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Commission
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Registrant; State of Incorporation;
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I.R.S. Employer
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File Number
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Address; and Telephone Number
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Identification No.
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333-21011
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FIRSTENERGY CORP.
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34-1843785
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(An Ohio Corporation)
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76 South Main Street
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Akron, OH 44308
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Telephone (800)736
-
3402
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000-53742
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FIRSTENERGY SOLUTIONS CORP.
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31-1560186
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(An Ohio Corporation)
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c/o FirstEnergy Corp.
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76 South Main Street
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Akron, OH 44308
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Telephone (800)736-3402
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Yes
þ
No
o
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FirstEnergy Corp. and FirstEnergy Solutions Corp.
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Yes
þ
No
o
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|
FirstEnergy Corp. and FirstEnergy Solutions Corp.
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Large Accelerated Filer
þ
|
FirstEnergy Corp.
|
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|
Accelerated Filer
o
|
N/A
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Non-accelerated Filer (Do not check
if a smaller reporting company) þ |
FirstEnergy Solutions Corp.
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Smaller Reporting Company
o
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N/A
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Emerging Growth Company
o
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N/A
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Yes
o
No
þ
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FirstEnergy Corp. and FirstEnergy Solutions Corp.
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OUTSTANDING
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CLASS
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AS OF MARCH 31, 2017
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FirstEnergy Corp., $0.10 par value
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443,740,014
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FirstEnergy Solutions Corp., no par value
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7
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•
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The ability to experience growth in the Regulated Distribution and Regulated Transmission segments and the effectiveness of our strategy to transition to a fully regulated business profile.
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•
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The accomplishment of our regulatory and operational goals in connection with our transmission investment plan, including, but not limited to, our planned transition to forward-looking formula rates.
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•
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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.
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•
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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.
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•
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Success of legislative and regulatory solutions for generation assets that recognize their environmental or energy security benefits.
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•
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The risks and uncertainties associated with the lack of viable alternative strategies regarding the CES segment, thereby causing FES, and possibly FENOC, to restructure its debt and other financial obligations with its creditors or seek protection under U.S. bankruptcy laws and the losses, liabilities and claims arising from such bankruptcy proceeding, including any obligations at FirstEnergy.
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•
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The risks and uncertainties at the CES segment, including FES and its subsidiaries and FENOC, related to continued depressed wholesale energy and capacity markets, and the viability and/or success of strategic business alternatives, such as pending and potential CES generating unit asset sales, the potential conversion of the remaining generation fleet from competitive operations to a regulated or regulated-like construct or the potential need to deactivate additional generating units.
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•
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The substantial uncertainty as to FES’ ability to continue as a going concern and substantial risk that it may be necessary for FES, and possibly FENOC, to seek protection under U.S. bankruptcy laws.
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•
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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.
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•
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The uncertainties associated with the deactivation of older regulated and competitive 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.
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•
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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.
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•
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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.
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•
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Costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices.
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•
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Replacement power costs being higher than anticipated or not fully hedged.
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•
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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.
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•
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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).
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•
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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.
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•
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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.
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•
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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.
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•
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The impact of labor disruptions by our unionized workforce.
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•
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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
.
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•
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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.
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•
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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; and FERC’s compliance and enforcement activity, including compliance and enforcement activity related to NERC’s mandatory reliability standards.
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•
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The uncertainties of various cost recovery and cost allocation issues resulting from ATSI's realignment into PJM.
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•
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The ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates.
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•
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Other legislative and regulatory changes, including the new federal administration's required review and potential revision of 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.
|
•
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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).
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•
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Issues arising from the indications of cracking in the shield building at Davis-Besse.
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•
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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.
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•
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The impact of changes to significant accounting policies.
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•
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The impact of any changes in tax laws or regulations or adverse tax audit results or rulings.
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•
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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.
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•
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Further 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, increase requirements to post additional collateral to support, or accelerate payments under outstanding commodity positions, LOCs and other financial guarantees, and the impact of these events on the financial condition and liquidity of FirstEnergy and/or its subsidiaries, specifically FES and its subsidiaries.
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•
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Issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business.
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•
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The risks and other factors discussed from time to time in our SEC filings, and other similar factors.
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TABLE OF CONTENTS
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Page
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Part I. Financial Information
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Item 1. Financial Statements
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Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
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Item 2. Management's Discussion and Analysis of Registrant and Subsidiaries
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FirstEnergy Corp.
Management's Discussion and Analysis of Financial Condition and Results of Operations
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Management's Narrative Analysis of Results of Operations
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Item 3.
Defaults Upon Senior Securities
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Item 4.
Mine Safety Disclosures
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Item 5. Other Information
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GLOSSARY OF TERMS,
Continued
|
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ARO
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Asset Retirement Obligation
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ARR
|
Auction Revenue Right
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ASU
|
Accounting Standards Update
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BGS
|
Basic Generation Service
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BNSF
|
BNSF Railway Company
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BRA
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PJM RPM Base Residual Auction
