CLEVELAND ELECTRIC ILLUMINATING CO Annual Compliance Report

I’m putting together a guide to help you understand the status of the CEI Funding LLC bond trust. My goal is to turn complex financial filings into plain English so you can decide if this specific debt instrument fits your goals.

1. What is this entity?

CEI Funding LLC is a special-purpose entity created in 2013 by The Cleveland Electric Illuminating Company (a subsidiary of FirstEnergy Corp). It was established to issue $450 million in bonds to cover specific environmental and storm-related costs. This report confirms that the mandatory charges collected from customers are successfully paying down that debt.

2. Financial performance

The trust tracks "Securitization Charges" collected from customers. This year, the trust collected approximately $28.5 million. Because these charges are mandatory for all customers in the service territory, they provide a highly predictable stream of cash dedicated solely to bond repayment.

3. Progress toward debt payoff

The "True-Up" process is the primary mechanism for success here. This annual adjustment ensures that collections remain on track to pay off the remaining bond balance by August 1, 2026. The process is functioning as intended, ensuring the debt is retired on schedule.

4. Financial health and credit rating

CEI Funding LLC is structured to be bankruptcy-remote, meaning the assets are protected. The original $450 million debt has been reduced to approximately $65 million. The trust maintains a reserve account to cover upcoming interest payments, which supports its AAA credit rating.

5. Risk factors

The primary risk to bondholders is a potential decline in electricity consumption within the service area. However, the "True-Up" mechanism is designed to mitigate this by adjusting rates for remaining customers, ensuring the debt obligation is met regardless of usage fluctuations. The trustee, U.S. Bank, manages the trust, and its broader corporate legal activities do not impact these specific bonds.

6. Regulatory environment

As a regulated utility, the parent company operates as a legal monopoly in its Ohio territory under the oversight of the Public Utilities Commission of Ohio. State law provides a firm legal framework that protects the right to collect these charges, which reinforces the security of the bonds.

7. Future outlook

This trust is in its final stages. The bonds reach their final maturity on August 1, 2026. The current trajectory confirms the debt will be fully satisfied by that date, at which point the entity will conclude its operations.

My Take: This document is a compliance report for a specific 2013 bond trust, not an overview of the parent company’s business operations. It confirms that the debt is being managed effectively and is on track for full repayment by 2026. If you are looking to evaluate the broader business performance or growth potential of the utility provider, you should review the full annual report for the parent company, FirstEnergy Corp.