FirstEnergy Nuclear Generation
Corp.                                                              Exhibit 10.8
FERC Electric Tariff, Original Volume No. 1
Service Agreement No.1
 
[Execution Copy]

NUCLEAR POWER SUPPLY AGREEMENT

Between FirstEnergy Nuclear Generation Corp., Seller
and
FirstEnergy Solutions Corp., Buyer

This Nuclear Power Supply Agreement ("Agreement") dated October 14, 2005 is made
by and between FirstEnergy Nuclear Generation Corp., ("FENGenco" or "Seller"),
and FirstEnergy Solutions Corp. ("Solutions" or "Buyer"). FENGenco and Solutions
may be identified collectively as "Parties" or individually as a "Party." This
Agreement is entered into in connection with the transfer of the ownership
interests of The Cleveland Electric Illuminating Company, Ohio Edison Company,
Pennsylvania Power Company, and The Toledo Edison Company in the Beaver Valley
Power Station, Davis-Besse Nuclear Power Station, and Perry Nuclear Power Plant
(“Nuclear Generating Plants”) to FENGenco.

WHEREAS, Seller is a newly formed, nuclear generation only company that intends
to acquire certain interests in Nuclear Generating Plants owned by The Cleveland
Electric Illuminating Company, Ohio Edison Company, Pennsylvania Power Company,
and The Toledo Edison Company (collectively "the FirstEnergy Operating
Companies"); and

WHEREAS, Seller will be a wholly owned subsidiary of FirstEnergy Corp; and

WHEREAS, the Nuclear Generating Plants are operated by FirstEnergy Nuclear
Operating Company, a wholly owned subsidiary of FirstEnergy Corp. and affiliate
of FENGenco; and

WHEREAS, Seller will also purchase the electrical output of Ohio Edison Company
and The Toledo Edison Company’s sale/leaseback interests in Beaver Valley Power
Station Unit 2 and Perry Nuclear Power Plant (“Leased Nuclear Generation
Facilities”); and

WHEREAS, Seller will be engaged exclusively in the business of owning the
Nuclear Generating Plants and selling Power from the owned Nuclear Generating
Plants and Leased Nuclear Generation Facilities (collectively, the “Nuclear
Generating Facilities”) at wholesale; and

WHEREAS, Buyer desires to obtain the entire electric output of the Nuclear
Generating Facilities, pursuant to the rates, terms and conditions set forth
herein.
 
 

Issued by: Gary R. Leidich, President
Effective Date:
Issued on: October 14, 2005
December 1, 2005

                                                   
                                                                                                                                                                                                           
 
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It is agreed as follows:

I.            TERM

The sale and purchase of Power pursuant to this Agreement shall begin on
December 1, 2005, or such later effective date authorized by the FERC, for an
initial term ending December 31, 2010. This Agreement shall remain in effect
from year to year thereafter unless terminated by either Party upon at least
sixty days written notice prior to the end of the calendar year.

II.           SALE AND PURCHASE OF CAPACITY AND ENERGY

A.      
Seller shall provide Buyer all of the Capacity, Energy, and Ancillary Services
available from the Nuclear Generating Facilities identified in Exhibit C to this
Agreement, and Buyer shall purchase and pay for such Capacity, Energy, and
Ancillary Services, in accordance with the terms of this Agreement. Seller shall
make Capacity, Energy, and Ancillary Services available at the Delivery Points.
Buyer shall arrange and will be responsible for all transmission, congestion
costs, losses, and related services at and from the Delivery Points. The
Capacity, Energy, and Ancillary Services, supplied by Seller are collectively
referred to as Buyer's "Power Supply Requirements." Capacity and Energy supplied
shall be sixty-hertz, three phase alternating current. The Power Supply
Requirements will be provided in accordance with Good Utility Practice, and
where applicable, the provisions of the applicable Transmission Provider OATT,
and the requirements of the NRC.

B.      
FENGenco shall cause the Nuclear Generating Facilities to be operated and
maintained in accordance with Good Utility Practice, the applicable requirements
of the FERC, NRC and NERC, as well as the requirements of the regional
reliability councils or Regional Entity, and Regional Transmission Organizations
where the Nuclear Generating Facilities are located. FENGenco will enter into
agreements with FirstEnergy Nuclear Operating Company, other FirstEnergy
affiliates, Transmission Provider, or Government Authority if necessary to
ensure compliance with this Section II.B.

III.          SCHEDULING AND SYSTEM PLANNING

A.      
In order for Solutions to be able to plan adequately to market and sell all of
the Capacity, Energy, and Ancillary Services, available from the Nuclear
Generating Facilities identified in Exhibit C, FENGenco shall notify Solutions
on or before November 1 of each year during the term of this Agreement of the
amount of Capacity, Energy, and Ancillary Services, it expects to have available
for each day in each month of the next calendar year. The information provided
in this notification shall include, but not be limited to, the time and expected
duration of any planned outage of the Nuclear Generating Facilities.

