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���������ֳ� - New York - 25 Aug 2021:

���������ֳ� has affirmed the Long- and Short-Term Issuer Default Ratings (IDR) of FirstEnergy Corporation (FE) and FirstEnergy Transmission, LLC (FET) at 'BB+' and 'B', respectively. ���������ֳ� has also affirmed the Long- and Short-Term IDRs of FE's utility subsidiaries at 'BBB-' and 'F3', respectively. The Rating Outlook for FE and its subsidiaries has been revised to Stable from Negative.

The rating affirmation and Stable Outlook consider the deferred prosecution agreement (DPA) reached by the U.S. Attorney's Office (USAO) and FE regarding the Department of Justice (DoJ) criminal investigation. ���������ֳ� believes the agreement is constructive from a credit perspective. The ratings and Stable Outlooks also consider the potential adverse impact of admissions contained in the DPA on the regulatory compact in Ohio. ���������ֳ� believes sufficient headroom exists, in a reasonable worst-case outcome, for FE and its Ohio-based utilities to absorb financial pressure from future regulatory actions in pending Ohio rate proceedings.

Key Rating Drivers

FIRSTENERGY CORP

DPA Settlement: ���������ֳ� believes FE's July 20, 2021 agreement with the U.S. Attorney's Office (USAO) for the Southern District of Ohio resolving the Department of Justice's (DoJ) investigation is a constructive development from a credit perspective.

Under the terms of the DPA, FE has agreed to the government's filing of a single charge of conspiracy to commit honest services wire fraud, which will be dismissed in three years, if FE meets certain conditions. Salient features of the settlement include a $230 million penalty, cooperation with the government's investigation, continued implementation of programs to detect and prevent violation of U.S. laws, forfeiture of approximately $6.5 million to the U.S. government and disclosure of payments to entities controlled by public officials made by FE in 2021, among other things.

FE is being investigated by several agencies, including the SEC and Federal Energy Regulatory Commission (FERC) and several suits are pending, including the Ohio Attorney General (OAG) and certain Ohio cities' civil complaints against FE alleging violation of the Ohio Corrupt Activity Act in connection with passage of HB6.

Reputational Damage: While admissions contained in the DPA damage FE's reputation with key constituents, the settlement removes significant source of uncertainty and provides an opportunity for FE to rehabilitate its reputation. FE has cooperated significantly with federal investigators, as acknowledged in the DPA, and the company plans to continue to cooperate with the investigation.

FE has been vocal in its commitment to empower a culture of compliance and transparency while rebuilding its reputation and cooperating with ongoing government and regulatory investigations. ���������ֳ� believes efforts underway at FE to enhance transparency and strengthen compliance with the company's code of conduct and other policies are credit supportive. Failure to realize meaningful improvement in corporate governance and culture at FE would result in adverse credit rating actions.

FE has strengthened its board and executive leadership, hiring John Somerhalder as Vice-Chairperson and Executive Director. Somerhalder will work with FE management to strengthen governance and compliance functions and enhance relationships with external stakeholders. Among other things, FE has hired a new chief legal officer and chief ethics and compliance officer. Five new directors joined FE's board in 2021.

Challenges in Ohio: Admissions in the DPA's statement of facts by FE create a challenging regulatory environment in Ohio, in ���������ֳ�'s view. Further financial pressure is likely to emerge from pending Ohio regulatory proceedings, including several opened to investigate impacts from FE's past corrupt activity. ���������ֳ� believes FE and its Ohio operating utilities have sufficient headroom in their credit metrics to absorb a reasonable worst-case outcome, supporting the rating affirmations and Stable Outlooks.

Credit Metrics Pressured: Based on ���������ֳ�'s estimates, FE credit metrics are expected to remain weak in 2021 and 2022, primarily driven by Ohio regulatory proceedings, before improving in 2023 and 2024. ���������ֳ� estimates FFO leverage of approximately 7.4x and 8.2, respectively, in 2021 and 2022, before improving to 7.1x and 6.4x in 2023 and 2024.

Parent and Subsidiary Rating Linkage: ���������ֳ� considers FE's subsidiary distribution and transmission utility operating companies (OpCos) to be generally stronger than their corporate parent, reflecting the utilities' relatively low business risk profile, balanced rate regulation and solid FFO-adjusted leverage.

While operational and strategic ties are robust, prescribed regulatory capital structures for FE's opcos leads to moderate rating linkage, allowing the utilities' IDRs to be notched above FE's IDR. ���������ֳ� applies a bottom-up approach rating FE's opcos. FE's utility subsidiary IDRs reflect their standalone credit profiles and moderate rating linkage with FE, while FE's IDR incorporates a consolidated approach.