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CAA
|
Clean Air Act
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CCR
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Coal Combustion Residuals
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CDWR
|
California Department of Water Resources
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CERCLA
|
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
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CFR
|
Code of Federal Regulations
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CO
2
|
Carbon Dioxide
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CPP
|
EPA's Clean Power Plan
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CSAPR
|
Cross-State Air Pollution Rule
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CSX
|
CSX Transportation, Inc.
|
CTA
|
Consolidated Tax Adjustment
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CWA
|
Clean Water Act
|
DCR
|
Delivery Capital Recovery
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DMR
|
Distribution Modernization Rider
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DR
|
Demand Response
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DSIC
|
Distribution System Improvement Charge
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DSP
|
Default Service Plan
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EDC
|
Electric Distribution Company
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EE&C
|
Energy Efficiency and Conservation
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EGS
|
Electric Generation Supplier
|
ELPC
|
Environmental Law & Policy Center
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EmPOWER Maryland
|
EmPOWER Maryland Energy Efficiency Act
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ENEC
|
Expanded Net Energy Cost
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EPA
|
United States Environmental Protection Agency
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ERO
|
Electric Reliability Organization
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ESP IV
|
Electric Security Plan IV
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ESP IV PPA
|
Unit Power Agreement entered into on April 1, 2016 by and between the Ohio Companies and FES
|
Facebook®
|
Facebook is a registered trademark of Facebook, Inc.
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FASB
|
Financial Accounting Standards Board
|
FERC
|
Federal Energy Regulatory Commission
|
Fitch
|
Fitch Ratings
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FMB
|
First Mortgage Bond
|
FPA
|
Federal Power Act
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FTR
|
Financial Transmission Right
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GAAP
|
Accounting Principles Generally Accepted in the United States of America
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GHG
|
Greenhouse Gases
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GWH
|
Gigawatt-hour
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HB554
|
Ohio House Bill No. 554
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HCl
|
Hydrochloric Acid
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ICE
|
Intercontinental Exchange, Inc.
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IRP
|
Integrated Resource Plan
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IRS
|
Internal Revenue Service
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ISO
|
Independent System Operator
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kV
|
Kilovolt
|
KWH
|
Kilowatt-hour
|
LOC
|
Letter of Credit
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LSE
|
Load Serving Entity
|
GLOSSARY OF TERMS,
Continued
|
|
LTIIPs
|
Long-Term Infrastructure Improvement Plans
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MATS
|
Mercury and Air Toxics Standards
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MDPSC
|
Maryland Public Service Commission
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MISO
|
Midcontinent Independent System Operator, Inc.
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MLP
|
Master Limited Partnership
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mmBTU
|
One Million British Thermal Units
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Moody’s
|
Moody’s Investors Service, Inc.
|
MOPR
|
Minimum Offer Price Rule
|
MVP
|
Multi-Value Project
|
MW
|
Megawatt
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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
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NJBPU
|
New Jersey Board of Public Utilities
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NMB
|
Non-Market Based
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NOAC
|
Northwestern Ohio Aggregation Coalition
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NOL
|
Net Operating Loss
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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
|
Regulation FD
|
Regulation Fair Disclosure promulgated by the SEC
|
REIT
|
Real Estate Investment Trust
|
RFC
|
Reliability
First
Corporation
|
RFP
|
Request for Proposal
|
GLOSSARY OF TERMS,
Continued
|
|
RGGI
|
Regional Greenhouse Gas Initiative
|
ROE
|
Return on Equity
|
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
|
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 March 31
|
|
||||||
(In millions, except per share amounts)
|
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
|
||||
REVENUES:
|
|
|
|
|
|
||||
Regulated Distribution
|
|
$
|
2,490
|
|
|
$
|
2,510
|
|
|
Regulated Transmission
|
|
313
|
|
|
286
|
|
|
||
Unregulated businesses
|
|
749
|
|
|
1,073
|
|
|
||
Total revenues*
|
|
3,552
|
|
|
3,869
|
|
|
||
|
|
|
|
|
|
|
|
||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||
Fuel
|
|
368
|
|
|
381
|
|
|
||
Purchased power
|
|
863
|
|
|
1,124
|
|
|
||
Other operating expenses
|
|
1,142
|
|
|
918
|
|
|
||
Provision for depreciation
|
|
275
|
|
|
329
|
|
|
||
Amortization of regulatory assets, net
|
|
59
|
|
|
61
|
|
|
||
General taxes
|
|
271
|
|
|
280
|
|
|
||
Total operating expenses
|
|
2,978
|
|
|
3,093
|
|
|
||
|
|
|
|
|
|
|
|
||
OPERATING INCOME
|
|
574
|
|
|
776
|
|
|
||
|
|
|
|
|
|
|
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
||
Investment income
|
|
24
|
|
|
28
|
|
|
||
Interest expense
|
|
(287
|
)
|
|
(288
|
)
|
|
||
Capitalized financing costs
|
|
20
|
|
|
25
|
|
|
||
Total other expense
|
|
(243
|
)
|
|
(235
|
)
|
|
||
|
|
|
|
|
|
|
|
||
INCOME BEFORE INCOME TAXES
|
|
331
|
|
|
541
|
|
|
||
|
|
|
|
|
|
|
|
||
INCOME TAXES
|
|
126
|
|
|
213
|
|
|
||
|
|
|
|
|
|
|
|
||
NET INCOME
|
|
$
|
205
|
|
|
$
|
328
|
|
|
|
|
|
|
|
|
|
|
||
EARNINGS PER SHARE OF COMMON STOCK:
|
|
|
|
|
|
|
|
||
Basic
|
|
$
|
0.46
|
|
|
$
|
0.78
|
|
|
Diluted
|
|
$
|
0.46
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
|
|
|
|
|
|
||||
Basic
|
|
443
|
|
|
424
|
|
|
||
Diluted
|
|
444
|
|
|
426
|
|
|
||
|
|
|
|
|
|
||||
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK
|
|
$
|
0.72
|
|
|
$
|
0.72
|
|
|
|
|
For the Three Months Ended March 31
|
|
||||||
(In millions)
|
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
|
||||
NET INCOME
|
|
$
|
205
|
|
|
$
|
328
|
|
|
|
|
|
|
|
|
||||
OTHER COMPREHENSIVE INCOME:
|
|
|
|
|
|
||||
Pension and OPEB prior service costs
|
|
(18
|
)
|
|
(18
|
)
|
|
||
Amortized losses on derivative hedges
|
|
3
|
|
|
2
|
|
|
||
Change in unrealized gains on available-for-sale securities
|
|
16
|
|
|
28
|
|
|
||
Other comprehensive income
|
|
1
|
|
|
12
|
|
|
||
Income taxes on other comprehensive income
|
|
—
|
|
|
4
|
|
|
||
Other comprehensive income, net of tax
|
|
1
|
|
|
8
|
|
|
||
|
|
|
|
|
|
||||
COMPREHENSIVE INCOME
|
|
$
|
206
|
|
|
$
|
336
|
|
|
|
|
|
|
|
|
(In millions, except share amounts)
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
|
|
|
|
|
|
||
CURRENT ASSETS:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
164
|
|
|
$
|
199
|
|
Receivables-
|
|
|
|
|
|
|
||
Customers, net of allowance for uncollectible accounts of $52 in 2017 and $53 in 2016
|
|
1,396
|
|
|
1,440
|
|
||
Other, net of allowance for uncollectible accounts of $1 in 2017 and 2016
|
|
155
|
|
|
175
|
|
||
Materials and supplies
|
|
531
|
|
|
564
|
|
||
Prepaid taxes
|
|
202
|
|
|
98
|
|
||
Derivatives
|
|
43
|
|
|
140
|
|
||
Collateral
|
|
122
|
|
|
176
|
|
||
Other
|
|
147
|
|
|
158
|
|
||
|
|
2,760
|
|
|
2,950
|
|
||
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
||
In service
|
|
42,976
|
|
|
43,767
|
|
||
Less — Accumulated provision for depreciation
|
|
15,769
|
|
|
15,731
|
|
||
|
|
27,207
|
|
|
28,036
|
|
||
Construction work in progress
|
|
1,588
|
|
|
1,351
|
|
||
|
|
28,795
|
|
|
29,387
|
|
||
INVESTMENTS:
|
|
|
|
|
|
|
||
Nuclear plant decommissioning trusts
|
|
2,571
|
|
|
2,514
|
|
||
Other
|
|
519
|
|
|
512
|
|
||
|
|
3,090
|
|
|
3,026
|
|
||
|
|
|
|
|
||||
ASSETS HELD FOR SALE (Note 1)
|
|
921
|
|
|
—
|
|
||
|
|
|
|
|
||||
DEFERRED CHARGES AND OTHER ASSETS:
|
|
|
|
|
|
|
||
Goodwill
|
|
5,618
|
|
|
5,618
|
|
||
Regulatory assets
|
|
1,000
|
|
|
1,014
|
|
||
Other
|
|
1,028
|
|
|
1,153
|
|
||
|
|
7,646
|
|
|
7,785
|
|
||
|
|
$
|
43,212
|
|
|
$
|
43,148
|
|
LIABILITIES AND CAPITALIZATION
|
|
|
|
|
|
|
||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Currently payable long-term debt
|
|
$
|
2,147
|
|
|
$
|
1,685
|
|
Short-term borrowings
|
|
2,750
|
|
|
2,675
|
|
||
Accounts payable
|
|
977
|
|
|
1,043
|
|
||
Accrued taxes
|
|
555
|
|
|
580
|
|
||
Accrued compensation and benefits
|
|
307
|
|
|
363
|
|
||
Derivatives
|
|
27
|
|
|
78
|
|
||
Collateral
|
|
46
|
|
|
42
|
|
||
Other
|
|
848
|
|
|
660
|
|
||
|
|
7,657
|
|
|
7,126
|
|
||
CAPITALIZATION:
|
|
|
|
|
|
|
||
Common stockholders’ equity-
|
|
|
|
|
|
|
||
Common stock, $0.10 par value, authorized 490,000,000 shares - 443,740,014 and 442,344,218 shares outstanding as of March 31, 2017 and December 31, 2016, respectively
|
|
44
|
|
|
44
|
|
||
Other paid-in capital
|
|
10,253
|
|
|
10,555
|
|
||
Accumulated other comprehensive income
|
|
175
|
|
|
174
|
|
||
Accumulated deficit
|
|
(4,333
|
)
|
|
(4,532
|
)
|
||
Total common stockholders’ equity
|
|
6,139
|
|
|
6,241
|
|
||
Long-term debt and other long-term obligations
|
|
17,762
|
|
|
18,192
|
|
||
|
|
23,901
|
|
|
24,433
|
|
||
NONCURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Accumulated deferred income taxes
|
|
3,882
|
|
|
3,765
|
|
||
Retirement benefits
|
|
3,756
|
|
|
3,719
|
|
||
Asset retirement obligations
|
|
1,505
|
|
|
1,482
|
|
||
Deferred gain on sale and leaseback transaction
|
|
748
|
|
|
757
|
|
||
Adverse power contract liability
|
|
157
|
|
|
162
|
|
||
Other
|
|
1,606
|
|
|
1,704
|
|
||
|
|
11,654
|
|
|
11,589
|
|
||
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 10)
|
|
|
|
|
|
|
||
|
|
$
|
43,212
|
|
|
$
|
43,148
|
|
|
|
For the Three Months Ended March 31
|
||||||
(In millions)
|
|
2017
|
|
2016
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net Income
|
|
$
|
205
|
|
|
$
|
328
|
|
Adjustments to reconcile net income to net cash from operating activities-
|
|
|
|
|
||||
Depreciation and amortization, including nuclear fuel, regulatory assets, net, intangible assets and deferred debt-related costs
|
|
392
|
|
|
461
|
|
||
Deferred purchased power and other costs
|
|
23
|
|
|
(10
|
)
|
||
Deferred income taxes and investment tax credits, net
|
|
114
|
|
|
206
|
|
||
Deferred costs on sale leaseback transaction, net
|
|
12
|
|
|
12
|
|
||
Retirement benefits, net of payments
|
|
10
|
|
|
16
|
|
||
Pension trust contributions
|
|
—
|
|
|
(160
|
)
|
||
Commodity derivative transactions, net (Note 8)
|
|
47
|
|
|
(64
|
)
|
||
Changes in current assets and liabilities-
|
|
|
|
|
||||
Receivables
|
|
68
|
|
|
1
|
|
||
Materials and supplies
|
|
11
|
|
|
4
|
|
||
Prepaid taxes and other current assets
|
|
(111
|
)
|
|
(82
|
)
|
||
Accounts payable
|
|
45
|
|
|
25
|
|
||
Accrued taxes
|
|
(131
|
)
|
|
(110
|
)
|
||
Accrued compensation and benefits
|
|
(137
|
)
|
|
(102
|
)
|
||
Other current liabilities
|
|
20
|
|
|
66
|
|
||
Collateral, net
|
|
58
|
|
|
(6
|
)
|
||
Other
|
|
159
|
|
|
65
|
|
||
Net cash provided from operating activities
|
|
785
|
|
|
650
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
New Financing-
|
|
|
|
|
||||
Long-term debt
|
|
250
|
|
|
—
|
|
||
Short-term borrowings, net
|
|
75
|
|
|
425
|
|
||
Redemptions and Repayments-
|
|
|
|
|
||||
Long-term debt
|
|
(211
|
)
|
|
(31
|
)
|
||
Common stock dividend payments
|
|
(159
|
)
|
|
(152
|
)
|
||
Other
|
|
(13
|
)
|
|
(12
|
)
|
||
Net cash (used for) provided from financing activities
|
|
(58
|
)
|
|
230