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B.        
FENGenco shall update its annual forecast of available Capacity, Energy, and
Ancillary Services for any change or expected change in the operation of the
Nuclear Generating Facilities that would materially affect the annual forecast
provided to Solutions. FENGenco shall provide the updated forecast to Solutions
for any full month(s) remaining in the calendar year within thirty days of
becoming aware of the change or expected change in the operation of the Nuclear
Generating Facilities.

C.        
FENGenco will supply Solutions, upon request, any such information as is
necessary to meet the requirements of the applicable Transmission Provider OATT,
FERC, NERC, NRC, Electric Reliability Organization, regional reliability
council, Regional Entity or Government Authority.

IV.           PRICE

Seller shall charge, and Buyer shall pay, for Buyer's Power Supply Requirements,
as follows on a monthly basis.

A.      Charges

Buyer will pay Seller the Monthly Charge under the cost-based formula set forth
in Exhibit A for the Power Supply Requirements available from the Nuclear
Generating Facilities identified in Exhibit C.
 
B.      Billing and Payment

Unless otherwise specifically agreed upon by the Parties, the calendar month
shall be the standard period for all billings and payments under this Agreement.
As soon as practicable after the end of each month, the Seller will render an
invoice to Buyer for the amounts due for Power Supply Requirements for the
preceding month. Payment shall be due and payable within ten days of receipt of
the invoice or, if such day is not a Business Day, then on the next Business
Day. Buyer will make payments by electronic funds transfer or by other mutually
agreeable method(s) to the account designated by Seller. Any amounts not paid by
the due date will be deemed delinquent and will accrue interest at the Interest
Rate until the date of payment in full.
 
C.      Records

Each Party shall keep complete and accurate records of its operations under this
Agreement and shall maintain such data as may be necessary to determine the
reasonableness and accuracy of all relevant data, estimates, payments or
invoices submitted by or to it hereunder. All records regarding this Agreement
shall be maintained for a period of three years from the date of the invoice or
payment, or for such longer period as may be required by law.

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D.      Audit and Adjustment Rights

Buyer shall have the right, at its own expense and during normal business hours,
to audit the accounts and records of Seller that reasonably relate to the
provision of service under this Agreement. If the audit reveals an inaccuracy in
an invoice, the necessary adjustment in such invoice and the payments therefore
will be promptly made. No adjustment will be made for any invoice or payment
made more than one year from rendition thereof. This provision shall survive the
termination of this Agreement for a period of one year from the date of
termination for the purpose of such invoice and payment objections. To the
extent that audited information includes Confidential Information, the Buyer
shall keep all such information confidential under Section VII.C. 

E.      Section 205 Rights

Nothing contained herein shall be construed as affecting in any way the right of
the Party furnishing service under this Agreement to unilaterally make
application to the FERC for a change in rates under Section 205 of the Federal
Power Act and pursuant to the FERC's Rules and Regulations thereunder. Provided,
however, that nonrate terms and conditions may be amended only by a written
agreement signed by the Parties.

V.            METERING

Generation metering will be installed, operated and maintained in accordance
with the applicable generator interconnection agreements between the FENGenco,
Transmission Provider, and Transmission Owner. Metering between control areas
shall be handled in accordance with the applicable Transmission Provider OATT.
Retail metering shall be provided in accordance with applicable state law.
Nothing in this Agreement requires Seller or Buyer to install new metering
facilities.

VI.           NOTICES

All notices, requests, statements or payments shall be made as specified below.
Notices required to be in writing shall be delivered by letter, facsimile or
other documentary form. Notice by facsimile or hand delivery shall be deemed to
have been received by the close of the Business Day on which it was transmitted
or hand delivered (unless transmitted or hand delivered after close in which
case it shall be deemed to have been received at the close of the next Business
Day). Notice by overnight mail or courier shall be deemed to have been received
two Business Days after it was sent. A Party may change its addresses by giving
notice as provided above.

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NOTICES & CORRESPONDENCE:
 
 

To Seller:
FirstEnergy Nuclear Generation Corp., President
 
76 South Main St.
 
Akron, Ohio 44308
   
To Buyer:
FirstEnergy Solutions Corp., Director, Wholesale Energy Transactions
 
395 Ghent Road
 
Akron, Ohio 44333

  
 
INVOICES & PAYMENTS:
 
To Seller:
FirstEnergy Nuclear Generation Corp., President
 
76 South Main St.
 
Akron, Ohio 44308
   
To Buyer:
FirstEnergy Solutions Corp., Director, Wholesale Energy Transactions
 
395 Ghent Road
 
Akron, Ohio 44333

   
SCHEDULING:
 