Manageable Leverage: While FE's consolidated leverage is manageable for its current rating category, parent-only leverage is high. FE's consolidated balance sheet debt totaled $23.8 billion as of June 30, 2021, and includes $7.8 billion of parent-only debt. FE's parent-only debt accounted for approximately 33% of consolidated debt at the end of 2Q 2021.

Utility Focused Growth Strategy: ���������ֳ� believes FE management's strategic focus on regulated utility growth is credit supportive. Rate base growth is expected to approach 6% in 2020-2023, driven by estimated capex of up to $2.9 billion in 2021 ($1.7 billion distribution and $1.1 billion transmission). Total capex is projected in a range of $2.9 billion-$3.2 billion in 2022 and $2.7 billion-$3.1 billion in 2023. Management foresees $20 billion of post-2023 transmission investment opportunities.

Ohio Utilities: Ohio Edison (OE), Cleveland Electric Illuminating Co. (CE) and Toledo Edison (TE)

Ohio Regulatory Update: ���������ֳ� believes economic regulation is likely to prove challenging as FE works to regain the trust of regulators, customers and other constituents in light of admissions contained in the DPA. Significant deterioration in the Ohio regulatory compact is a key credit concern and could pressure OE's, CE's, TE's and FE's creditworthiness. PUCO has opened several proceedings investigating OE, CE and TE. Open dockets include a review of charitable and political spending, corporate separation audit, distribution modernization rider review and review of vendor payments as part of PUCO's delivery capital rider audit.

In addition, the PUCO has consolidated ESP IV related significantly excessive earnings test (SEET) proceedings for OE, CE and TE for 2017, 2018 and 2019 in its quadrennial review of the utilities' ESP IV. FE does not believe it has significantly excessive earnings, while intervenors in the proceeding assert significant excessive earnings.

FE management is committed to pursuing an open dialogue to reach a global settlement of matters before the PUCO with an eye toward addressing regulatory concerns and uncertainties. FE hopes through this process to establish greater trust with constituents and restore its reputation. Worse than expected outcomes in open PUCO proceedings from a credit perspective cannot be ruled out and could result in future adverse credit rating actions. The Stable Rating Outlook for OE, CE, TE and their corporate parent reflects headroom in the operating utilities' credit metrics sufficient, in ���������ֳ�'s view, to absorb a reasonable worst-case outcome.

Parent and Subsidiary Rating Linkage: Rating linkage between CE, OE, TE and FE is moderate. FE is dependent on cash distributions from its operating utility and transmission subsidiaries. While FE's rated subsidiaries, including CE, OE and TE, have direct access to capital markets and are subject to cost-of-service regulation and jurisdictional capital requirements, they have relatively strong strategic and operational links to their corporate parent. Operating utility subsidiary funding is facilitated through central treasury operations including sub-limits under FE's fully committed bank agreement and participation in FE's regulated money pool.

Solid Credit Metrics: OE's, CE's and TE's IDRs and Stable Outlooks reflect solid underlying credit metrics, constructive rate design in Ohio and a balanced outcome in the utilities' Electric Security Plan (ESP) IV proceeding before the PUCO. ���������ֳ� estimates that average annual 2022-2024 FFO leverage in a range of 3.3x-3.6x for OE, 5.4x-6.9x for CE and 4.7x-5.5x for TE.

Pennsylvania Utilities: Metropolitan Edison Co. (ME); Pennsylvania Electric Co. (PN); West Penn Power (WP); and, Pennsylvania Power Co. (PP)

Solid Credit Metrics: Factors supporting the ratings and Stable Rating Outlooks for ME, PN, WP and PP include solid underlying credit metrics reflecting constructive rate design in Pennsylvania including settlement agreements in the utilities' past two base rate cases. In ���������ֳ�'s assessment, business risk at ME, PN, WP and PP, as pure transmission and distribution utilities providing essential electric utility services in parts of Pennsylvania, is low and cash flows relatively stable. ���������ֳ� estimates annual 2021-2024 FFO leverage will 5.0x or better for ME, PN, WP and PP.

Constructive Regulation: ���������ֳ� views the regulatory compact in Pennsylvania favorably from a credit point of view. Rate lag under Pennsylvania rate regulation is mitigated by use of forecast test years in base rate cases and adjustment mechanisms to recover infrastructure investment, smart meter costs, purchase power for default service and energy efficiency costs mandated by Act 129 outside of base rate case proceedings. In ���������ֳ�'s view, authorized PUC default service plans adequately protect utilities operating in the state from exposure to market price volatility.