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Property additions
|
|
(588
|
)
|
|
(698
|
)
|
||
Nuclear fuel
|
|
(132
|
)
|
|
(149
|
)
|
||
Sales of investment securities held in trusts
|
|
738
|
|
|
465
|
|
||
Purchases of investment securities held in trusts
|
|
(761
|
)
|
|
(488
|
)
|
||
Asset removal costs
|
|
(35
|
)
|
|
(34
|
)
|
||
Other
|
|
16
|
|
|
39
|
|
||
Net cash used for investing activities
|
|
(762
|
)
|
|
(865
|
)
|
||
|
|
|
|
|
||||
Net change in cash and cash equivalents
|
|
(35
|
)
|
|
15
|
|
||
Cash and cash equivalents at beginning of period
|
|
199
|
|
|
131
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
164
|
|
|
$
|
146
|
|
(In millions, except share amounts)
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
|
|
|
|
|
|
||
CURRENT ASSETS:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
2
|
|
|
$
|
2
|
|
Receivables-
|
|
|
|
|
|
|
||
Customers, net of allowance for uncollectible accounts of $4 in 2017 and $5 in 2016
|
|
173
|
|
|
213
|
|
||
Affiliated companies
|
|
376
|
|
|
452
|
|
||
Other
|
|
51
|
|
|
27
|
|
||
Notes receivable from affiliated companies
|
|
—
|
|
|
29
|
|
||
Materials and supplies
|
|
252
|
|
|
267
|
|
||
Derivatives
|
|
43
|
|
|
137
|
|
||
Collateral
|
|
107
|
|
|
157
|
|
||
Prepaid taxes and other
|
|
51
|
|
|
63
|
|
||
|
|
1,055
|
|
|
1,347
|
|
||
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
||
In service
|
|
7,108
|
|
|
7,057
|
|
||
Less — Accumulated provision for depreciation
|
|
5,998
|
|
|
5,929
|
|
||
|
|
1,110
|
|
|
1,128
|
|
||
Construction work in progress
|
|
488
|
|
|
427
|
|
||
|
|
1,598
|
|
|
1,555
|
|
||
INVESTMENTS:
|
|
|
|
|
|
|
||
Nuclear plant decommissioning trusts
|
|
1,593
|
|
|
1,552
|
|
||
Other
|
|
10
|
|
|
10
|
|
||
|
|
1,603
|
|
|
1,562
|
|
||
DEFERRED CHARGES AND OTHER ASSETS:
|
|
|
|
|
|
|
||
Property taxes
|
|
30
|
|
|
40
|
|
||
Accumulated deferred income taxes
|
|
2,268
|
|
|
2,279
|
|
||
Derivatives
|
|
17
|
|
|
77
|
|
||
Other
|
|
393
|
|
|
381
|
|
||
|
|
2,708
|
|
|
2,777
|
|
||
|
|
$
|
6,964
|
|
|
$
|
7,241
|
|
LIABILITIES AND CAPITALIZATION
|
|
|
|
|
|
|
||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Currently payable long-term debt
|
|
$
|
150
|
|
|
$
|
179
|
|
Short-term borrowings - affiliated companies
|
|
114
|
|
|
101
|
|
||
Accounts payable-
|
|
|
|
|
|
|
||
Affiliated companies
|
|
316
|
|
|
550
|
|
||
Other
|
|
107
|
|
|
110
|
|
||
Accrued taxes
|
|
137
|
|
|
143
|
|
||
Derivatives
|
|
25
|
|
|
77
|
|
||
Other
|
|
194
|
|
|
156
|
|
||
|
|
1,043
|
|
|
1,316
|
|
||
CAPITALIZATION:
|
|
|
|
|
|
|
||
Common stockholder's equity-
|
|
|
|
|
|
|
||
Common stock, without par value, authorized 750 shares - 7 shares outstanding as of March 31, 2017 and December 31, 2016
|
|
3,658
|
|
|
3,658
|
|
||
Accumulated other comprehensive income
|
|
77
|
|
|
69
|
|
||
Accumulated deficit
|
|
(3,589
|
)
|
|
(3,509
|
)
|
||
Total common stockholder's equity
|
|
146
|
|
|
218
|
|
||
Long-term debt and other long-term obligations
|
|
2,812
|
|
|
2,813
|
|
||
|
|
2,958
|
|
|
3,031
|
|
||
NONCURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Deferred gain on sale and leaseback transaction
|
|
748
|
|
|
757
|
|
||
Retirement benefits
|
|
202
|
|
|
197
|
|
||
Asset retirement obligations
|
|
915
|
|
|
901
|
|
||
Derivatives
|
|
3
|
|
|
52
|
|
||
Other
|
|
1,095
|
|
|
987
|
|
||
|
|
2,963
|
|
|
2,894
|
|
||
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 10)
|
|
|
|
|
|
|
||
|
|
$
|
6,964
|
|
|
$
|
7,241
|
|
|
|
For the Three Months Ended March 31
|
||||||
(In millions)
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
(80
|
)
|
|
$
|
131
|
|
Adjustments to reconcile net income (loss) to net cash from operating activities-
|
|
|
|
|
||||
Depreciation and amortization, including nuclear fuel, intangible assets and deferred debt-related costs
|
|
78
|
|
|
138
|
|
||
Deferred costs on sale and leaseback transaction, net
|
|
12
|
|
|
12
|
|
||
Deferred income taxes and investment tax credits, net
|
|
6
|
|
|
113
|
|
||
Investment impairments
|
|
3
|
|
|
8
|
|
||
Commodity derivative transactions, net (Note 8)
|
|
47
|
|
|
(64
|
)
|
||
Changes in current assets and liabilities-
|
|
|
|
|
||||
Receivables
|
|
92
|
|
|
2
|
|
||
Materials and supplies
|
|
(2
|
)
|
|
24
|
|
||
Prepaid taxes and other current assets
|
|
11
|
|
|
(12
|
)
|
||
Accounts payable
|
|
(126
|
)
|
|
(103
|
)
|
||
Accrued taxes
|
|
(16
|
)
|
|
(15
|
)
|
||
Other current liabilities
|
|
21
|
|
|
4
|
|
||
Collateral, net
|
|
50
|
|
|
(10
|
)
|
||
Other
|
|
125
|
|
|
1
|
|
||
Net cash provided from operating activities
|
|
221
|
|
|
229
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
New financing-
|
|
|
|
|
||||
Short-term borrowings, net
|
|
13
|
|
|
49
|
|
||
Redemptions and repayments-
|
|
|
|
|
||||
Long-term debt
|
|
(29
|
)
|
|
—
|
|
||
Other
|
|
(3
|
)
|
|
(3
|
)
|
||
Net cash (used for) provided from financing activities
|
|
(19
|
)
|
|
46
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Property additions
|
|
(85
|
)
|
|
(143
|
)
|
||
Nuclear fuel
|
|
(132
|
)
|
|
(149
|
)
|
||
Sales of investment securities held in trusts
|
|
231
|
|
|
138
|
|
||
Purchases of investment securities held in trusts
|
|
(245
|
)
|
|
(151
|
)
|
||
Cash investments
|
|
—
|
|
|
10
|
|
||
Loans to affiliated companies, net
|
|
29
|
|
|
11
|
|
||
Other
|
|
—
|
|
|
9
|
|
||
Net cash used for investing activities
|
|
(202
|
)
|
|
(275
|
)
|
||
|
|
|
|
|
||||
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
|
|
•
|
Legislative or regulatory solutions for generation assets that recognize their environmental or energy security benefits,
|
•
|
Additional asset sales and/or plant deactivations,
|
•
|
Restructuring FES debt with its creditors, and/or
|
•
|
Seeking protection under U.S. bankruptcy laws for FES and possibly FENOC.
|
•
|
The FES debt maturities, interest payments and sale-leaseback commitments due in June 2017.
|
•
|
The outcome of the recently announced directive by the Secretary of Energy to complete a study by mid-June 2017 that explores critical issues central to protecting the long-term reliability of the electric grid, including the impact of federal policy interventions and the changing nature of electricity fuel mix, compensation of on-site fuel supply and other factors that strengthen grid resilience, and the impact of regulatory burdens, mandates and tax and subsidy policies on the premature retirement of baseload power plants.
|
•
|
The resolution of recently introduced legislation before the Ohio General Assembly that would create a zero-emission nuclear (ZEN) credit that would compensate nuclear power plants for their environmental attributes and the potential for ZEN legislative action in Pennsylvania.
|
•
|
The inability to finalize and consummate settlement agreements with the parties to the previously disclosed disputes regarding long-term coal transportation contracts as discussed in "Environmental Matters" below, whereby FG could be subject to materially higher damages owed to CSX, BNSF and NS.
|
•
|
ASU 2017-03, "Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update),”
|
•
|
ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,”
|
•
|
ASU 2017-05, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets" and
|
•
|
ASU 2017-08, "Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities."
|
(In millions, except per share amounts)
|
|
For the Three Months Ended March 31
|
||||||
Reconciliation of Basic and Diluted Earnings per Share of Common Stock
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
Net income
|
|
$
|
205
|
|
|
$
|
328
|
|
|
|
|
|
|
||||
Weighted average number of basic shares outstanding
|
|
443
|
|
|
424
|
|
||
Assumed exercise of dilutive stock options and awards
(1)
|
|
1
|
|
|
2
|
|
||
Weighted average number of diluted shares outstanding
|
|
444
|
|
|
426
|
|
||
|
|
|
|
|
||||
Basic earnings per share of common stock
|
|
$
|
0.46
|
|
|
$
|
0.78
|
|
Diluted earnings per share of common stock
|
|
$
|
0.46
|
|
|
$
|
0.77
|
|
(1)
|
For both the
three
months ended
March 31
,
2017
and
March 31
,
2016
,
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 March 31
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In millions)
|
||||||||||||||
Service costs
|
|
$
|
52
|
|
|
$
|
48
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest costs
|
|
97
|
|
|
100
|
|
|
7
|
|
|
7
|
|
||||
Expected return on plan assets
|
|
(112
|
)
|
|
(97
|
)
|
|
(8
|
)
|
|
(8
|
)
|
||||
Amortization of prior service costs (credits)
|
|
2
|
|
|
2
|
|
|
(20
|
)
|
|
(20
|
)
|
||||
Net periodic costs (credits)
|
|
$
|
39
|
|
|
$
|
53
|
|
|
$
|
(20
|
)
|
|
$
|
(20
|
)
|
|
|
Pension
|
OPEB
|
|||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In millions)
|
||||||||||||||
For the Three Months Ended March 31
|
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
Net Periodic Benefit Expense (Credit)
|
|
Pension
|
|
OPEB
|
||||||||||||
For the Three Months Ended March 31
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In millions)
|
||||||||||||||
FirstEnergy
|
|
$
|
32
|
|
|
$
|
37
|
|
|
$
|
(15
|
)
|
|
$
|
(15
|
)
|
FES
|
|
3
|
|
|
6
|
|
|
(4
|
)
|
|
(4
|
)
|
FirstEnergy
|
|
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, 2017
|
|
$
|
(28
|
)
|
|
$
|
52
|
|
|
$
|
150
|
|
|
$
|
174
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
||||
Amounts reclassified from AOCI
|
|
3
|
|
|
(16
|
)
|
|
(18
|
)
|
|
(31
|
)
|
||||
Other comprehensive income (loss)
|
|
3
|
|
|
16
|
|
|
(18
|
)
|
|
1
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
1
|
|
|
5
|
|
|
(6
|
)
|
|
—
|
|
||||
Other comprehensive income (loss), net of tax
|
|
2
|
|
|
11
|
|
|
(12
|
)
|
|
1
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of March 31, 2017
|
|
$
|
(26
|
)
|
|
$
|
63
|
|
|
$
|
138
|
|
|
$
|
175
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of January 1, 2016
|
|
$
|
(33
|
)
|
|
$
|
18
|
|
|
$
|
186
|
|
|
$
|
171
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
41
|
|
|
—
|
|
|
41
|
|
||||
Amounts reclassified from AOCI
|
|
2
|
|
|
(13
|
)
|
|
(18
|
)
|
|
(29
|
)
|
||||
Other comprehensive income (loss)
|
|
2
|
|
|
28
|
|
|
(18
|
)
|
|
12
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
1
|
|
|
10
|
|
|
(7
|
)
|
|
4
|
|
||||
Other comprehensive income (loss), net of tax
|
|
1
|
|
|
18
|
|
|
(11
|
)
|
|
8
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of March 31, 2016
|
|
$
|
(32
|
)
|
|
$
|
36
|
|
|
$
|
175
|
|
|
$
|
179
|
|
|
|
|
|
|
|
|
|
|
FES
|
|
|
|
|
|
|
|
|
||||||||
|
|
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, 2017
|
|
$
|
(9
|
)
|
|
$
|
48
|
|
|
$
|
30
|
|
|
$
|
69
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
31
|
|
|
—
|
|
|
31
|
|
||||
Amounts reclassified from AOCI
|
|
—
|
|
|
(15
|
)
|
|
(3
|
)
|
|
(18
|
)
|
||||
Other comprehensive income (loss)
|
|
—
|
|
|
16
|
|
|
(3
|
)
|
|
13
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
—
|
|
|
6
|
|
|
(1
|
)
|
|
5
|
|
||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
10
|
|
|
(2
|
)
|
|
8
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of March 31, 2017
|
|
$
|
(9
|
)
|
|
$
|
58
|
|
|
$
|
28
|
|
|
$
|
77
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of January 1, 2016
|
|
$
|
(9
|
)
|
|
$
|
16
|
|
|
$
|
39
|
|
|
$
|
46
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
||||
Amounts reclassified from AOCI
|
|
—
|
|
|
(13
|
)
|
|
(4
|
)
|
|
(17
|
)
|
||||
Other comprehensive income (loss)
|
|
—
|
|
|
23
|
|
|
(4
|
)
|
|
19
|
|
||||
Income tax (benefits) on other comprehensive income (loss)
|
|
—
|
|
|
9
|
|
|
(2
|
)
|
|
7
|
|
||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
14
|
|
|
(2
|
)
|
|
12
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of March 31, 2016
|
|
$
|
(9
|
)
|
|
$
|
30
|
|
|
$
|
37
|
|
|
$
|
58
|
|
•
|
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
March 31, 2017
and
December 31, 2016
,
$327 million
and
$339 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
March 31, 2017
and
December 31, 2016
,
$74 million
and
$85 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
March 31, 2017
and
December 31, 2016
,
$395 million
and
$406 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, a proposed transmission line from West Virginia through Virginia into Maryland which PJM had previously suspended in February 2011, 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.
|
•
|
Purchase Power Agreements
-
FirstEnergy evaluated its PPAs 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 the 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 March 31, 2017, OE's leasehold interest was
2.60%
of Beaver Valley Unit 2 and FES' leasehold interest was
93.83%
of Bruce Mansfield Unit 1.
