|
Commission
|
|
Registrant; State of Incorporation;
|
|
I.R.S. Employer
|
File Number
|
|
Address; and Telephone Number
|
|
Identification No.
|
|
|
|
|
|
333-21011
|
|
FIRSTENERGY CORP.
|
|
34-1843785
|
|
|
(An Ohio Corporation)
|
|
|
|
|
76 South Main Street
|
|
|
|
|
Akron, OH 44308
|
|
|
|
|
Telephone (800)736
-
3402
|
|
|
|
|
|
|
|
000-53742
|
|
FIRSTENERGY SOLUTIONS CORP.
|
|
31-1560186
|
|
|
(An Ohio Corporation)
|
|
|
|
|
c/o FirstEnergy Corp.
|
|
|
|
|
76 South Main Street
|
|
|
|
|
Akron, OH 44308
|
|
|
|
|
Telephone (800)736-3402
|
|
|
Yes
þ
No
o
|
|
FirstEnergy Corp. and FirstEnergy Solutions Corp.
|
Yes
þ
No
o
|
|
FirstEnergy Corp. and FirstEnergy Solutions Corp.
|
Yes
o
No
þ
|
|
FirstEnergy Corp. and FirstEnergy Solutions Corp.
|
|
|
OUTSTANDING
|
|
CLASS
|
|
AS OF JUNE 30, 2016
|
|
FirstEnergy Corp., $0.10 par value
|
|
425,198,228
|
|
FirstEnergy Solutions Corp., no par value
|
|
7
|
|
|
•
|
The speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular.
|
•
|
The ability to experience growth in the Regulated Distribution and Regulated Transmission segments.
|
•
|
The accomplishment of our regulatory and operational goals in connection with our transmission investment plan, including, but not limited to, the proposed transmission asset transfer to MAIT, and the effectiveness of our strategy to reflect a more regulated business profile.
|
•
|
Changes in assumptions regarding economic conditions within our territories, assessment of the reliability of our transmission system, or the availability of capital or other resources supporting identified transmission investment opportunities.
|
•
|
The impact of the regulatory process and resulting outcomes on the matters at the federal level and in the various states in which we do business including, but not limited to, matters related to rates and the ESP IV.
|
•
|
The impact of the federal regulatory process on FERC-regulated entities and transactions, in particular FERC regulation of wholesale energy and capacity markets, including PJM markets and FERC-jurisdictional wholesale transactions; FERC regulation of cost-of-service rates, including FERC Opinion No. 531's revised ROE methodology for FERC-jurisdictional wholesale generation and transmission utility service; and FERC’s compliance and enforcement activity, including compliance and enforcement activity related to NERC’s mandatory reliability standards.
|
•
|
The uncertainties of various cost recovery and cost allocation issues resulting from ATSI's realignment into PJM.
|
•
|
Economic or weather conditions affecting future sales and margins such as a polar vortex or other significant weather events, and all associated regulatory events or actions.
|
•
|
Changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil prices, and their availability and impact on margins and asset valuations, including without limitation impairments thereon.
|
•
|
The risks and uncertainties at the CES segment, including FES, related to continued depressed wholesale energy and capacity markets, including the potential need to deactivate or sell additional generating units.
|
•
|
The continued ability of our regulated utilities to recover their costs.
|
•
|
Costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices.
|
•
|
Other legislative and regulatory changes, and revised environmental requirements, including, but not limited to, the effects of the EPA's CPP, CCR, CSAPR and MATS programs, including our estimated costs of compliance, CWA waste water effluent limitations for power plants, and CWA 316(b) water intake regulation.
|
•
|
The uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including NSR litigation, or potential regulatory initiatives or rulemakings (including that such initiatives or rulemakings could result in our decision to deactivate or idle certain generating units).
|
•
|
The uncertainties associated with the deactivation of certain older regulated and competitive fossil units, including the impact on vendor commitments, such as long-term fuel and transportation agreements, and as it relates to the reliability of the transmission grid, the timing thereof.
|
•
|
The impact of other future changes to the operational status or availability of our generating units and any capacity performance charges associated with unit unavailability.
|
•
|
Adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to, the revocation or non-renewal of necessary licenses, approvals or operating permits by the NRC or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant).
|
•
|
Issues arising from the indications of cracking in the shield building at Davis-Besse.
|
•
|
The risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments, such as long-term fuel and transportation agreements.
|
•
|
The impact of labor disruptions by our unionized workforce.
|
•
|
Replacement power costs being higher than anticipated or not fully hedged.
|
•
|
The ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates.
|
•
|
Changes in customers' demand for power, including, but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates.
|
•
|
The ability to accomplish or realize anticipated benefits from strategic and financial goals, including, but not limited to, the ability to continue to reduce costs and to successfully execute our financial plans designed to improve our credit metrics and strengthen our balance sheet through, among other actions, our cash flow improvement plan and other proposed capital raising initiatives.
|
•
|
Our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins.
|
•
|
Changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our NDTs, pension trusts and other trust funds, and cause us and/or our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated.
|
•
|
The impact of changes to material accounting policies.
|
•
|
The ability to access the public securities and other capital and credit markets in accordance with our financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries.
|
•
|
Actions that may be taken by credit rating agencies that could negatively affect us and/or our subsidiaries' access to financing, increase the costs thereof, and increase requirements to post additional collateral to support outstanding commodity positions, LOCs and other financial guarantees.
|
•
|
Changes in national and regional economic conditions affecting us, our subsidiaries and/or our major industrial and commercial customers, and other counterparties with which we do business, including fuel suppliers.
|
•
|
The impact of any changes in tax laws or regulations or adverse tax audit results or rulings.
|
•
|
Issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business.
|
•
|
The risks associated with cyber-attacks and other disruptions to our information technology system that may compromise our generation, transmission and/or distribution services and data security breaches of sensitive data, intellectual property and proprietary or personally identifiable information regarding our business, employees, shareholders, customers, suppliers, business partners and other individuals in our data centers and on our networks
.
|
•
|
The risks and other factors discussed from time to time in our SEC filings, and other similar factors.
|
TABLE OF CONTENTS
|
|
|
Page
|
|
|
Part I. Financial Information
|
|
|
|
|
|
Item 1. Financial Statements
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Operations and Comprehensive Loss
|
|
|
|
|
|
Item 2. Management's Discussion and Analysis of Registrant and Subsidiaries
|
|
FirstEnergy Corp.
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
|
Management's Narrative Analysis of Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 3.
Defaults Upon Senior Securities
|
|
|
|
Item 4.
Mine Safety Disclosures
|
|
|
|
Item 5. Other Information
|
|
|
|
GLOSSARY OF TERMS,
Continued
|
|
ARR
|
Auction Revenue Right
|
ASU
|
Accounting Standards Update
|
BGS
|
Basic Generation Service
|
BNSF
|
BNSF Railway Company
|
BRA
|
PJM RPM Base Residual Auction
|
CAA
|
Clean Air Act
|
CCR
|
Coal Combustion Residuals
|
CDWR
|
California Department of Water Resources
|
CERCLA
|
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
|
CFIP
|
Cash Flow Improvement Project
|
CFR
|
Code of Federal Regulations
|
CO
2
|
Carbon Dioxide
|
CPP
|
EPA's Clean Power Plan
|
CSAPR
|
Cross-State Air Pollution Rule
|
CSX
|
CSX Transportation, Inc.
|
CTA
|
Consolidated Tax Adjustment
|
CWA
|
Clean Water Act
|
DCR
|
Delivery Capital Recovery
|
DR
|
Demand Response
|
DSIC
|
Distribution System Improvement Charge
|
DSP
|
Default Service Plan
|
EDC
|
Electric Distribution Company
|
EE&C
|
Energy Efficiency and Conservation
|
EGS
|
Electric Generation Supplier
|
ELPC
|
Environmental Law & Policy Center
|
EmPOWER Maryland
|
EmPower Maryland Energy Efficiency Act
|
ENEC
|
Expanded Net Energy Cost
|
EPA
|
United States Environmental Protection Agency
|
ERO
|
Electric Reliability Organization
|
ESP
|
Electric Security Plan
|
ESP IV PPA
|
Unit Power Agreement entered into on April 1, 2016 by and between the Ohio Companies and FES
|
ESP IV PPA Facilities
|
100% of the output of the W. H. Sammis plant, 100% of the output of the Davis-Besse Nuclear Power Station and FES' 4.85% entitlement in OVEC
|
Facebook®
|
Facebook is a registered trademark of Facebook, Inc.
|
FASB
|
Financial Accounting Standards Board
|
FERC
|
Federal Energy Regulatory Commission
|
Fitch
|
Fitch Ratings
|
FMB
|
First Mortgage Bond
|
FPA
|
Federal Power Act
|
FTR
|
Financial Transmission Right
|
GAAP
|
Accounting Principles Generally Accepted in the United States of America
|
GHG
|
Greenhouse Gases
|
GWH
|
Gigawatt-hour
|
HB554
|
Ohio House Bill No. 554
|
HCl
|
Hydrochloric Acid
|
ICE
|
Intercontinental Exchange, Inc.
|
IRP
|
Integrated Resource Plan
|
IRS
|
Internal Revenue Service
|
ISO
|
Independent System Operator
|
kV
|
Kilovolt
|
KWH
|
Kilowatt-hour
|
LOC
|
Letter of Credit
|
GLOSSARY OF TERMS,
Continued
|
|
LSE
|
Load Serving Entity
|
LTIIPs
|
Long-Term Infrastructure Improvement Plans
|
MATS
|
Mercury and Air Toxics Standards
|
MDPSC
|
Maryland Public Service Commission
|
MISO
|
Midcontinent Independent System Operator, Inc.
|
MLP
|
Master Limited Partnership
|
mmBTU
|
One Million British Thermal Units
|
Moody’s
|
Moody’s Investors Service, Inc.
|
MOPR
|
Minimum Offer Price Rule
|
MVP
|
Multi-Value Project
|
MW
|
Megawatt
|
MWH
|
Megawatt-hour
|
NAAQS
|
National Ambient Air Quality Standards
|
NDT
|
Nuclear Decommissioning Trust
|
NERC
|
North American Electric Reliability Corporation
|
Ninth Circuit
|
United States Court of Appeals for the Ninth Circuit
|
NJBPU
|
New Jersey Board of Public Utilities
|
NOL
|
Net Operating Loss
|
NOV
|
Notice of Violation
|
NOx
|
Nitrogen Oxide
|
NPDES
|
National Pollutant Discharge Elimination System
|
NRC
|
Nuclear Regulatory Commission
|
NSR
|
New Source Review
|
NUG
|
Non-Utility Generation
|
NYPSC
|
New York State Public Service Commission
|
OCC
|
Ohio Consumers' Counsel
|
OPEB
|
Other Post-Employment Benefits
|
OTTI
|
Other Than Temporary Impairments
|
OVEC
|
Ohio Valley Electric Corporation
|
PA DEP
|
Pennsylvania Department of Environmental Protection
|
PCB
|
Polychlorinated Biphenyl
|
PCRB
|
Pollution Control Revenue Bond
|
PJM
|
PJM Interconnection, L.L.C.
|
PJM Region
|
The aggregate of the zones within PJM
|
PJM Tariff
|
PJM Open Access Transmission Tariff
|
PM
|
Particulate Matter
|
POLR
|
Provider of Last Resort
|
POR
|
Purchase of Receivables
|
PPA
|
Purchase Power Agreement
|
PPB
|
Parts Per Billion
|
PPUC
|
Pennsylvania Public Utility Commission
|
PSA
|
Power Supply Agreement
|
PSD
|
Prevention of Significant Deterioration
|
PUCO
|
Public Utilities Commission of Ohio
|
PURPA
|
Public Utility Regulatory Policies Act of 1978
|
RCRA
|
Resource Conservation and Recovery Act
|
REC
|
Renewable Energy Credit
|
REIT
|
Real Estate Investment Trust
|
RFC
|
Reliability
First
Corporation
|
RFP
|
Request for Proposal
|
RGGI
|
Regional Greenhouse Gas Initiative
|
ROE
|
Return on Equity
|
GLOSSARY OF TERMS,
Continued
|
|
RPM
|
Reliability Pricing Model
|
RRS
|
Retail Rate Stability
|
RSS
|
Rich Site Summary
|
RTEP
|
Regional Transmission Expansion Plan
|
RTO
|
Regional Transmission Organization
|
S&P
|
Standard & Poor’s Ratings Service
|
SB221
|
Amended Substitute Ohio Senate Bill No. 221
|
SB310
|
Substitute Ohio Senate Bill No. 310
|
SB320
|
Ohio Senate Bill No. 320
|
SBC
|
Societal Benefits Charge
|
SEC
|
United States Securities and Exchange Commission
|
SEC Regulation FD
|
SEC Regulation Fair Disclosure
|
Seventh Circuit
|
United States Court of Appeals for the Seventh Circuit
|
SIP
|
State Implementation Plan(s) Under the Clean Air Act
|
SO
2
|
Sulfur Dioxide
|
Sixth Circuit
|
United States Court of Appeals for the Sixth Circuit
|
SOS
|
Standard Offer Service
|
SPE
|
Special Purpose Entity
|
SREC
|
Solar Renewable Energy Credit
|
SSO
|
Standard Service Offer
|
TDS
|
Total Dissolved Solid
|
TMI-2
|
Three Mile Island Unit 2
|
TO
|
Transmission Owner
|
Twitter®
|
Twitter is a registered trademark of Twitter, Inc.
|
U.S. Court of Appeals for the D.C. Circuit
|
United States Court of Appeals for the District of Columbia Circuit
|
VIE
|
Variable Interest Entity
|
VSCC
|
Virginia State Corporation Commission
|
WVDEP
|
West Virginia Department of Environmental Protection
|
WVPSC
|
Public Service Commission of West Virginia
|
|
|
For the Three Months Ended June 30
|
|
For the Six Months Ended June 30
|
|
||||||||||||
(In millions)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
NET INCOME (LOSS)
|
|
$
|
(1,089
|
)
|
|
$
|
187
|
|
|
$
|
(761
|
)
|
|
$
|
409
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pension and OPEB prior service costs
|
|
(18
|
)
|
|
(32
|
)
|
|
(36
|
)
|
|
(63
|
)
|
|
||||
Amortized losses on derivative hedges
|
|
2
|
|
|
1
|
|
|
4
|
|
|
2
|
|
|
||||
Change in unrealized gains on available-for-sale securities
|
|
35
|
|
|
(14
|
)
|
|
63
|
|
|
(10
|
)
|
|
||||
Other comprehensive income (loss)
|
|
19
|
|
|
(45
|
)
|
|
31
|
|
|
(71
|
)
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
7
|
|
|
(17
|
)
|
|
11
|
|
|
(27
|
)
|
|
||||
Other comprehensive income (loss), net of tax
|
|
12
|
|
|
(28
|
)
|
|
20
|
|
|
(44
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(1,077
|
)
|
|
$
|
159
|
|
|
$
|
(741
|
)
|
|
$
|
365
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except share amounts)
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
ASSETS
|
|
|
|
|
|
|
||
CURRENT ASSETS:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
199
|
|
|
$
|
131
|
|
Receivables-
|
|
|
|
|
|
|
||
Customers, net of allowance for uncollectible accounts of $63 in 2016 and $69 in 2015
|
|
1,341
|
|
|
1,415
|
|
||
Other, net of allowance for uncollectible accounts of $3 in 2016 and $5 in 2015
|
|
153
|
|
|
180
|
|
||
Materials and supplies
|
|
759
|
|
|
785
|
|
||
Prepaid taxes
|
|
280
|
|
|
135
|
|
||
Derivatives
|
|
161
|
|
|
157
|
|
||
Collateral
|
|
20
|
|
|
70
|
|
||
Other
|
|
163
|
|
|
167
|
|
||
|
|
3,076
|
|
|
3,040
|
|
||
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
||
In service
|
|
50,367
|
|
|
49,952
|
|
||
Less — Accumulated provision for depreciation
|
|
15,295
|
|
|
15,160
|
|
||
|
|
35,072
|
|
|
34,792
|
|
||
Construction work in progress
|
|
2,389
|
|
|
2,422
|
|
||
|
|
37,461
|
|
|
37,214
|
|
||
INVESTMENTS:
|
|
|
|
|
|
|
||
Nuclear plant decommissioning trusts
|
|
2,456
|
|
|
2,282
|
|
||
Other
|
|
527
|
|
|
506
|
|
||
|
|
2,983
|
|
|
2,788
|
|
||
|
|
|
|
|
||||
DEFERRED CHARGES AND OTHER ASSETS:
|
|
|
|
|
|
|
||
Goodwill (Note 2)
|
|
5,618
|
|
|
6,418
|
|
||
Regulatory assets
|
|
1,187
|
|
|
1,348
|
|
||
Other
|
|
1,076
|
|
|
1,286
|
|
||
|
|
7,881
|
|
|
9,052
|
|
||
|
|
$
|
51,401
|
|
|
$
|
52,094
|
|
LIABILITIES AND CAPITALIZATION
|
|
|
|
|
|
|
||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Currently payable long-term debt
|
|
$
|
1,327
|
|
|
$
|
1,166
|
|
Short-term borrowings
|
|
2,925
|
|
|
1,708
|
|
||
Accounts payable
|
|
938
|
|
|
1,075
|
|
||
Accrued taxes
|
|
439
|
|
|
519
|
|
||
Accrued compensation and benefits
|
|
341
|
|
|
334
|
|
||
Derivatives
|
|
102
|
|
|
106
|
|
||
Other
|
|
687
|
|
|
694
|
|
||
|
|
6,759
|
|
|
5,602
|
|
||
CAPITALIZATION:
|
|
|
|
|
|
|
||
Common stockholders’ equity-
|
|
|
|
|
|
|
||
Common stock, $0.10 par value, authorized 490,000,000 shares - 425,198,228 and 423,560,397 shares outstanding as of June 30, 2016 and December 31, 2015, respectively
|
|
42
|
|
|
42
|
|
||
Other paid-in capital
|
|
9,984
|
|
|
9,952
|
|
||
Accumulated other comprehensive income
|
|
191
|
|
|
171
|
|
||
Retained earnings
|
|
1,190
|
|
|
2,256
|
|
||
Total common stockholders’ equity
|
|
11,407
|
|
|
12,421
|
|
||
Noncontrolling interest
|
|
—
|
|
|
1
|
|
||
Total equity
|
|
11,407
|
|
|
12,422
|
|
||
Long-term debt and other long-term obligations
|
|
18,348
|
|
|
19,099
|
|
||
|
|
29,755
|
|
|
31,521
|
|
||
NONCURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Accumulated deferred income taxes
|
|
6,888
|
|
|
6,773
|
|
||
Retirement benefits
|
|
4,177
|
|
|
4,245
|
|
||
Asset retirement obligations
|
|
1,448
|
|
|
1,410
|
|
||
Deferred gain on sale and leaseback transaction
|
|
774
|
|
|
791
|
|
||
Adverse power contract liability
|
|
181
|
|
|
197
|
|
||
Other
|
|
1,419
|
|
|
1,555
|
|
||
|
|
14,887
|
|
|
14,971
|
|
||
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 12)
|
|
|
|
|
|
|
||
|
|
$
|
51,401
|
|
|
$
|
52,094
|
|
|
|
For the Six Months Ended June 30
|
|
||||||
(In millions)
|
|
2016
|
|
2015
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||
Net Income (loss)
|
|
$
|
(761
|
)
|
|
$
|
409
|
|
|
Adjustments to reconcile net income (loss) to net cash from operating activities-
|
|
|
|
|
|
||||
Depreciation and amortization, including nuclear fuel, regulatory assets, net, and customer intangible asset amortization
|
|
922
|
|
|
869
|
|
|
||
Deferred purchased power and other costs
|
|
(33
|
)
|
|
(45
|
)
|
|
||
Deferred income taxes and investment tax credits, net
|
|
72
|
|
|
219
|
|
|
||
Impairment of assets (Note 2)
|
|
1,447
|
|
|
16
|
|
|
||
Investment impairments
|
|
10
|
|
|
24
|
|
|
||
Deferred costs on sale leaseback transaction, net
|
|
24
|
|
|
24
|
|
|
||
Retirement benefits
|
|
31
|
|
|
(16
|
)
|
|
||
Pension trust contributions
|
|
(160
|
)
|
|
(143
|
)
|
|
||
Commodity derivative transactions, net (Note 9)
|
|
5
|
|
|
(7
|
)
|
|
||
Lease payments on sale and leaseback transaction
|
|
(94
|
)
|
|
(102
|
)
|
|
||
Changes in current assets and liabilities-
|
|
|
|
|
|
||||
Receivables
|
|
101
|
|
|
8
|
|
|
||
Prepayments and other current assets
|
|
(91
|
)
|
|
(116
|
)
|
|
||
Accounts payable
|
|
(22
|
)
|
|
(245
|
)
|
|
||
Accrued taxes
|
|
(80
|
)
|
|
(23
|
)
|
|
||
Accrued compensation and benefits
|
|
(50
|
)
|
|
12
|
|
|
||
Other current liabilities
|
|
17
|
|
|
2
|
|
|
||
Cash collateral, net
|
|
21
|
|
|
38
|
|
|
||
Other
|
|
101
|
|
|
66
|
|
|
||
Net cash provided from operating activities
|
|
1,460
|
|
|
990
|
|
|
||
|
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||
New Financing-
|
|
|
|
|
|
||||
Long-term debt
|
|
—
|
|
|
200
|
|
|
||
Short-term borrowings, net
|
|
1,225
|
|
|
1,109
|
|
|
||
Redemptions and Repayments-
|
|
|
|
|
|
||||
Long-term debt
|
|
(581
|
)
|
|
(292
|
)
|
|
||
Common stock dividend payments
|
|
(305
|
)
|
|
(303
|
)
|
|
||
Other
|
|
36
|
|
|
(2
|
)
|
|
||
Net cash provided from financing activities
|
|
375
|
|
|
712
|
|
|
||
|
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||
Property additions
|
|
(1,492
|
)
|
|
(1,486
|
)
|
|
||
Nuclear fuel
|
|
(188
|
)
|
|
(97
|
)
|
|
||
Sales of investment securities held in trusts
|
|
1,024
|
|
|
819
|
|
|
||
Purchases of investment securities held in trusts
|
|
(1,073
|
)
|
|
(881
|
)
|
|
||
Asset removal costs
|
|
(63
|
)
|
|
(67
|
)
|
|
||
Other
|
|
25
|
|
|
19
|
|
|
||
Net cash used for investing activities
|
|
(1,767
|
)
|
|
(1,693
|
)
|
|
||
|
|
|
|
|
|
||||
Net change in cash and cash equivalents
|
|
68
|
|
|
9
|
|
|
||
Cash and cash equivalents at beginning of period
|
|
131
|
|
|
85
|
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
199
|
|
|
$
|
94
|
|
|
|
|
For the Three Months Ended June 30
|
|
For the Six Months Ended June 30
|
||||||||||||
(In millions)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|||||||
