will discuss this item later in the call. First quarter operating earnings were $0.78 per share, reflecting strong results in all three business units. Before I walk through each segment, I'll remind you that detailed information about the quarter can be found in the Consolidated Report to the Financial Community, which is posted on our website. In our Distribution business first quarter earnings increased due to the impact of new rates that went into effect in January at eight of our 10 operating companies. As you'll recall, the Ohio distribution modernization rider and the new base rates in New Jersey became effective on January 1, while new base rates in Pennsylvania were put in place on January 27. Weather was unseasonably mild across our service area, with heating degree days averaging 8% lower than the first quarter of 2016 and 16% below normal. This drove a 1% decrease in total distribution deliveries, with sales to residential and commercial customers down 3% and 1% respectively.…

Thanks, Jim, and good morning, everyone. As Jim indicated, I'm going to focus some of the recent developments related to our transition to a regulated company and our goal of exiting commodity-exposed generation by mid-2018. Overall, I am pleased with our progress on this effort and we're glad to have one of the significant open items resolved. On Wednesday, we announced the outcome of the arbitration decision in the first of two coal transportation contract disputes. In that case, our generation subsidiary reached a settlement in principle with CSX and BNSF for $109 million payable in three annual installments beginning next month and guaranteed by FirstEnergy. In addition to this settlement, we are in active settlement discussions with BNSF and NS on the remaining contract that is in litigation. The potential settlements would put a significant risk to FES and FirstEnergy behind us. I'll also note that absent these settlements, under accounting rules, we would have been required to take a significant charge this quarter based on the probable outcome of the damage hearings, which would have impacted both FES and FirstEnergy. We also continue to move forward with our other strategic alternatives for our competitive business. As we discussed in the fourth quarter call, we entered into an agreement in January to sell 1,572 megawatts of Allegheny Energy Supply's gas and hydroelectric generation for $925 million in an all-cash deal. We hope to close this transaction in the third quarter, subject to regulatory approvals and consents from third parties. We also entered into a $40 million agreement earlier this month to sell a portion of the real property and certain assets at the former Hatfield's Ferry Power Station in Masontown, Pennsylvania for the development of a 1,000 megawatt combined-cycle natural gas facility. The sale is expected to close in…

Thank you. We will now be conducting a question-and-answer session. Our first question comes from Stephen Byrd with Morgan Stanley. Please proceed with your question. Stephen Calder Byrd - Morgan Stanley & Co. LLC: Hi. Good morning. Thanks for taking my questions.

Hi, Stephen. Stephen Calder Byrd - Morgan Stanley & Co. LLC: Chuck, you mentioned that the FES board informed FirstEnergy that they'd like to wait for the Department of Energy review and for the Ohio process to play out. Maybe we could talk about Department of Energy just for a moment. I guess I'm thinking about what the range of possible support could be. And I guess I have some skepticism because DOE's authority is somewhat limited. It would require other agencies potentially to get involved. So, even after DOE comes back with a report, isn't there kind of a risk of either a significant amount of time for implementation, risk in implementation, and doesn't that have the potential to sort of drag out the process for exiting the business?

Well, Stephen, here's what I'm going to say about that DOE initiative, and obviously since it came out, we've had a lot of discussions and I've personally been down in D.C. and talked to people both at DOE and in the administration. To put a 60-day time on completing this is very aggressive. I think they view it as something that needs to be very aggressive because there are more and more closures of these fuel-secure baseload assets being announced all the time. So I think the administration is serious about this. Our Washington team tells me that this is a very serious initiative. I don't think we're in any position right now to handicap what they might do at the end of this study. But if their intention is to keep these fuel-secure baseload assets from closing, then they're going to have to do something to make sure that there's a financial incentive for these plants to not close. So I think it's prudent for us to let them do their work. It's clear DOE is focused on this. The Secretary was speaking at a Bloomberg conference earlier this week and talked about it there and the importance of this. And I'm sure this also clearly ties in to one of the President's key initiatives, which is to protect our coal natural resource and the mining and jobs that go along with that. So I think it's just prudent for us to see where that goes. Stephen Calder Byrd - Morgan Stanley & Co. LLC: Understand. And then maybe I could just shift over to the upcoming debt refinancing requirement at FES. What is the current plan in terms of how that would be dealt with?

