Lower Pricing Offsets Higher Volumes at FirstEnergy Solutions

Higher volumes of competitive retail sales directly to large and mass market customers by FirstEnergy Solutions in the second quarter of 2012 could not stem the negative impact of lower pricing in producing lower commodity margin, versus the year-ago quarter, FirstEnergy Corp. said today in reporting earnings.

Although FirstEnergy Solutions recorded an incremental commodity margin benefit (versus the year-ago quarter) of $100 million due to higher direct retail sales to large and mass market customers, this was offset by lower commodity margin from reduced pricing. In aggregate, commodity margin from contracted sales for the second quarter of 2012 decreased by about $13 million versus the year-ago.

In the second quarter of 2012, FirstEnergy Solutions' direct retail sales to large and medium customers increased by 2.0 million MWh, or 16%, versus the year ago. Direct, mass market retail sales increased by 794,000 MWh, or 254%.

A breakdown of growth in direct retail sales by market and customer segment for the second quarter, as well as comparisons of POLR and aggregation sales, is below:

FirstEnergy Solutions Retail Sales (in GWh)
Second Quarter Comparison

         2Q 2012    2Q 2011    Change
Direct: Large Commercial and Industrial
  OH      7,254      5,654     1,600
  PA      4,025      3,794       231
  NJ        319        427      (108)
  MI        577        485        92
  IL        767        820       (53)
  MD        165        164         1

Direct: Medium Commercial and Industrial
  OH        586        428       158
  PA        242        200        42
  IL          1         --         1
  MD          1         --         1

Direct: Mass Market
  OH        303        160       143
  PA        787        152       635
  IL          5         --         5
  MD         11         --        11

Aggregation
  OH       3,612     3,658       (46)
  IL          26        --        26

POLR
  OH       1,539     1,846      (307)
  PA       2,081     3,245    (1,164)
  MD         706       642        64

FirstEnergy's quarterly report includes an aggregate switching percent for the second quarter for each of its distribution companies, listed on page 15 of its report to investors. Although the data reflects an average for the quarter (rather than end of quarter statistics), and is not broken out by customer class, the data is of some utility given that the most recent Ohio migration data from PUCO is as of the first quarter.