REVENUES:
|
|
|
|
|
|
|
|
|
|
|||||||
Electric sales to non-affiliates
|
|
$
|
958
|
|
|
$
|
914
|
|
|
$
|
1,965
|
|
|
$
|
1,989
|
|
Electric sales to affiliates
|
|
102
|
|
|
157
|
|
|
249
|
|
|
412
|
|
||||
Other
|
|
42
|
|
|
48
|
|
|
87
|
|
|
95
|
|
||||
Total revenues
|
|
1,102
|
|
|
1,119
|
|
|
2,301
|
|
|
2,496
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
||||||
Fuel
|
|
228
|
|
|
191
|
|
|
393
|
|
|
421
|
|
||||
Purchased power from affiliates
|
|
167
|
|
|
77
|
|
|
249
|
|
|
147
|
|
||||
Purchased power from non-affiliates
|
|
266
|
|
|
392
|
|
|
643
|
|
|
935
|
|
||||
Other operating expenses
|
|
369
|
|
|
337
|
|
|
609
|
|
|
750
|
|
||||
Provision for depreciation
|
|
84
|
|
|
81
|
|
|
167
|
|
|
161
|
|
||||
General taxes
|
|
19
|
|
|
25
|
|
|
45
|
|
|
54
|
|
||||
Impairment of assets (Note 2)
|
|
540
|
|
|
16
|
|
|
540
|
|
|
16
|
|
||||
Total operating expenses
|
|
1,673
|
|
|
1,119
|
|
|
2,646
|
|
|
2,484
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OPERATING INCOME (LOSS)
|
|
(571
|
)
|
|
—
|
|
|
(345
|
)
|
|
12
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment income
|
|
19
|
|
|
1
|
|
|
32
|
|
|
14
|
|
||||
Miscellaneous income
|
|
1
|
|
|
4
|
|
|
3
|
|
|
4
|
|
||||
Interest expense — affiliates
|
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
Interest expense — other
|
|
(37
|
)
|
|
(37
|
)
|
|
(73
|
)
|
|
(74
|
)
|
||||
Capitalized interest
|
|
8
|
|
|
9
|
|
|
18
|
|
|
18
|
|
||||
Total other expense
|
|
(10
|
)
|
|
(25
|
)
|
|
(23
|
)
|
|
(42
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
LOSS BEFORE INCOME TAX BENEFITS
|
|
(581
|
)
|
|
(25
|
)
|
|
(368
|
)
|
|
(30
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
INCOME TAX BENEFITS
|
|
(143
|
)
|
|
(4
|
)
|
|
(61
|
)
|
|
(6
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
NET LOSS
|
|
$
|
(438
|
)
|
|
$
|
(21
|
)
|
|
$
|
(307
|
)
|
|
$
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
STATEMENTS OF COMPREHENSIVE LOSS
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
NET LOSS
|
|
$
|
(438
|
)
|
|
$
|
(21
|
)
|
|
$
|
(307
|
)
|
|
$
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
||||||
Pension and OPEB prior service costs
|
|
(3
|
)
|
|
(4
|
)
|
|
(7
|
)
|
|
(8
|
)
|
||||
Amortized gains on derivative hedges
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
||||
Change in unrealized gains on available-for-sale securities
|
|
33
|
|
|
(12
|
)
|
|
56
|
|
|
(9
|
)
|
||||
Other comprehensive income (loss)
|
|
29
|
|
|
(17
|
)
|
|
48
|
|
|
(19
|
)
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
12
|
|
|
(6
|
)
|
|
19
|
|
|
(7
|
)
|
||||
Other comprehensive income (loss), net of tax
|
|
17
|
|
|
(11
|
)
|
|
29
|
|
|
(12
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
COMPREHENSIVE LOSS
|
|
$
|
(421
|
)
|
|
$
|
(32
|
)
|
|
$
|
(278
|
)
|
|
$
|
(36
|
)
|
(In millions, except share amounts)
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
ASSETS
|
|
|
|
|
|
|
||
CURRENT ASSETS:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
2
|
|
|
$
|
2
|
|
Receivables-
|
|
|
|
|
|
|
||
Customers, net of allowance for uncollectible accounts of $7 in 2016 and $8 in 2015
|
|
225
|
|
|
275
|
|
||
Affiliated companies
|
|
411
|
|
|
451
|
|
||
Other, net of allowance for uncollectible accounts of $3 in 2016 and 2015
|
|
37
|
|
|
59
|
|
||
Notes receivable from affiliated companies
|
|
—
|
|
|
11
|
|
||
Materials and supplies
|
|
430
|
|
|
470
|
|
||
Derivatives
|
|
155
|
|
|
154
|
|
||
Collateral
|
|
20
|
|
|
70
|
|
||
Prepayments and other
|
|
81
|
|
|
66
|
|
||
|
|
1,361
|
|
|
1,558
|
|
||
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
||
In service
|
|
13,992
|
|
|
14,311
|
|
||
Less — Accumulated provision for depreciation
|
|
5,706
|
|
|
5,765
|
|
||
|
|
8,286
|
|
|
8,546
|
|
||
Construction work in progress
|
|
1,061
|
|
|
1,157
|
|
||
|
|
9,347
|
|
|
9,703
|
|
||
INVESTMENTS:
|
|
|
|
|
|
|
||
Nuclear plant decommissioning trusts
|
|
1,510
|
|
|
1,327
|
|
||
Other
|
|
10
|
|
|
10
|
|
||
|
|
1,520
|
|
|
1,337
|
|
||
DEFERRED CHARGES AND OTHER ASSETS:
|
|
|
|
|
|
|
||
Customer intangibles
|
|
52
|
|
|
61
|
|
||
Goodwill (Note 2)
|
|
—
|
|
|
23
|
|
||
Property taxes
|
|
20
|
|
|
40
|
|
||
Derivatives
|
|
83
|
|
|
79
|
|
||
Other
|
|
377
|
|
|
367
|
|
||
|
|
532
|
|
|
570
|
|
||
|
|
$
|
12,760
|
|
|
$
|
13,168
|
|
LIABILITIES AND CAPITALIZATION
|
|
|
|
|
|
|
||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Currently payable long-term debt
|
|
$
|
439
|
|
|
$
|
512
|
|
Short-term borrowings-
|
|
|
|
|
||||
Affiliated companies
|
|
210
|
|
|
—
|
|
||
Other
|
|
—
|
|
|
8
|
|
||
Accounts payable-
|
|
|
|
|
|
|
||
Affiliated companies
|
|
360
|
|
|
542
|
|
||
Other
|
|
114
|
|
|
139
|
|
||
Accrued taxes
|
|
78
|
|
|
76
|
|
||
Derivatives
|
|
99
|
|
|
104
|
|
||
Other
|
|
173
|
|
|
181
|
|
||
|
|
1,473
|
|
|
1,562
|
|
||
CAPITALIZATION:
|
|
|
|
|
|
|
||
Common stockholder's equity-
|
|
|
|
|
|
|
||
Common stock, without par value, authorized 750 shares - 7 shares outstanding as of June 30, 2016 and December 31, 2015
|
|
3,643
|
|
|
3,613
|
|
||
Accumulated other comprehensive income
|
|
75
|
|
|
46
|
|
||
Retained earnings
|
|
1,639
|
|
|
1,946
|
|
||
Total common stockholder's equity
|
|
5,357
|
|
|
5,605
|
|
||
Long-term debt and other long-term obligations
|
|
2,347
|
|
|
2,510
|
|
||
|
|
7,704
|
|
|
8,115
|
|
||
NONCURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Deferred gain on sale and leaseback transaction
|
|
774
|
|
|
791
|
|
||
Accumulated deferred income taxes
|
|
627
|
|
|
600
|
|
||
Retirement benefits
|
|
344
|
|
|
332
|
|
||
Asset retirement obligations
|
|
877
|
|
|
831
|
|
||
Derivatives
|
|
46
|
|
|
38
|
|
||
Other
|
|
915
|
|
|
899
|
|
||
|
|
3,583
|
|
|
3,491
|
|
||
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 12)
|
|
|
|
|
|
|
||
|
|
$
|
12,760
|
|
|
$
|
13,168
|
|
|
|
For the Six Months Ended June 30
|
|
||||||
(In millions)
|
|
2016
|
|
2015
|
|
||||
|
|
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||
Net loss
|
|
$
|
(307
|
)
|
|
$
|
(24
|
)
|
|
Adjustments to reconcile net loss to net cash from operating activities-
|
|
|
|
|
|
||||
Depreciation and amortization, including nuclear fuel and customer intangible asset amortization
|
|
281
|
|
|
278
|
|
|
||
Deferred costs on sale and leaseback transaction, net
|
|
24
|
|
|
24
|
|
|
||
Deferred income taxes and investment tax credits, net
|
|
(16
|
)
|
|
50
|
|
|
||
Investment impairments
|
|
9
|
|
|
22
|
|
|
||
Commodity derivative transactions, net (Note 9)
|
|
5
|
|
|
(7
|
)
|
|
||
Lease payments on sale and leaseback transaction
|
|
(94
|
)
|
|
(102
|
)
|
|
||
Impairment of assets (Note 2)
|
|
540
|
|
|
16
|
|
|
||
Changes in current assets and liabilities-
|
|
|
|
|
|
||||
Receivables
|
|
110
|
|
|
277
|
|
|
||
Materials and supplies
|
|
12
|
|
|
(9
|
)
|
|
||
Prepayments and other current assets
|
|
(13
|
)
|
|
(9
|
)
|
|
||
Accounts payable
|
|
(79
|
)
|
|
(259
|
)
|
|
||
Accrued taxes
|
|
2
|
|
|
(23
|
)
|
|
||
Accrued compensation and benefits
|
|
(6
|
)
|
|
1
|
|
|
||
Other current liabilities
|
|
22
|
|
|
17
|
|
|
||
Cash collateral, net
|
|
50
|
|
|
89
|
|
|
||
Other
|
|
16
|
|
|
2
|
|
|
||
Net cash provided from operating activities
|
|
556
|
|
|
343
|
|
|
||
|
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||
New financing-
|
|
|
|
|
|
||||
Short-term borrowings, net
|
|
210
|
|
|
124
|
|
|
||
Redemptions and repayments-
|
|
|
|
|
|
||||
Long-term debt
|
|
(245
|
)
|
|
(69
|
)
|
|
||
Other
|
|
(2
|
)
|
|
(2
|
)
|
|
||
Net cash (used for) provided from financing activities
|
|
(37
|
)
|
|
53
|
|
|
||
|
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||
Property additions
|
|
(335
|
)
|
|
(264
|
)
|
|
||
Nuclear fuel
|
|
(188
|
)
|
|
(97
|
)
|
|
||
Sales of investment securities held in trusts
|
|
441
|
|
|
376
|
|
|
||
Purchases of investment securities held in trusts
|
|
(467
|
)
|
|
(404
|
)
|
|
||
Cash investments
|
|
11
|
|
|
—
|
|
|
||
Loans to affiliated companies, net
|
|
11
|
|
|
(13
|
)
|
|
||
Other
|
|
8
|
|
|
6
|
|
|
||
Net cash used for investing activities
|
|
(519
|
)
|
|
(396
|
)
|
|
||
|
|
|
|
|
|
||||
Net change in cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
||
Cash and cash equivalents at beginning of period
|
|
2
|
|
|
2
|
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
2
|
|
|
$
|
2
|
|
|
•
|
ASU 2016-05, “Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships”
,
|
•
|
ASU 2016-06, “Contingent Put and Call Options in Debt Instruments (a consensus of the FASB Emerging Issues Task Force)",and
|
•
|
ASU 2016-07, “Simplifying the Transition to the Equity Method of Accounting”.
|
•
|
Future Energy and Capacity Prices:
Observable market information for near-term forward power prices, PJM auction results for near term capacity pricing, and a longer-term fundamental pricing model for energy and capacity that considered the impact of key factors such as load growth, plant retirements, carbon and other environmental regulations, and natural gas pipeline construction, as well as coal and natural gas pricing.
|
•
|
Retail Sales and Margin:
CES' current retail targeted portfolio to estimate future retail sales volume as well as historical financial results to estimate retail margins.
|
•
|
Operating and Capital Costs:
Estimated future operating and capital costs, including the estimated impact on costs of pending carbon and other environmental regulations, as well as costs associated with capacity performance reforms in the PJM market.
|
•
|
Discount Rate:
A discount rate of
9.50%
, based on selected comparable companies' capital structure, return on debt and return on equity.
|
•
|
Terminal Value:
A terminal value of
7.0x
earnings before interest, taxes, depreciation and amortization based on consideration of peer group data and analyst consensus expectations.
|
Goodwill
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive Energy Services
|
|
Consolidated
|
||||||||
|
|
(In millions)
|
||||||||||||||
Balance as of December 31, 2015
|
|
$
|
5,092
|
|
|
$
|
526
|
|
|
$
|
800
|
|
|
$
|
6,418
|
|
Impairment
|
|
—
|
|
|
—
|
|
|
(800
|
)
|
|
(800
|
)
|
||||
Balance as of June 30, 2016
|
|
$
|
5,092
|
|
|
$
|
526
|
|
|
$
|
—
|
|
|
$
|
5,618
|
|
(In millions, except per share amounts)
|
|
For the Three Months Ended June 30
|
|
For the Six Months Ended June 30
|
||||||||||||
Reconciliation of Basic and Diluted Earnings per Share of Common Stock
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
|
$
|
(1,089
|
)
|
|
$
|
187
|
|
|
$
|
(761
|
)
|
|
$
|
409
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of basic shares outstanding
|
|
425
|
|
|
422
|
|
|
424
|
|
|
422
|
|
||||
Assumed exercise of dilutive stock options and awards
(1)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Weighted average number of diluted shares outstanding
|
|
425
|
|
|
423
|
|
|
424
|
|
|
423
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings (losses) per share of common stock
|
|
$
|
(2.56
|
)
|
|
$
|
0.44
|
|
|
$
|
(1.79
|
)
|
|
$
|
0.97
|
|
Diluted earnings (losses) per share of common stock
|
|
$
|
(2.56
|
)
|
|
$
|
0.44
|
|
|
$
|
(1.79
|
)
|
|
$
|
0.97
|
|
(1)
|
For both the three and six months ended June 30, 2016,
three million
shares were excluded from the calculation of diluted shares outstanding, as their inclusion would be antidilutive as a result of the net loss. For both the three and six months ended
June 30, 2015
,
one million
shares were excluded from the calculation of diluted shares outstanding, as their inclusion would be antidilutive.
|
Components of Net Periodic Benefit Costs (Credits)
|
|
Pension
|
OPEB
|
|||||||||||||
For the Three Months Ended June 30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(In millions)
|
||||||||||||||
Service costs
|
|
$
|
48
|
|
|
$
|
48
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest costs
|
|
99
|
|
|
96
|
|
|
8
|
|
|
7
|
|
||||
Expected return on plan assets
|
|
(100
|
)
|
|
(111
|
)
|
|
(8
|
)
|
|
(8
|
)
|
||||
Amortization of prior service costs (credits)
|
|
2
|
|
|
2
|
|
|
(20
|
)
|
|
(34
|
)
|
||||
Net periodic costs (credits)
|
|
$
|
49
|
|
|
$
|
35
|
|
|
$
|
(19
|
)
|
|
$
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Components of Net Periodic Benefit Costs (Credits)
|
|
Pension
|
OPEB
|
|||||||||||||
For the Six Months Ended June 30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(In millions)
|
||||||||||||||
Service costs
|
|
$
|
96
|
|
|
$
|
96
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest costs
|
|
199
|
|
|
192
|
|
|
15
|
|
|
14
|
|
||||
Expected return on plan assets
|
|
(197
|
)
|
|
(222
|
)
|
|
(16
|
)
|
|
(16
|
)
|
||||
Amortization of prior service costs (credits)
|
|
4
|
|
|
4
|
|
|
(40
|
)
|
|
(67
|
)
|
||||
Net periodic costs (credits)
|
|
$
|
102
|
|
|
$
|
70
|
|
|
$
|
(39
|
)
|
|
$
|
(67
|
)
|
|
|
Pension
|
OPEB
|
|||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(In millions)
|
||||||||||||||
For the Three Months Ended June 30
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
(4
|
)
|
|
$
|
(5
|
)
|
For the Six Months Ended June 30
|
|
12
|
|
|
8
|
|
|
(8
|
)
|
|
(10
|
)
|
Net Periodic Benefit Expense (Credit)
|
|
Pension
|
|
OPEB
|
||||||||||||
For the Three Months Ended June 30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(In millions)
|
||||||||||||||
FirstEnergy
|
|
$
|
35
|
|
|
$
|
24
|
|
|
$
|
(15
|
)
|
|
$
|
(22
|
)
|
FES
|
|
6
|
|
|
4
|
|
|
(4
|
)
|
|
(4
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net Periodic Benefit Expense (Credit)
|
|
Pension
|
|
OPEB
|
||||||||||||
For the Six Months Ended June 30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(In millions)
|
||||||||||||||
FirstEnergy
|
|
$
|
72
|
|
|
$
|
49
|
|
|
$
|
(30
|
)
|
|
$
|
(45
|
)
|
FES
|
|
12
|
|
|
8
|
|
|
(8
|
)
|
|
(8
|
)
|
FirstEnergy
|
|
Gains & Losses on Cash Flow Hedges
|
|
Unrealized Gains on AFS Securities
|
|
Defined Benefit Pension & OPEB Plans
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
AOCI Balance as of April 1, 2016
|
|
$
|
(32
|
)
|
|
$
|
36
|
|
|
$
|
175
|
|
|
$
|
179
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
47
|
|
|
—
|
|
|
47
|
|
||||
Amounts reclassified from AOCI
|
|
2
|
|
|
(12
|
)
|
|
(18
|
)
|
|
(28
|
)
|
||||
Other comprehensive income (loss)
|
|
2
|
|
|
35
|
|
|
(18
|
)
|
|
19
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
1
|
|
|
13
|
|
|
(7
|
)
|
|
7
|
|
||||
Other comprehensive income (loss), net of tax
|
|
1
|
|
|
22
|
|
|
(11
|
)
|
|
12
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2016
|
|
$
|
(31
|
)
|
|
$
|
58
|
|
|
$
|
164
|
|
|
$
|
191
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of April 1, 2015
|
|
$
|
(36
|
)
|
|
$
|
28
|
|
|
$
|
238
|
|
|
$
|
230
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss before reclassifications
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
||||
Amounts reclassified from AOCI
|
|
1
|
|
|
(7
|
)
|
|
(32
|
)
|
|
(38
|
)
|
||||
Other comprehensive income (loss)
|
|
1
|
|
|
(14
|
)
|
|
(32
|
)
|
|
(45
|
)
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
1
|
|
|
(5
|
)
|
|
(13
|
)
|
|
(17
|
)
|
||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
(9
|
)
|
|
(19
|
)
|
|
(28
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2015
|
|
$
|
(36
|
)
|
|
$
|
19
|
|
|
$
|
219
|
|
|
$
|
202
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Gains & Losses on Cash Flow Hedges
|
|
Unrealized Gains on AFS Securities
|
|
Defined Benefit Pension & OPEB Plans
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
AOCI Balance as of January 1, 2016
|
|
$
|
(33
|
)
|
|
$
|
18
|
|
|
$
|
186
|
|
|
$
|
171
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
88
|
|
|
—
|
|
|
88
|
|
||||
Amounts reclassified from AOCI
|
|
4
|
|
|
(25
|
)
|
|
(36
|
)
|
|
(57
|
)
|
||||
Other comprehensive income (loss)
|
|
4
|
|
|
63
|
|
|
(36
|
)
|
|
31
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
2
|
|
|
23
|
|
|
(14
|
)
|
|
11
|
|
||||
Other comprehensive income (loss), net of tax
|
|
2
|
|
|
40
|
|
|
(22
|
)
|
|
20
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2016
|
|
$
|
(31
|
)
|
|
$
|
58
|
|
|
$
|
164
|
|
|
$
|
191
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of January 1, 2015
|
|
$
|
(37
|
)
|
|
$
|
25
|
|
|
$
|
258
|
|
|
$
|
246
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||
Amounts reclassified from AOCI
|
|
2
|
|
|
(17
|
)
|
|
(63
|
)
|
|
(78
|
)
|
||||
Other comprehensive income (loss)
|
|
2
|
|
|
(10
|
)
|
|
(63
|
)
|
|
(71
|
)
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
1
|
|
|
(4
|
)
|
|
(24
|
)
|
|
(27
|
)
|
||||
Other comprehensive income (loss), net of tax
|
|
1
|
|
|
(6
|
)
|
|
(39
|
)
|
|
(44
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2015
|
|
$
|
(36
|
)
|
|
$
|
19
|
|
|
$
|
219
|
|
|
$
|
202
|
|
|
|
|
|
|
|
|
|
|
FES
|
|
|
|
|
|
|
|
|
||||||||
|
|
Gains & Losses on Cash Flow Hedges
|
|
Unrealized Gains on AFS Securities
|
|
Defined Benefit Pension & OPEB Plans
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
AOCI Balance as of April 1, 2016
|
|
$
|
(9
|
)
|
|
$
|
30
|
|
|
$
|
37
|
|
|
$
|
58
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
44
|
|
|
—
|
|
|
44
|
|
||||
Amounts reclassified from AOCI
|
|
(1
|
)
|
|
(11
|
)
|
|
(3
|
)
|
|
(15
|
)
|
||||
Other comprehensive income (loss)
|
|
(1
|
)
|
|
33
|
|
|
(3
|
)
|
|
29
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
—
|
|
|
13
|
|
|
(1
|
)
|
|
12
|
|
||||
Other comprehensive income (loss), net of tax
|
|
(1
|
)
|
|
20
|
|
|
(2
|
)
|
|
17
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2016
|
|
$
|
(10
|
)
|
|
$
|
50
|
|
|
$
|
35
|
|
|
$
|
75
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of April 1, 2015
|
|
$
|
(8
|
)
|
|
$
|
24
|
|
|
$
|
40
|
|
|
$
|
56
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss before reclassifications
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
||||
Amounts reclassified from AOCI
|
|
(1
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|
(10
|
)
|
||||
Other comprehensive loss
|
|
(1
|
)
|
|
(12
|
)
|
|
(4
|
)
|
|
(17
|
)
|
||||
Income tax benefits on other comprehensive loss
|
|
—
|
|
|
(4
|
)
|
|
(2
|
)
|
|
(6
|
)
|
||||
Other comprehensive loss, net of tax
|
|
(1
|
)
|
|
(8
|
)
|
|
(2
|
)
|
|
(11
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2015
|
|
$
|
(9
|
)
|
|
$
|
16
|
|
|
$
|
38
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Gains & Losses on Cash Flow Hedges
|
|
Unrealized Gains on AFS Securities
|
|
Defined Benefit Pension & OPEB Plans
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
AOCI Balance as of January 1, 2016
|
|
$
|
(9
|
)
|
|
$
|
16
|
|
|
$
|
39
|
|
|
$
|
46
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
80
|
|
|
—
|
|
|
80
|
|
||||
Amounts reclassified from AOCI
|
|
(1
|
)
|
|
(24
|
)
|
|
(7
|
)
|
|
(32
|
)
|
||||
Other comprehensive income (loss)
|
|
(1
|
)
|
|
56
|
|
|
(7
|
)
|
|
48
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
—
|
|
|
22
|
|
|
(3
|
)
|
|
19
|
|
||||
Other comprehensive income (loss), net of tax
|
|
(1
|
)
|
|
34
|
|
|
(4
|
)
|
|
29
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2016
|
|
$
|
(10
|
)
|
|
$
|
50
|
|
|
$
|
35
|
|
|
$
|
75
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of January 1, 2015
|
|
$
|
(7
|
)
|
|
$
|
21
|
|
|
$
|
43
|
|
|
$
|
57
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||
Amounts reclassified from AOCI
|
|
(2
|
)
|
|
(15
|
)
|
|
(8
|
)
|
|
(25
|
)
|
||||
Other comprehensive loss
|
|
(2
|
)
|
|
(9
|
)
|
|
(8
|
)
|
|
(19
|
)
|
||||
Income tax benefits on other comprehensive loss
|
|
—
|
|
|
(4
|
)
|
|
(3
|
)
|
|
(7
|
)
|
||||
Other comprehensive loss, net of tax
|
|
(2
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(12
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2015
|
|
$
|
(9
|
)
|
|
$
|
16
|
|
|
$
|
38
|
|
|
$
|
45
|
|
•
|
PNBV Trust
-
PNBV
,
a business trust established by OE in 1996, issued certain beneficial interests and notes to fund the acquisition of a portion of the bonds issued by certain owner trusts in connection with the sale and leaseback in 1987 of a portion of OE's interest in the Perry Plant and Beaver Valley Unit 2. OE used debt and available funds to purchase the notes issued by PNBV. The beneficial ownership of PNBV includes a
3%
interest by unaffiliated third parties.