Well, I cannot speak for FES anymore. As part of our process to move out of this commodity-exposed business, we have set up a separate governance process for FES. It has now an independent board. And while I may have the opportunity to answer their questions from time-to-time, the decisions are theirs. But I would say that, since they've told me they plan to wait to see this DOE initiative and they're in the money pool, it's likely that they would satisfy those obligations that are coming due in June 1 out of the money pool. Stephen Calder Byrd - Morgan Stanley & Co. LLC: Understood. So they could avail themselves of the money pool presumably. That's an option that's fair to say is on the table?

Correct. But as I've said in my prepared remarks, they will be free cash flow neutral this year, even after satisfying those obligations. So we're not exposing FirstEnergy shareholders to any additional obligation by waiting to see the outcome of this study either. Stephen Calder Byrd - Morgan Stanley & Co. LLC: Okay. Understood. I'll let others ask questions. Thank you.

Our next question comes from Angie Storozynski with Macquarie. Please proceed with your question. Angie Storozynski - Macquarie Capital (USA), Inc.: Thank you. So, Chuck, but there seems to be a change in the timeline. And I understand that the DOE study came up, but I mean you have this June 1 maturity, there's been this discussion about the growing concern, question about FES. You've just extended an additional guarantee to the business. Is this purely on the back of the DOE study? Or is it that you feel that there's more of a chance to get the Ohio events in support of the nuclear plants? I mean, there seems to be many questions and changes in the strategy around FES as of late.

Well, I would just say this. As far as I see it, there is absolutely no change in the strategic direction that we want to take this company in. We do not want to be exposed to commodity-exposed generation any longer than we have to be. So let's talk about, just for a minute, the steps we have taken to move towards that. We announced the sale of 1,500, almost 1,600 megawatts of Allegheny Energy Supply assets. We're working on Pleasants. If we complete both of those by the end of the year, which I expect to happen, that's almost 3,000 megawatts less exposure to the commodity markets than what we had. We completed a major initiative with the banks at the end of last year to restructure our bank lines and position this company for this exit a little differently. We've engaged legal teams and restructuring teams and financial advisors on both sides of the company that have begun the process and are well along in the process to understand what may happen if a bankruptcy or restructuring is the only way for us to exit this business. But that is a very complicated process and we're working our way through it. That means we have to understand what is the implication for FirstEnergy shareholders on the FirstEnergy side, and that means the FES board has to understand all the implications that they need to deal with on the FirstEnergy Solutions side. That work is ongoing and it is not going to stop. I think many people assumed that the June 1 maturities would be a trigger. But given the position of FES this year with being free cash flow neutral, I'm not sure that was a good assumption that anybody was making in the first place because they need to be prepared and this company needs to be prepared before we take that step. And then the last thing I would say is I'm not sure it even affects the timeline. The DOE study is ongoing. It's going to happen quick. When we see the results of that study, then we may say it could affect the timeline. But just the study itself I'm not sure affects the timeline. So that leaves, I think, in the last piece of your question, Angie, was the guarantee that we gave... Angie Storozynski - Macquarie Capital (USA), Inc.: The guarantee.

Yeah. The guarantee that we gave on the rail settlement. Angie Storozynski - Macquarie Capital (USA), Inc.: The rail-centric – yes.

And as I said in my remarks, that has been a huge issue hanging over our company since the day I became CEO. Every time I've met with investors, every time I met with the rating agencies, we have talked about it and it's had the potential to be a tremendous exposure. We found out that, at least on the first case, the arbitration panel ruled against us. And based on that ruling, we were going to be required, under the accounting rules, to book a significant charge around a range of potential outcomes of that settlement. I'll ask Jon Taylor to walk you through the details a little bit, but that number would have had a significant hit to the equity of FirstEnergy, not just FES. And so the decision to settle that for literally a fraction of that potential claim that would have had to be booked I think was a prudent decision for both FirstEnergy Solutions and FirstEnergy, and shouldn't be taken to mean anything but that, that we're trying to get a risk that's affected my decision-making, the FES board's decision-making, how the rating agencies look at our credit, and how you all look at our company off the table and quantifying it for you so you know what it is. That's all we were trying to do there. So, Jon, why don't you just take a minute and walk them through the accounting.