Distribution utility capex in Pennsylvania is expected to approximate $525 million-$565 million per year during 2021-2023 in aggregate for WP, PP, ME and PN. Constructive Pennsylvania rate regulation mitigates ���������ֳ�'s concerns regarding the utilities' large capex program. The utilities' last two base rate cases were resolved through PPUC-approved settlement agreements in 2015 and 2017 resulting in base rate increases of $291 million in 2017 and $293 million in 2015.

LTIIP Approved: In January 2020, the PUC approved WP, PP, ME and PN's Long-Term Infrastructure Investment Plan (LTIIP). FE's Pennsylvania utility operating companies (OpCos) filed individual LTIIPs with the PUC in August 2019. PPUC's order authorizes capital investment of $572 million as proposed collectively by FE's Pennsylvania-based OpCos for 2020-2024. Cost associated with FE's LTIIP will be recovered through the utilities' Distribution System Investment Charge (DSIC) outside of base rate case proceedings.

In March 2020, the PPUC approved a settlement authorizing a temporary increase in PP's DSIC recoverability cap to 7.5% from 5.0%. The cap will expire with the effective date of new rates in PP's next base rate case filing or expiration of its LTIIP II program.

EE&C Settlement Approved: On March 25, 2021, the PPUC approved a settlement agreement reached by FE with intervenors in the proceeding in the company's Phase IV energy efficiency and conservation (EE&C) plan without modification. The plan is operative from June 2021 through May 2026 and sets demand reduction targets relative to 2007 to 2008 peak demand at 2.9% MW for ME, 3.3% MW for PN, 2.0% MW for PP and 2.5% MW for WP.

In addition, the PPUC-approved settlement authorizes energy consumption demand target reductions as a percentage of the companies historic 2009 to 2010 reference load 3.1% MWH for ME, 3.0% MWH for PN, 2.7% MWH for PP and 2.4% MWH for WP.

PA Divestiture Pending: In February, 2021, PN agreed to sell its Waverly, NY distribution assets to Tri-County Rural Electric Cooperative (Tri-County). PN, through the Waverly Electric Light & Power Company, serves approximately 4,000 customers in the Waverly NY vicinity. The transfer of assets and customers to Tri-County is subject to several closing conditions including regulatory approvals and is expected to close in 2022.

Parent and Subsidiary Rating Linkage: Rating linkage between ME, PN, WPP, PP and FE is moderate-to-strong. FE is dependent on cash distributions from its operating utility and transmission subsidiaries. While FE's rated subsidiaries, including ME, PN, WPP and PP, have direct access to capital markets and are subject to cost-of-service regulation and jurisdictional capital requirements, they have relatively strong strategic and operational linkage with their corporate parent. Operating utility subsidiary funding is facilitated through centralized treasure function. Salient features include sub-limits under FE's fully committed bank agreement and its subsidiaries participate in FE's regulated money pool.

Jersey Central Power & Light (JCP&L)

Low Stand-Alone Business Risk: JCP&L's ratings and Stable Outlook consider the utility's relatively low, stand-alone business risk profile as a pure transmission and distribution utility, predictable earnings and cash flows and solid projected 2022-2024 FFO leverage, reflecting the constructive effects of JCP&L's recent, commission approved base rate case settlement. New Jersey Board of Public Utilities and FERC rate regulation is generally balanced, in ���������ֳ�'s opinion, from a credit perspective. ���������ֳ� estimates FFO leverage will improve from 5.7x in 2021 to average 4.5x during 2022-2024, due in large part to a balanced outcome in JCP&L's most recent base rate case, and is supportive of JCP&L's current ratings.

Large Capex Program: JCP&L is targeting 2021-2023 transmission and distribution (T&D) capex in the $1.1 billion to $1.2 billion range, or approximately 14% of FE's total T&D capex of $8.2 billion to $8.9 billion. Projected 2021-2023 capex for JCP&L's transmission business represents 52% of total JCP&L capex in its low case, and 57% in its high case with distribution spending representing the remainder.

JCP&L's T&D capex program is focused on improving grid resilience and reliability with shorter outages, while modernizing the grid to facilitating clean energy goals. Proposed capex initiatives include electric vehicle charging, advanced meters and energy efficiency and conservation initiatives.

Coronavirus Impact Manageable: ���������ֳ� expects the effects of the coronavirus pandemic on JCP&L's operations and financials to be manageable within its current rating category, all else equal. The BPU has authorized tracking of coronavirus-related costs and deferral of bad debt expense for future recovery in rates.

Final BPU Decision: JCP&L reached a settlement in its last base rate case with intervenors, which was approved by the BPU in October 2020. The BPU-approved settlement included, among other things, a $94 million annual revenue increase based on a 9.6% authorized ROE and a 51.4% equity capital component, with new rates effective Nov. 1, 2021. The rate increase represents 51% of JCP&L's updated $185 million revenue increase supported by the utility at the time of the BPU's final decision.