|
•
|
Ohio Securitization
- In September 2012, the Ohio Companies created separate, wholly-owned limited liability companies (SPEs) which issued phase-in recovery bonds to securitize the recovery of certain all-electric customer heating discounts, fuel and purchased power regulatory assets. The phase-in recovery bonds are payable only from, and secured by, phase-in recovery property owned by the SPEs. The bondholder has no recourse to the general credit of FirstEnergy or any of the Ohio Companies. Each of the Ohio Companies, as servicer of its respective SPE, manages and administers the phase-in recovery property including the billing, collection and remittance of usage-based charges payable by retail electric customers. In the aggregate, the Ohio Companies are entitled to annual servicing fees of
$445 thousand
that are recoverable through the usage-based charges. The SPEs are considered VIEs and each one is consolidated into its applicable utility. As of
June 30, 2016
and
December 31, 2015
,
$350 million
and
$362 million
of the phase-in recovery bonds were outstanding, respectively.
|
•
|
JCP&L Securitization
-
In June 2002, JCP&L Transition Funding sold transition bonds to securitize the recovery of JCP&L’s bondable stranded costs associated with the previously divested Oyster Creek Nuclear Generating Station. In August 2006, JCP&L Transition Funding II sold transition bonds to securitize the recovery of deferred costs associated with JCP&L’s supply of BGS. JCP&L did not purchase and does not own any of the transition bonds, which are included as long-term debt on FirstEnergy’s and JCP&L’s Consolidated Balance Sheets. The transition bonds are the sole obligations of JCP&L Transition Funding and JCP&L Transition Funding II and are collateralized by each company’s equity and assets, which consist primarily of bondable transition property. As of
June 30, 2016
and
December 31, 2015
,
$108 million
and
$128 million
of the transition bonds were outstanding, respectively.
|
•
|
MP and PE Environmental Funding Companies
-
The entities issued bonds, the proceeds of which were used to construct environmental control facilities. The special purpose limited liability companies own the irrevocable right to collect non-bypassable environmental control charges from all customers who receive electric delivery service in MP's and PE's West Virginia service territories. Principal and interest owed on the environmental control bonds is secured by, and payable solely from, the proceeds of the environmental control charges. Creditors of FirstEnergy, other than the special purpose limited liability companies, have no recourse to any assets or revenues of the special purpose limited liability companies. As of
June 30, 2016
and
December 31, 2015
,
$418 million
and
$429 million
of the environmental control bonds were outstanding, respectively.
|
•
|
Global Holding
-
FEV holds a
33-1/3%
equity ownership in Global Holding, the holding company for a joint venture in the Signal Peak mining and coal transportation operations with coal sales in U.S. and international markets. FEV is not the primary beneficiary of the joint venture, as it does not have control over the significant activities affecting the joint venture's economic performance. FEV's ownership interest is subject to the equity method of accounting.
|
•
|
PATH WV
-
PATH is a series limited liability company that is comprised of multiple series, each of which has separate rights, powers and duties regarding specified property and the series profits and losses associated with such property. A subsidiary of FE owns
100%
of the Allegheny Series (PATH-Allegheny) and
50%
of the West Virginia Series (PATH-WV), which is a joint venture with a subsidiary of AEP. FirstEnergy is not the primary beneficiary of PATH-WV, as it does not have control over the significant activities affecting the economics of PATH-WV. FirstEnergy's ownership interest in PATH-WV is subject to the equity method of accounting.
|
•
|
Power Purchase Agreements
-
FirstEnergy evaluated its power purchase agreements and determined that certain NUG entities at its Regulated Distribution segment may be VIEs to the extent that they own a plant that sells substantially all of its output to the applicable utilities and the contract price for power is correlated with the plant’s variable costs of production.
|
•
|
Sale and Leaseback Transactions
-
OE and FES
have obligations that are not included on their Consolidated Balance Sheets related to Beaver Valley Unit 2 and 2007 Bruce Mansfield Unit 1 sale and leaseback arrangements, respectively, which are satisfied through operating lease payments. FirstEnergy is not the primary beneficiary of these interests as it does not have control over the significant activities affecting the economics of the arrangements.
As of June 30, 2016, FirstEnergy's leasehold interest was
2.60%
of Beaver Valley Unit 2 and
93.83%
of Bruce Mansfield Unit 1.
|
|
Maximum
Exposure
|
|
Discounted Lease
Payments, net
|
|
Net
Exposure
|
||||||
|
(In millions)
|
||||||||||
FirstEnergy
|
$
|
1,123
|
|
|
$
|
880
|
|
|
$
|
243
|
|
FES
|
1,094
|
|
|
872
|
|
|
222
|
|
Level 1
|
-
|
Quoted prices for identical instruments in active market
|
|
|
|
Level 2
|
-
|
Quoted prices for similar instruments in active market
|
|
-
|
Quoted prices for identical or similar instruments in markets that are not active
|
|
-
|
Model-derived valuations for which all significant inputs are observable market data
|
Level 3
|
-
|
Valuation inputs are unobservable and significant to the fair value measurement
|
FirstEnergy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Recurring Fair Value Measurements
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
(In millions)
|
||||||||||||||||||||||||||||||
Corporate debt securities
|
$
|
—
|
|
|
$
|
1,206
|
|
|
$
|
—
|
|
|
$
|
1,206
|
|
|
$
|
—
|
|
|
$
|
1,245
|
|
|
$
|
—
|
|
|
$
|
1,245
|
|
Derivative assets - commodity contracts
|
12
|
|
|
214
|
|
|
—
|
|
|
226
|
|
|
4
|
|
|
224
|
|
|
—
|
|
|
228
|
|
||||||||
Derivative assets - FTRs
|
—
|
|
|
—
|
|
|
17
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
||||||||
Derivative assets - NUG contracts
(1)
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||||
Equity securities
(2)
|
770
|
|
|
—
|
|
|
—
|
|
|
770
|
|
|
576
|
|
|
—
|
|
|
—
|
|
|
576
|
|
||||||||
Foreign government debt securities
|
—
|
|
|
73
|
|
|
—
|
|
|
73
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
75
|
|
||||||||
U.S. government debt securities
|
—
|
|
|
189
|
|
|
—
|
|
|
189
|
|
|
—
|
|
|
180
|
|
|
—
|
|
|
180
|
|
||||||||
U.S. state debt securities
|
—
|
|
|
247
|
|
|
—
|
|
|
247
|
|
|
—
|
|
|
246
|
|
|
—
|
|
|
246
|
|
||||||||
Other
(3)
|
199
|
|
|
231
|
|
|
—
|
|
|
430
|
|
|
105
|
|
|
212
|
|
|
—
|
|
|
317
|
|
||||||||
Total assets
|
$
|
981
|
|
|
$
|
2,160
|
|
|
$
|
18
|
|
|
$
|
3,159
|
|
|
$
|
685
|
|
|
$
|
2,182
|
|
|
$
|
9
|
|
|
$
|
2,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities - commodity contracts
|
$
|
(3
|
)
|
|
$
|
(137
|
)
|
|
$
|
—
|
|
|
$
|
(140
|
)
|
|
$
|
(9
|
)
|
|
$
|
(122
|
)
|
|
$
|
—
|
|
|
$
|
(131
|
)
|
Derivative liabilities - FTRs
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
(13
|
)
|
||||||||
Derivative liabilities - NUG contracts
(1)
|
—
|
|
|
—
|
|
|
(124
|
)
|
|
(124
|
)
|
|
—
|
|
|
—
|
|
|
(137
|
)
|
|
(137
|
)
|
||||||||
Total liabilities
|
$
|
(3
|
)
|
|
$
|
(137
|
)
|
|
$
|
(132
|
)
|
|
$
|
(272
|
)
|
|
$
|
(9
|
)
|
|
$
|
(122
|
)
|
|
$
|
(150
|
)
|
|
$
|
(281
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net assets (liabilities)
(4)
|
$
|
978
|
|
|
$
|
2,023
|
|
|
$
|
(114
|
)
|
|
$
|
2,887
|
|
|
$
|
676
|
|
|
$
|
2,060
|
|
|
$
|
(141
|
)
|
|
$
|
2,595
|
|
(1)
|
NUG contracts are subject to regulatory accounting treatment and do not impact earnings.
|
(2)
|
NDT funds hold equity portfolios whose performance is benchmarked against the Alerian MLP Index or the Wells Fargo Hybrid and Preferred Securities REIT index.
|
(3)
|
Primarily consists of short-term cash investments.
|
(4)
|
Excludes
$7 million
as of
June 30, 2016
and
December 31, 2015
, of receivables, payables, taxes and accrued income associated with financial instruments reflected within the fair value table.
|
|
NUG Contracts
(1)
|
|
FTRs
|
||||||||||||||||||||
|
Derivative Assets
|
|
Derivative Liabilities
|
|
Net
|
|
Derivative Assets
|
|
Derivative Liabilities
|
|
Net
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
January 1, 2015 Balance
|
$
|
2
|
|
|
$
|
(153
|
)
|
|
$
|
(151
|
)
|
|
$
|
39
|
|
|
$
|
(14
|
)
|
|
$
|
25
|
|
Unrealized gain (loss)
|
2
|
|
|
(49
|
)
|
|
(47
|
)
|
|
(5
|
)
|
|
(7
|
)
|
|
(12
|
)
|
||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
(11
|
)
|
|
11
|
|
||||||
Settlements
|
(3
|
)
|
|
65
|
|
|
62
|
|
|
(48
|
)
|
|
19
|
|
|
(29
|
)
|
||||||
December 31, 2015 Balance
|
$
|
1
|
|
|
$
|
(137
|
)
|
|
$
|
(136
|
)
|
|
$
|
8
|
|
|
$
|
(13
|
)
|
|
$
|
(5
|
)
|
Unrealized loss
|
—
|
|
|
(11
|
)
|
|
(11
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
(7
|
)
|
|
8
|
|
||||||
Settlements
|
—
|
|
|
24
|
|
|
24
|
|
|
(6
|
)
|
|
13
|
|
|
7
|
|
||||||
June 30, 2016 Balance
|
$
|
1
|
|
|
$
|
(124
|
)
|
|
$
|
(123
|
)
|
|
$
|
17
|
|
|
$
|
(8
|
)
|
|
$
|
9
|
|
(1)
|
NUG contracts are subject to regulatory accounting treatment and do not impact earnings.
|
|
|
Fair Value, Net (In millions)
|
|
Valuation
Technique |
|
Significant Input
|
|
Range
|
|
Weighted Average
|
|
Units
|
|||
FTRs
|
|
$
|
9
|
|
|
Model
|
|
RTO auction clearing prices
|
|
($2.60) to $6.60
|
|
$1.00
|
|
Dollars/MWH
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
NUG Contracts
|
|
$
|
(123
|
)
|
|
Model
|
|
Generation
|
|
400 to 3,430,000
|
|
719,000
|
|
|
MWH
|
|
|
|
Regional electricity prices
|
|
$33.80 to $33.90
|
|
$33.80
|
|
Dollars/MWH
|
FES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Recurring Fair Value Measurements
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
(In millions)
|
||||||||||||||||||||||||||||||
Corporate debt securities
|
$
|
—
|
|
|
$
|
698
|
|
|
$
|
—
|
|
|
$
|
698
|
|
|
$
|
—
|
|
|
$
|
678
|
|
|
$
|
—
|
|
|
$
|
678
|
|
Derivative assets - commodity contracts
|
12
|
|
|
214
|
|
|
—
|
|
|
226
|
|
|
4
|
|
|
224
|
|
|
—
|
|
|
228
|
|
||||||||
Derivative assets - FTRs
|
—
|
|
|
—
|
|
|
12
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||||
Equity securities
(1)
|
495
|
|
|
—
|
|
|
—
|
|
|
495
|
|
|
378
|
|
|
—
|
|
|
—
|
|
|
378
|
|
||||||||
Foreign government debt securities
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
59
|
|
||||||||
U.S. government debt securities
|
—
|
|
|
60
|
|
|
—
|
|
|
60
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
||||||||
U.S. state debt securities
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||||
Other
(2)
|
—
|
|
|
192
|
|
|
—
|
|
|
192
|
|
|
—
|
|
|
184
|
|
|
—
|
|
|
184
|
|
||||||||
Total assets
|
$
|
507
|
|
|
$
|
1,225
|
|
|
$
|
12
|
|
|
$
|
1,744
|
|
|
$
|
382
|
|
|
$
|
1,172
|
|
|
$
|
5
|
|
|
$
|
1,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities - commodity contracts
|
$
|
(3
|
)
|
|
$
|
(137
|
)
|
|
$
|
—
|
|
|
$
|
(140
|
)
|
|
$
|
(9
|
)
|
|
$
|
(122
|
)
|
|
$
|
—
|
|
|
$
|
(131
|
)
|
Derivative liabilities - FTRs
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
(11
|
)
|
||||||||
Total liabilities
|
$
|
(3
|
)
|
|
$
|
(137
|
)
|
|
$
|
(5
|
)
|
|
$
|
(145
|
)
|
|
$
|
(9
|
)
|
|
$
|
(122
|
)
|
|
$
|
(11
|
)
|
|
$
|
(142
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net assets (liabilities)
(3)
|
$
|
504
|
|
|
$
|
1,088
|
|
|
$
|
7
|
|
|
$
|
1,599
|
|
|
$
|
373
|
|
|
$
|
1,050
|
|
|
$
|
(6
|
)
|
|
$
|
1,417
|
|
(1)
|
NDT funds hold equity portfolios whose performance is benchmarked against the Alerian MLP Index or the Wells Fargo Hybrid and Preferred Securities REIT index.
|
(2)
|
Primarily consists of short-term cash investments.
|
(3)
|
Excludes
$4 million
and
$1 million
as of
June 30, 2016
and
December 31, 2015
, respectively, of receivables, payables, taxes and accrued income associated with the financial instruments reflected within the fair value table.
|
|
|
Derivative Asset
|
|
Derivative Liability
|
|
Net Asset (Liability)
|
||||||
|
|
(In millions)
|
||||||||||
January 1, 2015 Balance
|
|
$
|
27
|
|
|
$
|
(13
|
)
|
|
$
|
14
|
|
Unrealized gain (loss)
|
|
2
|
|
|
(5
|
)
|
|
(3
|
)
|
|||
Purchases
|
|
9
|
|
|
(10
|
)
|
|
(1
|
)
|
|||
Settlements
|
|
(33
|
)
|
|
17
|
|
|
(16
|
)
|
|||
December 31, 2015 Balance
|
|
$
|
5
|
|
|
$
|
(11
|
)
|
|
$
|
(6
|
)
|
Unrealized loss
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Purchases
|
|
9
|
|
|
(4
|
)
|
|
5
|
|
|||
Settlements
|
|
(2
|
)
|
|
11
|
|
|
9
|
|
|||
June 30, 2016 Balance
|
|
$
|
12
|
|
|
$
|
(5
|
)
|
|
$
|
7
|
|
|
|
Fair Value, Net (In millions)
|
|
Valuation
Technique |
|
Significant Input
|
|
Range
|
|
Weighted Average
|
|
Units
|
||
FTRs
|
|
$
|
7
|
|
|
Model
|
|
RTO auction clearing prices
|
|
($2.60) to $6.60
|
|
$0.70
|
|
Dollars/MWH
|
|
|
June 30, 2016
(1)
|
|
December 31, 2015
(2)
|
||||||||||||||||||||
|
|
Cost Basis
|
|
Unrealized Gains
|
|
Fair Value
|
|
Cost Basis
|
|
Unrealized Gains
|
|
Fair Value
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
Debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FirstEnergy
|
|
$
|
1,698
|
|
|
$
|
62
|
|
|
$
|
1,760
|
|
|
$
|
1,778
|
|
|
$
|
16
|
|
|
$
|
1,794
|
|
FES
|
|
820
|
|
|
41
|
|
|
861
|
|
|
801
|
|
|
9
|
|
|
810
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FirstEnergy
|
|
$
|
681
|
|
|
$
|
89
|
|
|
$
|
770
|
|
|
$
|
542
|
|
|
$
|
34
|
|
|
$
|
576
|
|
FES
|
|
434
|
|
|
61
|
|
|
495
|
|
|
354
|
|
|
24
|
|
|
378
|
|
(1)
|
Excludes short-term cash investments: FE Consolidated -
$176 million
; FES -
$154 million
.
|
(2)
|
Excludes short-term cash investments: FE Consolidated -
$157 million
; FES -
$139 million
.
|
For the Three Months Ended
|
||||||||||||||||||||
June 30, 2016
|
|
Sale Proceeds
|
|
Realized Gains
|
|
Realized Losses
|
|
OTTI
|
|
Interest and
Dividend Income
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
FirstEnergy
|
|
$
|
559
|
|
|
$
|
34
|
|
|
$
|
(24
|
)
|
|
$
|
(2
|
)
|
|
$
|
25
|
|
FES
|
|
303
|
|
|
25
|
|
|
(15
|
)
|
|
(2
|
)
|
|
13
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
June 30, 2015
|
|
Sale Proceeds
|
|
Realized Gains
|
|
Realized Losses
|
|
OTTI
|
|
Interest and Dividend Income
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
FirstEnergy
|
|
$
|
448
|
|
|
$
|
42
|
|
|
$
|
(39
|
)
|
|
$
|
(17
|
)
|
|
$
|
25
|
|
FES
|
|
187
|
|
|
32
|
|
|
(27
|
)
|
|
(16
|
)
|
|
15
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Six Months Ended
|
||||||||||||||||||||
June 30, 2016
|
|
Sale Proceeds
|
|
Realized Gains
|
|
Realized Losses
|
|
OTTI
|
|
Interest and
Dividend Income
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
FirstEnergy
|
|
$
|
1,024
|
|
|
$
|
95
|
|
|
$
|
(73
|
)
|
|
$
|
(10
|
)
|
|
$
|
48
|
|
FES
|
|
441
|
|
|
67
|
|
|
(43
|
)
|
|
(9
|
)
|
|
26
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
June 30, 2015
|
|
Sale Proceeds
|
|
Realized Gains
|
|
Realized Losses
|
|
OTTI
|
|
Interest and Dividend Income
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
FirstEnergy
|
|
$
|
819
|
|
|
$
|
102
|
|
|
$
|
(89
|
)
|
|
$
|
(24
|
)
|
|
$
|
50
|
|
FES
|
|
376
|
|
|
70
|
|
|
(55
|
)
|
|
(22
|
)
|
|
29
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
|
(In millions)
|
||||||||||||||
FirstEnergy
|
$
|
19,664
|
|
|
$
|
21,627
|
|
|
$
|
20,244
|
|
|
$
|
21,519
|
|
FES
|
2,791
|
|
|
2,884
|
|
|
3,027
|
|
|
3,121
|
|
•
|
Changes in the fair value of derivative instruments that are designated and qualify as cash flow hedges are recorded to AOCI with subsequent reclassification to earnings in the period during which the hedged forecasted transaction affects earnings.
|
•
|
Changes in the fair value of derivative instruments that are designated and qualify as fair value hedges are recorded as an adjustment to the item being hedged. When fair value hedges are discontinued, the adjustment recorded to the item being hedged is amortized into earnings.
|
•
|
Changes in the fair value of derivative instruments that are not designated in a hedging relationship are recorded in earnings on a mark-to-market basis, unless otherwise noted.
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||
|
Fair Value
|
|
|
Fair Value
|
||||||||||||
|
June 30,
2016 |
|
December 31,
2015 |
|
|
June 30,
2016 |
|
December 31,
2015 |
||||||||
|
(In millions)
|
|
|
(In millions)
|
||||||||||||
Current Assets - Derivatives
|
|
|
|
|
Current Liabilities - Derivatives
|
|
|
|
||||||||
Commodity Contracts
|
$
|
144
|
|
|
$
|
150
|
|
|
Commodity Contracts
|
$
|
(94
|
)
|
|
$
|
(94
|
)
|
FTRs
|
17
|
|
|
7
|
|
|
FTRs
|
(8
|
)
|
|
(12
|
)
|
||||
|
161
|
|
|
157
|
|
|
|
(102
|
)
|
|
(106
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Deferred Charges and Other Assets - Other
|
|
|
|
|
Noncurrent Liabilities - Adverse Power Contract Liability
|
|
|
|
||||||||
|
|
|
|
NUGs
(1)
|
(124
|
)
|
|
(137
|
)
|
|||||||
Commodity Contracts
|
82
|
|
|
78
|
|
|
Noncurrent Liabilities - Other
|
|
|
|
||||||
FTRs
|
—
|
|
|
1
|
|
|
Commodity Contracts
|
(46
|
)
|
|
(37
|
)
|
||||
NUGs
(1)
|
1
|
|
|
1
|
|
|
FTRs
|
—
|
|
|
(1
|
)
|
||||
|
83
|
|
|
80
|
|
|
|
(170
|
)
|
|
(175
|
)
|
||||
Derivative Assets
|
$
|
244
|
|
|
$
|
237
|
|
|
Derivative Liabilities
|
$
|
(272
|
)
|
|
$
|
(281
|
)
|
(1)
|
NUG contracts are subject to regulatory accounting treatment and do not impact earnings.