Okay. So, Angie, as you know, these were long-term contracts we had basically 11 years in dispute. And if you remember, we settled 2012, 2013, and 2014 for about $70 million per year. So, if you do the math, 11 years, $70 million, that's a big number. And that doesn't include escalations, changes in rates, and that type of thing. So the range could have been anywhere from $600 million to about $1 billion of exposure on a net-present-value basis. So, to get this settlement in place, if you take the after-tax impact of what could have been $600 million to the $164 million, you're preserving $300 million or so of equity. And that's just based on where we thought it might settle out based on discussions with counsel and those types of things. I mean, if it would have settled out on the high end, I mean you're looking at $600 million of equity that's preserved. So it was something that we thought was the right thing to do.

And even if the FES board had decided to file to avoid the $109 million payments, that impact would have still occurred on the FirstEnergy books. Angie Storozynski - Macquarie Capital (USA), Inc.: Okay. And so the last question, so assuming that nothing comes out from the other DOE study but Ohio does come in and support nuclear plants, what happens with the coal plants within FES?

Well, let me give a range of outcomes I guess. If let's just say nothing happens out of the DOE study, they say everything's (27:00) fine, we're really not that concerned about these baseload assets closing anymore and they move forward. And then let's say Ohio decides they don't want to move forward. I would tell you it's pretty clear, there's only one other alternative left for the FES board to consider at least from the way I see it. Should Ohio move forward with approving the ZEN at its current rate and the plants run very reliably, that's worth about $300 million a year that would flow to those two nuclear units. That amount in and of itself I don't think is enough to necessarily avoid an FES bankruptcy either. It would be enough potentially for those assets to emerge from bankruptcy and for a reputable nuclear operator be willing to take them on and run them forward. And that is why the ZEN argument is most critical is to make sure those assets are available to the State of Ohio. And the attributes that they bring in addition to 4,300 jobs that support them, the environmental attributes, the fuel security attributes, and so forth. That's the basis of the legislation. I just want to say, again, we have not made any change in our strategy to exit this commodity-exposed generation business and become a fully regulated company. Angie Storozynski - Macquarie Capital (USA), Inc.: Okay. Thank you.

Our next question is from Julien Dumoulin-Smith with UBS. Please proceed with your question.

Hey. Good morning. It's Jerimiah Booream. That was a great explanation on the $109 million there. Just wanted to be sure, crystal clear, are there any future obligations that could be guaranteed at the FE level associated with FES at this point that we know of?

There's the $500 million credit line that, as I mentioned, FES has not drawn down on at all. And beyond that, we've talked about the nuclear support agreement. But as long as they still have the $500 million credit facility, they don't need the nuclear support agreement at this time. So, as of now, nothing that I know of is being contemplated.

Got it. Makes sense. And then just a little bit longer-term. At what point should we expect a strategic update on kind of 2019-plus prospects more structurally going forward thinking about the company?

Well, we've got a lot to figure out over the next 6 to 12 months that I think is going to have an impact on that. So I would say let us get through this transition period and then we'll talk to you about what the company looks like after that when we're done.

Yeah. That makes sense. Thank you.

Our next question comes from Gregg Orrill with Barclays Bank. Please proceed with your question.

Thank you. Just two questions. First, can you talk about the EBITDA guidance increase at the competitive business for 2018 and then about the other coal transportation contract you're in discussions around and whether you took an impairment related to that?

Hey, Greg. It's Jon Taylor. So the 2018 EBITDA increased about $35 million to $40 million. Most of that is just around the fuel rate. We saw $1 lower fuel rate as we worked through 2018. A lot of it's coming from just what nuclear fuel we're going to burn, timing of outages and that type of thing. So it's really just around nuclear fuel and other fuel costs.

And your second question is, in our 10-Q, we did state that we are booking $164 million total for rail settlement. We're in active discussions with BNSF and NS on the second contract. But, as you know, the second contract hasn't been litigated yet even in front of the arbitration panel. But I think, as I said, they're active discussions and we wouldn't have booked that amount if we didn't have some feel of certainty that we can get it done in that range.

Okay. Thank you.

Our next question comes from John Kiani with Cove Key Management. Please proceed with your question.

Good morning.

Hi, John.

Chuck, I have a few questions here. Could you remind me of the history behind the DMR? I guess, it was originally a PPA for FES and what happened? And how it now became the $600 million DMR that we're benefiting from today, please? Thank you.