To Seller:
FirstEnergy Nuclear Generation Corp., President
 
76 South Main St.
 
Akron, Ohio 44308
   
To Buyer:
FirstEnergy Solutions Corp., Director, Wholesale Energy Transactions
 
395 Ghent Road
 
Akron, Ohio 44333

     
 
VII.          MISCELLANEOUS

A.      Performance Excused

 
If either Party is rendered unable by an event of Force Majeure to carry out, in
whole or part, its obligations hereunder, then, during the pendency of such
Force Majeure but for no longer period, the Party affected by the event shall be
relieved of its obligations insofar as they are affected by Force Majeure. The
Party affected by an event of Force Majeure shall provide the other Party with
written notice setting forth the full details thereof as soon as practicable
after the occurrence of such event and shall take all reasonable measures to
mitigate or minimize the effects of such event of Force Majeure. Nothing in this
section requires Seller to deliver, or Buyer to receive, Power at Delivery
Points other than those Delivery Points designated under this Agreement, or
relieves Buyer of its obligation to make payment under Section IV of this
Agreement.
 

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Force Majeure shall be defined as any cause beyond the reasonable control of,
and not the result of negligence or the lack of diligence of, the Party claiming
Force Majeure or its contractors or suppliers. It includes, without limitation,
earthquake, storm, lightning, flood, backwater caused by flood, fire, explosion,
act of the public enemy, epidemic, accident, failure of facilities, equipment or
fuel supply, acts of God, war, riot, civil disturbances, strike, labor
disturbances, labor or material shortage, national emergency, restraint by court
order or other Government Authority, interruption of synchronous operation, or
other similar or dissimilar causes beyond the control of the Party affected,
which causes such Party could not have avoided by exercising Good Utility
Practice. Nothing contained herein shall be construed to require a Party to
settle any strike, lockout, work stoppage, or other industrial disturbance or
dispute in which it may be involved or to take an appeal from any judicial,
regulatory or administrative action.

B.      Transfer of Title and Indemnification

Title and risk of loss related to the Power Supply Requirements shall transfer
to the Buyer at the Delivery Points. Seller warrants that it will deliver the
Power Supply Requirements to Buyer free and clear of all liens, security
interests, claims and encumbrances or any interest therein or thereto by any
person arising prior to the Delivery Points. Each Party shall indemnify, defend
and hold harmless the other Party from and against any claims arising from or
out of any event, circumstance, act or incident first occurring or existing
during the period when control and title to the Power Supply Requirements is
vested in the other Party.

C.      Confidentiality

Neither Party shall disclose to third parties Confidential Information obtained
from the other Party pursuant to this Agreement except in order to comply with
the requirements of FERC, NRC, NERC, Electric Reliability Organization,
applicable regional reliability councils or Regional Entity, Regional
Transmission Organization, or Government Authority. Each Party shall use
reasonable efforts to prevent or limit the disclosure required to third parties
under this section.

D.      Further Assurances

Subject to the terms and conditions of this Agreement, each of the Parties will
use reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and effectuate the transactions contemplated
hereby.

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E.      Assignment

No assignment, pledge, or transfer of this Agreement shall be made by any Party
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld. No prior written consent shall be required for (i) the
assignment, pledge or other transfer to another company or affiliate in the same
holding company system as the assignor, pledgor or transferor, or (ii) the
transfer incident to a merger or consolidation with, or transfer of all, or
substantially all, of the assets of the transferor, to another person or
business entity; provided, however, that such assignee, pledgee, transferee or
acquirer of such assets or the person with which it merges or into which it
consolidates assumes in writing all of the obligations of such Party hereunder
and provided, further, that either Party may, without the consent of the other
Party (and without relieving itself from liability hereunder), transfer, sell,
pledge, encumber or assign such Party's rights to the accounts, revenues or
proceeds hereof in connection with any financing or other financial
arrangements.

F.      Governing Law

The interpretation and performance of this Agreement shall be according to and
controlled by the laws of the State of Ohio regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws.

G.      Counterparts

This Agreement may be executed in two or more counterparts and each such
counterpart shall constitute one and the same instrument.

H.      Waiver

No waiver by a Party of any default by the other Party shall be construed as a
waiver of any other default. Any waiver shall be effective only for the
particular event for which it is issued and shall not be deemed a waiver with
respect to any subsequent performance, default or matter.

I.      No Third Party Beneficiaries

This Agreement shall not impart any rights enforceable by any third party other
than a permitted successor or assignee bound to this Agreement.

J.      Severability

Any provision of this Agreement declared or rendered unlawful by any Government
Authority or deemed unlawful because of a statutory change will not otherwise
affect the remaining lawful obligations that arise under this Agreement.

K.      Construction

The term "including" when used in this Agreement shall be by way of example only
and shall not be considered in any way to be a limitation. The headings used
herein are for convenience and reference purposes only.

