Project Cost Estimating, Long-Term Planning Ron Kovach Asia Pacific Partnership United States of America Power Generation Task Force August 13 – 17, 2007

Asia Pacific Partnership Aug , 2007 FirstEnergy Corp. & Duke Energy Corporation Cost Estimating; n Project Cost Estimating; –Capital or O&M. –Large $ items must be proven to be cost effective before they are approved. n Project Cost Estimating; –Options are; –In House (Hydro/CT Technical staff), FE Project Engineering, outside engineering firm. –Depending on type of project, size of the project, manpower availability. n In House; –Technical staff performs the engineering analysis, looks at past history if a similar project was done and develops the cost estimate for the project. –Budgetary material cost and labor to install cost are obtained from vendors. In all cases, we go through a bid process and solicit competitive bids. Project Cost Estimating, Long-Term Planning 2

Asia Pacific Partnership Aug , 2007 FirstEnergy Corp. & Duke Energy Corporation Cost Estimating; n FE Project Engineering Group; –The Engineering group is utilized for high dollar projects or if a project requires multidiscipline support. –A similar process is used by the project group, i.e. soliciting competitive bids. n Outside Engineering Firm, –Outside firms are used when a project requires expertise that is not available within the company or, there is a Lack of manpower to support the project, etc, –Outside firm will develop cost estimates with FE guidance and provides FE with the project cost. Project Cost Estimating, Long-Term Planning 3

Asia Pacific Partnership Aug , 2007 FirstEnergy Corp. & Duke Energy Corporation A Five year Business Plan is used to develop the going forward strategy. The purpose of the business plan is to identify the roles and responsibility of the Hydro fleet in the FE portfolio. The bp provides a complete assessment of the company strategy and how each business unit supports the portfolio. Long Term Planning: n The plan includes; –Vision-Mission statement, –Financial Report, –Generation strategy for the portfolio, –Outages Schedules, –List of major projects, –Performance Matrices –Excellence/Continuous improvement, –Key Event Time line, Project Cost Estimating, Long-Term Planning 4

Asia Pacific Partnership Aug , 2007 FirstEnergy Corp. & Duke Energy Corporation Technical Services Structure Project Cost Estimating, Long-Term Planning 5 Director, Hydro & CT William Harker Manager, Technical Services Sergon Gevergiz Sumpter Site Engineer West Lorain Site Engineer Richland Site Engineer Civil Engineer Mechanical Engineer Electrical Engineer Project Management Project Planning Cost Estimating Outage Planning Outage Management

Asia Pacific Partnership Aug , 2007 FirstEnergy Corp. & Duke Energy Corporation Project Cost Estimating, Long-Term Planning Akron Toledo Reading Seneca 443 MW Edgewater 48 MW Richland 432 MW Stryker 18 MW Yards Creek 200 MW York Haven 19 MW Forked River 86 MW Mad River 60 MW West Lorain 545 MW Sumpter (Michigan) 340 MW Erie Ohio Pennsylvania New Jersey Harrisburg Morristown Newark Allenhurst Trenton Columbus New Castle Cleveland Johnstown Towanda FirstEnergy Power Plants G Gas H Hydro O Oil Hydro & CT Portfolio Ohio Edison Illuminating Company Toledo Edison Met-Ed Penelec Pennsylvania Power Jersey Central Power & Light The Hydro & CT Group operates 50 units at 9 plants over a 4 state region. This group contains the oldest and newest plants in the FE Generation portfolio. FirstEnergy Pumped Hydro Seneca & Yards Creek Stations 4

Asia Pacific Partnership Aug , 2007 FirstEnergy Corp. & Duke Energy Corporation Long Term Planning & Project Cost Estimating Project Cost Estimating, Long-Term Planning 5 Project Identification Maintenance Inspection Outage Report Health Study Other Scope Refinement Two major deliverables are cost and duration Develop technical specification Potentially develop a bid specification Consensus Has a consensus been reached with the plant and Technical Services that the scope is acceptable? Additional Expertise FE Project Engineering Consultants/vendors/ contractors Request for Quote/Proposal No Compare the proposed outage timing, duration and cost to the remainder of the Hydro & CT Portfolio Yes Is the project large enough that it requires capital analysis? Capital Analysis Did it pass? Yes Did any of the project parameters change during the capital analysis. Yes No Yes Project placed into the Business Plan No Project is evaluated against projects in the entire Fossil portfolio. Did project make it? Were any project parameters changed? Project funding, duration and timing locked in. No Outage planning commences. Covered in detail in tomorrow’s presentation Yes Re-evaluate No Yes No