John, it's going to take the rest of this call for me to give you (32:47)

Just high level, what the history was behind that? And how it was originally a PPA and then became this? So, just quickly.

Yeah. So, obviously we filed an Energy Security Plan that included a PPA as part of it. That was approved 5-0 votes by the Ohio Public Utilities Commission I believe on February 28 of last year. And then was reviewed by FERC. And about seven weeks later, FERC determined that the waiver that we used for that PPA was not valid. And we went back to the commission in Ohio with an alternative plan. And they came back with the DMR, which is worth $200 million a year for sure three years and up to five years. And the rest of the ESP that we filed was basically approved and stayed in effect. The only thing that changed was the PPA got replaced with the DMR.

So the way to think about it is that originally the benefit through the PPA would have accrued to FES. And then as it evolved, it became the DMR where that $600 million benefit accrues to the regulated utilities instead of FES. Is that the right way to think about it?

Correct.

Got it. Okay. My next question, please, is have you spoken with the NRC about the Nuclear Decommissioning Trust at FES? And obviously you're working hard to get a ZEN in Ohio and there's some effort going on in Pennsylvania as well. But in the event that you're not able to get that for those assets and, hypothetically, if those assets then are shut in a bankruptcy or some type of restructuring or whatnot, who's going to be on the hook for the liability at the NDT? Because obviously it's fully funded today, but those assets have to be shut early, would flip from being funded to being under-funded by a substantial amount based on our estimates. So have you spoken with the NRC? And what are their thoughts, if you have, and your thoughts around an insolvent entity being the guarantor of such a liability, please? Thank you.

So, no, I have not spoken to the NRC. But Sam Belcher, our Chief Nuclear Officer, has been in contact with the NRC and have had very transparent discussions with them about everything going on with regard to our competitive affiliate. With regards, specifically, to the new Nuclear Decommissioning Trust, if the event arose that these units would be shut down immediately and needed to be placed in safe storage, there would likely be somewhere around $120 million shortfall in the Nuclear Decommissioning Trust. The liability for that would be under the competitive affiliate. Now, how that would ultimately then be adjudicated, I can't speak to that, but it would be about a $120 million shortfall. And that's what would be needed to allow the fuel to decay enough that it could be put in safe, permanent storage.

Would you as the parent consider guaranteeing that in the event that FES is insolvent and can't cover that?

I do not see that as the responsibility of the parent.

I see. Okay. And then the last question is, have you all evaluated, and are you confident – have you evaluated the potential for – if all your hard effort and work doesn't result in what you need for FES and if there is a restructuring at some point, have you all evaluated the risk of veil piercing or subcon at the parent company?

Well, we obviously, as I said, have a legal team, restructuring team, financial advisory team working on the FirstEnergy side of this transaction that is evaluating all those potentials. We are not going to discuss what that evaluation might show or even a range of outcomes of what it might show. But clearly that's a big piece of what we're trying to understand on the FirstEnergy side of things.

Got it. So veil piercing or subcon are just difficult, complicated, obviously, things for you to figure out, so you just don't know yet?

No. We think they're very simple and there shouldn't be any.

Got it. Okay. Thank you.

Our next question comes from Paul Patterson with Glenrock Associates. Please proceed with your question.

Good morning.

Hey, Paul.

Let's just assume that the DOE is going to find that coal and nuclear plants are important base of resources. I mean, FERC has pretty much already found that. You could say that the capacity performance products approval was based on this. I mean, we've certainly heard them verbally talk about it. I guess what I'm wondering is let's just assume that the DOE study says these are important assets and we don't want them to close. How should we think about the federal government acting, assuming such a study finding? What would actually – how should we think about that actually – what they might actually do considering we've already sort of heard this from the federal government before?

Well, Paul, as I said, I'm not going to try to predict what might happen at the end of this study, but there is a lot of discussion going on in a lot of fronts with regard to what's happening in our country with fuel-secure baseload assets. And it's clear to me, may not be clear to everybody, but it is clear to me that capacity performance hasn't solved this problem. Our competitive affiliate is on the verge of bankruptcy. It's got 8,000 megawatts of fuel-secure assets in PJM that are not getting paid enough money to keep them open. So I don't think it's working. FERC held a technical conference. They're starting to understand that maybe that it's not working. I think even PJM is now talking about the impact on the resiliency of the grid of these assets closing. And so I think there's a lot of concern being developed.