The delay in the effective date of the rate increase is partially offset by amortization of deferrals and use of proceeds from the sale of the Yards Creek generating facility of approximately $109 million to reduce regulatory assets for previously incurred storm costs.

Management Audit: In October 2020, the BPU initiated a JCP&L management audit. In December 2020, the commission issued a request for proposals seeking bids from firms interested in conducting the audit. The audit is expected to examine reliability and resilience, vegetation management, internal and external communications, distribution circuit undergrounding, affiliate transactions and operational and investment decision making.

Parent and Subsidiary Rating Linkage: JCP&L's rating linkage with FE is moderate. ���������ֳ� takes a strong subsidiary/weak parent approach in its analysis. JCP&L has close strategic, operational and financial ties with FE, which has a centralized treasury and management structure and is dependent on cash distributions from its operating subsidiaries to meet its obligations. JCP&L participates in FE's utility money pool and relies on a sub-limit under FE's bank facility, in part, to meet its liquidity needs. JCP&L has direct access to debt capital markets and is regulated by the BPU and FERC on a cost-of-service basis and subject to jurisdictional capital requirements.

Monongahela Power Co. (MP), Potomac Edison Co. (PE) and Allegheny Generating Co. (AGC)

Solid Credit Metrics: The IDRs and Stable Outlooks for MP, AGC and PE reflect solid projected credit metrics in the wake of relatively constructive outcomes in West Virginia rate proceedings in recent years for MP and the Maryland Public Service Commission's (MPSC) order in PE's last base rate case. In addition, the ratings for MP and PE reflect the impact of coronavirus pandemic on MP and PE, lower revenue due to the Tax Cuts and Jobs Act of 2017 and solid C&I growth in deliveries 2021-2023. ���������ֳ� projects annual 2021-2024 FFO-adjusted leverage will average 4.4x for MP, 5.1x for PE and 3.4x for AGC.

Low Business Risk: MP is an integrated electric utility serving parts of West Virginia while PE is a pure T&D utility primarily serving parts of Maryland and West Virginia. MP provides power supply services to PE in West Virginia and the companies file joint rate case proceedings before the West Virginia Public Service Commission (WVPSC). ���������ֳ� believes MP offers a somewhat higher operating risk profile compared with PE's pure transmission and distribution utility business risk profile. MP owns or controls 3,580MW of primarily coal-fired, rate regulated generating capacity.

WV Regulatory Environment: Utilities operating in West Virginia file rate cases based on historical test years, utilizing an average base rate. In addition, final WVPSC decisions are typically issued a year or more after the established test year. These factors contribute to regulatory lag and ROEs tend to be below the industry average. While regulation is somewhat challenging, in ���������ֳ�'s view, signs of improvement include more balanced outcomes MP's most recent base rate cases and adoption of cost recovery riders for fuel and purchased power and vegetation management.

AGC Rating Linked to MP: Allegheny Generating Co. is a FERC-regulated wholly owned subsidiary of MP. AGC's sole asset is a 16% ownership interest (480-mW) in the Bath County Project's (BCP) 3000-MW pumped storage generating facility. All of the output from AGC's ownership interest in BCP is sold under a power sales agreement with MP at cost-plus rates.

MD Rate Regulation: Similar to West Virginia, Maryland regulation tends to rely on historic test years and has been reluctant to adopt innovative cost recovery mechanisms. However, ���������ֳ� notes that the MPSC in PE's last general rate case incorporated a partially forecasted test year supplementing a full 12 months of actual data. In addition, Maryland is considering alternative ratemaking including multi-year rate plans, which, if implemented in a balanced manner, would be constructive from a credit perspective.

PE's last rate case was filed in August 2018 and the PSC issued an order approving a $10.4 million base rate increase, adopting company proposed electric distribution investment surcharge (EDIS) and addressing issues associated with the federal tax changes enacted in 2017. PE supported a $17.6 million rate increase at the time of the MPSC decision. The EDIS rider facilitates recovery of distribution investment to enhance system reliability outside of base rate case filings and is reconciled annually. The MPSC decision requires PE to file a base rate case at the end of the approved EDIS program in early 2023. ���������ֳ� believes the final MPSC decision is credit neutral for PE.

WV and MD Capex: FE plans distribution investment of $255 million-$285 million per year in West Virginia 2021-2023 and $70 million-$95 million per year in Maryland.