|
|
Maximum
Exposure
|
|
Discounted Lease
Payments, net
|
|
Net
Exposure
|
||||||
|
(In millions)
|
||||||||||
FirstEnergy
|
$
|
1,133
|
|
|
$
|
894
|
|
|
$
|
239
|
|
FES
|
1,113
|
|
|
890
|
|
|
223
|
|
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
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
(In millions)
|
||||||||||||||||||||||||||||||
Corporate debt securities
|
$
|
—
|
|
|
$
|
1,244
|
|
|
$
|
—
|
|
|
$
|
1,244
|
|
|
$
|
—
|
|
|
$
|
1,247
|
|
|
$
|
—
|
|
|
$
|
1,247
|
|
Derivative assets - commodity contracts
|
—
|
|
|
60
|
|
|
—
|
|
|
60
|
|
|
10
|
|
|
200
|
|
|
—
|
|
|
210
|
|
||||||||
Derivative assets - FTRs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
||||||||
Derivative assets - NUG contracts
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||||
Equity securities
(2)
|
982
|
|
|
—
|
|
|
—
|
|
|
982
|
|
|
925
|
|
|
—
|
|
|
—
|
|
|
925
|
|
||||||||
Foreign government debt securities
|
—
|
|
|
95
|
|
|
—
|
|
|
95
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
78
|
|
||||||||
U.S. government debt securities
|
—
|
|
|
152
|
|
|
—
|
|
|
152
|
|
|
—
|
|
|
161
|
|
|
—
|
|
|
161
|
|
||||||||
U.S. state debt securities
|
—
|
|
|
250
|
|
|
—
|
|
|
250
|
|
|
—
|
|
|
246
|
|
|
—
|
|
|
246
|
|
||||||||
Other
(3)
|
164
|
|
|
128
|
|
|
—
|
|
|
292
|
|
|
199
|
|
|
123
|
|
|
—
|
|
|
322
|
|
||||||||
Total assets
|
$
|
1,146
|
|
|
$
|
1,929
|
|
|
$
|
—
|
|
|
$
|
3,075
|
|
|
$
|
1,134
|
|
|
$
|
2,055
|
|
|
$
|
8
|
|
|
$
|
3,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities - commodity contracts
|
$
|
—
|
|
|
$
|
(26
|
)
|
|
$
|
—
|
|
|
$
|
(26
|
)
|
|
$
|
(6
|
)
|
|
$
|
(118
|
)
|
|
$
|
—
|
|
|
$
|
(124
|
)
|
Derivative liabilities - FTRs
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||||||
Derivative liabilities - NUG contracts
(1)
|
—
|
|
|
—
|
|
|
(103
|
)
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
(108
|
)
|
|
(108
|
)
|
||||||||
Total liabilities
|
$
|
—
|
|
|
$
|
(26
|
)
|
|
$
|
(107
|
)
|
|
$
|
(133
|
)
|
|
$
|
(6
|
)
|
|
$
|
(118
|
)
|
|
$
|
(114
|
)
|
|
$
|
(238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net assets (liabilities)
(4)
|
$
|
1,146
|
|
|
$
|
1,903
|
|
|
$
|
(107
|
)
|
|
$
|
2,942
|
|
|
$
|
1,128
|
|
|
$
|
1,937
|
|
|
$
|
(106
|
)
|
|
$
|
2,959
|
|
(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
$(14) million
and
$(3) million
as of
March 31, 2017
and
December 31, 2016
, respectively, 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, 2016 Balance
|
$
|
1
|
|
|
$
|
(137
|
)
|
|
$
|
(136
|
)
|
|
$
|
8
|
|
|
$
|
(13
|
)
|
|
$
|
(5
|
)
|
Unrealized gain (loss)
|
2
|
|
|
(17
|
)
|
|
(15
|
)
|
|
(6
|
)
|
|
(4
|
)
|
|
(10
|
)
|
||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
(7
|
)
|
|
9
|
|
||||||
Settlements
|
(2
|
)
|
|
46
|
|
|
44
|
|
|
(11
|
)
|
|
18
|
|
|
7
|
|
||||||
December 31, 2016 Balance
|
$
|
1
|
|
|
$
|
(108
|
)
|
|
$
|
(107
|
)
|
|
$
|
7
|
|
|
$
|
(6
|
)
|
|
$
|
1
|
|
Unrealized loss
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Settlements
|
(1
|
)
|
|
11
|
|
|
10
|
|
|
(7
|
)
|
|
3
|
|
|
(4
|
)
|
||||||
March 31, 2017 Balance
|
$
|
—
|
|
|
$
|
(103
|
)
|
|
$
|
(103
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
(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
|
|
$
|
(4
|
)
|
|
Model
|
|
RTO auction clearing prices
|
|
$(2.70) to $2.90
|
|
$0.30
|
|
Dollars/MWH
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
NUG Contracts
|
|
$
|
(103
|
)
|
|
Model
|
|
Generation
|
|
400 to 2,766,000
|
|
560,000
|
|
|
MWH
|
|
|
|
Regional electricity prices
|
|
$31.70 to $33.60
|
|
$31.70
|
|
Dollars/MWH
|
FES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Recurring Fair Value Measurements
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
(In millions)
|
||||||||||||||||||||||||||||||
Corporate debt securities
|
$
|
—
|
|
|
$
|
746
|
|
|
$
|
—
|
|
|
$
|
746
|
|
|
$
|
—
|
|
|
$
|
726
|
|
|
$
|
—
|
|
|
$
|
726
|
|
Derivative assets - commodity contracts
|
—
|
|
|
60
|
|
|
—
|
|
|
60
|
|
|
10
|
|
|
200
|
|
|
—
|
|
|
210
|
|
||||||||
Derivative assets - FTRs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
||||||||
Equity securities
(1)
|
667
|
|
|
—
|
|
|
—
|
|
|
667
|
|
|
634
|
|
|
—
|
|
|
—
|
|
|
634
|
|
||||||||
Foreign government debt securities
|
—
|
|
|
62
|
|
|
—
|
|
|
62
|
|
|
—
|
|
|
58
|
|
|
—
|
|
|
58
|
|
||||||||
U.S. government debt securities
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
48
|
|
||||||||
U.S. state debt securities
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||||
Other
(2)
|
2
|
|
|
87
|
|
|
—
|
|
|
89
|
|
|
2
|
|
|
81
|
|
|
—
|
|
|
83
|
|
||||||||
Total assets
|
$
|
669
|
|
|
$
|
988
|
|
|
$
|
—
|
|
|
$
|
1,657
|
|
|
$
|
646
|
|
|
$
|
1,116
|
|
|
$
|
4
|
|
|
$
|
1,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities - commodity contracts
|
$
|
—
|
|
|
$
|
(26
|
)
|
|
$
|
—
|
|
|
$
|
(26
|
)
|
|
$
|
(6
|
)
|
|
$
|
(118
|
)
|
|
$
|
—
|
|
|
$
|
(124
|
)
|
Derivative liabilities - FTRs
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||||
Total liabilities
|
$
|
—
|
|
|
$
|
(26
|
)
|
|
$
|
(2
|
)
|
|
$
|
(28
|
)
|
|
$
|
(6
|
)
|
|
$
|
(118
|
)
|
|
$
|
(5
|
)
|
|
$
|
(129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net assets (liabilities)
(3)
|
$
|
669
|
|
|
$
|
962
|
|
|
$
|
(2
|
)
|
|
$
|
1,629
|
|
|
$
|
640
|
|
|
$
|
998
|
|
|
$
|
(1
|
)
|
|
$
|
1,637
|
|
(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
$(2) million
and
$2 million
as of
March 31, 2017
and
December 31, 2016
, 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, 2016 Balance
|
|
$
|
5
|
|
|
$
|
(11
|
)
|
|
$
|
(6
|
)
|
Unrealized loss
|
|
(4
|
)
|
|
(3
|
)
|
|
(7
|
)
|
|||
Purchases
|
|
10
|
|
|
(5
|
)
|
|
5
|
|
|||
Settlements
|
|
(7
|
)
|
|
14
|
|
|
7
|
|
|||
December 31, 2016 Balance
|
|
$
|
4
|
|
|
$
|
(5
|
)
|
|
$
|
(1
|
)
|
Settlements
|
|
(4
|
)
|
|
3
|
|
|
(1
|
)
|
|||
March 31, 2017 Balance
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
|
Fair Value, Net (In millions)
|
|
Valuation
Technique |
|
Significant Input
|
|
Range
|
|
Weighted Average
|
|
Units
|
||
FTRs
|
|
$
|
(2
|
)
|
|
Model
|
|
RTO auction clearing prices
|
|
($2.70) to $2.40
|
|
$0.20
|
|
Dollars/MWH
|
|
|
March 31, 2017
(1)
|
|
December 31, 2016
(2)
|
||||||||||||||||||||
|
|
Cost Basis
|
|
Unrealized Gains
|
|
Fair Value
|
|
Cost Basis
|
|
Unrealized Gains
|
|
Fair Value
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
Debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FirstEnergy
|
|
$
|
1,746
|
|
|
$
|
38
|
|
|
$
|
1,784
|
|
|
$
|
1,735
|
|
|
$
|
38
|
|
|
$
|
1,773
|
|
FES
|
|
855
|
|
|
28
|
|
|
883
|
|
|
847
|
|
|
27
|
|
|
874
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FirstEnergy
|
|
$
|
852
|
|
|
$
|
130
|
|
|
$
|
982
|
|
|
$
|
822
|
|
|
$
|
103
|
|
|
$
|
925
|
|
FES
|
|
578
|
|
|
89
|
|
|
667
|
|
|
564
|
|
|
70
|
|
|
634
|
|
(1)
|
Excludes short-term cash investments: FirstEnergy -
$53 million
; FES -
$43 million
.
|
(2)
|
Excludes short-term cash investments: FirstEnergy -
$61 million
; FES -
$44 million
.
|
For the Three Months Ended
|
||||||||||||||||||||
March 31, 2017
|
|
Sale Proceeds
|
|
Realized Gains
|
|
Realized Losses
|
|
OTTI
|
|
Interest and
Dividend Income
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
FirstEnergy
|
|
$
|
738
|
|
|
$
|
85
|
|
|
$
|
(63
|
)
|
|
$
|
(3
|
)
|
|
$
|
23
|
|
FES
|
|
231
|
|
|
64
|
|
|
(48
|
)
|
|
(3
|
)
|
|
14
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
March 31, 2016
|
|
Sale Proceeds
|
|
Realized Gains
|
|
Realized Losses
|
|
OTTI
|
|
Interest and Dividend Income
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
FirstEnergy
|
|
$
|
465
|
|
|
$
|
61
|
|
|
$
|
(50
|
)
|
|
$
|
(9
|
)
|
|
$
|
23
|
|
FES
|
|
138
|
|
|
42
|
|
|
(29
|
)
|
|
(8
|
)
|
|
13
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
|
(In millions)
|
||||||||||||||
FirstEnergy
|
$
|
19,921
|
|
|
$
|
20,029
|
|
|
$
|
19,885
|
|
|
$
|
19,829
|
|
FES
|
2,971
|
|
|
1,424
|
|
|
3,000
|
|
|
1,555
|
|
•
|
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
|
||||||||||||
|
March 31,
2017 |
|
December 31,
2016 |
|
|
March 31,
2017 |
|
December 31,
2016 |
||||||||
|
(In millions)
|
|
|
(In millions)
|
||||||||||||
Current Assets - Derivatives
|
|
|
|
|
Current Liabilities - Derivatives
|
|
|
|
||||||||
Commodity Contracts
|
$
|
43
|
|
|
$
|
133
|
|
|
Commodity Contracts
|
$
|
(23
|
)
|
|
$
|
(72
|
)
|
FTRs
|
—
|
|
|
7
|
|
|
FTRs
|
(4
|
)
|
|
(6
|
)
|
||||
|
43
|
|
|
140
|
|
|
|
(27
|
)
|
|
(78
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Deferred Charges and Other Assets - Other
|
|
|
|
|
Noncurrent Liabilities - Adverse Power Contract Liability
|
|
|
|
||||||||
|
|
|
|
|
NUGs
(1)
|
(103
|
)
|
|
(108
|
)
|
||||||
|
|
|
|
|
Noncurrent Liabilities - Other
|
|
|
|
||||||||
Commodity Contracts
|
17
|
|
|
77
|
|
|
Commodity Contracts
|
(3
|
)
|
|
(52
|
)
|
||||
NUGs
(1)
|
—
|
|
|
1
|
|
|
|
|
|
|
||||||
|
17
|
|
|
78
|
|
|
|
(106
|
)
|
|
(160
|
)
|
||||
Derivative Assets
|
$
|
60
|
|
|
$
|
218
|
|
|
Derivative Liabilities
|
$
|
(133
|
)
|
|
$
|
(238
|
)
|
(1)
|
NUG contracts are subject to regulatory accounting treatment and do not impact earnings.