Chuck, I completely agree. I'm not saying that it's working. I guess what I'm wondering is whether or not they'd actually take steps to come to the conclusion that maybe something other than another form of capacity performance or whatever I mean, in other words, should we think about them basically going down the same sort of like market-based approach, which simply hasn't worked, or is there something else in which they – something more direct and effective might happen than some sort of additional stakeholder process for them to figure out some sort of market-based mechanism to fix it? Do you see what I'm sort of thinking here? I mean we've sort of been down this road where they say there's an issue, they're going to come up with a solution, and the solution doesn't work.

Well, I think that what they do if they decide there's a problem here that they need to fix has to be fast, it has to be clear, and it has to be transparent to those asset owners that it's going to be secure enough for them to keep those assets running. And how they do that? I can't tell you how they're going to do that. We are obviously working fast and furious inside FirstEnergy to develop our own ideas as to how that could happen that hopefully we'll get a chance to inject into the process at some point in time. I know that our industry group, EEI, is also working to see how they can get involved in this issue. But the real issue for me is I've gotten into it and that you have to read between the lines a little bit. But the Secretary has been very outspoken about the national security implications of allowing these fuel-secure assets to continue to close. And that's a big concern for me too, because we are moving to a place where the bulk electric system in our country, which is tremendously redundant, very sophisticated, is being placed on top of a bulk gas transmission network that is not robust, does not have redundancy, is congested. And any exposure to that bulk gas system then will expose the electric system also.

Okay. Fair enough. And just quickly, on the FENOC guarantee, you mentioned that you don't see in the near-term parental support. Can you give us just a little more color as to how the parent guarantee for FENOC might be employed?

Well, FENOC's operating license with the NRC requires them to at all times have enough liquidity to ensure that in the event that all four of those reactors were to have an issue and need to be placed in safe storage, that they have enough liquidity to do that. That was the whole point behind the nuclear support agreement. As long as they are in the money pool and they have this $500 million secure credit facility that is undrawn, there's no reason for a nuclear support agreement to be in place.

But if there was no nuclear – if nothing works on the state level or the federal level, what have you, and FES goes into Chapter 11 or whatever, should we think of that FENOC money as basically being potentially an avenue for creditors to get money?

I would think not. I mean, that nuclear support agreement has – we would not agree to a nuclear support agreement that was there for any purpose but what it's intended to be, provide the liquidity in the event that all four units have issues that force them to have to be put in safe storage on an emergency basis.

I see. So economic retirement would not be one of them?

No.

Okay. Thanks so much.

Our next question comes from Steven Fleishman with Wolfe Research. Please proceed with your question.

Yeah. Thanks. Good morning.

Hey, Steve.

Hey, Chuck. Just on the decision to settle the rail case, you mentioned the scenario where if you hadn't settled, you would have had to take this potentially large write-off at FE, which I assume would have been non-cash. Is there a reason that that would have mattered if it was non-cash? Would it have been like a covenant issue or rating agency issue? Because it would seem like, otherwise, I'm not sure why that would have been a concern.

Hey, Steve. This is Jim. It would not have tripped any covenant. It probably would have impacted our covenant by about 2%. But, ultimately, it could have been a cash issue, depending on what the arbiters decided. In fact, there's scenarios where the decision could have made a payment demanded in full this year. So, from our standpoint, a settlement that is in the $50 million range on a cash basis each year for three years and not having to record that large equity hit, we thought that was the prudent thing to do.

Yeah. Does that mean...

I think that – go ahead.

It makes sense on the surface if you look at the cost to settle versus that potential liability. I guess, the one thing I wonder though is to the degree that FES is clearly separate and distinct from FE, that's really an FES cost, not an FE cost. So I guess my question would be why would FE commit the money to settle, if it's really an FES cost?

Again, the railroads wouldn't settle without it.

Okay. Okay. And then just on the kind of comment you made about wanting to get through the DOE and Ohio potential legislation that the FES board also wanted to kind of see this play out, can you just maybe end that sentence by saying, like, play out before what?