Parent and Subsidiary Rating Linkage: MP's and PE's rating linkage with FE is moderate. ���������ֳ� takes a strong subsidiary/weak parent approach in its analysis. MP and PE have close strategic, operational and financial ties with FE, which has a centralized treasury and management structure and is dependent on cash distributions from its operating subsidiaries to meet its obligations. MP and PE participate in FE's utility money pool and relies on sub-limits under FE's bank facility, in part, to meet their liquidity needs. MP and PE have direct access to debt capital markets and are regulated by the MPSC, WVPSC and FERC on a cost-of-service basis and subject to jurisdictional capital requirements. AGC's rating linkage with MP is strong reflecting close strategic, operational and financial ties.

FirstEnergy Transmission Co. (FET), American Transmission Systems, Inc. (ATSI), Mid-Atlantic Interstate Transmission, LLC (MAIT), Trans-Allegheny Interstate Line Co. (TrAIL)

Solid Credit Metrics: Factors supporting the IDRs and Stable Outlooks for ATSI, MAIT and TrAIL include solid underlying credit metrics, formula-based rate design and balanced FERC rate regulation. ���������ֳ� estimates average annual 2021-2024 FFO-adjusted leverage of 5.5x for FET and better than 4.0x for ATSI, MAIT and TrAIL.

Large Capex Program: FE, is targeting transmission capex of $1.1 billion in 2021, $1.2 billion to $1.5 billion in 2022 and $1.1 billion-$1.5 billion in 2023. Projected 2021 through 2023 total capex for ATSI, TrAIL and MAIT on average represents approximately 75%, 65% and 67% of FE's annual consolidated transmission capital spend over the same time horizon. The transmission build-out is designed to improve FE's system reliability and customer service and consist of a large number of relatively small projects. FE has identified more than $20 billion of post-2023 investment opportunities in its transmission business.

Constructive Price Regulation: FET's, ATSI's, MAIT's and TrAIL's IDRs and Stable Outlooks consider balanced FERC rate regulation, which includes forward-looking test years, formula-based rates with annual true-up and relatively attractive ROE. These factors mitigate regulatory lag and ���������ֳ�'s concerns regarding FET's and its subsidiaries' large capital investment program.

Counterparty Risk: While FET's operating subsidiaries are dependent on the FE operating companies for a substantial proportion of its revenues, counterparty risk is with the regional transmission organizations (PJM), not the utilities that ultimately collect the funds from the end customers. ���������ֳ� believes PJM has appropriate credit policies in place including, collateral requirements and settlement procedures that would minimize financial impacts to FET or other transmission owners of a default or failure to pay by a transmission user.

Shift to Formula-Based Rates: As a part of its transmission business expansion strategy, FET's corporate parent, FE, has shifted the regulatory paradigm so that a substantial proportion of FE's transmission assets and investment is housed at FET's subsidiaries, subject to FERC formula-based rates with relatively low regulatory lag and competitive authorized ROE. ���������ֳ� believes the shift to formula-based rates is a positive development from a credit point of view.

���������ֳ� notes that FERC's methodology for calculating electric transmission utility ROE gives rise to a measure of uncertainty as a result of an April 2017 District of Columbia Circuit Court of Appeals decision vacating the agency's methodology for calculating ROE. In ���������ֳ�'s view, uncertainty regarding FERC's ROE methodology is manageable within FET's and its subsidiaries' current rating categories, given the transmission utilities'.

Parent and Subsidiary Rating Linkage: FET is an intermediate holding company for FE's three transmission subsidiaries, with no operations other than ownership of ATSI, MAIT and TrAIL. Rating linkage with FE is strong reflecting close strategic, operational and financial ties and a centralized management structure, including a centralized treasury function and participation in FE's unregulated companies' money pool. As a result, FET's ratings are impacted by strong linkage with its corporate parent under ���������ֳ� criteria.

ATSI's, MAIT's and TrAIL's rating linkage with FET and FE is moderate. The utilities' have close strategic, operational and financial ties with FE and FET, which have a centralized treasury and management structures and are dependent on cash distributions from their operating subsidiaries to meet their obligations. FET's transmission utility subsidiaries participate in FE's utility money pool and rely on sub-limits under FET's bank facility to meet their liquidity needs.

ATSI, MAIT and TrAIL have direct access to debt capital markets and are regulated by the FERC on a cost-of-service basis and, unlike FET, subject to jurisdictional capital requirements.

MAIT Settlement: FET subsidiary, MAIT filed a settlement agreement with FERC in its formula-based transmission rate proceeding in October 2017 that was approved by the commission in May 2018. The FERC in a May 2018 order accepted a settlement without conditions, establishing a formula-based rate template incorporating 10.3% authorized ROE (9.8% base plus a regional transmission operator participation adder of 0.50%) and a 50% equity — 50% debt hypothetical capital structure for 2017 and 2018 (as agreed to in the MAIT asset transfer proceedings) and a 60% equity ceiling for 2019-2021.