|
|
|
|
|
Amounts Not Offset in Consolidated Balance Sheet
|
|
|
||||||||||
June 30, 2016
|
|
Fair Value
|
|
Derivative Instruments
|
|
Cash Collateral (Received)/Pledged
|
|
Net Fair Value
|
||||||||
|
|
(In millions)
|
||||||||||||||
Derivative Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
226
|
|
|
$
|
(128
|
)
|
|
$
|
(3
|
)
|
|
$
|
95
|
|
FTRs
|
|
17
|
|
|
(8
|
)
|
|
—
|
|
|
9
|
|
||||
NUG contracts
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
|
|
$
|
244
|
|
|
$
|
(136
|
)
|
|
$
|
(3
|
)
|
|
$
|
105
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
(140
|
)
|
|
$
|
128
|
|
|
$
|
2
|
|
|
$
|
(10
|
)
|
FTRs
|
|
(8
|
)
|
|
8
|
|
|
—
|
|
|
—
|
|
||||
NUG contracts
|
|
(124
|
)
|
|
—
|
|
|
—
|
|
|
(124
|
)
|
||||
|
|
$
|
(272
|
)
|
|
$
|
136
|
|
|
$
|
2
|
|
|
$
|
(134
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Not Offset in Consolidated Balance Sheet
|
|
|
||||||||||
December 31, 2015
|
|
Fair Value
|
|
Derivative Instruments
|
|
Cash Collateral (Received)/Pledged
|
|
Net Fair Value
|
||||||||
|
|
(In millions)
|
||||||||||||||
Derivative Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
228
|
|
|
$
|
(125
|
)
|
|
$
|
—
|
|
|
$
|
103
|
|
FTRs
|
|
8
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
||||
NUG contracts
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
|
|
$
|
237
|
|
|
$
|
(133
|
)
|
|
$
|
—
|
|
|
$
|
104
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
(131
|
)
|
|
$
|
125
|
|
|
$
|
3
|
|
|
$
|
(3
|
)
|
FTRs
|
|
(13
|
)
|
|
8
|
|
|
5
|
|
|
—
|
|
||||
NUG contracts
|
|
(137
|
)
|
|
—
|
|
|
—
|
|
|
(137
|
)
|
||||
|
|
$
|
(281
|
)
|
|
$
|
133
|
|
|
$
|
8
|
|
|
$
|
(140
|
)
|
|
Purchases
|
|
Sales
|
|
Net
|
|
Units
|
|||
|
(In millions)
|
|||||||||
Power Contracts
|
11
|
|
|
46
|
|
|
(35
|
)
|
|
MWH
|
FTRs
|
55
|
|
|
—
|
|
|
55
|
|
|
MWH
|
NUGs
|
4
|
|
|
—
|
|
|
4
|
|
|
MWH
|
Natural Gas
|
61
|
|
|
—
|
|
|
61
|
|
|
mmBTU
|
|
|
For the Three Months Ended June 30
|
||||||||||
Derivatives Not in a Hedging Relationship with Regulatory Offset
|
|
NUGs
|
|
Regulated FTRs
|
|
Total
|
||||||
|
|
(In millions)
|
||||||||||
Outstanding net liability as of April 1, 2016
|
|
$
|
(135
|
)
|
|
$
|
(2
|
)
|
|
$
|
(137
|
)
|
Purchases
|
|
—
|
|
|
4
|
|
|
4
|
|
|||
Settlements
|
|
11
|
|
|
2
|
|
|
13
|
|
|||
Outstanding net asset (liability) as of June 30, 2016
|
|
$
|
(124
|
)
|
|
$
|
4
|
|
|
$
|
(120
|
)
|
|
|
|
|
|
|
|
||||||
Outstanding net asset (liability) as of April 1, 2015
|
|
$
|
(148
|
)
|
|
$
|
1
|
|
|
$
|
(147
|
)
|
Unrealized loss
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||
Purchases
|
|
—
|
|
|
12
|
|
|
12
|
|
|||
Settlements
|
|
16
|
|
|
(1
|
)
|
|
15
|
|
|||
Outstanding net asset (liability) as of June 30, 2015
|
|
$
|
(140
|
)
|
|
$
|
12
|
|
|
$
|
(128
|
)
|
|
|
|
|
|
|
|
||||||
|
|
For the Six Months Ended June 30
|
||||||||||
Derivatives Not in a Hedging Relationship with Regulatory Offset
|
|
NUGs
|
|
Regulated FTRs
|
|
Total
|
||||||
|
|
(In millions)
|
||||||||||
Outstanding net asset (liability) as of January 1, 2016
|
|
$
|
(136
|
)
|
|
$
|
1
|
|
|
$
|
(135
|
)
|
Unrealized loss
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|||
Purchases
|
|
—
|
|
|
4
|
|
|
4
|
|
|||
Settlements
|
|
24
|
|
|
(1
|
)
|
|
23
|
|
|||
Outstanding net asset (liability) as of June 30, 2016
|
|
$
|
(124
|
)
|
|
$
|
4
|
|
|
$
|
(120
|
)
|
|
|
|
|
|
|
|
||||||
Outstanding net asset (liability) as of January 1, 2015
|
|
$
|
(151
|
)
|
|
$
|
11
|
|
|
$
|
(140
|
)
|
Unrealized gain (loss)
|
|
(16
|
)
|
|
1
|
|
|
(15
|
)
|
|||
Purchases
|
|
—
|
|
|
12
|
|
|
12
|
|
|||
Settlements
|
|
27
|
|
|
(12
|
)
|
|
15
|
|
|||
Outstanding net asset (liability) as of June 30, 2015
|
|
$
|
(140
|
)
|
|
$
|
12
|
|
|
$
|
(128
|
)
|
|
|
2016
|
|
2015
|
||||
|
|
(In millions)
|
||||||
FirstEnergy
|
|
$
|
2,456
|
|
|
$
|
2,282
|
|
FES
|
|
$
|
1,510
|
|
|
$
|
1,327
|
|
ARO Reconciliation
|
|
FirstEnergy
|
|
FES
|
||||
|
|
(In millions)
|
||||||
Balance, December 31, 2015
|
|
$
|
1,410
|
|
|
$
|
831
|
|
Liabilities settled
|
|
(13
|
)
|
|
(12
|
)
|
||
Liabilities incurred
|
|
4
|
|
|
32
|
|
||
Accretion
|
|
47
|
|
|
26
|
|
||
Balance, June 30, 2016
|
|
$
|
1,448
|
|
|
$
|
877
|
|
•
|
An
eight
-year term (June 1, 2016 - May 31, 2024);
|
•
|
Contemplates continuing a base distribution rate freeze through May 31, 2024;
|
•
|
An Economic Stability Program that flows through charges or credits through Rider RRS representing the net result of the price paid to FES through an
eight
-year FERC-jurisdictional PPA, referred to as the ESP IV PPA, for the output of the ESP IV PPA Facilities against the revenues received from selling such output into the PJM markets;
|
•
|
Continuing to provide power to non-shopping customers at a market-based price set through an auction process;
|
•
|
Continuing Rider DCR with increased revenue caps of approximately
$30 million
per year from June 1, 2016 through May 31, 2019;
$20 million
per year from June 1, 2019 through May 31, 2022; and
$15 million
per year from June 1, 2022 through May 31, 2024 that supports continued investment related to the distribution system for the benefit of customers;
|
•
|
Collection of lost distribution revenues associated with energy efficiency and peak demand reduction programs;
|
•
|
A risk-sharing mechanism that would provide guaranteed credits under Rider RRS in years five through eight to customers as follows:
$10 million
in year five,
$20 million
in year six,
$30 million
in year seven and
$40 million
in year eight;
|
•
|
A continuing commitment not to recover from retail customers certain costs related to transmission cost allocations for the longer of the
five
-year period from June 1, 2011 through May 31, 2016 or when the amount of such costs avoided by customers for certain types of products totals
$360 million
, including such costs from MISO along with such costs from PJM, subject to the outcome of certain FERC proceedings;
|
•
|
Potential procurement of
100 MW
of new Ohio wind or solar resources subject to a demonstrated need to procure new renewable energy resources as part of a strategy to further diversify Ohio's energy portfolio;
|
•
|
An agreement to file a case with the PUCO by April 3, 2017, seeking to transition to decoupled base rates for residential customers;
|
•
|
An agreement to file by February 29, 2016, a Grid Modernization Business Plan for PUCO consideration and approval (which filing was made on February 29, 2016);
|
•
|
A goal across FirstEnergy to reduce CO
2
emissions by
90%
below 2005 levels by 2045;
|
•
|
A contribution of
$3 million
per year (
$24 million
over the
eight
-year term) to fund energy conservation programs, economic development and job retention in the Ohio Companies service territory;
|
•
|
Contributions of
$2.4 million
per year (
$19 million
over the
eight
-year term) to fund a fuel-fund in each of the Ohio Companies service territories to assist low-income customers; and
|
•
|
A contribution of
$1 million
per year (
$8 million
over the
eight
-year term) to establish a Customary Advisory Council to ensure preservation and growth of the competitive market in Ohio.
|
•
|
Limiting average customer bill amounts for the first
two
years of the plan, subject to certain exceptions, and permitting deferral for the second year;
|
•
|
Prohibiting recovery of retirement costs of the ESP IV PPA Facilities through Rider RRS;
|
•
|
Assigning the burden of capacity performance penalties incurred by the ESP IV PPA Facilities to the Ohio Companies, rather than customers, and to provide that all capacity performance bonuses earned by the ESP IV PPA Facilities be retained by the Ohio Companies, rather than customers; and
|
•
|
Providing for the modification of the severability provision previously included in ESP IV, to also address potential future PJM Tariff or rule changes prohibiting the Ohio Companies from offering output of the ESP IV PPA Facilities into PJM auctions.
|
Collateral Provisions
|
|
FES/ AE Supply (Tied to FE Corp. Rating)
|
|
FES/ AE Supply (Tied to FES Rating)
|
|
Utilities
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
Split Rating
(One rating agency's rating below investment grade)
|
|
$
|
25
|
|
|
$
|
174
|
|
|
$
|
44
|
|
|
$
|
243
|
|
Non-Investment Grade Ratings
(All Rating Agencies at or below BB+/Ba1)
|
|
$
|
25
|
|
|
$
|
187
|
|
|
$
|
44
|
|
|
$
|
256
|
|
Total Exposure from Contractual Obligations
|
|
$
|
25
|
|
|
$
|
310
|
|
|
$
|
44
|
|
|
$
|
379
|
|
FIRSTENERGY SOLUTIONS CORP.
|
||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Three Months Ended June 30, 2016
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
REVENUES
|
|
$
|
1,061
|
|
|
$
|
400
|
|
|
$
|
473
|
|
|
$
|
(832
|
)
|
|
$
|
1,102
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
—
|
|
|
181
|
|
|
47
|
|
|
—
|
|
|
228
|
|
|||||
Purchased power from affiliates
|
|
950
|
|
|
—
|
|
|
49
|
|
|
(832
|
)
|
|
167
|
|
|||||
Purchased power from non-affiliates
|
|
266
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
266
|
|
|||||
Other operating expenses
|
|
119
|
|
|
88
|
|
|
148
|
|
|
14
|
|
|
369
|
|
|||||
Provision for depreciation
|
|
3
|
|
|
32
|
|
|
50
|
|
|
(1
|
)
|
|
84
|
|
|||||
General taxes
|
|
7
|
|
|
6
|
|
|
6
|
|
|
—
|
|
|
19
|
|
|||||
Impairment of assets
|
|
23
|
|
|
517
|
|
|
—
|
|
|
—
|
|
|
540
|
|
|||||
Total operating expenses
|
|
1,368
|
|
|
824
|
|
|
300
|
|
|
(819
|
)
|
|
1,673
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS)
|
|
(307
|
)
|
|
(424
|
)
|
|
173
|
|
|
(13
|
)
|
|
(571
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income, including net income (loss) from equity investees
|
|
(163
|
)
|
|
7
|
|
|
22
|
|
|
153
|
|
|
19
|
|
|||||
Miscellaneous income
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Interest expense — affiliates
|
|
(12
|
)
|
|
(2
|
)
|
|
—
|
|
|
13
|
|
|
(1
|
)
|
|||||
Interest expense — other
|
|
(13
|
)
|
|
(26
|
)
|
|
(13
|
)
|
|
15
|
|
|
(37
|
)
|
|||||
Capitalized interest
|
|
—
|
|
|
2
|
|
|
6
|
|
|
—
|
|
|
8
|
|
|||||
Total other income (expense)
|
|
(187
|
)
|
|
(19
|
)
|
|
15
|
|
|
181
|
|
|
(10
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
(494
|
)
|
|
(443
|
)
|
|
188
|
|
|
168
|
|
|
(581
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
INCOME TAXES (BENEFITS)
|
|
(56
|
)
|
|
(149
|
)
|
|
61
|
|
|
1
|
|
|
(143
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
NET INCOME (LOSS)
|
|
$
|
(438
|
)
|
|
$
|
(294
|
)
|
|
$
|
127
|
|
|
$
|
167
|
|
|
$
|
(438
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
NET INCOME (LOSS)
|
|
$
|
(438
|
)
|
|
$
|
(294
|
)
|
|
$
|
127
|
|
|
$
|
167
|
|
|
$
|
(438
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Pension and OPEB prior service costs
|
|
(3
|
)
|
|
(4
|
)
|
|
—
|
|
|
4
|
|
|
(3
|
)
|
|||||
Amortized gains on derivative hedges
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Change in unrealized gains on available-for-sale securities
|
|
33
|
|
|
—
|
|
|
32
|
|
|
(32
|
)
|
|
33
|
|
|||||
Other comprehensive income (loss)
|
|
29
|
|
|
(4
|
)
|
|
32
|
|
|
(28
|
)
|
|
29
|
|
|||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
12
|
|
|
(2
|
)
|
|
13
|
|
|
(11
|
)
|
|
12
|
|
|||||
Other comprehensive income (loss), net of tax
|
|
17
|
|
|
(2
|
)
|
|
19
|
|
|
(17
|
)
|
|
17
|
|
|||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(421
|
)
|
|
$
|
(296
|
)
|
|
$
|
146
|
|
|
$
|
150
|
|
|
$
|
(421
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
FIRSTENERGY SOLUTIONS CORP.
|
||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Six Months Ended June 30, 2016
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
REVENUES
|
|
$
|
2,216
|
|
|
$
|
815
|
|
|
$
|
1,004
|
|
|
$
|
(1,734
|
)
|
|
$
|
2,301
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
—
|
|
|
300
|
|
|
93
|
|
|
—
|
|
|
393
|
|
|||||
Purchased power from affiliates
|
|
1,877
|
|
|
—
|
|
|
106
|
|
|
(1,734
|
)
|
|
249
|
|
|||||
Purchased power from non-affiliates
|
|
643
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
643
|
|
|||||
Other operating expenses
|
|
123
|
|
|
159
|
|
|
301
|
|
|
26
|
|
|
609
|
|
|||||
Provision for depreciation
|
|
6
|
|
|
63
|
|
|
100
|
|
|
(2
|
)
|
|
167
|
|
|||||
General taxes
|
|
15
|
|
|
16
|
|
|
14
|
|
|
—
|
|
|
45
|
|
|||||
Impairment of assets
|
|
23
|
|
|
517
|
|
|
—
|
|
|
—
|
|
|
540
|
|
|||||
Total operating expenses
|
|
2,687
|
|
|
1,055
|
|
|
614
|
|
|
(1,710
|
)
|
|
2,646
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS)
|
|
(471
|
)
|
|
(240
|
)
|
|
390
|
|
|
(24
|
)
|
|
(345
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income, including net income (loss) from equity investees
|
|
86
|
|
|
13
|
|
|
39
|
|
|
(106
|
)
|
|
32
|
|
|||||
Miscellaneous income
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Interest expense — affiliates
|
|
(21
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
24
|
|
|
(3
|
)
|
|||||
Interest expense — other
|
|
(26
|
)
|
|
(52
|
)
|
|
(24
|
)
|
|
29
|
|
|
(73
|
)
|
|||||
Capitalized interest
|
|
—
|
|
|
4
|
|
|
14
|
|
|
—
|
|
|
18
|
|
|||||
Total other income (expense)
|
|
42
|
|
|
(39
|
)
|
|
27
|
|
|
(53
|
)
|
|
(23
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
(429
|
)
|
|
(279
|
)
|
|
417
|
|
|
(77
|
)
|
|
(368
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME TAXES (BENEFITS)
|
|
(122
|
)
|
|
(88
|
)
|
|
147
|
|
|
2
|
|
|
(61
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(307
|
)
|
|
$
|
(191
|
)
|
|
$
|
270
|
|
|
$
|
(79
|
)
|
|
$
|
(307
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(307
|
)
|
|
$
|
(191
|
)
|
|
$
|
270
|
|
|
$
|
(79
|
)
|
|
$
|
(307
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pensions and OPEB prior service costs
|
|
(7
|
)
|
|
(7
|
)
|
|
—
|
|
|
7
|
|
|
(7
|
)
|
|||||
Amortized gains on derivative hedges
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Change in unrealized gains on available-for-sale securities
|
|
56
|
|
|
—
|
|
|
55
|
|
|
(55
|
)
|
|
56
|
|
|||||
Other comprehensive income (loss)
|
|
48
|
|
|
(7
|
)
|
|
55
|
|
|
(48
|
)
|
|
48
|
|
|||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
19
|
|
|
(3
|
)
|
|
21
|
|
|
(18
|
)
|
|
19
|
|
|||||
Other comprehensive income (loss), net of tax
|
|
29
|
|
|
(4
|
)
|
|
34
|
|
|
(30
|
)
|
|
29
|
|
|||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(278
|
)
|
|
$
|
(195
|
)
|
|
$
|
304
|
|
|
$
|
(109
|
)
|
|
$
|
(278
|
)
|
FIRSTENERGY SOLUTIONS CORP.
|
||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Three Months Ended June 30, 2015
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
REVENUES
|
|
$
|
1,074
|
|
|
$
|
346
|
|
|
$
|
456
|
|
|
$
|
(757
|
)
|
|
$
|
1,119
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fuel
|
|
—
|
|
|
150
|
|
|
41
|
|
|
—
|
|
|
191
|
|
|||||
Purchased power from affiliates
|
|
768
|
|
|
—
|
|
|
66
|
|
|
(757
|
)
|
|
77
|
|
|||||
Purchased power from non-affiliates
|
|
392
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
392
|
|
|||||
Other operating expenses
|
|
86
|
|
|
75
|
|
|
164
|
|
|
12
|
|
|
337
|
|
|||||
Provision for depreciation
|
|
2
|
|
|
32
|
|
|
47
|
|
|
—
|
|
|
81
|
|
|||||
General taxes
|
|
11
|
|
|
7
|
|
|
7
|
|
|
—
|
|
|
25
|
|
|||||
Impairment of assets
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||
Total operating expenses
|
|
1,275
|
|
|
264
|
|
|
325
|
|
|
(745
|
)
|
|
1,119
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS)
|
|
(201
|
)
|
|
82
|
|
|
131
|
|
|
(12
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income, including net income from equity investees
|
|
119
|
|
|
5
|
|
|
3
|
|
|
(126
|
)
|
|
1
|
|
|||||
Miscellaneous income
|
|
1
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
Interest expense — affiliates
|
|
(7
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
8
|
|
|
(2
|
)
|
|||||
Interest expense — other
|
|
(13
|
)
|
|
(26
|
)
|
|
(12
|
)
|
|
14
|
|
|
(37
|
)
|
|||||
Capitalized interest
|
|
—
|
|
|
2
|
|
|
7
|
|
|
—
|
|
|
9
|
|
|||||
Total other income (expense)
|
|
100
|
|
|
(18
|
)
|
|
(3
|
)
|
|
(104
|
)
|
|
(25
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
(101
|
)
|
|
64
|
|
|
128
|
|
|
(116
|
)
|
|
(25
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME TAXES (BENEFITS)
|
|
(80
|
)
|
|
28
|
|
|
47
|
|
|
1
|
|
|
(4
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(21
|
)
|
|
$
|
36
|
|
|
$
|
81
|
|
|
$
|
(117
|
)
|
|
$
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(21
|
)
|
|
$
|
36
|
|
|
$
|
81
|
|
|
$
|
(117
|
)
|
|
$
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and OPEB prior service costs
|
|
(4
|
)
|
|
(4
|
)
|
|
—
|
|
|
4
|
|
|
(4
|
)
|
|||||
Amortized gains on derivative hedges
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Change in unrealized gains on available for sale securities
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|
12
|
|
|
(12
|
)
|
|||||
Other comprehensive loss
|
|
(17
|
)
|
|
(4
|
)
|
|
(12
|
)
|
|
16
|
|
|
(17
|
)
|
|||||
Income tax benefits on other comprehensive loss
|
|
(6
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
6
|
|
|
(6
|
)
|
|||||
Other comprehensive loss, net of tax
|
|
(11
|
)
|
|
(2
|
)
|
|
(8
|
)
|
|
10
|
|
|
(11
|
)
|
|||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(32
|
)
|
|
$
|
34
|
|
|
$
|
73
|
|
|
$
|
(107
|
)
|
|
$
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
FIRSTENERGY SOLUTIONS CORP.