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||
|
Fair Value
|
|
|
Fair Value
|
||||||||||||
|
March 31,
2017 |
|
December 31,
2016 |
|
|
March 31,
2017 |
|
December 31,
2016 |
||||||||
|
(In millions)
|
|
|
(In millions)
|
||||||||||||
Current Assets - Derivatives
|
|
|
|
|
Current Liabilities - Derivatives
|
|
|
|
||||||||
Commodity Contracts
|
$
|
43
|
|
|
$
|
133
|
|
|
Commodity Contracts
|
$
|
(23
|
)
|
|
$
|
(72
|
)
|
FTRs
|
—
|
|
|
4
|
|
|
FTRs
|
(2
|
)
|
|
(5
|
)
|
||||
|
43
|
|
|
137
|
|
|
|
(25
|
)
|
|
(77
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Deferred Charges and Other Assets - Other
|
|
|
|
|
Noncurrent Liabilities - Other
|
|
|
|
||||||||
Commodity Contracts
|
17
|
|
|
77
|
|
|
Commodity Contracts
|
(3
|
)
|
|
(52
|
)
|
||||
|
17
|
|
|
77
|
|
|
|
(3
|
)
|
|
(52
|
)
|
||||
Derivative Assets
|
$
|
60
|
|
|
$
|
214
|
|
|
Derivative Liabilities
|
$
|
(28
|
)
|
|
$
|
(129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Not Offset in Consolidated Balance Sheet
|
|
|
||||||||||
March 31, 2017
|
|
Fair Value
|
|
Derivative Instruments
|
|
Cash Collateral Pledged
|
|
Net Fair Value
|
||||||||
|
|
(In millions)
|
||||||||||||||
Derivative Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
60
|
|
|
$
|
(21
|
)
|
|
$
|
—
|
|
|
$
|
39
|
|
|
|
$
|
60
|
|
|
$
|
(21
|
)
|
|
$
|
—
|
|
|
$
|
39
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
(26
|
)
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
FTRs
|
|
(4
|
)
|
|
—
|
|
|
1
|
|
|
(3
|
)
|
||||
NUG contracts
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
||||
|
|
$
|
(133
|
)
|
|
$
|
21
|
|
|
$
|
1
|
|
|
$
|
(111
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Not Offset in Consolidated Balance Sheet
|
|
|
||||||||||
December 31, 2016
|
|
Fair Value
|
|
Derivative Instruments
|
|
Cash Collateral Pledged
|
|
Net Fair Value
|
||||||||
|
|
(In millions)
|
||||||||||||||
Derivative Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
210
|
|
|
$
|
(117
|
)
|
|
$
|
—
|
|
|
$
|
93
|
|
FTRs
|
|
7
|
|
|
(6
|
)
|
|
—
|
|
|
1
|
|
||||
NUG contracts
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
|
|
$
|
218
|
|
|
$
|
(123
|
)
|
|
$
|
—
|
|
|
$
|
95
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
(124
|
)
|
|
$
|
117
|
|
|
$
|
1
|
|
|
$
|
(6
|
)
|
FTRs
|
|
(6
|
)
|
|
6
|
|
|
—
|
|
|
—
|
|
||||
NUG contracts
|
|
(108
|
)
|
|
—
|
|
|
—
|
|
|
(108
|
)
|
||||
|
|
$
|
(238
|
)
|
|
$
|
123
|
|
|
$
|
1
|
|
|
$
|
(114
|
)
|
|
|
|
|
Amounts Not Offset in Consolidated Balance Sheet
|
|
|
||||||||||
March 31, 2017
|
|
Fair Value
|
|
Derivative Instruments
|
|
Cash Collateral Pledged
|
|
Net Fair Value
|
||||||||
|
|
(In millions)
|
||||||||||||||
Derivative Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
60
|
|
|
$
|
(21
|
)
|
|
$
|
—
|
|
|
$
|
39
|
|
|
|
$
|
60
|
|
|
$
|
(21
|
)
|
|
$
|
—
|
|
|
$
|
39
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
(26
|
)
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
FTRs
|
|
(2
|
)
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
||||
|
|
$
|
(28
|
)
|
|
$
|
21
|
|
|
$
|
1
|
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Not Offset in Consolidated Balance Sheet
|
|
|
||||||||||
December 31, 2016
|
|
Fair Value
|
|
Derivative Instruments
|
|
Cash Collateral Pledged
|
|
Net Fair Value
|
||||||||
|
|
(In millions)
|
||||||||||||||
Derivative Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
210
|
|
|
$
|
(117
|
)
|
|
$
|
—
|
|
|
$
|
93
|
|
FTRs
|
|
4
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
214
|
|
|
$
|
(121
|
)
|
|
$
|
—
|
|
|
$
|
93
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
(124
|
)
|
|
$
|
117
|
|
|
$
|
1
|
|
|
$
|
(6
|
)
|
FTRs
|
|
(5
|
)
|
|
4
|
|
|
1
|
|
|
—
|
|
||||
|
|
$
|
(129
|
)
|
|
$
|
121
|
|
|
$
|
2
|
|
|
$
|
(6
|
)
|
|
Purchases
|
|
Sales
|
|
Net
|
|
Units
|
|||
|
(In millions)
|
|||||||||
Power Contracts
|
2
|
|
|
11
|
|
|
(9
|
)
|
|
MWH
|
FTRs
|
13
|
|
|
—
|
|
|
13
|
|
|
MWH
|
NUGs
|
3
|
|
|
—
|
|
|
3
|
|
|
MWH
|
Natural Gas
|
1
|
|
|
1
|
|
|
—
|
|
|
mmBTU
|
|
Purchases
|
|
Sales
|
|
Net
|
|
Units
|
|||
|
(In millions)
|
|||||||||
Power Contracts
|
2
|
|
|
11
|
|
|
(9
|
)
|
|
MWH
|
FTRs
|
11
|
|
|
—
|
|
|
11
|
|
|
MWH
|
Natural Gas
|
1
|
|
|
1
|
|
|
—
|
|
|
mmBTU
|
|
For the Three Months Ended March 31
|
||||||||||
|
Commodity Contracts
|
|
FTRs
|
|
Total
|
||||||
|
(In millions)
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|||
Unrealized Loss Recognized in:
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
(46
|
)
|
|
$
|
(1
|
)
|
|
$
|
(47
|
)
|
|
|
|
|
|
|
||||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
25
|
|
Purchased Power Expense
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(9
|
)
|
|
(9
|
)
|
|||
Fuel Expense
|
4
|
|
|
—
|
|
|
4
|
|
|||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
For the Three Months Ended March 31
|
||||||||||
|
Commodity Contracts
|
|
FTRs
|
|
Total
|
||||||
|
(In millions)
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|||
Unrealized Gain Recognized in:
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
62
|
|
|
$
|
2
|
|
|
$
|
64
|
|
|
|
|
|
|
|
||||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
71
|
|
|
$
|
2
|
|
|
$
|
73
|
|
Purchased Power Expense
|
(45
|
)
|
|
—
|
|
|
(45
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
|||
Fuel Expense
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
For the Three Months Ended March 31
|
|||||||||||
|
Commodity
Contracts
|
|
FTRs
|
|
|
Total
|
||||||
2017
|
(In millions)
|
|||||||||||
Unrealized Loss Recognized in:
|
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
(46
|
)
|
|
$
|
(1
|
)
|
|
|
$
|
(47
|
)
|
|
|
|
|
|
|
|
|
|||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
25
|
|
|
$
|
—
|
|
|
|
$
|
25
|
|
Purchased Power Expense
|
(7
|
)
|
|
—
|
|
|
|
(7
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(9
|
)
|
|
|
(9
|
)
|
|||
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
|
For the Three Months Ended March 31
|
|||||||||||
|
Commodity
Contracts
|
|
FTRs
|
|
|
Total
|
||||||
|
(In millions)
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|||
Unrealized Gain Recognized in:
|
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
62
|
|
|
$
|
2
|
|
|
|
$
|
64
|
|
|
|
|
|
|
|
|
||||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
71
|
|
|
$
|
2
|
|
|
|
$
|
73
|
|
Purchased Power Expense
|
(45
|
)
|
|
—
|
|
|
|
(45
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(12
|
)
|
|
|
(12
|
)
|
|||
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31
|
||||||||||
Derivatives Not in a Hedging Relationship with Regulatory Offset
|
|
NUGs
|
|
Regulated FTRs
|
|
Total
|
||||||
|
|
(In millions)
|
||||||||||
Outstanding net asset (liability) as of January 1, 2017
|
|
$
|
(107
|
)
|
|
$
|
2
|
|
|
$
|
(105
|
)
|
Unrealized loss
|
|
(5
|
)
|
|
(1
|
)
|
|
(6
|
)
|
|||
Settlements
|
|
9
|
|
|
(3
|
)
|
|
6
|
|
|||
Outstanding net liability as of March 31, 2017
|
|
$
|
(103
|
)
|
|
$
|
(2
|
)
|
|
$
|
(105
|
)
|
|
|
|
|
|
|
|
||||||
Outstanding net asset (liability) as of January 1, 2016
|
|
$
|
(136
|
)
|
|
$
|
1
|
|
|
$
|
(135
|
)
|
Unrealized loss
|
|
(12
|
)
|
|
(1
|
)
|
|
(13
|
)
|
|||
Settlements
|
|
13
|
|
|
(2
|
)
|
|
11
|
|
|||
Outstanding net liability as of March 31, 2016
|
|
$
|
(135
|
)
|
|
$
|
(2
|
)
|
|
$
|
(137
|
)
|
|
|
|
|
|
|
|
Potential Collateral Obligations
|
|
FES
|
|
AE Supply
|
|
Regulated
|
|
FE Corp
|
|
Total
|
||||||||||
|
|
|
(in millions)
|
|||||||||||||||||
Contractual Obligations for Additional Collateral
|
|
|
|
|
|
|
|
|
|
|
||||||||||
At Current Credit Rating
|
|
$
|
8
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
Upon Further Downgrade
|
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
|||||
Surety Bonds (Collateralized Amount)
(1)
|
|
233
|
|
|
25
|
|
|
93
|
|
|
7
|
|
|
358
|
|
|||||
Total Exposure from Contractual Obligations
|
|
$
|
241
|
|
|
$
|
28
|
|
|
$
|
143
|
|
|
$
|
7
|
|
|
$
|
419
|
|
FIRSTENERGY SOLUTIONS CORP.