The 60% equity ceiling will remain in effect until changed through a subsequent rate case filing. Under the terms of the FERC-approved settlement no party to the settlement, including MAIT, may file for a change in ROE or capital structure with an effective date earlier than Jan. 1, 2022.

ESG Considerations: ���������ֳ� has revised FE's Environmental, Social and Governance (ESG) Relevance Score to '4' from '5' for Management Strategy, Governance Structure, Group Structure and Financial Transparency reflecting the signed DPA settling the federal criminal investigation of FE and ongoing efforts to ameliorate weak internal controls and corporate governance issues as discussed above. FE's ESG Relevance Scores of '4' for Management Strategy, '4' for Governance Structure, '4' for Group Structure and '4' for Financial Transparency, are relevant to the ratings and have an impact on FE's ratings in combination with other factors.

���������ֳ� has also revised OE's, CE's and TE's Environmental, Social and Governance (ESG) Relevance Score to '4' from '3' for Management Strategy, Governance Structure, Group Structure and Financial Transparency reflecting the signed DPA settling the federal criminal investigation of FE and ongoing efforts to ameliorate weak internal controls and corporate governance issues as discussed above. FE's ESG Relevance Scores of '4' for Management Strategy, '4' for Governance Structure, '4' for Group Structure and '4' for Financial Transparency, are relevant to the ratings and has an impact on FE's ratings in combination with other factors.

Except for the matters discussed above, the highest level of ESG credit relevance, if present, is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity.

Derivation Summary

FE's IDR of 'BB+'/Stable is three notches lower than other large, multi-utility holding company peers American Electric Power (AEP; BBB+/Stable); Exelon Corporation (EXC; BBB+/Stable) and WEC Energy Group, Inc. (BBB+/Stable). FE's comparatively low ratings reflect weak, albeit improving, corporate governance risk, heightened reputational risk in the wake of its DPA, potential exposure to ongoing federal agency and other pending investigations and regulatory proceedings, especially in Ohio. AEP, EXC and WEC, like FE, are large utility holding companies with operations spanning several states focused strategically on maximizing relatively predictable operating utility returns.

Similarly rated 'BB' category FE peers include DPL, Inc. (DPL; BB/Negative) and PG&E Corp. (PCG; BB/Stable), which are single utility-holding companies with operations in Ohio and California, respectively. Unlike PCG and DPL, FE provides electric utility service in parts of six Mid-Atlantic states and benefits from greater regulatory diversity than either PCG or DPL. FE is significantly larger than DPL, which provides electric utility services in a relatively small service territory in western Ohio, but smaller than PCG, which owns one of the largest combination electric and gas utilities in the nation, Pacific Gas and Electric Company (BB/Stable), serving central and northern California. PCG's creditworthiness is challenged by catastrophic wildfire activity, related potentially outsized third-party liabilities and safety-related and operational issues. DPL's creditworthiness has been adversely impacted by regulatory developments in Ohio, primarily due to a PUCO order blocking distribution modernization charges of $105 million per year, and reflect high parent-only debt.

FE's parent-only debt approximates 33% of total consolidated debt, higher than PCG's 12% but meaningfully lower than DPL's 60% parent-only debt. ���������ֳ� estimates FFO leverage at FE will approximate 6.4x-8.2x during 2021-2024, which compares to 7.7x for DPL in 2022 and approximately 6x and 5x for PG&E in 2021 and 2022, respectively.

Key Assumptions

���������ֳ�'s Key Assumptions Within the Rating Case for the Issuer

-���������ֳ� assumes FE will comply fully with its federal DPA and the sole charge dropped;

-DPA penalty of $230 million paid in 2021 as per terms of the agreement;

-Baseline distribution deliveries growth is projected at one-percent per annum on average 2021-2023;

-Distribution and transmission utility rate base growth of ~5% and ~8%, respectively, through 2023;

-Consolidated FE capex estimated at $2.9 billion in 2021, $2.9 billion-$3.2 billion in 2022 and $2.7 billion-$3.1 billion in 2023;

-Gradual improvement in Ohio economic regulation following ongoing proceedings examining FE's conduct in light of H.B. 6 related revelations;

-Continued credit-supportive economic regulation in Pennsylvania, New Jersey, Maryland and West Virginia;

-Continuation of generally balanced rate regulation;

-Rate increase at JCPL effective November 2021;

-Reflects decoupling revenues as per settlement and FE's voluntary decision to forego collection of lost distribution revenues;

-Equity issuance of $1 billion and no asset monetization.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade for FE:

--Favorable resolution of rate proceedings currently pending before the PUCO and gradual improvement in the regulatory compact in Ohio;

--Full compliance with the requirements of the recently announced DPA over the agreements three-year term and resolution of federal investigations and legal proceeding underway regarding FE's actions with regard to HB 6 and related matters;

--Sustained efforts to address admitted failings of FE's corporate governance and culture to ensure no future violations of its code of conduct and resolve weak internal controls;

--FFO leverage of 6.5x or better coupled with meaningfully improved internal controls and corporate governance;

--Continued balanced rate regulation by jurisdictional authorities in Pennsylvania, New Jersey, West Virginia, Maryland and FERC;

--Improvement in leverage driven by prudent asset monetization and equity issuance;

--Continued strategic focus on relatively low-risk utility and transmission businesses.