|
||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Six Months Ended June 30, 2015
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
REVENUES
|
|
$
|
2,406
|
|
|
$
|
839
|
|
|
$
|
963
|
|
|
$
|
(1,712
|
)
|
|
$
|
2,496
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
—
|
|
|
330
|
|
|
91
|
|
|
—
|
|
|
421
|
|
|||||
Purchased power from affiliates
|
|
1,725
|
|
|
—
|
|
|
134
|
|
|
(1,712
|
)
|
|
147
|
|
|||||
Purchased power from non-affiliates
|
|
935
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
935
|
|
|||||
Other operating expenses
|
|
266
|
|
|
142
|
|
|
318
|
|
|
24
|
|
|
750
|
|
|||||
Provision for depreciation
|
|
5
|
|
|
62
|
|
|
95
|
|
|
(1
|
)
|
|
161
|
|
|||||
General taxes
|
|
26
|
|
|
15
|
|
|
13
|
|
|
—
|
|
|
54
|
|
|||||
Impairment of assets
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||
Total operating expenses
|
|
2,973
|
|
|
549
|
|
|
651
|
|
|
(1,689
|
)
|
|
2,484
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS)
|
|
(567
|
)
|
|
290
|
|
|
312
|
|
|
(23
|
)
|
|
12
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income, including net income from equity investees
|
|
360
|
|
|
8
|
|
|
17
|
|
|
(371
|
)
|
|
14
|
|
|||||
Miscellaneous income
|
|
1
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
Interest expense — affiliates
|
|
(13
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
15
|
|
|
(4
|
)
|
|||||
Interest expense — other
|
|
(26
|
)
|
|
(52
|
)
|
|
(25
|
)
|
|
29
|
|
|
(74
|
)
|
|||||
Capitalized interest
|
|
—
|
|
|
3
|
|
|
15
|
|
|
—
|
|
|
18
|
|
|||||
Total other income (expense)
|
|
322
|
|
|
(42
|
)
|
|
5
|
|
|
(327
|
)
|
|
(42
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
(245
|
)
|
|
248
|
|
|
317
|
|
|
(350
|
)
|
|
(30
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME TAXES (BENEFITS)
|
|
(221
|
)
|
|
95
|
|
|
117
|
|
|
3
|
|
|
(6
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(24
|
)
|
|
$
|
153
|
|
|
$
|
200
|
|
|
$
|
(353
|
)
|
|
$
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(24
|
)
|
|
$
|
153
|
|
|
$
|
200
|
|
|
$
|
(353
|
)
|
|
$
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and OPEB prior service costs
|
|
(8
|
)
|
|
(8
|
)
|
|
—
|
|
|
8
|
|
|
(8
|
)
|
|||||
Amortized gains on derivative hedges
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Change in unrealized gains on available-for-sale securities
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|
9
|
|
|
(9
|
)
|
|||||
Other comprehensive loss
|
|
(19
|
)
|
|
(8
|
)
|
|
(9
|
)
|
|
17
|
|
|
(19
|
)
|
|||||
Income tax benefits on other comprehensive loss
|
|
(7
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
6
|
|
|
(7
|
)
|
|||||
Other comprehensive loss, net of tax
|
|
(12
|
)
|
|
(5
|
)
|
|
(6
|
)
|
|
11
|
|
|
(12
|
)
|
|||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(36
|
)
|
|
$
|
148
|
|
|
$
|
194
|
|
|
$
|
(342
|
)
|
|
$
|
(36
|
)
|
For the Six Months Ended June 30, 2016
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET CASH PROVIDED FROM (USED FOR) OPERATING ACTIVITIES
|
|
$
|
(336
|
)
|
|
$
|
308
|
|
|
$
|
596
|
|
|
$
|
(12
|
)
|
|
$
|
556
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
New Financing-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Short-term borrowings, net
|
|
322
|
|
|
89
|
|
|
8
|
|
|
(209
|
)
|
|
210
|
|
|||||
Redemptions and Repayments-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Long-term debt
|
|
—
|
|
|
(12
|
)
|
|
(245
|
)
|
|
12
|
|
|
(245
|
)
|
|||||
Other
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Net cash provided from (used for) financing activities
|
|
322
|
|
|
75
|
|
|
(237
|
)
|
|
(197
|
)
|
|
(37
|
)
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Property additions
|
|
(27
|
)
|
|
(126
|
)
|
|
(182
|
)
|
|
—
|
|
|
(335
|
)
|
|||||
Nuclear fuel
|
|
—
|
|
|
—
|
|
|
(188
|
)
|
|
—
|
|
|
(188
|
)
|
|||||
Sales of investment securities held in trusts
|
|
—
|
|
|
—
|
|
|
441
|
|
|
—
|
|
|
441
|
|
|||||
Purchases of investment securities held in trusts
|
|
—
|
|
|
—
|
|
|
(467
|
)
|
|
—
|
|
|
(467
|
)
|
|||||
Cash investments
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||
Loans to affiliated companies, net
|
|
22
|
|
|
(257
|
)
|
|
37
|
|
|
209
|
|
|
11
|
|
|||||
Other
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Net cash provided from (used for) investing activities
|
|
14
|
|
|
(383
|
)
|
|
(359
|
)
|
|
209
|
|
|
(519
|
)
|
|||||
Net change in cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash and cash equivalents at beginning of period
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
For the Three Months Ended
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive Energy Services
|
|
Corporate/ Other
|
|
Reconciling Adjustments
|
|
Consolidated
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
External revenues
|
|
$
|
2,200
|
|
|
$
|
264
|
|
|
$
|
1,008
|
|
|
$
|
(39
|
)
|
|
$
|
(32
|
)
|
|
$
|
3,401
|
|
Internal revenues
|
|
—
|
|
|
—
|
|
|
108
|
|
|
—
|
|
|
(108
|
)
|
|
—
|
|
||||||
Total revenues
|
|
2,200
|
|
|
264
|
|
|
1,116
|
|
|
(39
|
)
|
|
(140
|
)
|
|
3,401
|
|
||||||
Depreciation
|
|
170
|
|
|
44
|
|
|
103
|
|
|
17
|
|
|
—
|
|
|
334
|
|
||||||
Amortization of regulatory assets, net
|
|
61
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63
|
|
||||||
Impairment of assets (Note 2)
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|
—
|
|
|
—
|
|
|
1,447
|
|
||||||
Investment income
|
|
13
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
(12
|
)
|
|
19
|
|
||||||
Interest expense
|
|
145
|
|
|
42
|
|
|
48
|
|
|
54
|
|
|
—
|
|
|
289
|
|
||||||
Income taxes (benefits)
|
|
84
|
|
|
42
|
|
|
(230
|
)
|
|
(27
|
)
|
|
1
|
|
|
(130
|
)
|
||||||
Net income (loss)
|
|
146
|
|
|
71
|
|
|
(1,259
|
)
|
|
(47
|
)
|
|
—
|
|
|
(1,089
|
)
|
||||||
Total assets
|
|
27,907
|
|
|
7,855
|
|
|
15,464
|
|
|
175
|
|
|
—
|
|
|
51,401
|
|
||||||
Total goodwill
|
|
5,092
|
|
|
526
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,618
|
|
||||||
Property additions
|
|
313
|
|
|
251
|
|
|
213
|
|
|
17
|
|
|
—
|
|
|
794
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
External revenues
|
|
$
|
2,239
|
|
|
$
|
269
|
|
|
$
|
1,034
|
|
|
$
|
(42
|
)
|
|
$
|
(35
|
)
|
|
$
|
3,465
|
|
Internal revenues
|
|
—
|
|
|
—
|
|
|
162
|
|
|
—
|
|
|
(162
|
)
|
|
—
|
|
||||||
Total revenues
|
|
2,239
|
|
|
269
|
|
|
1,196
|
|
|
(42
|
)
|
|
(197
|
)
|
|
3,465
|
|
||||||
Depreciation
|
|
170
|
|
|
38
|
|
|
99
|
|
|
15
|
|
|
—
|
|
|
322
|
|
||||||
Amortization of regulatory assets, net
|
|
57
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
||||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||||
Investment income (loss)
|
|
12
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(10
|
)
|
|
(3
|
)
|
||||||
Interest expense
|
|
146
|
|
|
40
|
|
|
48
|
|
|
49
|
|
|
(1
|
)
|
|
282
|
|
||||||
Income taxes (benefits)
|
|
91
|
|
|
52
|
|
|
(4
|
)
|
|
(22
|
)
|
|
(2
|
)
|
|
115
|
|
||||||
Net income (loss)
|
|
156
|
|
|
89
|
|
|
(8
|
)
|
|
(50
|
)
|
|
—
|
|
|
187
|
|
||||||
Total assets
|
|
28,006
|
|
|
6,855
|
|
|
16,417
|
|
|
893
|
|
|
—
|
|
|
52,171
|
|
||||||
Total goodwill
|
|
5,092
|
|
|
526
|
|
|
800
|
|
|
—
|
|
|
—
|
|
|
6,418
|
|
||||||
Property additions
|
|
312
|
|
|
297
|
|
|
191
|
|
|
18
|
|
|
—
|
|
|
818
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
For the Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
External revenues
|
|
$
|
4,721
|
|
|
$
|
539
|
|
|
$
|
2,160
|
|
|
$
|
(81
|
)
|
|
$
|
(69
|
)
|
|
$
|
7,270
|
|
Internal revenues
|
|
—
|
|
|
—
|
|
|
260
|
|
|
—
|
|
|
(260
|
)
|
|
—
|
|
||||||
Total revenues
|
|
4,721
|
|
|
539
|
|
|
2,420
|
|
|
(81
|
)
|
|
(329
|
)
|
|
7,270
|
|
||||||
Depreciation
|
|
339
|
|
|
87
|
|
|
205
|
|
|
32
|
|
|
—
|
|
|
663
|
|
||||||
Amortization of regulatory assets, net
|
|
120
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
124
|
|
||||||
Impairment of assets (Note 2)
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|
—
|
|
|
—
|
|
|
1,447
|
|
||||||
Investment income
|
|
24
|
|
|
—
|
|
|
33
|
|
|
11
|
|
|
(21
|
)
|
|
47
|
|
||||||
Interest expense
|
|
292
|
|
|
85
|
|
|
95
|
|
|
105
|
|
|
—
|
|
|
577
|
|
||||||
Income taxes (benefits)
|
|
182
|
|
|
85
|
|
|
(145
|
)
|
|
(40
|
)
|
|
1
|
|
|
83
|
|
||||||
Net income (loss)
|
|
311
|
|
|
145
|
|
|
(1,115
|
)
|
|
(102
|
)
|
|
—
|
|
|
(761
|
)
|
||||||
Property additions
|
|
575
|
|
|
509
|
|
|
382
|
|
|
26
|
|
|
—
|
|
|
1,492
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
External revenues
|
|
$
|
4,801
|
|
|
$
|
507
|
|
|
$
|
2,209
|
|
|
$
|
(84
|
)
|
|
$
|
(71
|
)
|
|
$
|
7,362
|
|
Internal revenues
|
|
—
|
|
|
—
|
|
|
422
|
|
|
—
|
|
|
(422
|
)
|
|
—
|
|
||||||
Total revenues
|
|
4,801
|
|
|
507
|
|
|
2,631
|
|
|
(84
|
)
|
|
(493
|
)
|
|
7,362
|
|
||||||
Depreciation
|
|
342
|
|
|
75
|
|
|
195
|
|
|
29
|
|
|
—
|
|
|
641
|
|
||||||
Amortization of regulatory assets, net
|
|
86
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
91
|
|
||||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||||
Investment income (loss)
|
|
25
|
|
|
—
|
|
|
12
|
|
|
(3
|
)
|
|
(20
|
)
|
|
14
|
|
||||||
Interest expense
|
|
290
|
|
|
79
|
|
|
96
|
|
|
96
|
|
|
—
|
|
|
561
|
|
||||||
Income taxes (benefits)
|
|
213
|
|
|
94
|
|
|
(8
|
)
|
|
(40
|
)
|
|
—
|
|
|
259
|
|
||||||
Net income (loss)
|
|
364
|
|
|
161
|
|
|
(16
|
)
|
|
(100
|
)
|
|
—
|
|
|
409
|
|
||||||
Property additions
|
|
592
|
|
|
551
|
|
|
317
|
|
|
26
|
|
|
—
|
|
|
1,486
|
|
•
|
On February 11, 2016, the PPUC approved the Pennsylvania Companies' LTIIPs for infrastructure improvements over the 2016-2020 period totaling nearly $245 million. On June 9, 2016, the PPUC approved the Pennsylvania Companies’ DSIC riders to be effective July 1, 2016, subject to hearings and refund or reallocation among customers.
|
•
|
The Ohio Companies’ ESP IV,
Powering Ohio’s Progress
, was approved by the PUCO on March 31, 2016, with certain modifications and included an Economic Stability Program that flows through charges or credits through Rider RRS representing the net result of the price paid to FES through an eight-year FERC-jurisdictional PPA, referred to as the ESP IV PPA, for the output of the ESP IV PPA Facilities against the revenues received from selling such output into the PJM markets. On April 1, 2016, the Ohio Companies and FES entered into the ESP IV PPA. However, on April 27, 2016, FERC issued an order prohibiting any transactions under the ESP IV PPA pending future authorization by FERC and directed FES to submit the ESP IV PPA for FERC review if the companies desired to transact under the agreement. FES did not file the ESP IV PPA for FERC review but rather agreed to suspend the ESP IV PPA prior to transacting thereunder, pending the outcome of the PUCO and FERC proceedings.
|
•
|
On April 28, 2016, JCP&L filed tariffs with the NJBPU proposing a general rate increase associated with its distribution operations that seeks to improve service and benefit customers by supporting equipment maintenance, tree trimming, and inspections of lines, poles and substations, while also compensating for other business and operating expenses. The filing requested approval to increase annual operating revenues by approximately $142.1 million based upon a hybrid test year for the twelve months ending June 30, 2016. JCP&L requested that the proposed new rates take effect in January 2017. On July 13, 2016, this matter was submitted to the Office of Administrative Law for hearing and the issuance of an Initial Decision. A procedural schedule has not yet been issued.
|
•
|
On April 28, 2016, each of the Pennsylvania Companies filed tariffs with the PPUC proposing general rate increases associated with their distribution operations that will benefit customers by modernizing the grid with smart technologies, increasing vegetation management activities, and continuing other customer service enhancements. The filings request approval to increase annual operating revenues by approximately $140.2 million at ME, $158.8 million at PN, $42.0 million at Penn, and $98.2 million at WP, based upon fully projected future test years for the twelve months ending December 31, 2017 at each of the Pennsylvania Companies. As a result of Act 40 of 2016, the Pennsylvania Companies submitted testimony on July 7, 2016, quantifying the value of the elimination of the CTA and outlined their plan for investing 50% of that amount in rate base eligible equipment as required by the new law. A procedural schedule has been set with hearings commencing on September 6, 2016. The proposed new rates are expected to take effect in January 2017, pending regulatory approval.
|
|
2016 - 2017*
|
|
2017 - 2018*
|
|
||||||||||||
|
Legacy Obligation
|
|
Capacity Performance
|
|
Legacy Obligation
|
|
Capacity Performance
|
|
||||||||
|
(MW)
|
|
($/MWD)
|
|
(MW)
|
|
($/MWD)
|
|
(MW)
|
|
($/MWD)
|
|
(MW)
|
|
($/MWD)
|
|
ATSI
|
2,765
|
|
$114.23
|
|
4,210
|
|
$134.00
|
|
375
|
|
$120.00
|
|
6,245
|
|
$151.50
|
|
RTO
|
875
|
|
$59.37
|
|
3,675
|
|
$134.00
|
|
985
|
|
$120.00
|
|
3,565
|
|
$151.50
|
|
All Other Zones
|
135
|
|
$119.13
|
|
—
|
|
$134.00
|
|
150
|
|
$120.00
|
|
—
|
|
$151.50
|
|
|
3,775
|
|
|
|
7,885
|
|
|
|
1,510
|
|
|
|
9,810
|
|
|
|
|
2018 - 2019*
|
|
2019 - 2020*
|
||||||||||||
|
Base Generation
|
|
Capacity Performance
|
|
Base Generation
|
|
Capacity Performance
|
||||||||
|
(MW)
|
|
($/MWD)
|
|
(MW)
|
|
($/MWD)
|
|
(MW)
|
|
($/MWD)
|
|
(MW)
|
|
($/MWD)
|
ATSI
|
—
|
|
$149.98
|
|
6,245
|
|
$164.77
|
|
—
|
|
$80.00
|
|
5,680
|
|
$100.00
|
RTO
|
240
|
|
$149.98
|
|
3,930
|
|
$164.77
|
|
245
|
|
$80.00
|
|
3,691
|
|
$100.00
|
All Other Zones
|
35
|
|
**
|
|
20
|
|
**
|
|
37
|
|
***
|
|
18
|
|
***
|
|
275
|
|
|
|
10,195
|
|
|
|
282
|
|
|
|
9,389
|
|
|
(In millions, except per share amounts)
|
|
For the Three Months Ended June 30
|
|
For the Six Months Ended June 30
|
||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
REVENUES:
|
|
$
|
3,401
|
|
|
$
|
3,465
|
|
|
$
|
(64
|
)
|
|
(2
|
)%
|
|
$
|
7,270
|
|
|
$
|
7,362
|
|
|
$
|
(92
|
)
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fuel
|
|
438
|
|
|
383
|
|
|
55
|
|
|
14
|
%
|
|
819
|
|
|
896
|
|
|
(77
|
)
|
|
(9
|
)%
|
||||||
Purchased power
|
|
889
|
|
|
989
|
|
|
(100
|
)
|
|
(10
|
)%
|
|
2,013
|
|
|
2,102
|
|
|
(89
|
)
|
|
(4
|
)%
|
||||||
Other operating expenses
|
|
964
|
|
|
900
|
|
|
64
|
|
|
7
|
%
|
|
1,882
|
|
|
1,957
|
|
|
(75
|
)
|
|
(4
|
)%
|
||||||
Provision for depreciation
|
|
334
|
|
|
322
|
|
|
12
|
|
|
4
|
%
|
|
663
|
|
|
641
|
|
|
22
|
|
|
3
|
%
|
||||||
Amortization of regulatory assets, net
|
|
63
|
|
|
59
|
|
|
4
|
|
|
7
|
%
|
|
124
|
|
|
91
|
|
|
33
|
|
|
36
|
%
|
||||||
General taxes
|
|
241
|
|
|
242
|
|
|
(1
|
)
|
|
—
|
%
|
|
521
|
|
|
511
|
|
|
10
|
|
|
2
|
%
|
||||||
Impairment of assets
|
|
1,447
|
|
|
16
|
|
|
1,431
|
|
|
NM
|
|
|
1,447
|
|
|
16
|
|
|
1,431
|
|
|
NM
|
|
||||||
Total operating expenses
|
|
4,376
|
|
|
2,911
|
|
|
1,465
|
|
|
50
|
%
|
|
7,469
|
|
|
6,214
|
|
|
1,255
|
|
|
20
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
OPERATING INCOME (LOSS)
|
|
(975
|
)
|
|
554
|
|
|
(1,529
|
)
|
|
NM
|
|
|
(199
|
)
|
|
1,148
|
|
|
(1,347
|
)
|
|
NM
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment income (loss)
|
|
19
|
|
|
(3
|
)
|
|
22
|
|
|
NM
|
|
|
47
|
|
|
14
|
|
|
33
|
|
|
NM
|
|
||||||
Interest expense
|
|
(289
|
)
|
|
(282
|
)
|
|
(7
|
)
|
|
2
|
%
|
|
(577
|
)
|
|
(561
|
)
|
|
(16
|
)
|
|
3
|
%
|
||||||
Capitalized financing costs
|
|
26
|
|
|
33
|
|
|
(7
|
)
|
|
(21
|
)%
|
|
51
|
|
|
67
|
|
|
(16
|
)
|
|
(24
|
)%
|
||||||
Total other expense
|
|
(244
|
)
|
|
(252
|
)
|
|
8
|
|
|
(3
|
)%
|
|
(479
|
)
|
|
(480
|
)
|
|
1
|
|
|
—
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
(1,219
|
)
|
|
302
|
|
|
(1,521
|
)
|
|
NM
|
|
|
(678
|
)
|
|
668
|
|
|
(1,346
|
)
|
|
NM
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
INCOME TAXES (BENEFITS)
|
|
(130
|
)
|
|
115
|
|
|
(245
|
)
|
|
NM
|
|
|
83
|
|
|
259
|
|
|
(176
|
)
|
|
(68
|
)%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
NET INCOME (LOSS)
|
|
$
|
(1,089
|
)
|
|
$
|
187
|
|
|
$
|
(1,276
|
)
|
|
NM
|
|
|
$
|
(761
|
)
|
|
$
|
409
|
|
|
$
|
(1,170
|
)
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
EARNINGS (LOSSES) PER SHARE OF COMMON STOCK:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic
|
|
$
|
(2.56
|
)
|
|
$
|
0.44
|
|
|
$
|
(3.00
|
)
|
|
NM
|
|
|
$
|
(1.79
|
)
|
|
$
|
0.97
|
|
|
$
|
(2.76
|
)
|
|
NM
|
|
Diluted
|
|
$
|
(2.56
|
)
|
|
$
|
0.44
|
|
|
$
|
(3.00
|
)
|
|
NM
|
|
|
$
|
(1.79
|
)
|
|
$
|
0.97
|
|
|
$
|
(2.76
|
)
|
|
NM
|
|
•
|
Non-cash impairment charges of $800 million associated with goodwill at CES,
|
•
|
Non-cash impairment charges of $647 million associated with the announced plan to exit operations by 2020 of Units 1-4 of the W. H. Sammis generating station (720 MW) and the Bay Shore Unit 1 generating station (136 MW),
|
•
|
Coal contract settlement and termination costs of $58 million, and
|
•
|
Valuation allowances against state and local NOL carryforwards of $159 million.
|
•
|
The decrease in revenue at CES resulted from a
4 million
MWHs decline in contract sales as the segment continues to align its sales to its generation. The decline in contract sales volume was partially offset by higher wholesale sales and increased capacity revenue associated with higher capacity auction prices.
|
•
|
The decrease in revenue at Regulated Distribution resulted from lower regulated generation sales volumes due to increased customer shopping as well as lower industrial usage in West Virginia. The declines in regulated generation sales volumes were partially offset by the impact of rate increases at the Pennsylvania companies implemented in May of
2015
as a result of approved rate cases.
|
•
|
The decrease in revenue at Regulated Transmission primarily reflected adjustments associated with ATSI's and TrAIL's annual rate filing for costs previously recovered as well as a lower ROE at ATSI under its FERC-approved comprehensive settlement related to the implementation of a forward-looking rate, partially offset by higher recovery of incremental operating expenses and a higher asset base at ATSI and TrAIL.
|
•
|
Fuel expense increased $
55 million
primarily resulting from settlement and termination costs on coal contracts recognized in the
second
quarter of
2016
at CES as well as higher generation at CES' and Regulated Distribution.
|
•
|
Purchased power decreased
$100 million
due to lower required volumes at Regulated Distribution as a result of higher customer shopping as well as lower volumes at CES associated with lower contract sales.
|
•
|
Other operating expenses increased $
64 million
, primarily reflecting an increase of $
42 million
at Regulated Distribution associated with higher transmission expenses and retirement benefit costs and an increase at CES due to mark-to-market losses on commodity contract positions.
|
•
|
Impairment of assets increased
$1,431 million
due to impairment charges at CES associated with goodwill (
$800 million
) and the announcement to exit operations of Units 1-4 of the W. H. Sammis generating station ($497 million) and the Bay Shore Unit 1 generating station ($150 million).
|
•
|
The decrease in revenue at CES resulted from an 11 million MWHs decline in contract sales as the segment continues to align its sales to its generation. The decline in contract sales volume was partially offset by higher wholesale sales and increased capacity revenue associated with higher capacity auction prices.
|
•
|
The decrease in revenue at Regulated Distribution resulted from lower distribution deliveries to residential and commercial customers resulting from decreased weather-related usage and lower average customer usage associated with more energy efficient products and services as well as lower deliveries to industrial customers. Regulated generation sales volumes were also lower year-over-year due to increased customer shopping and lower industrial usage in West Virginia. These declines were partially offset by the impact of net rate increases implemented in the first six months of 2015 as a result of approved rate cases at certain operating companies.
|
•
|
The increase in revenue at Regulated Transmission primarily reflected higher recovery of incremental operating expenses and higher rate base at ATSI and TrAIL, partially offset by adjustments associated with ATSI and TrAIL's annual rate filing for costs previously recovered as well as a lower ROE at ATSI under its FERC-approved comprehensive settlement related to the implementation of a forward-looking rate.
|
•
|
Fuel expense decreased
$77 million
resulting from lower generation at CES associated with outages and economic dispatch of fossil units.
|
•
|
Purchased power decreased
$89 million
due to lower volumes.
|
•
|
Other operating expenses decreased
$75 million
, reflecting a decrease of $
177 million
at CES resulting from lower transmission expenses and higher mark-to-market gains on commodity contract positions, partially offset by an increase of
$93 million
at Regulated Distribution resulting from the recognition of economic development and energy efficiency obligations in accordance with the PUCO’s March 31 Opinion and Order adopting and approving, with modifications, the Ohio Company’s ESP IV as well as higher retirement costs.
|
•
|
Impairment of assets increased
$1,431 million
as further described above.
|
•
|
Increased transmission revenue associated with increased investments at ATSI and TrAIL, partially offset by a lower ROE at ATSI. The lower ROE at ATSI is the result of its FERC-approved comprehensive settlement related to the implementation of its forward-looking rate. The ROE at ATSI for 2016 is 10.38% and compares to 12.38% for the period January 1, 2015 to June 30, 2015 and 11.06% from July 1, 2015 to December 31, 2015.
|
•
|
As part of FirstEnergy’s
Energizing the Future
transmission expansion plan, 2016 forecasted capital expenditures are $1.05 billion of which approximately $715 million will be within ATSI and TrAIL and subject to their forward-looking rates with the remaining capital expenditures of $335 million to be within the Utilities' transmission system.
|
•
|
Distribution deliveries of 146.4 million MWH in 2016 (assumes normal weather) versus 148.4 million MWH in 2015, resulting from lower weather-related usage and declining average customer usage associated with more energy efficient products and services.
|
•
|
Increased revenues from the full year impact of approved distribution rate increases for the Pennsylvania Companies (effective May 3, 2015) and higher DCR revenues at the Ohio Companies in connection with their ESP IV, partially offset by the full year impact of an approved distribution rate decrease at JCP&L (effective April 1, 2015).
|
•
|
Lower operation and maintenance expenses as the business continues its focus on cost management.
|
•
|
Increased depreciation and property taxes as a result of a higher asset base.
|
•
|
Increased Pension/OPEB expense primarily due to lower amortization of prior service credits and higher pension financing costs.
|
•
|
Increased regulatory charges primarily reflecting the Ohio Companies’ recognition of economic development and energy efficiency obligations in accordance with the PUCO's March 31 Opinion and Order adopting and approving, with modifications, their ESP IV.
|
•
|
Capital expenditures for 2016 are forecasted to be approximately $1.3 billion primarily associated with reliability improvements.
|
•
|
Lower CES capacity revenue resulting from lower capacity rates as discussed above.
|
•
|
Decreased operation and maintenance expenses primarily resulting from two nuclear refueling outages in 2016 versus three in 2015 and lower retail related costs.
|
•
|
Increased Pension/OPEB expense primarily due to lower amortization of prior service credits and higher pension financing costs.
|
•
|
Asset impairment and plant exit costs as a result of an impairment of goodwill ($800 million pre-tax), the impairment of Bay Shore Unit 1 and W. H. Sammis Units 1-4 generating stations ($647 million pre-tax), and other costs associated with the deactivation of certain power plants.
|
•
|
Lower tax benefits on forecasted pre-tax losses associated with valuation allowances against state and local NOL carryforwards of $159 million and the impact of the impairment of goodwill of which $433 million was non-deductible for tax purposes.
|
•
|
Capital expenditures for 2016 are forecasted to be $545 million.
|
•
|
Higher net financing costs primarily due to higher interest expense.
|
•
|
Reduced tax benefits on uncertain tax positions.
|
•
|
Capital expenditures for 2016 are forecasted to be $85 million.