|
||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Three Months Ended March 31, 2017
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
STATEMENTS OF INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
REVENUES
|
|
$
|
880
|
|
|
$
|
236
|
|
|
$
|
336
|
|
|
$
|
(538
|
)
|
|
$
|
914
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
—
|
|
|
98
|
|
|
46
|
|
|
—
|
|
|
144
|
|
|||||
Purchased power from affiliates
|
|
663
|
|
|
—
|
|
|
38
|
|
|
(538
|
)
|
|
163
|
|
|||||
Purchased power from non-affiliates
|
|
160
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
160
|
|
|||||
Other operating expenses
|
|
114
|
|
|
225
|
|
|
167
|
|
|
12
|
|
|
518
|
|
|||||
Provision for depreciation
|
|
3
|
|
|
7
|
|
|
15
|
|
|
—
|
|
|
25
|
|
|||||
General taxes
|
|
6
|
|
|
8
|
|
|
7
|
|
|
—
|
|
|
21
|
|
|||||
Total operating expenses
|
|
946
|
|
|
338
|
|
|
273
|
|
|
(526
|
)
|
|
1,031
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS)
|
|
(66
|
)
|
|
(102
|
)
|
|
63
|
|
|
(12
|
)
|
|
(117
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss), including net income (loss) from equity investees
|
|
(18
|
)
|
|
10
|
|
|
27
|
|
|
1
|
|
|
20
|
|
|||||
Miscellaneous income
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
Interest expense — affiliates
|
|
(18
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
20
|
|
|
(2
|
)
|
|||||
Interest expense — other
|
|
(11
|
)
|
|
(27
|
)
|
|
(11
|
)
|
|
14
|
|
|
(35
|
)
|
|||||
Capitalized interest
|
|
—
|
|
|
1
|
|
|
7
|
|
|
—
|
|
|
8
|
|
|||||
Total other income (expense)
|
|
(47
|
)
|
|
(19
|
)
|
|
27
|
|
|
35
|
|
|
(4
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
(113
|
)
|
|
(121
|
)
|
|
90
|
|
|
23
|
|
|
(121
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME TAXES (BENEFITS)
|
|
(33
|
)
|
|
(42
|
)
|
|
33
|
|
|
1
|
|
|
(41
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(80
|
)
|
|
$
|
(79
|
)
|
|
$
|
57
|
|
|
$
|
22
|
|
|
$
|
(80
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(80
|
)
|
|
$
|
(79
|
)
|
|
$
|
57
|
|
|
$
|
22
|
|
|
$
|
(80
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and OPEB prior service costs
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
3
|
|
|
(3
|
)
|
|||||
Change in unrealized gains on available-for-sale securities
|
|
16
|
|
|
—
|
|
|
16
|
|
|
(16
|
)
|
|
16
|
|
|||||
Other comprehensive income (loss)
|
|
13
|
|
|
(3
|
)
|
|
16
|
|
|
(13
|
)
|
|
13
|
|
|||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
5
|
|
|
(1
|
)
|
|
6
|
|
|
(5
|
)
|
|
5
|
|
|||||
Other comprehensive income (loss), net of tax
|
|
8
|
|
|
(2
|
)
|
|
10
|
|
|
(8
|
)
|
|
8
|
|
|||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(72
|
)
|
|
$
|
(81
|
)
|
|
$
|
67
|
|
|
$
|
14
|
|
|
$
|
(72
|
)
|
FIRSTENERGY SOLUTIONS CORP.
|
||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
||||||||||||||||||||
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Three Months Ended March 31, 2016
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
REVENUES
|
|
$
|
1,155
|
|
|
$
|
415
|
|
|
$
|
531
|
|
|
$
|
(902
|
)
|
|
$
|
1,199
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
—
|
|
|
119
|
|
|
46
|
|
|
—
|
|
|
165
|
|
|||||
Purchased power from affiliates
|
|
927
|
|
|
—
|
|
|
57
|
|
|
(902
|
)
|
|
82
|
|
|||||
Purchased power from non-affiliates
|
|
377
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
377
|
|
|||||
Other operating expenses
|
|
4
|
|
|
71
|
|
|
153
|
|
|
12
|
|
|
240
|
|
|||||
Provision for depreciation
|
|
3
|
|
|
31
|
|
|
50
|
|
|
(1
|
)
|
|
83
|
|
|||||
General taxes
|
|
8
|
|
|
10
|
|
|
8
|
|
|
—
|
|
|
26
|
|
|||||
Total operating expenses
|
|
1,319
|
|
|
231
|
|
|
314
|
|
|
(891
|
)
|
|
973
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS)
|
|
(164
|
)
|
|
184
|
|
|
217
|
|
|
(11
|
)
|
|
226
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income, including net income from equity investees
|
|
249
|
|
|
6
|
|
|
17
|
|
|
(259
|
)
|
|
13
|
|
|||||
Miscellaneous income
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Interest expense — affiliates
|
|
(9
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
11
|
|
|
(2
|
)
|
|||||
Interest expense — other
|
|
(13
|
)
|
|
(26
|
)
|
|
(11
|
)
|
|
14
|
|
|
(36
|
)
|
|||||
Capitalized interest
|
|
—
|
|
|
2
|
|
|
8
|
|
|
—
|
|
|
10
|
|
|||||
Total other income (expense)
|
|
229
|
|
|
(20
|
)
|
|
12
|
|
|
(234
|
)
|
|
(13
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
65
|
|
|
164
|
|
|
229
|
|
|
(245
|
)
|
|
213
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME TAXES (BENEFITS)
|
|
(66
|
)
|
|
61
|
|
|
86
|
|
|
1
|
|
|
82
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
131
|
|
|
$
|
103
|
|
|
$
|
143
|
|
|
$
|
(246
|
)
|
|
$
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
131
|
|
|
$
|
103
|
|
|
$
|
143
|
|
|
$
|
(246
|
)
|
|
$
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and OPEB prior service costs
|
|
(4
|
)
|
|
(3
|
)
|
|
—
|
|
|
3
|
|
|
(4
|
)
|
|||||
Change in unrealized gains on available-for-sale securities
|
|
23
|
|
|
—
|
|
|
23
|
|
|
(23
|
)
|
|
23
|
|
|||||
Other comprehensive income (loss)
|
|
19
|
|
|
(3
|
)
|
|
23
|
|
|
(20
|
)
|
|
19
|
|
|||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
7
|
|
|
(1
|
)
|
|
8
|
|
|
(7
|
)
|
|
7
|
|
|||||
Other comprehensive income (loss), net of tax
|
|
12
|
|
|
(2
|
)
|
|
15
|
|
|
(13
|
)
|
|
12
|
|
|||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
143
|
|
|
$
|
101
|
|
|
$
|
158
|
|
|
$
|
(259
|
)
|
|
$
|
143
|
|
For the Three Months Ended March 31, 2017
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET CASH PROVIDED FROM (USED FOR) OPERATING ACTIVITIES
|
|
$
|
(142
|
)
|
|
$
|
163
|
|
|
$
|
200
|
|
|
$
|
—
|
|
|
$
|
221
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
New Financing-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Short-term borrowings, net
|
|
100
|
|
|
—
|
|
|
1
|
|
|
(88
|
)
|
|
13
|
|
|||||
Redemptions and Repayments-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Long-term debt
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|||||
Short-term borrowings, net
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
22
|
|
|
—
|
|
|||||
Other
|
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Net cash provided from (used for) financing activities
|
|
99
|
|
|
(53
|
)
|
|
1
|
|
|
(66
|
)
|
|
(19
|
)
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Property additions
|
|
—
|
|
|
(21
|
)
|
|
(64
|
)
|
|
—
|
|
|
(85
|
)
|
|||||
Nuclear fuel
|
|
—
|
|
|
—
|
|
|
(132
|
)
|
|
—
|
|
|
(132
|
)
|
|||||
Sales of investment securities held in trusts
|
|
—
|
|
|
—
|
|
|
231
|
|
|
—
|
|
|
231
|
|
|||||
Purchases of investment securities held in trusts
|
|
—
|
|
|
—
|
|
|
(245
|
)
|
|
—
|
|
|
(245
|
)
|
|||||
Loans to affiliated companies, net
|
|
43
|
|
|
(89
|
)
|
|
9
|
|
|
66
|
|
|
29
|
|
|||||
Net cash provided from (used for) investing activities
|
|
43
|
|
|
(110
|
)
|
|
(201
|
)
|
|
66
|
|
|
(202
|
)
|
|||||
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)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
External revenues
|
|
$
|
2,490
|
|
|
$
|
313
|
|
|
$
|
814
|
|
|
$
|
—
|
|
|
$
|
(65
|
)
|
|
$
|
3,552
|
|
Internal revenues
|
|
—
|
|
|
—
|
|
|
117
|
|
|
—
|
|
|
(117
|
)
|
|
—
|
|
||||||
Total revenues
|
|
2,490
|
|
|
313
|
|
|
931
|
|
|
—
|
|
|
(182
|
)
|
|
3,552
|
|
||||||
Depreciation
|
|
178
|
|
|
51
|
|
|
28
|
|
|
18
|
|
|
—
|
|
|
275
|
|
||||||
Amortization of regulatory assets, net
|
|
57
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
||||||
Investment income
|
|
14
|
|
|
—
|
|
|
20
|
|
|
3
|
|
|
(13
|
)
|
|
24
|
|
||||||
Interest expense
|
|
138
|
|
|
39
|
|
|
45
|
|
|
65
|
|
|
—
|
|
|
287
|
|
||||||
Income taxes (benefits)
|
|
138
|
|
|
52
|
|
|
(35
|
)
|
|
(29
|
)
|
|
—
|
|
|
126
|
|
||||||
Net income (loss)
|
|
237
|
|
|
88
|
|
|
(67
|
)
|
|
(53
|
)
|
|
—
|
|
|
205
|
|
||||||
Total assets
|
|
27,826
|
|
|
8,938
|
|
|
5,811
|
|
|
637
|
|
|
—
|
|
|
43,212
|
|
||||||
Total goodwill
|
|
5,004
|
|
|
614
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,618
|
|
||||||
Property additions
|
|
264
|
|
|
224
|
|
|
92
|
|
|
8
|
|
|
—
|
|
|
588
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
External revenues
|
|
$
|
2,510
|
|
|
$
|
286
|
|
|
$
|
1,152
|
|
|
$
|
—
|
|
|
$
|
(79
|
)
|
|
$
|
3,869
|
|
Internal revenues
|
|
—
|
|
|
—
|
|
|
152
|
|
|
—
|
|
|
(152
|
)
|
|
—
|
|
||||||
Total revenues
|
|
2,510
|
|
|
286
|
|
|
1,304
|
|
|
—
|
|
|
(231
|
)
|
|
3,869
|
|
||||||
Depreciation
|
|
167
|
|
|
45
|
|
|
102
|
|
|
15
|
|
|
—
|
|
|
329
|
|
||||||
Amortization of regulatory assets, net
|
|
59
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
||||||
Investment income
|
|
11
|
|
|
—
|
|
|
15
|
|
|
11
|
|
|
(9
|
)
|
|
28
|
|
||||||
Interest expense
|
|
150
|
|
|
40
|
|
|
47
|
|
|
51
|
|
|
—
|
|
|
288
|
|
||||||
Income taxes (benefits)
|
|
94
|
|
|
47
|
|
|
85
|
|
|
(13
|
)
|
|
—
|
|
|
213
|
|
||||||
Net income (loss)
|
|
158
|
|
|
81
|
|
|
144
|
|
|
(55
|
)
|
|
—
|
|
|
328
|
|
||||||
Total assets
|
|
27,447
|
|
|
8,139
|
|
|
16,578
|
|
|
531
|
|
|
—
|
|
|
52,695
|
|
||||||
Total goodwill
|
|
5,004
|
|
|
614
|
|
|
800
|
|
|
—
|
|
|
—
|
|
|
6,418
|
|
||||||
Property additions
|
|
241
|
|
|
279
|
|
|
169
|
|
|
9
|
|
|
—
|
|
|
698
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Legislative or regulatory solutions for generation assets that recognize their environmental or energy security benefits,
|
•
|
Additional asset sales and/or plant deactivations,
|
•
|
Restructuring FES debt with its creditors, and/or
|
•
|
Seeking protection under U.S. bankruptcy laws for FES and possibly FENOC.