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IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to execute this Agreement on their behalf as of October 14,
2005.

            FirstEnergy Solutions Corp.  
   
   
          

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President, FirstEnergy Solutions Corp.    

 

           FirstEnergy Nuclear Generation Corp.  
   
   
          

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President, FirstEnergy Nuclear Generation Corp.    

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EXHIBIT A

FirstEnergy Nuclear Generation Corp.
Monthly Charge Formula

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EXHIBIT B

DEFINITIONS

In addition to terms defined elsewhere in this Agreement, the terms listed below
are defined as follows:

Affiliate means, with respect to any person, any other person (other than an
individual) that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such person. For
purposes of the foregoing definition, control means the direct or indirect
ownership of more than fifty percent (50%) of the outstanding capital stock or
other equity interests having ordinary voting power or ability to direct the
affairs of the affiliate.

Ancillary Services means Reactive Supply and Voltage Control from Generation
Resources Service, Regulation and Frequency Response Service, Operating Reserve
- Spinning Reserve Service, and Operating Reserve - Supplemental Service, and
such additional Ancillary Services as defined in the Transmission Provider OATT
and to the extent available from the Nuclear Generating Facilities.

Business Day means any day on which Federal Reserve member banks in New York
City are open for business.

Capacity means the resource that produces electric Energy, measured in
megawatts.

Confidential Information means any confidential, proprietary, trade secret,
critical energy infrastructure information, or commercially sensitive
information relating to the present or planned business of a Party that is
supplied under this Agreement, and is identified as confidential by the Party
supplying the information.

Delivery Point means where Capacity, Energy and Ancillary Services are supplied
by the Seller at the point of interconnection between the Nuclear Generating
Facilities and the transmission facilities of Transmission Owner.

Electric Reliability Organization has the meaning given in Section 215(a)(2) of
the Federal Power Act.

Energy means electric energy delivered under this Agreement at three-phase,
60-hertz alternating current measured in megawatt hours.

FERC means The Federal Energy Regulatory Commission or its regulatory successor.

Force Majeure has the meaning given in Section VII.A. 

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Good Utility Practice means any of the practices, methods and acts engaged in or
approved by a significant portion of the electric utility industry during the
relevant time period or any of the practices, methods and acts which, in the
exercise of reasonable judgment in light of the facts known at the time the
decision was made, could have been expected to accomplish the desired result at
a reasonable cost consistent with good business practices, reliability, safety,
and expedition. Good Utility Practice includes compliance with the standards
adopted by NRC, NERC, its applicable regional councils, or an Electric
Reliability Organization or Regional Entity as approved by the FERC. Good
Utility Practice is not intended to be limited to the optimum practice, method
or act to the exclusion of all others, but rather to be acceptable practices,
methods or acts, generally accepted in the region and consistently adhered to by
utilities in the region.

Government Authority means any federal, state, local, municipal or other
governmental entity, authority or agency, department, board, court, tribunal,
regulatory commission, or other body, whether legislative, judicial or
executive, together or individually, exercising or entitled to exercise any
administrative, executive, judicial, policy, regulatory or taxing authority or
power over Buyer or Seller.

Interest Rate means the lesser of Prime Rate plus two percent and the maximum
rate permitted by applicable law.

NERC means The North American Electric Reliability Council or any superceding
organization with responsibility for establishing reliability standards for the
interstate transmission grid.

NRC means the Nuclear Regulatory Commission or its regulatory successor.

Power means Capacity and/or Energy.

Prime Rate means for any date, the per annum rate of interest announced from
time to time by Citibank, NA as its prime rate for commercial loans, effective
for such date as established from time to time by such bank.

Regional Entity has the meaning given in Section 215(a)(7) of the Federal Power
Act.

Regional Transmission Organization has the meaning given in Section 3(27) of the
Federal Power Act.

Taxes means all ad valorem, property, occupation, utility, gross receipts,
sales, use, excise and other taxes, governmental charges, licenses, permits and
assessments, other than taxes based on net income or net worth.

Transmission Owner means the entity that owns facilities used for the
transmission of Power from the Nuclear Generating Facilities.

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Transmission Provider means the utility or utilities, including Regional
Transmission Organizations, transmitting Power on behalf of Buyer from the
Delivery Point(s) under this Agreement.

Transmission Provider OATT means the Open Access Transmission Tariff, Open
Access Transmission and Energy Markets Tariff, or any other tariff of general
applicability on file at the FERC under which the Transmission Provider offers
transmission service.

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EXHIBIT C

Nuclear Generating Facilities

NDC in MW
 

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Beaver Valley Unit 1   821

Beaver Valley Unit 2                             831
 
Davis Besse              883
 
Perry                                                     1260        

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Total                                                     3,795