Factors that could, individually or collectively, lead to negative rating action/downgrade for FE:

--A worse than expected outcome in pending ratemaking matters before the PUCO;

--An unexpected inability to comply with the terms of the DPA;

--Inability to ameliorate corporate governance issues and material weakness of internal controls;

--Meaningfully worse than anticipated outcomes in pending federal investigations and legal proceedings;

--Significant deterioration in FE's rate regulation or unanticipated operating or other developments, resulting in lower than expected earnings and cash flows and higher leverage, including greater than expected impact from the coronavirus pandemic;

--A change in corporate strategy embracing investment in businesses with higher risk profiles;

--These or other factors resulting in sustained FFO leverage greater than 7.3x.

Factors that could, individually or collectively, lead to positive rating action/upgrade for OE, Pennsylvania Power Company (PP), CE or TE include:

--A credit rating upgrade at the utilities' corporate parent FE;

--Rehabilitation of the utilities' reputation and normalization of the regulatory compact in Ohio;

--Balanced outcomes in pending rate cases and audits currently before the PUCO;

--FFO leverage of 5.0x or better on a sustained basis.

Factors that could, individually or collectively, lead to negative rating action/downgrade for OE, PP, CE or TE include:

--An adverse credit rating action at FE;

--FFO leverage of higher than 6.0x;

--Significant deterioration in jurisdictional price regulation in Ohio;

--An unexpected, catastrophic event resulting in a prolonged outage.

Factors that could, individually or collectively, lead to positive rating action/upgrade for Metropolitan Edison Company (ME), Pennsylvania Electric Company (PN) or West Penn Power Company (WP) include:

--A credit rating upgrade at the utilities' corporate parent FE;

--FFO leverage of 5.0x or better on a sustained basis;

--Continued balanced jurisdictional price regulation.

Factors that could, individually or collectively, lead to negative rating action/downgrade for ME, PN or WP include:

--An adverse credit rating action at FE;

--FFO leverage higher than 6.0x;

--Significant deterioration in jurisdictional price regulation;

--An unexpected, catastrophic event resulting in a prolonged outage.

Factors that could, individually or collectively, lead to positive rating action/upgrade for Jersey Central Power & Light Company (JCP&L) include:

--A credit rating upgrade at the utility's corporate parent;

--FFO leverage of 5.0x or better on a sustained basis;

--Continued balanced jurisdictional price regulation.

Factors that could, individually or collectively, lead to negative rating action/downgrade for JCP&L include:

--An adverse credit rating action at FE;

--FFO leverage of higher than 6.0x;

--Deterioration in jurisdictional price regulation;

--An unexpected, catastrophic event resulting in a prolonged outage.

Factors that could, individually or collectively, lead to positive rating action/upgrade for MP and PE include:

--A credit rating upgrade at the utilities' corporate parent;

--FFO leverage of 5.0x or better;

--Continued balanced jurisdictional price regulation.

Factors that could, individually or collectively, lead to negative rating action/downgrade for MP and PE include:

--An adverse rating action at FE;

--FFO leverage of worse than 6.0x on a sustained basis;

--Deterioration in jurisdictional price regulation;

--An unexpected, catastrophic event resulting in prolonged outages.

Factors that could, individually or collectively, lead to positive rating action/upgrade for Allegheny Generating Co.:

--An upgrade at MP and FFO leverage of 5.0x or lower at Allegheny Generating Co.

Factors that could, individually or collectively, lead to negative rating action/downgrade for Allegheny Generating Co.

--Deterioration in the company's FFO leverage to above 6.0x;

--Meaningful deterioration in FERC rate regulation;

--Downgrade of corporate parent and off-taker MP;

--A prolonged catastrophic outage at Bath County Project.

Factors that could, individually or collectively, lead to positive rating action/upgrade for FET:

--A credit rating upgrade at corporate parent FE.

Factors that could, individually or collectively, lead to negative rating action/downgrade for FET:

--An adverse rating action at FE;

--Significant deterioration in FERC regulation;

--FFO leverage sustaining at 6.0x or higher due to deterioration in regulatory oversight or other factors;

--An unexpected catastrophic outage or event at FET's transmission subsidiaries.