Well, I'm just going to be very direct here. I think there was an assumption made that we created this separate governance for FES with a sole purpose of moving towards bankruptcy. That is not why we did it. We did it with the understanding that a bankruptcy or restructuring may at some point become inevitable. That FES board is sitting there looking at a whole lot of things but I think, clearly, if there is something in the near-term that can make the picture for creditors better, it's prudent for them to look at that too. We didn't go into this with the idea of figuring out how to not pay creditors back what they loaned us in good faith. And I sit here doing the same thing. I look out for all of you as investors. I'm looking out for our employees and communities, but also sitting here saying if there's a way that we can do better by these creditors, I get paid to do that as a CEO, too.

That makes sense. Yeah. One last question, just going back to the utilities. Just if we go back to the utility plan that you laid out at EEI, is everything pretty much on track with what you laid out there?

I think we're right on track.

Okay. Great. Thank you.

Before we take our next question, there are several callers in the queue. In order to address all callers, we ask that you please limit to one question per caller. Thank you. Our next question comes from Dylan Campbell with Goldman Sachs. Please proceed with your question. Dylan Campbell - Goldman Sachs & Co.: Hi. Good morning. Thanks for taking my question.

Morning. Dylan Campbell - Goldman Sachs & Co.: For the inter-company credit facility between FE Corp. and FES, does the arbitration settlement trigger an event of default? We're just looking at the $50 million limit spelled out in your December 8-K filing.

Dylan, it's Steve. It does not. Dylan Campbell - Goldman Sachs & Co.: Okay. Thanks. And then on your regulated business in New Jersey, do you anticipate filing to get infrastructure trackers and to facilitate more investment and energy efficiency in solar?

I wouldn't say anticipate. I think the outcome of our rig case last year in New Jersey, I think, puts us in a position to have that type of dialogue with the BPU, and we intend to have that dialogue with the BPU about their appetite for an investment program for New Jersey that will drive improved service and reliability for customers. And we'll see if we can do that. But I don't think anticipate would be the right way to say it. We plan to have those discussions. Dylan Campbell - Goldman Sachs & Co.: Okay. Thank you.

Our next question comes from Anthony Crowdell with Jefferies. Please proceed with your question.

Two quick items; one is since now FES is going to wait for the DOE, does that maybe lessen the urgency in the Ohio legislature to get a ZEN approved? Because wouldn't it benefit the Ohio legislature to wait also for the DOE?

I don't think it should lessen any urgency on the part of the Ohio legislature. The whole point of the ZEN is you have two very important assets in Ohio that you need to protect for your state. If they're going to sit around and wait for the federal government, I'm not sure that's prudent on their part. The bills have been introduced. The hearings have started. I think they need to move forward with that.

And just last, I think Beaver Valley, one of the units was previously owned by one of the Ohio utilities or took the output. Does the ZEN cover Beaver Valley or some of the output from Beaver Valley?

The ZEN does not limit it to Ohio assets. Assets from outside of Ohio are eligible to apply, and then it would ultimately be, if the legislation's approved the way it is, up to the Public Utilities Commission as to whether or not they qualify.

Great. Thanks for taking my questions.

Our next question comes from Greg Gordon with Evercore. Please proceed with your question.

Thanks, guys. I don't mean to beat a dead horse and come back to Steve's question, but it troubles me a little that what would have been an executory contract that could have become an unsecured claim and a bankruptcy filing is now being guaranteed by the FE parent because that's incremental liability for the equity holder of FE. And how much more of that is going to happen as we think about the time vector between now and when a decision on bankruptcy or non-bankruptcy is made, which really goes also to the question John Kiani asked in that, like, what other hidden liabilities are going to move up to the parent balance sheet as we move through time here before we get to a decision point where you say we're not going to guarantee any more of these liabilities?

So, Greg, as we were contemplating whether or not to do this parental guarantee, I completely understood that some of you were going to like it and some of you weren't. But that's pretty much what goes along with every single decision that I've made as CEO since I took this job. I thought it was the right thing to do for FirstEnergy to move forward with this and offer that guarantee. I said earlier, I don't know of anything else that's of this magnitude for sure or anything else at all that would require us to provide further support to our competitive business. It's free cash flow neutral throughout the rest of this year, doesn't need any support. And essentially, since the day I became CEO, we really have provided nothing to support that business. It's been running on its own and, conversely, when we initiated the CFIP program, much of the improvement in cash flow for this company came from that business and put them in that position where they didn't need any parental support. Now, we talked about the fact we've got a second contract that's not yet settled but, as I said, we booked $164 million total for the combination of both contracts.

Okay. I appreciate the answer. Thank you.