|
Second Quarter 2016 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
2,147
|
|
|
$
|
264
|
|
|
$
|
963
|
|
|
$
|
(43
|
)
|
|
$
|
3,331
|
|
Other
|
|
53
|
|
|
—
|
|
|
45
|
|
|
(28
|
)
|
|
70
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
108
|
|
|
(108
|
)
|
|
—
|
|
|||||
Total Revenues
|
|
2,200
|
|
|
264
|
|
|
1,116
|
|
|
(179
|
)
|
|
3,401
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
141
|
|
|
—
|
|
|
297
|
|
|
—
|
|
|
438
|
|
|||||
Purchased power
|
|
721
|
|
|
—
|
|
|
276
|
|
|
(108
|
)
|
|
889
|
|
|||||
Other operating expenses
|
|
580
|
|
|
36
|
|
|
432
|
|
|
(84
|
)
|
|
964
|
|
|||||
Provision for depreciation
|
|
170
|
|
|
44
|
|
|
103
|
|
|
17
|
|
|
334
|
|
|||||
Amortization of regulatory assets, net
|
|
61
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|||||
General taxes
|
|
170
|
|
|
36
|
|
|
29
|
|
|
6
|
|
|
241
|
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|
—
|
|
|
1,447
|
|
|||||
Total Operating Expenses
|
|
1,843
|
|
|
118
|
|
|
2,584
|
|
|
(169
|
)
|
|
4,376
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
357
|
|
|
146
|
|
|
(1,468
|
)
|
|
(10
|
)
|
|
(975
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income
|
|
13
|
|
|
—
|
|
|
18
|
|
|
(12
|
)
|
|
19
|
|
|||||
Interest expense
|
|
(145
|
)
|
|
(42
|
)
|
|
(48
|
)
|
|
(54
|
)
|
|
(289
|
)
|
|||||
Capitalized financing costs
|
|
5
|
|
|
9
|
|
|
9
|
|
|
3
|
|
|
26
|
|
|||||
Total Other Expense
|
|
(127
|
)
|
|
(33
|
)
|
|
(21
|
)
|
|
(63
|
)
|
|
(244
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
230
|
|
|
113
|
|
|
(1,489
|
)
|
|
(73
|
)
|
|
(1,219
|
)
|
|||||
Income taxes (benefits)
|
|
84
|
|
|
42
|
|
|
(230
|
)
|
|
(26
|
)
|
|
(130
|
)
|
|||||
Net Income (Loss)
|
|
$
|
146
|
|
|
$
|
71
|
|
|
$
|
(1,259
|
)
|
|
$
|
(47
|
)
|
|
$
|
(1,089
|
)
|
Second Quarter 2015 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
2,189
|
|
|
$
|
269
|
|
|
$
|
980
|
|
|
$
|
(43
|
)
|
|
$
|
3,395
|
|
Other
|
|
50
|
|
|
—
|
|
|
54
|
|
|
(34
|
)
|
|
70
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
162
|
|
|
(162
|
)
|
|
—
|
|
|||||
Total Revenues
|
|
2,239
|
|
|
269
|
|
|
1,196
|
|
|
(239
|
)
|
|
3,465
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
120
|
|
|
—
|
|
|
263
|
|
|
—
|
|
|
383
|
|
|||||
Purchased power
|
|
806
|
|
|
—
|
|
|
345
|
|
|
(162
|
)
|
|
989
|
|
|||||
Other operating expenses
|
|
538
|
|
|
35
|
|
|
411
|
|
|
(84
|
)
|
|
900
|
|
|||||
Provision for depreciation
|
|
170
|
|
|
38
|
|
|
99
|
|
|
15
|
|
|
322
|
|
|||||
Amortization of regulatory assets, net
|
|
57
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|||||
General taxes
|
|
174
|
|
|
26
|
|
|
36
|
|
|
6
|
|
|
242
|
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
|||||
Total Operating Expenses
|
|
1,865
|
|
|
101
|
|
|
1,170
|
|
|
(225
|
)
|
|
2,911
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income
|
|
374
|
|
|
168
|
|
|
26
|
|
|
(14
|
)
|
|
554
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income
|
|
12
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(3
|
)
|
|||||
Interest expense
|
|
(146
|
)
|
|
(40
|
)
|
|
(48
|
)
|
|
(48
|
)
|
|
(282
|
)
|
|||||
Capitalized financing costs
|
|
7
|
|
|
13
|
|
|
10
|
|
|
3
|
|
|
33
|
|
|||||
Total Other Expense
|
|
(127
|
)
|
|
(27
|
)
|
|
(38
|
)
|
|
(60
|
)
|
|
(252
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
247
|
|
|
141
|
|
|
(12
|
)
|
|
(74
|
)
|
|
302
|
|
|||||
Income taxes (benefits)
|
|
91
|
|
|
52
|
|
|
(4
|
)
|
|
(24
|
)
|
|
115
|
|
|||||
Net Income (Loss)
|
|
$
|
156
|
|
|
$
|
89
|
|
|
$
|
(8
|
)
|
|
$
|
(50
|
)
|
|
$
|
187
|
|
Changes Between Second Quarter 2016 and Second Quarter 2015 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
(42
|
)
|
|
$
|
(5
|
)
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
$
|
(64
|
)
|
Other
|
|
3
|
|
|
—
|
|
|
(9
|
)
|
|
6
|
|
|
—
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
|
54
|
|
|
—
|
|
|||||
Total Revenues
|
|
(39
|
)
|
|
(5
|
)
|
|
(80
|
)
|
|
60
|
|
|
(64
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
21
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
55
|
|
|||||
Purchased power
|
|
(85
|
)
|
|
—
|
|
|
(69
|
)
|
|
54
|
|
|
(100
|
)
|
|||||
Other operating expenses
|
|
42
|
|
|
1
|
|
|
21
|
|
|
—
|
|
|
64
|
|
|||||
Provision for depreciation
|
|
—
|
|
|
6
|
|
|
4
|
|
|
2
|
|
|
12
|
|
|||||
Amortization of regulatory assets, net
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
General taxes
|
|
(4
|
)
|
|
10
|
|
|
(7
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
1,431
|
|
|
—
|
|
|
1,431
|
|
|||||
Total Operating Expenses
|
|
(22
|
)
|
|
17
|
|
|
1,414
|
|
|
56
|
|
|
1,465
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
(17
|
)
|
|
(22
|
)
|
|
(1,494
|
)
|
|
4
|
|
|
(1,529
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income
|
|
1
|
|
|
—
|
|
|
18
|
|
|
3
|
|
|
22
|
|
|||||
Interest expense
|
|
1
|
|
|
(2
|
)
|
|
—
|
|
|
(6
|
)
|
|
(7
|
)
|
|||||
Capitalized financing costs
|
|
(2
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|
—
|
|
|
(7
|
)
|
|||||
Total Other Expense
|
|
—
|
|
|
(6
|
)
|
|
17
|
|
|
(3
|
)
|
|
8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
(17
|
)
|
|
(28
|
)
|
|
(1,477
|
)
|
|
1
|
|
|
(1,521
|
)
|
|||||
Income taxes (benefits)
|
|
(7
|
)
|
|
(10
|
)
|
|
(226
|
)
|
|
(2
|
)
|
|
(245
|
)
|
|||||
Net Income (Loss)
|
|
$
|
(10
|
)
|
|
$
|
(18
|
)
|
|
$
|
(1,251
|
)
|
|
$
|
3
|
|
|
$
|
(1,276
|
)
|
|
|
For the Three Months Ended June 30
|
|
Increase
|
||||||||
Revenues by Type of Service
|
|
2016
|
|
2015
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Distribution services
|
|
$
|
1,105
|
|
|
$
|
1,089
|
|
|
$
|
16
|
|
|
|
|
|
|
|
|
||||||
Generation sales:
|
|
|
|
|
|
|
||||||
Retail
|
|
922
|
|
|
970
|
|
|
(48
|
)
|
|||
Wholesale
|
|
120
|
|
|
130
|
|
|
(10
|
)
|
|||
Total generation sales
|
|
1,042
|
|
|
1,100
|
|
|
(58
|
)
|
|||
|
|
|
|
|
|
|
||||||
Other
|
|
53
|
|
|
50
|
|
|
3
|
|
|||
Total Revenues
|
|
$
|
2,200
|
|
|
$
|
2,239
|
|
|
$
|
(39
|
)
|
|
|
For the Three Months Ended June 30
|
|
|
|||||
Electric Distribution MWH Deliveries
|
|
2016
|
|
2015
|
|
(Decrease)
|
|||
|
|
(In thousands)
|
|
|
|||||
Residential
|
|
11,656
|
|
|
11,839
|
|
|
(1.5
|
)%
|
Commercial
|
|
10,349
|
|
|
10,411
|
|
|
(0.6
|
)%
|
Industrial
|
|
12,346
|
|
|
12,688
|
|
|
(2.7
|
)%
|
Other
|
|
145
|
|
|
145
|
|
|
—
|
%
|
Total Electric Distribution MWH Deliveries
|
|
34,496
|
|
|
35,083
|
|
|
(1.7
|
)%
|
Source of Change in Generation Revenues
|
|
Increase (Decrease)
|
||
|
|
(In millions)
|
||
Retail:
|
|
|
|
|
Effect of decrease in sales volumes
|
|
$
|
(61
|
)
|
Change in prices
|
|
13
|
|
|
|
|
(48
|
)
|
|
Wholesale:
|
|
|
||
Effect of increase in sales volumes
|
|
17
|
|
|
Change in prices
|
|
(27
|
)
|
|
|
|
(10
|
)
|
|
Decrease in Generation Revenues
|
|
$
|
(58
|
)
|
•
|
Fuel expense increased
$21 million
in the
second
quarter of 2016, as compared to the same period in 2015, primarily related to higher generation.
|
•
|
Purchased power costs were
$85 million
lower in the
second
quarter of 2016, as compared to the same period in 2015, primarily due to decreased volumes reflecting increased customer shopping, as described above.
|
Source of Change in Purchased Power
|
|
Increase(Decrease)
|
|||
|
|
(In millions)
|
|||
Purchases from non-affiliates:
|
|
|
|||
Change due to increased unit costs
|
|
$
|
11
|
|
|
Change due to decreased volumes
|
|
(29
|
)
|
||
|
|
(18
|
)
|
||
Purchases from affiliates:
|
|
|
|||
Change due to increased unit costs
|
|
4
|
|
||
Change due to decreased volumes
|
|
(59
|
)
|
||
|
|
(55
|
)
|
||
Capacity Expense
|
|
(3
|
)
|
||
Amortization of deferred costs
|
|
(9
|
)
|
||
Decrease in Purchased Power Costs
|
|
$
|
(85
|
)
|
•
|
Other operating expenses increased
$42 million
primarily due to:
|
•
|
Higher transmission expenses of $22 million primarily due to an increase in network transmission expenses at the Ohio Companies. The difference between current revenues and transmission costs incurred are deferred for future recovery or refund, resulting in no material impact on current period earnings.
|
•
|
Higher retirement benefit costs of $12 million.
|
•
|
Net amortization of regulatory assets increased
$4 million
primarily due to recovery of storm costs in Pennsylvania and vegetation management program costs in West Virginia, partially offset by higher deferral of Ohio network transmission expenses.
|
|
|
For the Three Months Ended June 30
|
|
|
||||||||
Revenues by Transmission Asset Owner
|
|
2016
|
|
2015
|
|
Increase
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
ATSI
|
|
$
|
128
|
|
|
$
|
127
|
|
|
$
|
1
|
|
TrAIL
|
|
59
|
|
|
65
|
|
|
(6
|
)
|
|||
PATH
|
|
3
|
|
|
3
|
|
|
—
|
|
|||
Utilities
|
|
74
|
|
|
74
|
|
|
—
|
|
|||
Total Revenues
|
|
$
|
264
|
|
|
$
|
269
|
|
|
$
|
(5
|
)
|
|
|
For the Three Months Ended June 30
|
|
Increase (Decrease)
|
||||||||
Revenues by Type of Service
|
|
2016
|
|
2015
|
|
|||||||
|
|
(In millions)
|
||||||||||
Contract Sales:
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
196
|
|
|
$
|
324
|
|
|
$
|
(128
|
)
|
Governmental Aggregation
|
|
191
|
|
|
218
|
|
|
(27
|
)
|
|||
Mass Market
|
|
37
|
|
|
61
|
|
|
(24
|
)
|
|||
POLR
|
|
125
|
|
|
169
|
|
|
(44
|
)
|
|||
Structured Sales
|
|
115
|
|
|
126
|
|
|
(11
|
)
|
|||
Total Contract Sales
|
|
664
|
|
|
898
|
|
|
(234
|
)
|
|||
Wholesale
|
|
389
|
|
|
216
|
|
|
173
|
|
|||
Transmission
|
|
18
|
|
|
28
|
|
|
(10
|
)
|
|||
Other
|
|
45
|
|
|
54
|
|
|
(9
|
)
|
|||
Total Revenues
|
|
$
|
1,116
|
|
|
$
|
1,196
|
|
|
$
|
(80
|
)
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30
|
|
Increase (Decrease)
|
|||||
MWH Sales by Channel
|
|
2016
|
|
2015
|
|
||||
|
|
(In thousands)
|
|||||||
Contract Sales:
|
|
|
|
|
|
|
|||
Direct
|
|
3,684
|
|
|
6,070
|
|
|
(39.3
|
)%
|
Governmental Aggregation
|
|
2,991
|
|
|
3,453
|
|
|
(13.4
|
)%
|
Mass Market
|
|
536
|
|
|
905
|
|
|
(40.8
|
)%
|
POLR
|
|
2,081
|
|
|
2,920
|
|
|
(28.7
|
)%
|
Structured Sales
|
|
2,842
|
|
|
2,808
|
|
|
1.2
|
%
|
Total Contract Sales
|
|
12,134
|
|
|
16,156
|
|
|
(24.9
|
)%
|
Wholesale
|
|
3,577
|
|
|
804
|
|
|
NM
|
|
Total MWH Sales
|
|
15,711
|
|
|
16,960
|
|
|
(7.4
|
)%
|
|
|
|
|
|
|
|
|
|
Source of Change in Revenues
|
||||||||||||||||||
|
|
Increase (Decrease)
|
||||||||||||||||||
MWH Sales Channel:
|
|
Sales Volumes
|
|
Prices
|
|
Gain on Settled Contracts
|
|
Capacity Revenue
|
|
Total
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Direct
|
|
$
|
(127
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(128
|
)
|
Governmental Aggregation
|
|
(29
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|||||
Mass Market
|
|
(25
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|||||
POLR
|
|
(48
|
)
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(44
|
)
|
|||||
Structured Sales
|
|
2
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|||||
Wholesale
|
|
88
|
|
|
(24
|
)
|
|
51
|
|
|
58
|
|
|
173
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
•
|
Fuel costs increased
$34 million
, primarily due to a pre-tax charge of $58 million from settlement and termination costs on coal contracts recognized in the second quarter of 2016 and higher nuclear generation, partially offset by lower generation associated with outages and economic dispatch of fossil units resulting from low wholesale spot market energy prices, as described above, as well as lower unit prices on fossil fuel contracts.
|
•
|
Purchased power costs decreased
$69 million
due to lower volumes ($76 million) and lower capacity expense ($19 million), partially offset by higher losses on financially settled contracts ($13 million) and higher unit prices ($13 million). Lower volumes and capacity expense primarily resulted from lower contract sales as discussed above, partially offset by economic purchases, resulting from the low wholesale spot market price environment. Higher losses on financially settled contracts were due to lower wholesale spot market prices in the second quarter of 2016 compared to the second quarter of 2015. Higher unit prices were primarily due to a higher proportion of purchases coming from purchased power agreements for wind, solar and CES' entitlement in OVEC, partially offset by the lower wholesale spot prices.
|
•
|
Fossil operating costs increased $13 million, primarily due to increased outage costs.
|
•
|
Nuclear operating costs decreased $22 million, primarily due to lower refueling outage costs. There was one refueling outage during the second quarter of 2016, as compared to two refueling outages during the same period of 2015.
|
•
|
Retirement benefit costs increased $8 million.
|
•
|
Transmission expenses decreased $32 million, due to lower congestion and market-based ancillary costs, primarily resulting from lower sales.
|
•
|
Other operating expenses increased $54 million, primarily due to a $79 million increase in mark-to-market losses on commodity contract positions, partially offset by lower lease expense as a result of the expiration of a nuclear sale-leaseback agreement and lower retail-related costs.
|
•
|
General taxes decreased $7 million, primarily due to lower gross receipts taxes associated with lower retail sales volumes.
|
•
|
Impairment of assets increased $1,431 million primarily due to an $800 million impairment of goodwill and a decision to exit operations of Units 1-4 of the W. H. Sammis generating station by May 31, 2020 and the Bay Shore Unit 1 generating station by October 1, 2020, resulting in an impairment of $647 million.
|
First Six Months 2016 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
4,589
|
|
|
$
|
539
|
|
|
$
|
2,064
|
|
|
$
|
(89
|
)
|
|
$
|
7,103
|
|
Other
|
|
132
|
|
|
—
|
|
|
96
|
|
|
(61
|
)
|
|
167
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
260
|
|
|
(260
|
)
|
|
—
|
|
|||||
Total Revenues
|
|
4,721
|
|
|
539
|
|
|
2,420
|
|
|
(410
|
)
|
|
7,270
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
280
|
|
|
—
|
|
|
539
|
|
|
—
|
|
|
819
|
|
|||||
Purchased power
|
|
1,647
|
|
|
—
|
|
|
626
|
|
|
(260
|
)
|
|
2,013
|
|
|||||
Other operating expenses
|
|
1,228
|
|
|
72
|
|
|
753
|
|
|
(171
|
)
|
|
1,882
|
|
|||||
Provision for depreciation
|
|
339
|
|
|
87
|
|
|
205
|
|
|
32
|
|
|
663
|
|
|||||
Amortization of regulatory assets, net
|
|
120
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
124
|
|
|||||
General taxes
|
|
355
|
|
|
77
|
|
|
68
|
|
|
21
|
|
|
521
|
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|
—
|
|
|
1,447
|
|
|||||
Total Operating Expenses
|
|
3,969
|
|
|
240
|
|
|
3,638
|
|
|
(378
|
)
|
|
7,469
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
752
|
|
|
299
|
|
|
(1,218
|
)
|
|
(32
|
)
|
|
(199
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income
|
|
24
|
|
|
—
|
|
|
33
|
|
|
(10
|
)
|
|
47
|
|
|||||
Interest expense
|
|
(292
|
)
|
|
(85
|
)
|
|
(95
|
)
|
|
(105
|
)
|
|
(577
|
)
|
|||||
Capitalized financing costs
|
|
9
|
|
|
16
|
|
|
20
|
|
|
6
|
|
|
51
|
|
|||||
Total Other Expense
|
|
(259
|
)
|
|
(69
|
)
|
|
(42
|
)
|
|
(109
|
)
|
|
(479
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
493
|
|
|
230
|
|
|
(1,260
|
)
|
|
(141
|
)
|
|
(678
|
)
|
|||||
Income taxes (benefits)
|
|
182
|
|
|
85
|
|
|
(145
|
)
|
|
(39
|
)
|
|
83
|
|
|||||
Net Income (Loss)
|
|
$
|
311
|
|
|
$
|
145
|
|
|
$
|
(1,115
|
)
|
|
$
|
(102
|
)
|
|
$
|
(761
|
)
|
|
||||||||||||||||||||
First Six Months 2015 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
4,706
|
|
|
$
|
507
|
|
|
$
|
2,105
|
|
|
$
|
(88
|
)
|
|
$
|
7,230
|
|
Other
|
|
95
|
|
|
—
|
|
|
104
|
|
|
(67
|
)
|
|
132
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
422
|
|
|
(422
|
)
|
|
—
|
|
|||||
Total Revenues
|
|
4,801
|
|
|
507
|
|
|
2,631
|
|
|
(577
|
)
|
|
7,362
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
266
|
|
|
—
|
|
|
630
|
|
|
—
|
|
|
896
|
|
|||||
Purchased power
|
|
1,781
|
|
|
—
|
|
|
743
|
|
|
(422
|
)
|
|
2,102
|
|
|||||
Other operating expenses
|
|
1,135
|
|
|
70
|
|
|
930
|
|
|
(178
|
)
|
|
1,957
|
|
|||||
Provision for depreciation
|
|
342
|
|
|
75
|
|
|
195
|
|
|
29
|
|
|
641
|
|
|||||
Amortization of regulatory assets, net
|
|
86
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
91
|
|
|||||
General taxes
|
|
364
|
|
|
50
|
|
|
77
|
|
|
20
|
|
|
511
|
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
|||||
Total Operating Expenses
|
|
3,974
|
|
|
200
|
|
|
2,591
|
|
|
(551
|
)
|
|
6,214
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income
|
|
827
|
|
|
307
|
|
|
40
|
|
|
(26
|
)
|
|
1,148
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income
|
|
25
|
|
|
—
|
|
|
12
|
|
|
(23
|
)
|
|
14
|
|
|||||
Interest expense
|
|
(290
|
)
|
|
(79
|
)
|
|
(96
|
)
|
|
(96
|
)
|
|
(561
|
)
|
|||||
Capitalized financing costs
|
|
15
|
|
|
27
|
|
|
20
|
|
|
5
|
|
|
67
|
|
|||||
Total Other Expense
|
|
(250
|
)
|
|
(52
|
)
|
|
(64
|
)
|
|
(114
|
)
|
|
(480
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
577
|
|
|
255
|
|
|
(24
|
)
|
|
(140
|
)
|
|
668
|
|
|||||
Income taxes (benefits)
|
|
213
|
|
|
94
|
|
|
(8
|
)
|
|
(40
|
)
|
|
259
|
|
|||||
Net Income (Loss)
|
|
$
|
364
|
|
|
$
|
161
|
|
|
$
|
(16
|
)
|
|
$
|
(100
|
)
|
|
$
|
409
|
|
|
||||||||||||||||||||
Changes Between First Six Months 2016 and First Six Months 2015 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
(117
|
)
|
|
$
|
32
|
|
|
$
|
(41
|
)
|
|
$
|
(1
|
)
|
|
$
|
(127
|
)
|
Other
|
|
37
|
|
|
—
|
|
|
(8
|
)
|
|
6
|
|
|
35
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
(162
|
)
|
|
162
|
|
|
—
|
|
|||||
Total Revenues
|
|
(80
|
)
|
|
32
|
|
|
(211
|
)
|
|
167
|
|
|
(92
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
14
|
|
|
—
|
|
|
(91
|
)
|
|
—
|
|
|
(77
|
)
|
|||||
Purchased power
|
|
(134
|
)
|
|
—
|
|
|
(117
|
)
|
|
162
|
|
|
(89
|
)
|
|||||
Other operating expenses
|
|
93
|
|
|
2
|
|
|
(177
|
)
|
|
7
|
|
|
(75
|
)
|
|||||
Provision for depreciation
|
|
(3
|
)
|
|
12
|
|
|
10
|
|
|
3
|
|
|
22
|
|
|||||
Amortization of regulatory assets, net
|
|
34
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
33
|
|
|||||
General taxes
|
|
(9
|
)
|
|
27
|
|
|
(9
|
)
|
|
1
|
|
|
10
|
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
1,431
|
|
|
—
|
|
|
1,431
|
|
|||||
Total Operating Expenses
|
|
(5
|
)
|
|
40
|
|
|
1,047
|
|
|
173
|
|
|
1,255
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
(75
|
)
|
|
(8
|
)
|
|
(1,258
|
)
|
|
(6
|
)
|
|
(1,347
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income
|
|
(1
|
)
|
|
—
|
|
|
21
|
|
|
13
|
|
|
33
|
|
|||||
Interest expense
|
|
(2
|
)
|
|
(6
|
)
|
|
1
|
|
|
(9
|
)
|
|
(16
|
)
|
|||||
Capitalized financing costs
|
|
(6
|
)
|
|
(11
|
)
|
|
—
|
|
|
1
|
|
|
(16
|
)
|
|||||
Total Other Expense
|
|
(9
|
)
|
|
(17
|
)
|
|
22
|
|
|
5
|
|
|
1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
(84
|
)
|
|
(25
|
)
|
|
(1,236
|
)
|
|
(1
|
)
|
|
(1,346
|
)
|
|||||
Income taxes (benefits)
|
|
(31
|
)
|
|
(9
|
)
|
|
(137
|
)
|
|
1
|
|
|
(176
|
)
|
|||||
Net Income (Loss)
|
|
$
|
(53
|
)
|
|
$
|
(16
|
)
|
|
$
|
(1,099
|
)
|
|
$
|
(2
|
)
|
|
$
|
(1,170
|
)
|
|
|
For the Six Months Ended June 30
|
|
Increase
|
||||||||
Revenues by Type of Service
|
|
2016
|
|
2015
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Distribution services
|
|
$
|
2,290
|
|
|
$
|
2,256
|
|
|
$
|
34
|
|
|
|
|
|
|
|
|
||||||
Generation sales:
|
|
|
|
|
|
|
||||||
Retail
|
|
2,057
|
|
|
2,150
|
|
|
(93
|
)
|
|||
Wholesale
|
|
242
|
|
|
300
|
|
|
(58
|
)
|
|||
Total generation sales
|
|
2,299
|
|
|
2,450
|
|
|
(151
|
)
|
|||
|
|
|
|
|
|
|
||||||
Other
|
|
132
|
|
|
95
|
|
|
37
|
|
|||
Total Revenues
|
|
$
|
4,721
|
|
|
$
|
4,801
|
|
|
$
|
(80
|
)
|
|
|
For the Six Months Ended June 30
|
|
|
|||||
Electric Distribution MWH Deliveries
|
|
2016
|
|
2015
|
|
(Decrease)
|
|||
|
|
(In thousands)
|
|
|
|||||
Residential
|
|
25,992
|
|
|
28,401
|
|
|
(8.5
|
)%
|
Commercial
|
|
20,908
|
|
|
21,543
|
|
|
(2.9
|
)%
|
Industrial
|
|
24,724
|
|
|
25,428
|
|
|
(2.8
|
)%
|
Other
|
|
292
|
|
|
292
|
|
|
—
|
%
|
Total Electric Distribution MWH Deliveries
|
|
71,916
|
|
|
75,664
|
|
|
(5.0
|
)%
|
Source of Change in Generation Revenues
|
|
Increase (Decrease)
|
||
|
|
(In millions)
|
||
Retail:
|
|
|
|
|
Effect of decrease in sales volumes
|
|
$
|
(200
|
)
|
Change in prices
|
|
107
|
|
|
|
|
(93
|
)
|
|
Wholesale:
|
|
|
||
Effect of increase in sales volumes
|
|
31
|
|
|
Change in prices
|
|
(98
|
)
|
|
Capacity Revenue
|
|
9
|
|
|
|
|
(58
|
)
|
|
Decrease in Generation Revenues
|
|
$
|
(151
|
)
|
•
|
Fuel expense increased
$14 million
in the first
six
months of 2016, as compared to the same period of 2015, primarily related to higher generation.