Factors that could, individually or collectively, lead to positive rating action/upgrade for ATSI, MAIT and TrAIL include:

--An upgrade at FE along with FFO leverage sustaining at 5.0x or lower;

--Continued balanced FERC rate regulation.

Factors that could, individually or collectively, lead to negative rating action/downgrade for ATSI, MAIT and TrAIL include:

--An adverse rating actions at FE;

--Significant deterioration in FERC regulation;

--FFO leverage sustaining at 6.0x or higher due to deterioration in regulatory oversight or other factors;

--An unexpected catastrophic outage or event.

Best/Worst Case Rating Scenario

International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit /site/re/10111579.

Liquidity and Debt Structure

In ���������ֳ�'s opinion, FE's liquidity position is generally solid, and is on more stable ground in light of the signed DPA. As discussed above, FE was unable to comply with covenants contained in the Representations and Warranties section of FE's bank facilities due to FE's inability to rule out corruption with regard to the 4Q 2020 disclosure of a $4.3 million third-party contract payment in 2019 and for a short period of time FE and its subsidiaries were unable to access their RCFs pending waivers from their bank group. With such waivers provided, FE borrowed just under $2 billion of the $3.5 billion of total borrowing capacity available under its credit facilities in November 2020 in a proactive measure to ensure financial flexibility and fully repaid such borrowings shortly following the DPA announcement July 2021.

FE again was permitted by its bank group to again amend its RCFs to provide modifications necessitated by facts and circumstances described in the recently announced DPA. The amendments allowed FE regain compliance and maintain access to its RCFs. ���������ֳ� does not expect the DoJ investigation, with the signed DPA in place, to result in further disruption in FE access to its RCFs.

FE and FET had remaining short-term borrowings under their RCFs of $350 million and $150 million, respectively, as of June 30, 2021. FE and FET repaid their RCFs and had full access to the facilities, with the exception of $4 million of letters of credit issued at FE as of July 21, 2021. FE has issued unsecured and secured debt across several subsidiaries earlier this year, demonstrating solid access to debt capital markets during the pendency of the DoJ investigation.

As of July 21, 2021, FE had total available liquidity of $4.0 billion, composed of $460 million of cash and cash equivalents and available borrowing capacity of $3.5 billion under FE's and FET's RCFs. FE's and FET's RCFs terminate December 2022. FE's long-term debt maturities are manageable with $1.8 billion scheduled to mature annually on average during 2021-2024.

Issuer Profile

FE provides regulated electricity services in the Midwest and Mid-Atlantic regions of the U.S. and is one of the largest electric systems in the nation. FE provides distribution, transmission and default and regulated generation services to approximately six million customers in six states across a 65,000 square mile service territory.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

FirstEnergy Corporation has an ESG Relevance Score of '4' for Management Strategy due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

FirstEnergy Corporation has an ESG Relevance Score of '4' for Group Structure due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

FirstEnergy Corporation has an ESG Relevance Score of '4' for Governance Structure due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

FirstEnergy Corporation has an ESG Relevance Score of '4' for Financial Transparency due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

Ohio Edison Company has an ESG Relevance Score of '4' for Management Strategy due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

Ohio Edison Company has an ESG Relevance Score of '4' for Group Structure due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

Ohio Edison Company has an ESG Relevance Score of '4' for Governance Structure due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

Ohio Edison Company has an ESG Relevance Score of '4' for Financial Transparency due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

The Cleveland Electric Illuminating Company has an ESG Relevance Score of '4' for Management Strategy due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

The Cleveland Electric Illuminating Company has an ESG Relevance Score of '4' for Group Structure due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

The Cleveland Electric Illuminating Company has an ESG Relevance Score of '4' for Governance Structure due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

The Cleveland Electric Illuminating Company has an ESG Relevance Score of '4' for Financial Transparency due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

The Toledo Edison Company has an ESG Relevance Score of '4' for Management Strategy due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

The Toledo Edison Company has an ESG Relevance Score of '4' for Group Structure due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

The Toledo Edison Company has an ESG Relevance Score of '4' for Governance Structure due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

The Toledo Edison Company has an ESG Relevance Score of '4' for Financial Transparency due to material weakness in internal controls over FE's financial reporting and uncertainties associated with admissions included in FE's DPA discussed above, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on ���������ֳ�'s ESG Relevance Scores, visit .

Additional information is available on

APPLICABLE MODELS

Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

• Corporate Monitoring & Forecasting Model (COMFORT Model), v7.9.0 (1)

ADDITIONAL DISCLOSURES

• Dodd-Frank Rating Information Disclosure Form
• Solicitation Status
• Endorsement Policy

ENDORSEMENT STATUS