|
•
|
The FES debt maturities, interest payments and sale-leaseback commitments due in June 2017.
|
•
|
The outcome of the recently announced directive by the Secretary of Energy to complete a study by mid-June 2017 that explores critical issues central to protecting the long-term reliability of the electric grid, including the impact of federal policy interventions and the changing nature of electricity fuel mix, compensation of on-site fuel supply and other factors that strengthen grid resilience, and the impact of regulatory burdens, mandates and tax and subsidy policies on the premature retirement of baseload power plants.
|
•
|
The resolution of recently introduced legislation before the Ohio General Assembly that would create a zero-emission nuclear (ZEN) credit that would compensate nuclear power plants for their environmental attributes and the potential for ZEN legislative action in Pennsylvania.
|
•
|
The inability to finalize and consummate settlement agreements with the parties to the previously disclosed disputes regarding long-term coal transportation contracts as discussed in "Environmental Matters" below, whereby FG could be subject to materially higher damages owed to CSX, BNSF and NS.
|
(In millions, except per share amounts)
|
|
For the Three Months Ended March 31
|
|||||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
|
|
|
|
|
|
|
|
|||||||
REVENUES:
|
|
$
|
3,552
|
|
|
$
|
3,869
|
|
|
$
|
(317
|
)
|
|
(8
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|||||||
Fuel
|
|
368
|
|
|
381
|
|
|
(13
|
)
|
|
(3
|
)%
|
|||
Purchased power
|
|
863
|
|
|
1,124
|
|
|
(261
|
)
|
|
(23
|
)%
|
|||
Other operating expenses
|
|
1,142
|
|
|
918
|
|
|
224
|
|
|
24
|
%
|
|||
Provision for depreciation
|
|
275
|
|
|
329
|
|
|
(54
|
)
|
|
(16
|
)%
|
|||
Amortization of regulatory assets, net
|
|
59
|
|
|
61
|
|
|
(2
|
)
|
|
(3
|
)%
|
|||
General taxes
|
|
271
|
|
|
280
|
|
|
(9
|
)
|
|
(3
|
)%
|
|||
Total operating expenses
|
|
2,978
|
|
|
3,093
|
|
|
(115
|
)
|
|
(4
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
OPERATING INCOME
|
|
574
|
|
|
776
|
|
|
(202
|
)
|
|
(26
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|||||||
Investment income
|
|
24
|
|
|
28
|
|
|
(4
|
)
|
|
(14
|
)%
|
|||
Interest expense
|
|
(287
|
)
|
|
(288
|
)
|
|
1
|
|
|
—
|
%
|
|||
Capitalized financing costs
|
|
20
|
|
|
25
|
|
|
(5
|
)
|
|
(20
|
)%
|
|||
Total other expense
|
|
(243
|
)
|
|
(235
|
)
|
|
(8
|
)
|
|
3
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
INCOME BEFORE INCOME TAXES
|
|
331
|
|
|
541
|
|
|
(210
|
)
|
|
(39
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
INCOME TAXES
|
|
126
|
|
|
213
|
|
|
(87
|
)
|
|
(41
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
NET INCOME
|
|
$
|
205
|
|
|
$
|
328
|
|
|
$
|
(123
|
)
|
|
(38
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
EARNINGS PER SHARE OF COMMON STOCK:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
0.46
|
|
|
$
|
0.78
|
|
|
$
|
(0.32
|
)
|
|
(41
|
)%
|
Diluted
|
|
$
|
0.46
|
|
|
$
|
0.77
|
|
|
$
|
(0.31
|
)
|
|
(40
|
)%
|
•
|
The decrease in revenue at CES was primarily due to lower contract sales volumes at lower prices and lower capacity revenues partially offset by an increase in wholesale sales.
|
•
|
The decrease in revenue at Regulated Distribution primarily resulted from lower generation revenues mainly related to increased shopping in Ohio, Pennsylvania, and New Jersey as well as the absence of the sale of oil and gas royalties recognized in 2016 at WP. These declines were partially offset by increases in distribution services revenues resulting from the implementation of new rates in 2017 in Ohio, Pennsylvania and New Jersey.
|
•
|
The increase in revenue at Regulated Transmission resulted from recovery of incremental operating expenses and a higher rate base at ATSI and TrAIL, partially offset by lower network transmission revenues at the Utilities associated with lower peak demands.
|
•
|
Fuel expense decreased
$13 million
, primarily resulting from lower generation associated with outages and lower economic dispatch of fossil units resulting from low wholesale spot market energy prices.
|
•
|
Purchased power decreased
$261 million
, primarily at CES, due to lower capacity expense as a result of lower contract sales and lower capacity rates as well as lower purchased power volumes and market prices. At Regulated Distribution, the decline in purchased power was the result of lower volumes from increased customer shopping as well as lower prices reflecting lower default service auction prices.
|
•
|
Other operating expenses increased
$224 million
, reflecting an increase of
$243 million
at CES primarily associated with estimated losses on long-term coal transportation contract disputes, as previously discussed, and higher mark-to-market expenses on commodity contract positions. Operating expenses decreased
$23 million
at Regulated Distribution resulting primarily from the absence of economic development and energy efficiency obligations recognized in 2016 under the Ohio
|
First Three Months 2017 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
2,444
|
|
|
$
|
313
|
|
|
$
|
773
|
|
|
$
|
(42
|
)
|
|
$
|
3,488
|
|
Other
|
|
46
|
|
|
—
|
|
|
41
|
|
|
(23
|
)
|
|
64
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
117
|
|
|
(117
|
)
|
|
—
|
|
|||||
Total Revenues
|
|
2,490
|
|
|
313
|
|
|
931
|
|
|
(182
|
)
|
|
3,552
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
141
|
|
|
—
|
|
|
227
|
|
|
—
|
|
|
368
|
|
|||||
Purchased power
|
|
813
|
|
|
—
|
|
|
167
|
|
|
(117
|
)
|
|
863
|
|
|||||
Other operating expenses
|
|
624
|
|
|
45
|
|
|
564
|
|
|
(91
|
)
|
|
1,142
|
|
|||||
Provision for depreciation
|
|
178
|
|
|
51
|
|
|
28
|
|
|
18
|
|
|
275
|
|
|||||
Amortization of regulatory assets, net
|
|
57
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|||||
General taxes
|
|
184
|
|
|
42
|
|
|
30
|
|
|
15
|
|
|
271
|
|
|||||
Total Operating Expenses
|
|
1,997
|
|
|
140
|
|
|
1,016
|
|
|
(175
|
)
|
|
2,978
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
493
|
|
|
173
|
|
|
(85
|
)
|
|
(7
|
)
|
|
574
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss)
|
|
14
|
|
|
—
|
|
|
20
|
|
|
(10
|
)
|
|
24
|
|
|||||
Interest expense
|
|
(138
|
)
|
|
(39
|
)
|
|
(45
|
)
|
|
(65
|
)
|
|
(287
|
)
|
|||||
Capitalized financing costs
|
|
6
|
|
|
6
|
|
|
8
|
|
|
—
|
|
|
20
|
|
|||||
Total Other Expense
|
|
(118
|
)
|
|
(33
|
)
|
|
(17
|
)
|
|
(75
|
)
|
|
(243
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
375
|
|
|
140
|
|
|
(102
|
)
|
|
(82
|
)
|
|
331
|
|
|||||
Income taxes (benefits)
|
|
138
|
|
|
52
|
|
|
(35
|
)
|
|
(29
|
)
|
|
126
|
|
|||||
Net Income (Loss)
|
|
$
|
237
|
|
|
$
|
88
|
|
|
$
|
(67
|
)
|
|
$
|
(53
|
)
|
|
$
|
205
|
|
|
||||||||||||||||||||
First Three Months 2016 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
2,431
|
|
|
$
|
286
|
|
|
$
|
1,101
|
|
|
$
|
(46
|
)
|
|
$
|
3,772
|
|
Other
|
|
79
|
|
|
—
|
|
|
51
|
|
|
(33
|
)
|
|
97
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
152
|
|
|
(152
|
)
|
|
—
|
|
|||||
Total Revenues
|
|
2,510
|
|
|
286
|
|
|
1,304
|
|
|
(231
|
)
|
|
3,869
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
139
|
|
|
—
|
|
|
242
|
|
|
—
|
|
|
381
|
|
|||||
Purchased power
|
|
926
|
|
|
—
|
|
|
350
|
|
|
(152
|
)
|
|
1,124
|
|
|||||
Other operating expenses
|
|
647
|
|
|
37
|
|
|
321
|
|
|
(87
|
)
|
|
918
|
|
|||||
Provision for depreciation
|
|
167
|
|
|
45
|
|
|
102
|
|
|
15
|
|
|
329
|
|
|||||
Amortization of regulatory assets, net
|
|
59
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|||||
General taxes
|
|
185
|
|
|
41
|
|
|
39
|
|
|
15
|
|
|
280
|
|
|||||
Total Operating Expenses
|
|
2,123
|
|
|
125
|
|
|
1,054
|
|
|
(209
|
)
|
|
3,093
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
387
|
|
|
161
|
|
|
250
|
|
|
(22
|
)
|
|
776
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income
|
|
11
|
|
|
—
|
|
|
15
|
|
|
2
|
|
|
28
|
|
|||||
Interest expense
|
|
(150
|
)
|
|
(40
|
)
|
|
(47
|
)
|
|
(51
|
)
|
|
(288
|
)
|
|||||
Capitalized financing costs
|
|
4
|
|
|
7
|
|
|
11
|
|
|
3
|
|
|
25
|
|
|||||
Total Other Expense
|
|
(135
|
)
|
|
(33
|
)
|
|
(21
|
)
|
|
(46
|
)
|
|
(235