|
•
|
Purchased power costs decreased
$134 million
during the first
six
months of
2016
, as compared to the same period of
2015
primarily due to decreased volumes reflecting lower weather-related usage and increased customer shopping, as described above.
|
Source of Change in Purchased Power
|
|
Increase (Decrease)
|
|||
|
|
(In millions)
|
|||
Purchases from non-affiliates:
|
|
|
|||
Change due to decreased unit costs
|
|
$
|
(1
|
)
|
|
Change due to volumes
|
|
8
|
|
||
|
|
7
|
|
||
Purchases from affiliates:
|
|
|
|||
Change due to increased unit costs
|
|
16
|
|
||
Change due to volumes
|
|
(179
|
)
|
||
|
|
(163
|
)
|
||
Capacity Expense
|
|
10
|
|
||
Amortization of deferred costs
|
|
12
|
|
||
Decrease in Purchased Power Costs
|
|
$
|
(134
|
)
|
•
|
Other operating expenses increased
$93 million
primarily due to:
|
•
|
An increase of $51 million resulting from the recognition of economic development and energy efficiency obligations in accordance with the PUCO's March 31 Opinion and Order adopting and approving, with modifications, the Ohio Companies' ESP IV.
|
•
|
Higher retirement benefit costs of $25 million.
|
•
|
Higher transmission expenses of $11 million primarily related to an increase in network transmission expenses at the Ohio Companies, partially offset by lower congestion expenses at MP. The difference between current revenues and costs incurred are deferred for future recovery or refund, resulting in no material impact on current period earnings.
|
•
|
Net amortization of regulatory assets increased
$34 million
primarily due to:
|
•
|
Recovery of storm costs in New Jersey, Pennsylvania, and West Virginia effective with the implementation of new rates as discussed above ($35 million),
|
•
|
Recovery of West Virginia vegetation management program costs ($27 million), partially offset by
|
•
|
Higher deferral of Ohio network transmission expenses ($26 million).
|
•
|
General taxes decreased
$9 million
primarily due to lower property taxes in Ohio, partially offset by higher revenue-related taxes in Pennsylvania.
|
|
|
For the Six Months Ended June 30
|
|
Increase
|
||||||||
Revenues by Transmission Asset Owner
|
|
2016
|
|
2015
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
ATSI
|
|
$
|
262
|
|
|
$
|
223
|
|
|
$
|
39
|
|
TrAIL
|
|
120
|
|
|
126
|
|
|
(6
|
)
|
|||
PATH
|
|
6
|
|
|
7
|
|
|
(1
|
)
|
|||
Utilities
|
|
151
|
|
|
151
|
|
|
—
|
|
|||
Total Revenues
|
|
$
|
539
|
|
|
$
|
507
|
|
|
$
|
32
|
|
|
|
For the Six Months Ended June 30
|
|
Increase (Decrease)
|
||||||||
Revenues by Type of Service
|
|
2016
|
|
2015
|
|
|||||||
|
|
(In millions)
|
||||||||||
Contract Sales:
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
403
|
|
|
$
|
717
|
|
|
$
|
(314
|
)
|
Governmental Aggregation
|
|
432
|
|
|
506
|
|
|
(74
|
)
|
|||
Mass Market
|
|
85
|
|
|
160
|
|
|
(75
|
)
|
|||
POLR
|
|
282
|
|
|
445
|
|
|
(163
|
)
|
|||
Structured Sales
|
|
277
|
|
|
259
|
|
|
18
|
|
|||
Total Contract Sales
|
|
1,479
|
|
|
2,087
|
|
|
(608
|
)
|
|||
Wholesale
|
|
806
|
|
|
347
|
|
|
459
|
|
|||
Transmission
|
|
39
|
|
|
93
|
|
|
(54
|
)
|
|||
Other
|
|
96
|
|
|
104
|
|
|
(8
|
)
|
|||
Total Revenues
|
|
$
|
2,420
|
|
|
$
|
2,631
|
|
|
$
|
(211
|
)
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30
|
|
Increase (Decrease)
|
|||||
MWH Sales by Channel
|
|
2016
|
|
2015
|
|
||||
|
|
(In thousands)
|
|
|
|||||
Contract Sales:
|
|
|
|
|
|
|
|||
Direct
|
|
7,478
|
|
|
13,319
|
|
|
(43.9
|
)%
|
Governmental Aggregation
|
|
6,560
|
|
|
8,052
|
|
|
(18.5
|
)%
|
Mass Market
|
|
1,239
|
|
|
2,340
|
|
|
(47.1
|
)%
|
POLR
|
|
4,633
|
|
|
7,742
|
|
|
(40.2
|
)%
|
Structured Sales
|
|
6,738
|
|
|
5,897
|
|
|
14.3
|
%
|
Total Contract Sales
|
|
26,648
|
|
|
37,350
|
|
|
(28.7
|
)%
|
Wholesale
|
|
5,490
|
|
|
867
|
|
|
NM
|
|
Total MWH Sales
|
|
32,138
|
|
|
38,217
|
|
|
(15.9
|
)%
|
|
|
|
|
|
|
|
|
|
Source of Change in Revenues
|
||||||||||||||||||
|
|
Increase (Decrease)
|
||||||||||||||||||
MWH Sales Channel:
|
|
Sales Volumes
|
|
Prices
|
|
Gain on Settled Contracts
|
|
Capacity Revenue
|
|
Total
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Direct
|
|
$
|
(314
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(314
|
)
|
Governmental Aggregation
|
|
(94
|
)
|
|
20
|
|
|
—
|
|
|
—
|
|
|
(74
|
)
|
|||||
Mass Market
|
|
(76
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|||||
POLR
|
|
(179
|
)
|
|
16
|
|
|
—
|
|
|
—
|
|
|
(163
|
)
|
|||||
Structured Sales
|
|
37
|
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||
Wholesale
|
|
149
|
|
|
(30
|
)
|
|
121
|
|
|
219
|
|
|
459
|
|
•
|
Fuel costs decreased
$91 million
,
primarily due to lower generation associated with outages and economic dispatch of fossil units resulting from low wholesale spot market energy prices, as described above, as well as lower unit prices on fossil fuel contracts. Additionally, fuel costs were impacted by a pre-tax charge of $58 million from settlement and termination costs on coal contracts in the second quarter of 2016.
|
•
|
Purchased power costs decreased
$117 million
due to lower volumes ($193 million) and lower unit prices ($3 million), partially offset by higher losses on financial settled contracts ($54 million) and higher capacity expenses ($25 million). Lower volumes primarily resulted from lower contract sales as discussed above, partially offset by economic purchases, resulting from the low wholesale spot market price environment. Lower unit prices and higher losses on financially settled contracts were both due to lower wholesale spot market prices in the first six months of 2016, compared to the same period of 2015. The increase in capacity expense, which is a component of CES' retail price, was primarily the result of higher capacity rates associated with CES' retail sales obligations.
|
•
|
Fossil operating costs increased $21 million, primarily due to increased outage costs.
|
•
|
Nuclear operating costs decreased $33 million as a result of lower refueling outage costs. There was one refueling outage during the first six months of 2016 as compared to two refueling outages during the same period of 2015.
|
•
|
Retirement benefit costs increased $16 million.
|
•
|
Transmission expenses decreased $151 million, primarily due to lower congestion and market-based ancillary costs associated with less volatile market conditions as compared to the first six months of 2015, as well as lower load requirements.
|
•
|
Other operating expenses decreased $30 million, primarily due to a $14 million increase in mark-to-market gains on commodity contract positions, lower lease expense as a result of the expiration of a nuclear sale-leaseback agreement and lower retail-related costs.
|
•
|
Depreciation expense increased
$10 million
as a result of a higher asset base.
|
•
|
General taxes decreased $9 million due to lower gross receipts taxes associated with lower retail sales volumes.
|
•
|
Impairment of assets increased $1,431 million primarily due to an $800 million impairment of goodwill and a decision to exit operations of Units 1-4 of the W. H. Sammis generating station by May 31, 2020 and the Bay Shore Unit 1 generating station by October 1, 2020, resulting in an impairment of $647 million.
|
Regulatory Assets (Liabilities) by Source
|
|
June 30,
2016 |
|
December 31,
2015 |
|
Increase
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Regulatory transition costs
|
|
$
|
143
|
|
|
$
|
185
|
|
|
$
|
(42
|
)
|
Customer receivables for future income taxes
|
|
424
|
|
|
355
|
|
|
69
|
|
|||
Nuclear decommissioning and spent fuel disposal costs
|
|
(306
|
)
|
|
(272
|
)
|
|
(34
|
)
|
|||
Asset removal costs
|
|
(462
|
)
|
|
(372
|
)
|
|
(90
|
)
|
|||
Deferred transmission costs
|
|
136
|
|
|
115
|
|
|
21
|
|
|||
Deferred generation costs
|
|
243
|
|
|
243
|
|
|
—
|
|
|||
Deferred distribution costs
|
|
315
|
|
|
335
|
|
|
(20
|
)
|
|||
Contract valuations
|
|
179
|
|
|
186
|
|
|
(7
|
)
|
|||
Storm-related costs
|
|
375
|
|
|
403
|
|
|
(28
|
)
|
|||
Other
|
|
140
|
|
|
170
|
|
|
(30
|
)
|
|||
Net Regulatory Assets included on the Consolidated Balance Sheets
|
|
$
|
1,187
|
|
|
$
|
1,348
|
|
|
$
|
(161
|
)
|
Reportable Segment
|
|
Capital
Expenditures
Accrued - First six months of 2016
|
|
Capital
Expenditures
Forecast 2016
|
||||
|
|
(In millions)
|
||||||
Regulated Distribution
|
|
$
|
619
|
|
|
$
|
1,270
|
|
Regulated Transmission
|
|
514
|
|
|
1,050
|
|
||
Competitive Energy Services
|
|
314
|
|
|
545
|
|
||
Corporate/Other
|
|
42
|
|
|
85
|
|
||
Total
|
|
$
|
1,489
|
|
|
$
|
2,950
|
|
Currently Payable Long-Term Debt
|
|
(In millions)
|
||
PCRBs supported by bank LOCs
(1)
|
|
$
|
92
|
|
Unsecured notes
|
|
380
|
|
|
FMBs
|
|
395
|
|
|
Unsecured PCRBs
(1)
|
|
325
|
|
|
Collateralized lease obligation bonds
|
|
8
|
|
|
Sinking fund requirements
|
|
89
|
|
|
Other notes
|
|
38
|
|
|
|
|
$
|
1,327
|
|
(1)
|
These PCRBs are classified as currently payable long-term debt because the applicable interest rate mode permits individual debt holders to put the respective debt back to the issuer prior to maturity.
|
Borrower(s)
|
|
Type
|
|
Maturity
|
|
Commitment
|
|
Available Liquidity
|
||||
|
|
|
|
|
|
(In millions)
|
||||||
FirstEnergy
(1)
|
|
Revolving
|
|
March 2019
|
|
$
|
3,500
|
|
|
$
|
719
|
|
FES / AE Supply
|
|
Revolving
|
|
March 2019
|
|
1,500
|
|
|
1,499
|
|
||
FET
(2)
|
|
Revolving
|
|
March 2019
|
|
1,000
|
|
|
850
|
|
||
|
|
|
|
Subtotal
|
|
$
|
6,000
|
|
|
$
|
3,068
|
|
|
|
|
|
Cash
|
|
—
|
|
|
199
|
|
||
|
|
|
|
Total
|
|
$
|
6,000
|
|
|
$
|
3,267
|
|
(1)
|
FE and the Utilities.
|
(2)
|
Includes FET, ATSI and TrAIL.
|
Borrower
|
|
FE Revolving
Credit Facility
Sublimit
|
|
FES/AE Supply Revolving
Credit Facility
Sublimit
|
|
FET Revolving
Credit Facility
Sublimit
|
|
Regulatory and
Other Short-Term Debt Limitations
|
|
||||||||||||
|
|
(In millions)
|
|
||||||||||||||||||
FE
|
|
|
$
|
3,500
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
(1)
|
FES
|
|
|
—
|
|
|
|
1,500
|
|
|
|
—
|
|
|
|
—
|
|
(2)
|
||||
AE Supply
|
|
|
—
|
|
|
|
1,000
|
|
|
|
—
|
|
|
|
—
|
|
(2)
|
||||
FET
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000
|
|
|
|
—
|
|
(1)
|
||||
OE
|
|
|
500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500
|
|
(3)
|
||||
CEI
|
|
|
500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500
|
|
(3)
|
||||
TE
|
|
|
500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500
|
|
(3)
|
||||
JCP&L
|
|
|
600
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500
|
|
(3)
|
||||
ME
|
|
|
300
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500
|
|
(3)
|
||||
PN
|
|
|
300
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300
|
|
(3)
|
||||
WP
|
|
|
200
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200
|
|
(3)
|
||||
MP
|
|
|
500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500
|
|
(3)
|
||||
PE
|
|
|
150
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150
|
|
(3)
|
||||
ATSI
|
|
|
—
|
|
|
|
—
|
|
|
|
500
|
|
|
|
500
|
|
(3)
|
||||
Penn
|
|
|
50
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100
|
|
(3)
|
||||
TrAIL
|
|
|
—
|
|
|
|
—
|
|
|
|
400
|
|
|
|
400
|
|
(3)
|
(1)
|
No limitations.
|
(2)
|
No limitation based upon blanket financing authorization from the FERC under existing open market tariffs.
|
(3)
|
Includes amounts which may be borrowed under the regulated companies' money pool.
|
Bank
|
|
Aggregate Amount
(1)
|
|
Termination Date
|
|
Reimbursements of Draws Due
|
||
|
|
(In millions)
|
|
|
|
|
||
The Bank of Nova Scotia
|
|
$
|
92
|
|
|
March 2017
|
|
March 2017
|
|
|
Senior Secured
|
|
Senior Unsecured
|
||||||
Issuer
|
|
S&P
|
|
Moody’s
|
|
S&P
|
|
Moody’s
|
|
Fitch
|
FE
|
|
—
|
|
—
|
|
BB+
|
|
Baa3
|
|
BB+
|
FES
|
|
BBB-
|
|
—
|
|
BBB-
|
|
Baa3
|
|
—
|
AE Supply
|
|
BBB-
|
|
—
|
|
BBB-
|
|
Baa3
|
|
—
|
AGC
|
|
—
|
|
—
|
|
BBB-
|
|
Baa3
|
|
—
|
ATSI
|
|
—
|
|
—
|
|
BBB-
|
|
Baa2
|
|
—
|
CEI
|
|
BBB+
|
|
Baa1
|
|
BBB-
|
|
Baa3
|
|
—
|
FET
|
|
—
|
|
—
|
|
BB+
|
|
Baa3
|
|
—
|
JCP&L
|
|
—
|
|
—
|
|
BBB-
|
|
Baa2
|
|
—
|
ME
|
|
—
|
|
—
|
|
BBB-
|
|
Baa1
|
|
—
|
MP
|
|
BBB+
|
|
A3
|
|
—
|
|
—
|
|
—
|
OE
|
|
BBB+
|
|
A2
|
|
BBB-
|
|
Baa1
|
|
—
|
PN
|
|
—
|
|
—
|
|
BBB-
|
|
Baa2
|
|
—
|
Penn
|
|
—
|
|
A2
|
|
—
|
|
—
|
|
—
|
PE
|
|
BBB+
|
|
A3
|
|
—
|
|
—
|
|
—
|
TE
|
|
BBB+
|
|
Baa1
|
|
—
|
|
—
|
|
—
|
TrAIL
|
|
—
|
|
—
|
|
BBB-
|
|
A3
|
|
—
|
WP
|
|
BBB+
|
|
A2
|
|
—
|
|
—
|
|
—
|
•
|
Distribution rate increases associated with the implementation of new rates, partially offset by a year-over-year decline in distribution deliveries primarily associated with lower weather-related usage;
|
•
|
Higher transmission revenue, reflecting recovery of incremental operating expenses and a higher rate base;
|
•
|
Higher capacity revenues at CES, partially offset by a decline in sales volume; and
|
•
|
Lower disbursements for fuel and purchased power resulting from the lower sales volumes.
|
|
|
For the Six Months Ended June 30
|
||||||
Securities Issued or Redeemed / Repaid
|
|
2016
|
|
2015
|
||||
|
|
(In millions)
|
||||||
New Issues
|
|
|
|
|
|
|
||
Term Loan
|
|
$
|
—
|
|
|
$
|
200
|
|
|
|
$
|
—
|
|
|
$
|
200
|
|
|
|
|
|
|
||||
Redemptions / Repayments
|
|
|
|
|
|
|
||
Term Loan
|
|
$
|
—
|
|
|
$
|
(200
|
)
|
Unsecured notes
|
|
(356
|
)
|
|
—
|
|
||
Senior secured notes
|
|
(225
|
)
|
|
(92
|
)
|
||
|
|
$
|
(581
|
)
|
|
$
|
(292
|
)
|
|
|
|
|
|
||||
Short-term borrowings, net
|
|
$
|
1,225
|
|
|
$
|
1,109
|
|
|
|
|
|
|
||||
Common stock dividend payments
|
|
$
|
(305
|
)
|
|
$
|
(303
|
)
|
|
|
For the Six Months Ended June 30
|
|
|
||||||||
Cash Used for Investing Activities
|
|
2016
|
|
2015
|
|
Increase (Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Property Additions:
|
|
|
|
|
|
|
||||||
Regulated Distribution
|
|
$
|
575
|
|
|
$
|
592
|
|
|
$
|
(17
|
)
|
Regulated Transmission
|
|
509
|
|
|
551
|
|
|
(42
|
)
|
|||
Competitive Energy Services
|
|
382
|
|
|
317
|
|
|
65
|
|
|||
Corporate / Other
|
|
26
|
|
|
26
|
|
|
—
|
|
|||
Nuclear fuel
|
|
188
|
|
|
97
|
|
|
91
|
|
|||
Investments
|
|
49
|
|
|
62
|
|
|
(13
|
)
|
|||
Asset removal costs
|
|
63
|
|
|
67
|
|
|
(4
|
)
|
|||
Other
|
|
(25
|
)
|
|
(19
|
)
|
|
(6
|
)
|
|||
|
|
$
|
1,767
|
|
|
$
|
1,693
|
|
|
$
|
74
|
|
Guarantees and Other Assurances
|
|
Maximum Exposure
|
||
|
|
(In millions)
|
||
FE's Guarantees on Behalf of its Subsidiaries
|
|
|
|
|
Energy and Energy-Related Contracts
(1)
|
|
$
|
33
|
|
Deferred compensation arrangements
|
|
544
|
|
|
Other
(2)
|
|
13
|
|
|
|
|
590
|
|
|
Subsidiaries’ Guarantees
|
|
|
||
Energy and Energy-Related Contracts
(3)
|
|
248
|
|
|
FES’ guarantee of NG’s nuclear property insurance
|
|
96
|
|
|
FES' guarantee of nuclear decommissioning costs
|
|
21
|
|
|
FES’ guarantee of FG’s sale and leaseback obligations
|
|
1,674
|
|
|
|
|
2,039
|
|
|
|
|
|
||
FE's Guarantees on Behalf of Business Ventures
|
|
|
||
Global Holding facility
|
|
300
|
|
|
|
|
|
||
Other Assurances
|
|
|
||
Surety Bonds - Wholly Owned Subsidiaries
|
|
383
|
|
|
Surety Bonds
|
|
22
|
|
|
FES' LOC (long-term tax-exempt debt)
(4)
|
|
93
|
|
|
LOCs
(5)
|
|
99
|
|
|
|
|
597
|
|
|
Total Guarantees and Other Assurances
|
|
$
|
3,526
|
|
(1)
|
Issued for open-ended terms, with a 10-day termination right by FirstEnergy.
|
(2)
|
Includes guarantees of
$4 million
for nuclear decommissioning funding assurances,
$5 million
for railcar leases and $
4 million
for various leases.
|
(3)
|
Includes energy and energy-related contracts associated with FES of approximately $
248 million
.
|
(4)
|
Reflects the $1 million of interest coverage portion of LOCs issued in support of floating rate PCRBs with various maturities and the principal amount of floating-rate PCRBs of
$92 million
, all of which is reflected in currently payable long-term debt on FirstEnergy's consolidated balance sheets.
|
(5)
|
Includes
$7 million
issued for various terms pursuant to LOC capacity available under FirstEnergy’s revolving credit facilities, $
87 million
issued in connection with energy and energy related contracts, $
1 million
issued in connection with railcar leases and
$4 million
pledged in connection with the sale and leaseback of Beaver Valley Unit 2 by OE.
