OHIO EDISON CO Annual Report - How They Did This Year

I’ve put together a simple guide to help you understand how Ohio Edison performed this year. Think of this as a "cheat sheet" to help you decide if this company fits your investment goals.

1. What does this company do?

Ohio Edison is an electric utility owned by FirstEnergy Corp. This report focuses on the Ohio Edison Company Securitization Funding LLC, an entity created in 2013 to issue $450 million in bonds to cover costs from the shift to competitive retail electricity. This document confirms that the extra fees collected from customers are being paid to bondholders as promised.

2. Financial Performance

The company collected and paid out between $35 million and $40 million in bond fees this year. These funds go directly toward paying off the 2013 bonds, which have an average interest rate of 2.5%. A "true-up" process is used to adjust customer fees annually, ensuring the bonds remain on track to be fully paid off by 2028.

3. Major Wins

The steady repayment schedule has kept these bonds at a top-tier AAA credit rating. The company has successfully managed these payments for 11 years, and all distributions to bondholders were made on time.

4. Financial Health

Using a separate "Funding LLC" keeps this specific debt off the parent company’s main balance sheet, which helps lower the interest rate compared to standard corporate debt. A $2.25 million reserve account remains fully funded, acting as a safety net to protect bondholders if customer payments fluctuate. This structure ensures that this specific debt is being managed independently and safely.

5. Key Risks

The Trustee, U.S. Bank, is involved in ongoing legal matters related to mortgage-backed securities from 2004–2008. While these are separate from the bank's role here, any significant legal or financial instability at the Trustee level could theoretically impact payment distributions. Additionally, the collection of these fees is subject to the oversight and approval of the Public Utilities Commission of Ohio (PUCO).

6. Future Outlook

The outlook is steady and predictable. The remaining debt has been reduced from the original $450 million to approximately $120 million. The company will continue annual reviews to ensure customer fees cover the remaining balance, with a target payoff date of 2028.

Investor Note: This document is a legal requirement focused on the mechanics of a specific bond issuance. It confirms that the "plumbing" of this debt is working, but it does not reflect the parent company’s overall growth or profitability. To evaluate your investment in the parent company, check the main annual report for FirstEnergy (FE) for revenue and profit figures.