Our next question comes from Christina Ren with Capital Group. Please proceed with your question. Christina (Ren) Van Het Hoen - Capital Group: Hi. Good morning. I just have a question about the $109 million settlement payments. Is that going to be paid in an equal installment over the three years? And then I know it says there agreed in principle. When will this be, I guess, finalized and what's the risk of it not being finalized?

Well, I wouldn't say it's going to be paid in equal installments, but essentially equal installments. There was some rounding to make it simpler. All three parties have signed a term sheet. So it's a matter of getting a definitive agreement in place. But I don't see any risk to that happening. It just takes a little bit longer to do that. But all three parties have signed the term sheet. Christina (Ren) Van Het Hoen - Capital Group: Okay. Thank you.

Hey. This is Jim. I want to say we have a hard stop at 11 o'clock and there's still a number of people on the call. So, if we don't get to you, the IR team will reach out to you to get your questions taken care of.

Our next question comes from Jonathan Arnold with Deutsche Bank. Please proceed with your question.

Hey. Good morning, guys.

Hi, John.

Sort of slightly different topic but also on FES. We noticed in the 2018 drivers that you're talking about nuclear fuel costs of $5 a megawatt hour and I think last quarter you were showing those as $7. What would account for what seemed like quite a big change?

Jonathan, It's Jon. It just was the timing of when some of the lower cost nuclear fuel was going to be burned. Previously, we thought it was going to be burned 2019 and beyond. But given some of the outages and the like, some of that will be burned in the second half of 2018.

Okay. So there's a fuel inventory and timing of burn kind of thing.

That's right. That's right.

Okay. And may I just, Chuck, one quick thing on timing. When you committed to 18 months, you didn't know that we were going to have this DOE study and other things that the FES board now wants to wait for. So how do we reconcile that? Or is it – and how do you feel about that overall timing issue, given now some of these what look like delays?

Well, I need to clarify the difference between a goal and a commitment. Because what I've said is it's our goal to exit by middle of next year. I would never make a commitment because as we began down this path, all of the decisions to complete this exit from commodity-exposed generation are not in my control. But that remains the goal. And as I said earlier, I'm not sure the DOE study itself is going to take that off track. Now if the DOE study says, hey, we're going to do something and make these assets stay around, then I think we need to wait to see what that solution is before we make any final decision.

I don't want to put words in your mouth, but it seems like you are endorsing the idea that achieving that goal might be slightly less likely.

I'm not endorsing that.

Okay. Thank you for clarifying.

If the DOE study does what I believe it should do, then we will take a pause and see how that evaluates. But I'm not sure they're going to agree with me, but I clearly believe we are making a mistake as a country if we continue to let these fuel-secure assets close as rapidly as they are, both nuclear and fossil. And that's why the states are having to step up to solve this problem because the markets are not taking care of it. They don't reward the security and a lot of the other attributes that these assets bring. So we need to get this fixed as a country. And I applaud the Trump administration and Secretary Perry for getting this process going.

Okay. Great. Thank you.

Our next question comes from Kamal Patel with Wells Fargo. Please proceed with your question.

Morning, everyone. Looking at the DMR, I think stuff may have indicated that essentially to support the parent balance sheet and the overall utility balance sheet, it's a transfer of value from rate payers. How do you view the potential for $300 million in ZEN payments that the rate payers would take on? And what type of value are they receiving? Is there a implied value that you guys have estimated from keeping the nuclear plants open?

Well, that's up to the legislature to determine. The value is 4,300 jobs. The value is fuel security. The value is the zero-emissions environmental attributes that these assets bring. The value is the tax base that it brings to Ohio. The value is $510 million a year of impact on Ohio's gross domestic product that these plants bring. And Brattle just did a study that would indicate that it will also save customers $1.3 billion in their electric rates over the next 10 years if these assets are there versus if these assets are gone. So, that's the value that they have to quantify. The legislation has a cap of about a $5 increase on customer bills. So, that's the decision that the legislature's going to have to make.

Okay. Thanks for the time.

Okay. Well, we're at the end of our time and, as Jim said, there's a couple more in the queue. Feel free to call Irene and her team, or they'll reach out to you. We'll make sure we get your questions answered. And a lot going on and hopefully we provided some clarity around our recent decisions. If you don't have all the clarity you need, follow up with Irene. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. And we thank you for your participation.