|
Collateral Provisions
|
|
FES/ AE Supply (Tied to FE Corp. Rating)
|
|
FES/ AE Supply (Tied to FES Rating)
|
|
Utilities
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
Split Rating
(One rating agency's rating below investment grade)
|
|
$
|
25
|
|
|
$
|
174
|
|
|
$
|
44
|
|
|
$
|
243
|
|
Non-Investment Grade Ratings
(All Rating Agencies at or below BB+/Ba1)
|
|
$
|
25
|
|
|
$
|
187
|
|
|
$
|
44
|
|
|
$
|
256
|
|
Total Exposure from Contractual Obligations
|
|
$
|
25
|
|
|
$
|
310
|
|
|
$
|
44
|
|
|
$
|
379
|
|
Source of Information-
Fair Value by Contract Year
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||||||
Prices actively quoted
(1)
|
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Other external sources
(2)
|
|
12
|
|
|
5
|
|
|
(22
|
)
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|||||||
Prices based on models
|
|
5
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(3
|
)
|
|||||||
Total
(3)
|
|
$
|
21
|
|
|
$
|
12
|
|
|
$
|
(22
|
)
|
|
$
|
(29
|
)
|
|
$
|
(10
|
)
|
|
$
|
—
|
|
|
$
|
(28
|
)
|
(1)
|
Represents exchange traded New York Mercantile Exchange futures and options.
|
(2)
|
Primarily represents contracts based on broker and ICE quotes.
|
(3)
|
Includes
$(123) million
in non-hedge derivative contracts that are primarily related to NUG contracts at certain of the Utilities. NUG contracts are subject to regulatory accounting and do not impact earnings.
|
•
|
An
eight
-year term (June 1, 2016 - May 31, 2024);
|
•
|
Contemplates continuing a base distribution rate freeze through May 31, 2024;
|
•
|
An Economic Stability Program that flows through charges or credits through Rider RRS representing the net result of the price paid to FES through an
eight
-year FERC-jurisdictional PPA, referred to as the ESP IV PPA, for the output of the ESP IV PPA Facilities against the revenues received from selling such output into the PJM markets;
|
•
|
Continuing to provide power to non-shopping customers at a market-based price set through an auction process;
|
•
|
Continuing Rider DCR with increased revenue caps of approximately
$30 million
per year from June 1, 2016 through May 31, 2019;
$20 million
per year from June 1, 2019 through May 31, 2022; and
$15 million
per year from June 1, 2022 through May 31, 2024 that supports continued investment related to the distribution system for the benefit of customers;
|
•
|
Collection of lost distribution revenues associated with energy efficiency and peak demand reduction programs;
|
•
|
A risk-sharing mechanism that would provide guaranteed credits under Rider RRS in years five through eight to customers as follows:
$10 million
in year five,
$20 million
in year six,
$30 million
in year seven and
$40 million
in year eight;
|
•
|
A continuing commitment not to recover from retail customers certain costs related to transmission cost allocations for the longer of the
five
-year period from June 1, 2011 through May 31, 2016 or when the amount of such costs avoided by customers for certain types of products totals
$360 million
, including such costs from MISO along with such costs from PJM, subject to the outcome of certain FERC proceedings;
|
•
|
Potential procurement of
100 MW
of new Ohio wind or solar resources subject to a demonstrated need to procure new renewable energy resources as part of a strategy to further diversify Ohio's energy portfolio;
|
•
|
An agreement to file a case with the PUCO by April 3, 2017, seeking to transition to decoupled base rates for residential customers;
|
•
|
An agreement to file by February 29, 2016, a Grid Modernization Business Plan for PUCO consideration and approval (which filing was made on February 29, 2016);
|
•
|
A goal across FirstEnergy to reduce CO
2
emissions by
90%
below 2005 levels by 2045;
|
•
|
A contribution of
$3 million
per year (
$24 million
over the
eight
-year term) to fund energy conservation programs, economic development and job retention in the Ohio Companies service territory;
|
•
|
Contributions of
$2.4 million
per year (
$19 million
over the
eight
-year term) to fund a fuel-fund in each of the Ohio Companies service territories to assist low-income customers; and
|
•
|
A contribution of
$1 million
per year (
$8 million
over the
eight
-year term) to establish a Customary Advisory Council to ensure preservation and growth of the competitive market in Ohio.
|
•
|
Limiting average customer bill amounts for the first
two
years of the plan, subject to certain exceptions, and permitting deferral for the second year;
|
•
|
Prohibiting recovery of retirement costs of the ESP IV PPA Facilities through Rider RRS;
|
•
|
Assigning the burden of capacity performance penalties incurred by the ESP IV PPA Facilities to the Ohio Companies, rather than customers, and to provide that all capacity performance bonuses earned by the ESP IV PPA Facilities be retained by the Ohio Companies, rather than customers; and
|
•
|
Providing for the modification of the severability provision previously included in ESP IV, to also address potential future PJM Tariff or rule changes prohibiting the Ohio Companies from offering output of the ESP IV PPA Facilities into PJM auctions.
|
•
|
ASU 2016-05, “Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships”
,
|
•
|
ASU 2016-06, “Contingent Put and Call Options in Debt Instruments (a consensus of the FASB Emerging Issues Task Force)",and
|
•
|
ASU 2016-07, “Simplifying the Transition to the Equity Method of Accounting”.
|
|
|
For the Six Months Ended June 30
|
|
Increase
|
||||||||
Revenues by Type of Service
|
|
2016
|
|
2015
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Contract Sales:
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
402
|
|
|
$
|
717
|
|
|
$
|
(315
|
)
|
Governmental Aggregation
|
|
431
|
|
|
506
|
|
|
(75
|
)
|
|||
Mass Market
|
|
85
|
|
|
160
|
|
|
(75
|
)
|
|||
POLR
|
|
282
|
|
|
445
|
|
|
(163
|
)
|
|||
Structured Sales
|
|
265
|
|
|
246
|
|
|
19
|
|
|||
Total Contract Sales
|
|
1,465
|
|
|
2,074
|
|
|
(609
|
)
|
|||
Wholesale
|
|
712
|
|
|
244
|
|
|
468
|
|
|||
Transmission
|
|
37
|
|
|
83
|
|
|
(46
|
)
|
|||
Other
|
|
87
|
|
|
95
|
|
|
(8
|
)
|
|||
Total Revenues
|
|
$
|
2,301
|
|
|
$
|
2,496
|
|
|
$
|
(195
|
)
|
|
|
For the Six Months Ended June 30
|
|
Increase
|
|||||
MWH Sales by Channel
|
|
2016
|
|
2015
|
|
(Decrease)
|
|||
|
|
(In thousands)
|
|
|
|||||
Contract Sales:
|
|
|
|
|
|
|
|||
Direct
|
|
7,478
|
|
|
13,319
|
|
|
(43.9
|
)%
|
Governmental Aggregation
|
|
6,560
|
|
|
8,052
|
|
|
(18.5
|
)%
|
Mass Market
|
|
1,239
|
|
|
2,340
|
|
|
(47.1
|
)%
|
POLR
|
|
4,632
|
|
|
7,742
|
|
|
(40.2
|
)%
|
Structured Sales
|
|
6,534
|
|
|
5,673
|
|
|
15.2
|
%
|
Wholesale
|
|
3,959
|
|
|
161
|
|
|
NM
|
|
Total MWH Sales
|
|
30,402
|
|
|
37,287
|
|
|
(18.5
|
)%
|
|
|
Source of Change in Revenues
|
||||||||||||||||||
|
|
Increase (Decrease)
|
||||||||||||||||||
MWH Sales Channel:
|
|
Sales Volumes
|
|
Prices
|
|
Gain on Settled Contracts
|
|
Capacity Revenue
|
|
Total
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Direct
|
|
$
|
(315
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(315
|
)
|
Governmental Aggregation
|
|
(94
|
)
|
|
19
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|||||
Mass Market
|
|
(76
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|||||
POLR
|
|
(179
|
)
|
|
16
|
|
|
—
|
|
|
—
|
|
|
(163
|
)
|
|||||
Structured Sales
|
|
37
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
19
|
|
|||||
Wholesale
|
|
66
|
|
|
31
|
|
|
122
|
|
|
249
|
|
|
468
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Source of Change
|
||||||||||||||||||
|
|
Increase (Decrease)
|
||||||||||||||||||
Operating Expense
|
|
Volumes
|
|
Prices
|
|
Loss on Settled Contracts
|
|
Capacity Expense
|
|
Total
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Fossil Fuel
|
|
$
|
(78
|
)
|
|
$
|
(22
|
)
|
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
(30
|
)
|
Nuclear Fuel
|
|
3
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Affiliated Purchased Power
|
|
12
|
|
|
(39
|
)
|
|
129
|
|
|
—
|
|
|
102
|
|
|||||
Non-affiliated Purchased Power
|
|
(340
|
)
|
|
(31
|
)
|
|
55
|
|
|
24
|
|
|
(292
|
)
|
•
|
Fossil operating costs increased $10 million primarily due to increased outage costs.
|
•
|
Nuclear operating costs decreased $33 million as a result of lower planned refueling outage costs. There was one planned refueling outage during the first six months of 2016 as compared to two planned refueling outages during the same period of 2015.
|
•
|
Retirement benefit costs increased $15 million.
|
•
|
Transmission expenses decreased $129
million, primarily due to lower congestion and market-based ancillary costs associated with less volatile market conditions as compared to the first six months of 2015, as well as lower load requirements.
|
•
|
Other operating expenses decreased $4 million, primarily due to a $14 million increase in mark-to-market gains on commodity contract positions, lower lease expense as a result of the expiration of a nuclear sale-leaseback agreement and lower retail-related costs.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
Exhibit Number
|
|
||
FirstEnergy
|
|
|
|
(A)
|
10.1
|
|
Unit Power Agreement, dated as of April 1, 2016, by and among FirstEnergy Solutions Corp., and Ohio Edison Company, The Cleveland Electric Illuminating Company and The Toledo Edison Company.
|
(A)
|
12
|
|
Fixed charge ratio
|
(A)
|
31.1
|
|
Certification of chief executive officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
31.2
|
|
Certification of chief financial officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
32
|
|
Certification of chief executive officer and chief financial officer, pursuant to 18 U.S.C. Section 1350
|
|
101
|
|
The following materials from the Quarterly Report on Form 10-Q of FirstEnergy Corp. for the period ended June 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income (Loss) and Consolidated Statements of Comprehensive Income (Loss), (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) related notes to these financial statements and (v) document and entity information.
|
FES
|
|
|
|
(A)
|
10.1
|
|
Unit Power Agreement, dated as of April 1, 2016, by and among FirstEnergy Solutions Corp., and Ohio Edison Company, The Cleveland Electric Illuminating Company and The Toledo Edison Company. (Incorporated by reference to FE's Form 10-Q, Exhibit 10.1 filed herewith, File No. 333-21011.)
|
(A)
|
31.1
|
|
Certification of chief executive officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
31.2
|
|
Certification of chief financial officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
32
|
|
Certification of chief executive officer and chief financial officer, pursuant to 18 U.S.C. Section 1350
|
|
101
|
|
The following materials from the Quarterly Report on Form 10-Q of FirstEnergy Solutions Corp. for the period ended June 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations and Comprehensive Loss, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) related notes to these financial statements and (v) document and entity information.
|
|
FIRSTENERGY CORP.
|
|
Registrant
|
|
|
|
FIRSTENERGY SOLUTIONS CORP.
|
|
Registrant
|
|
|
|
/s/ K. Jon Taylor
|
|
K. Jon Taylor
|
|
Vice President, Controller
and Chief Accounting Officer
|
Exhibit Number
|
|
||
|
|
|
|
FirstEnergy
|
|
|
|
(A)
|
10.1
|
|
Unit Power Agreement, dated as of April 1, 2016, by and among FirstEnergy Solutions Corp., and Ohio Edison Company, The Cleveland Electric Illuminating Company and The Toledo Edison Company.
|
(A)
|
12
|
|
Fixed charge ratio
|
(A)
|
31.1
|
|
Certification of chief executive officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
31.2
|
|
Certification of chief financial officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
32
|
|
Certification of chief executive officer and chief financial officer, pursuant to 18 U.S.C. Section 1350
|
|
101
|
|
The following materials from the Quarterly Report on Form 10-Q of FirstEnergy Corp. for the period ended June 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income (Loss) and Consolidated Statements of Comprehensive Income (Loss), (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) related notes to these financial statements and (v) document and entity information.
|
|
|
|
|
FES
|
|
|
|
(A)
|
10.1
|
|
Unit Power Agreement, dated as of April 1, 2016, by and among FirstEnergy Solutions Corp., and Ohio Edison Company, The Cleveland Electric Illuminating Company and The Toledo Edison Company. (Incorporated by reference to FE's Form 10-Q, Exhibit 10.1 filed herewith, File No. 333-21011.)
|
(A)
|
31.1
|
|
Certification of chief executive officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
31.2
|
|
Certification of chief financial officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
32
|
|
Certification of chief executive officer and chief financial officer, pursuant to 18 U.S.C. Section 1350
|
|
101
|
|
The following materials from the Quarterly Report on Form 10-Q of FirstEnergy Solutions Corp. for the period ended June 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations and Comprehensive Loss, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) related notes to these financial statements and (v) document and entity information.
|
TABLE OF CONTENTS
|
|
|
|
|
|
ARTICLE I DEFINITIONS.........................................................................................................
|
1
|
1.1 Defined Terms................................................................................................................
|
1
|
1.2 Interpretation..................................................................................................................
|
9
|
1.3 Technical Meanings........................................................................................................
|
9
|
ARTICLE II TERM......................................................................................................................
|
10
|
2.1 Term................................................................................................................................
|
10
|
2.2 Delivery Period..............................................................................................................
|
10
|
ARTICLE III PURCHASE AND SALE OBLIGATION..........................................................
|
10
|
3.1 Seller's and Buyers' Obligations.....................................................................................
|
10
|
3.2 Unit Contingent..............................................................................................................
|
10
|
3.3 Delivery Point................................................................................................................
|
11
|
3.4 Scheduling and Dispatch................................................................................................
|
11
|
3.5 Force Majeure................................................................................................................
|
12
|
ARTICLE IV FACILITY OPERATIONS..................................................................................
|
12
|
4.1 Operation and Maintenance...........................................................................................
|
12
|
4.2 Capital Expenditures......................................................................................................
|
12
|
4.3 Planned Outage Schedule...............................................................................................
|
13
|
4.4 Auxiliary Power..............................................................................................................
|
13
|
ARTICLE V PRICING.................................................................................................................
|
13
|
5.1 Monthly Payment...........................................................................................................
|
13
|
5.2 Component of Monthly Payment...................................................................................
|
13
|
ARTIVLE VI BILLING AND PAYMENT..................................................................................
|
14
|
|
|
6.1 Billing and Payment, Netting.........................................................................................
|
14
|
6.2 Invoice Adjustment........................................................................................................
|
14
|
6.3 Books and Records; Audit..............................................................................................
|
15
|
ARTICLE VII LIMITATIONS....................................................................................................
|
15
|
7.1 Limitation of Remedies, Liability and Damages...........................................................
|
15
|
ARTICLE VIII TAXES................................................................................................................
|
15
|
8.1 Cooperation....................................................................................................................
|
15
|
8.2 Taxes...............................................................................................................................
|
15
|
8.3 Change-in-Law Taxes.....................................................................................................
|
16
|
8.4 Exemptions.....................................................................................................................
|
16
|
ARTICLE IX SEVERAL OBLIGATIONS OF BUYERS.........................................................
|
16
|
9.1 Several Obligations of Buyers.......................................................................................
|
16
|
ARTICLE X CONDITIONS........................................................................................................
|
16
|
10.1 Seller's Conditions........................................................................................................
|
16
|
10.2 Buyers' Conditions.......................................................................................................
|
17
|
10.3 Sale or Transfer of the Facilities..................................................................................
|
17
|
10.4 Obligations of Buyers and Seller..................................................................................
|
17
|
ARTICLE XI REPRESENTATIONS AND WARRANTIES....................................................
|
17
|
11.1 Representations and Warranties of All Parties.............................................................
|
17
|
ARTICLE XII MISCELLANEOUS............................................................................................
|
18
|
12.1 Title and Risk of Loss..................................................................................................
|
18
|
12.2 Indemnity......................................................................................................................
|
18
|
12.3 Amendments and Waivers............................................................................................
|
19
|
12.4 Notices..........................................................................................................................
|
19
|
12.5 Dispute Resolution.......................................................................................................
|
19
|
|
|
12.6 Successors and Assigns; Assignment...........................................................................
|
20
|
12.7 Integration....................................................................................................................
|
20
|
12.8 Acknowledgments........................................................................................................
|
20
|
12.9 Waiver...........................................................................................................................
|
21
|
12.10 Counterparts.................................................................................................................
|
21
|
12.11 Headings.......................................................................................................................
|
21
|
12.12 Confidentiality..............................................................................................................
|
21
|
12.13 Governing Law.............................................................................................................
|
21
|
12.14 Severability...................................................................................................................
|
21
|
12.15 Standards of Review.....................................................................................................
|
22
|
|
|
•
|
W. H. Sammis Plant, a 2,220 MW Capacity coal-fired and 13 MW diesel-fired power plant located in Stratton, Jefferson County, Ohio;
|
•
|
Davis-Besse Power Station, a 908 MW Capacity nuclear power plant located in Oak Harbor, Ottawa County, Ohio;
|
•
|
Seller’s 4.85% power participation ratio under the Amended and Restated ICPA, which represents Seller’s entitlement to a pro rata share of available energy and capacity from the generating units owned by OVEC;
|
|
SIC * WACOC
|
|
|
12
|
|
|
SIC * (0.5*0.1038) * (1/(1-Seller's effective tax rate) -1)
|
|
|
12
|
|
(ii)
|
the execution, delivery and performance of this Agreement are within its powers, have been duly authorized by all necessary action and do not violate any of the terms and conditions in its governing documents, any contracts to which it is a party;
|
(iii)
|
this Agreement constitutes a legally valid and binding obligation enforceable against it in accordance with its terms, subject to any Equitable Defenses;
|
(iv)
|
it is not Bankrupt;
|
(v)
|
there is not pending against it any legal proceedings that could materially adversely affect its ability to perform its obligations under this Agreement;
|
(vi)
|
no material breach of this Agreement with respect to it has occurred and is continuing and no such material breach would occur as a result of its entering into or performing its obligations under this Agreement; and
|
(vii)
|
it has entered into this Agreement in connection with the conduct of its business and it has the capacity or ability to make or take delivery of Buyers’ Contractual Capacity and associated Energy and Ancillary Services and Environmental Attributes as required herein.
|
By:
|
|
Its:
|
|
|
|
By:
|
/s/ Kevin T. Warvell
|
Name: Kevin T. Warvell
|
|
Title: VP, Commercial Operations Structuring & Pricing
|
By: FirstEnergy Service Company
|
|
Its: Agent
|
|
|
|
By:
|
/s/ Jay A. Ruberto
|
Name: Jay A. Ruberto
|
|
Title: Director, Regulated Generation & Dispatch
|
By: FirstEnergy Service Company
|
|
Its: Agent
|
|
|
|
By:
|
/s/ Jay A. Ruberto
|
Name: Jay A. Ruberto
|
|
Title: Director, Regulated Generation & Dispatch
|
By: FirstEnergy Service Company
|
|
Its: Agent
|
|
|
|
By:
|
/s/ Jay A. Ruberto
|
Name: Jay A. Ruberto
|
|
Title: Director, Regulated Generation & Dispatch
|
a.
|
In
Electric Power Supply Association v. FirstEnergy Solutions Corporation
, FERC Docket No. EL16-34-000, certain entities filed a complaint requesting FERC review of this Agreement under Section 205 of the Federal Power Act. This proceeding remains pending.
|
b.
|
In
Calpine Corporation v. PJM Interconnection, L.L.C.
, FERC Docket No. EL16- 49-000, a number of generation owners filed a complaint against PJM requesting that FERC expand the Minimum Offer Price Rule in the PJM Tariff to prevent the alleged artificial suppression of prices in the PJM capacity markets by state-subsidized generation, in particular this Agreement and other similar agreements.
|
|
|
|
|
|
If to Seller:
|
|
If to Buyers:
|
||
|
|
|
|
|
|
FirstEnergy Solutions Corp.
|
|
|
Ohio Edison Company
|
|
341 White Pond Drive
|
|
|
c/o
FirstEnergy Service Company
|
|
Akron, Ohio 44320
|
|
|
5001 NASA Boulevard
|
|
Attention: Vice President,
|
|
|
Fairmont WV 26554
|
|
Commercial Ops, Structuring &
|
|
|
Attention: Director, Regulated
|
|
Pricing
|
|
|
Generation & Dispatch
|
|
|
|
|
|
with a copy to:
|
|
|
The Cleveland Electric Illuminating
|
|
|
|
|
|
Company
|
|
FirstEnergy Service Company
|
|
|
c/o
FirstEnergy Service Company
|
|
76 South Main Street
|
|
|
5001 NASA Boulevard
|
|
Akron, Ohio 44308
|
|
|
Fairmont WV 26554
|
|
Attention: Legal: Associate General
|
|
|
Attention: Director, Regulated
|
|
Counsel, State Comp
|
|
|
Generation & Dispatch
|
|
|
|
|
|
|
|
|
|
The Toledo Edison Company
|
|
|
|
|
c/o
FirstEnergy Service Company
|
|
|
|
|
5001 NASA Boulevard
|
|
|
|
|
Fairmont WV 26554
|
|
|
|
|
Attention: Director, Regulated
|
|
|
|
|
Generation & Dispatch
|
|
|
|
|
|
|
|
|
with a copy to:
|
|
|
|
|
|
|
|
|
|
|
FirstEnergy Service Company
|
|
|
|
|
76 South Main Street
|
|
|
|
|
Akron, Ohio 44308
|
|
|
|
|
Attention: Legal: Associate General
|
|
|
|
|
Counsel, State Reg
|
|
|
|
|
|
Description of Charges
|
|
|
|
|
|
|
||||||
|
|
OVEC
|
|
Davis Besse
|
|
Sammis
|
||||||
|
|
|
|
|
|
|
||||||
Fuel Payment
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operations & Maintenance Payment
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Depreciation Payment
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Capacity Payment
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Tax Reimbursement Payment
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total Contract Monthly Payment by Facility
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||||
Total Contract Monthly Payment
|
|
|
|
|
|
$
|
—
|
|
(1)
|
Includes the interest element of rentals where determinable plus 1/3 of rental expense where no readily defined interest element can be determined.
|
(2)
|
The ratio of earnings to fixed charges was negative for the six months ended June 30, 2016. Additional earnings of $712 million would be needed to have a one-to-one ratio of earnings to fixed charges.
|
1.
|
I have reviewed this report on Form 10-Q of FirstEnergy Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Charles E. Jones
|
|
|
Charles E. Jones
|
|
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this report on Form 10-Q of FirstEnergy Solutions Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Donald R. Schneider
|
|
|
Donald R. Schneider
|
|
|
President
|
|
1.
|
I have reviewed this report on Form 10-Q of FirstEnergy Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ James F. Pearson
|
|
|
James F. Pearson
|
|
|
Executive Vice President and Chief Financial Officer
|
|
1.
|
I have reviewed this report on Form 10-Q of FirstEnergy Solutions Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ James F. Pearson
|
|
|
James F. Pearson
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
/s/ Charles E. Jones
|
|
|
Charles E. Jones
|
|
|
President and Chief Executive Officer
|
|
|
|
|
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/s/ James F. Pearson
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James F. Pearson
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Executive Vice President and Chief Financial Officer
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/s/ Donald R. Schneider
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Donald R. Schneider
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President
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/s/ James F. Pearson
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James F. Pearson
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Executive Vice President and Chief Financial Officer
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