Master PIPP Supply Agreement

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Question: Can you provide details of the PIPP program and the rules for customers switching from SSO to PIPP and back?

Answer: Percentage of Income Payment Plan (PIPP) is an extended payment arrangement that requires regulated gas and electric companies to accept payments based on a percentage of the household income. As a part of the Universal Service Fund program enabled by Ohio Substitute Senate Bill 3, the Ohio Development Services Agency will administer the PIPP for electricity customers. Please see the following link for further details: http://development.ohio.gov/is/is_pipp.htm. Customers who remain eligible for PIPP based on their income verification generally will not leave the PIPP program. If/when a customer would leave the PIPP program, they would be able to become an SSO customer or shop with a Competitive Retail Electric Service (CRES) supplier.

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Question: Who is the PIPP Supplier's counterparty to the Master PIPP Supply Agreement and is there a single contract or three?

Answer: The PIPP Supplier's counterparty to the Master PIPP Supply Agreement is the FirstEnergy Ohio Utilities. There is one contract.

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Question: Are each of The Cleveland Electric Illuminating Company, The Toledo Edison Company, and Ohio Edison Company (hereafter each referred to as an “EDC”) able to separately exercise rights and remedies under the Master PIPP Supply Agreement or are they able to exercise rights and remedies only collectively as the Companies? For example, is there any danger to a PIPP Supplier that a particular EDC will issue an instruction (e.g., regarding margin calls) or make a declaration (e.g., regarding an Event of Default) that is contrary to another EDC under the Master PIPP Supply Agreement or make contrary determinations regarding an SSO Supplier’s creditworthiness for purposes of Article 6 of the Master PIPP Supply Agreement?

Answer: It would not be expected that the electric distribution utilities under the Master PIPP Supply Agreement would render conflicting decisions. Also note that another FAQ states that, "The PIPP Supplier's counterparty to the Master PIPP Supply Agreement is the FirstEnergy Ohio Utilities. There is one contract."

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Question: Are each of The Cleveland Electric Illuminating Company, The Toledo Edison Company, and Ohio Edison Company jointly and severally liable or collectively liable for obligations of the “Companies” under the Master PIPP Supply Agreement? If not, please explain what their respective and collective liability is thereunder. Is a PIPP Supplier entitled to exercise rights and remedies (e.g., termination) against the Companies collectively, for example in the event that any particular Electricity Distribution Company (EDC) defaults and a consequent Event of Default occurs under the Master PIPP Supply Agreement?

Answer: It is the Companies' position that the Companies under the Master PIPP Supply Agreement are severally, but not jointly, liable. Each Company would be responsible for its proportionate share of liability.

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Question: Please confirm that William R. Ridmann or another specified single point of contact will speak for the Companies collectively with respect to notices (other than those required under Article 6) and that a single point of contact will speak for the Companies collectively with respect to notices required under Article 6.

Answer: Please see Article 13.1 of the Master PIPP Supply Agreement which provides for notifications to the Company.

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Question: Do the FirstEnergy Ohio Utilities have an overarching parent guaranty from FirstEnergy Corp.?

Answer: No, the FirstEnergy Ohio Utilities do not have an overarching parent guaranty from FirstEnergy Corp.

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Question: As this is a sale for resale, is there a risk that the FirstEnergy Ohio Utilities withhold payment to the PIPP Supplier in the event of PIPP customer non-payment or dispute?

Answer: No. There is no risk that payments to PIPP Suppliers are withheld in the event of PIPP customer non-payment.

FAQs Disclaimer

The information presented and distributed in the Frequently Asked Questions (FAQs) may be subject to modifications and/or amendments and is provided for informational purposes only. The information provided in the CBP, or on the CBP Information Website, has been prepared to assist bidders in evaluating the CBP. It does not purport to contain all the information that may be relevant to a bidder in satisfying its due diligence efforts. Neither FirstEnergy Corp., the FirstEnergy Ohio Utilities nor the CBP Manager make any representation or warranty, expressed or implied, as to the accuracy or completeness of the information, and shall not, either individually or as a corporation, be liable for any representation expressed or implied in the CBP or any omissions from the CBP, or any information provided to a bidder by any other source. A bidder should check the CBP Information Website frequently to ensure it has the latest documentation and information. Neither the FirstEnergy Ohio Utilities, nor the CBP Manager, nor any of their representatives, shall be liable to a bidder or any of its representatives for any consequences relating to or arising from the bidder’s use of outdated information. The information is not intended to form any part of the basis of any investment decision, valuation or any bid that may be submitted during the CBP process. Each recipient should not rely solely on this information and should make its own independent assessment of the potential value to supply the FirstEnergy Ohio Utilities' load after making all investigations it deems necessary.

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