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
252
|
|
|
128
|
|
|
229
|
|
|
(68
|
)
|
|
541
|
|
|||||
Income taxes (benefits)
|
|
94
|
|
|
47
|
|
|
85
|
|
|
(13
|
)
|
|
213
|
|
|||||
Net Income (Loss)
|
|
$
|
158
|
|
|
$
|
81
|
|
|
$
|
144
|
|
|
$
|
(55
|
)
|
|
$
|
328
|
|
|
||||||||||||||||||||
Changes Between First Three Months 2017 and First Three Months 2016 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
13
|
|
|
$
|
27
|
|
|
$
|
(328
|
)
|
|
$
|
4
|
|
|
$
|
(284
|
)
|
Other
|
|
(33
|
)
|
|
—
|
|
|
(10
|
)
|
|
10
|
|
|
(33
|
)
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
(35
|
)
|
|
35
|
|
|
—
|
|
|||||
Total Revenues
|
|
(20
|
)
|
|
27
|
|
|
(373
|
)
|
|
49
|
|
|
(317
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
2
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(13
|
)
|
|||||
Purchased power
|
|
(113
|
)
|
|
—
|
|
|
(183
|
)
|
|
35
|
|
|
(261
|
)
|
|||||
Other operating expenses
|
|
(23
|
)
|
|
8
|
|
|
243
|
|
|
(4
|
)
|
|
224
|
|
|||||
Provision for depreciation
|
|
11
|
|
|
6
|
|
|
(74
|
)
|
|
3
|
|
|
(54
|
)
|
|||||
Amortization of regulatory assets, net
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
General taxes
|
|
(1
|
)
|
|
1
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|||||
Total Operating Expenses
|
|
(126
|
)
|
|
15
|
|
|
(38
|
)
|
|
34
|
|
|
(115
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
106
|
|
|
12
|
|
|
(335
|
)
|
|
15
|
|
|
(202
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss)
|
|
3
|
|
|
—
|
|
|
5
|
|
|
(12
|
)
|
|
(4
|
)
|
|||||
Interest expense
|
|
12
|
|
|
1
|
|
|
2
|
|
|
(14
|
)
|
|
1
|
|
|||||
Capitalized financing costs
|
|
2
|
|
|
(1
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|||||
Total Other Expense
|
|
17
|
|
|
—
|
|
|
4
|
|
|
(29
|
)
|
|
(8
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
123
|
|
|
12
|
|
|
(331
|
)
|
|
(14
|
)
|
|
(210
|
)
|
|||||
Income taxes (benefits)
|
|
44
|
|
|
5
|
|
|
(120
|
)
|
|
(16
|
)
|
|
(87
|
)
|
|||||
Net Income (Loss)
|
|
$
|
79
|
|
|
$
|
7
|
|
|
$
|
(211
|
)
|
|
$
|
2
|
|
|
$
|
(123
|
)
|
|
|
For the Three Months Ended March 31
|
|
Increase
|
||||||||
Revenues by Type of Service
|
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Distribution services
|
|
$
|
1,308
|
|
|
$
|
1,157
|
|
|
$
|
151
|
|
|
|
|
|
|
|
|
||||||
Generation sales:
|
|
|
|
|
|
|
||||||
Retail
|
|
1,013
|
|
|
1,152
|
|
|
(139
|
)
|
|||
Wholesale
|
|
123
|
|
|
122
|
|
|
1
|
|
|||
Total generation sales
|
|
1,136
|
|
|
1,274
|
|
|
(138
|
)
|
|||
|
|
|
|
|
|
|
||||||
Other
|
|
46
|
|
|
79
|
|
|
(33
|
)
|
|||
Total Revenues
|
|
$
|
2,490
|
|
|
$
|
2,510
|
|
|
$
|
(20
|
)
|
|
|
For the Three Months Ended March 31
|
|
Increase
|
|||||
Electric Distribution MWH Deliveries
|
|
2017
|
|
2016
|
|
(Decrease)
|
|||
|
|
(In thousands)
|
|
|
|||||
Residential
|
|
13,869
|
|
|
14,336
|
|
|
(3.3
|
)%
|
Commercial
|
|
10,445
|
|
|
10,560
|
|
|
(1.1
|
)%
|
Industrial
|
|
12,433
|
|
|
12,377
|
|
|
0.5
|
%
|
Other
|
|
143
|
|
|
147
|
|
|
(2.7
|
)%
|
Total Electric Distribution MWH Deliveries
|
|
36,890
|
|
|
37,420
|
|
|
(1.4
|
)%
|
Source of Change in Generation Revenues
|
|
Increase (Decrease)
|
||
|
|
(In millions)
|
||
Retail:
|
|
|
|
|
Effect of decrease in sales volumes
|
|
$
|
(88
|
)
|
Change in prices
|
|
(51
|
)
|
|
|
|
(139
|
)
|
|
Wholesale:
|
|
|
||
Effect of increase in sales volumes
|
|
22
|
|
|
Change in prices
|
|
(8
|
)
|
|
Capacity Revenue
|
|
(13
|
)
|
|
|
|
1
|
|
|
Decrease in Generation Revenues
|
|
$
|
(138
|
)
|
•
|
Purchased power costs decreased
$113 million
during the first
three
months of
2017
, as compared to the same period of
2016
primarily due to decreased volumes resulting from increased customer shopping, as described above, as well as lower unit costs reflecting lower default service auction prices.
|
Source of Change in Purchased Power
|
|
Increase (Decrease)
|
|||
|
|
(In millions)
|
|||
Purchases from non-affiliates:
|
|
|
|||
Change due to decreased unit costs
|
|
$
|
(47
|
)
|
|
Change due to volumes
|
|
(54
|
)
|
||
|
|
(101
|
)
|
||
Purchases from affiliates:
|
|
|
|||
Change due to decreased unit costs
|
|
(10
|
)
|
||
Change due to volumes
|
|
(25
|
)
|
||
|
|
(35
|
)
|
||
Capacity Expense
|
|
(10
|
)
|
||
Amortization of deferred costs
|
|
33
|
|
||
Decrease in Purchased Power Costs
|
|
$
|
(113
|
)
|
•
|
Other operating expenses decreased
$23 million
primarily due to:
|
•
|
A decrease of $51 million resulting from the recognition in 2016 of economic development and energy efficiency obligations in accordance with the PUCO's March 31, 2016 Opinion and Order adopting and approving, with modifications, the Ohio Companies' ESP IV.
|
•
|
Partially offsetting the decrease were higher operating and maintenance expenses of $26 million, including increased storm restoration costs of $17 million, which were deferred for future recovery, resulting in no material impact on current period earnings, and increased operating and maintenance expenses in Pennsylvania recovered through the new base distribution rates effective January 27, 2017.
|
•
|
Depreciation expense increased
$11 million
primarily due to a higher rate base as well as increased rates in Pennsylvania.
|
|
|
For the Three Months Ended March 31
|
|
Increase
|
||||||||
Revenues by Transmission Asset Owner
|
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
ATSI
|
|
$
|
153
|
|
|
$
|
134
|
|
|
$
|
19
|
|
TrAIL
|
|
71
|
|
|
62
|
|
|
9
|
|
|||
MAIT
|
|
25
|
|
|
27
|
|
|
(2
|
)
|
|||
JCP&L
|
|
23
|
|
|
23
|
|
|
—
|
|
|||
Other
|
|
41
|
|
|
40
|
|
|
1
|
|
|||
Total Revenues
|
|
$
|
313
|
|
|
$
|
286
|
|
|
$
|
27
|
|
|
|
For the Three Months Ended March 31
|
|
Decrease
|
||||||||
Revenues by Type of Service
|
|
2017
|
|
2016
|
|
|||||||
|
|
(In millions)
|
||||||||||
Contract Sales:
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
200
|
|
|
$
|
206
|
|
|
$
|
(6
|
)
|
Governmental Aggregation
|
|
110
|
|
|
240
|
|
|
(130
|
)
|
|||
Mass Market
|
|
37
|
|
|
49
|
|
|
(12
|
)
|
|||
POLR
|
|
154
|
|
|
157
|
|
|
(3
|
)
|
|||
Structured Sales
|
|
80
|
|
|
162
|
|
|
(82
|
)
|
|||
Total Contract Sales
|
|
581
|
|
|
814
|
|
|
(233
|
)
|
|||
Wholesale
|
|
296
|
|
|
418
|
|
|
(122
|
)
|
|||
Transmission
|
|
13
|
|
|
21
|
|
|
(8
|
)
|
|||
Other
|
|
41
|
|
|
51
|
|
|
(10
|
)
|
|||
Total Revenues
|
|
$
|
931
|
|
|
$
|
1,304
|
|
|
$
|
(373
|
)
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31
|
|
Increase (Decrease)
|
|||||
MWH Sales by Channel
|
|
2017
|
|
2016
|
|
||||
|
|
(In thousands)
|
|
|
|||||
Contract Sales:
|
|
|
|
|
|
|
|||
Direct
|
|
3,939
|
|
|
3,794
|
|
|
3.8
|
%
|
Governmental Aggregation
|
|
2,137
|
|
|
3,569
|
|
|
(40.1
|
)%
|
Mass Market
|
|
543
|
|
|
703
|
|
|
(22.8
|
)%
|
POLR
|
|
2,764
|
|
|
2,552
|
|
|
8.3
|
%
|
Structured Sales
|
|
1,952
|
|
|
3,896
|
|
|
(49.9
|
)%
|
Total Contract Sales
|
|
11,335
|
|
|
14,514
|
|
|
(21.9
|
)%
|
Wholesale
|
|
4,455
|
|
|
1,913
|
|
|
132.9
|
%
|
Total MWH Sales
|
|
15,790
|
|
|
16,427
|
|
|
(3.9
|
)%
|
|
|
|
|
|
|
|
|
|
Source of Change in Revenues
|
||||||||||||||||||
|
|
Increase (Decrease)
|
||||||||||||||||||
MWH Sales Channel:
|
|
Sales Volumes
|
|
Prices
|
|
Gain on Settled Contracts
|
|
Capacity Revenue
|
|
Total
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Direct
|
|
$
|
8
|
|
|
$
|
(14
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
Governmental Aggregation
|
|
(96
|
)
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
(130
|
)
|
|||||
Mass Market
|
|
(11
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|||||
POLR
|
|
13
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Structured Sales
|
|
(81
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(82
|
)
|
|||||
Wholesale
|
|
77
|
|
|
(4
|
)
|
|
(46
|
)
|
|
(149
|
)
|
|
(122
|
)
|
•
|
Fuel costs decreased
$15 million
, primarily due to lower generation associated with outages and lower economic dispatch of fossil units resulting from low wholesale spot market energy prices, as described above.
|
•
|
Purchased power costs decreased
$183 million
, primarily due to lower capacity expenses ($138 million), and lower volumes ($17 million) at lower unit prices ($28 million). The decrease in capacity expense, which is a component of CES' retail price, was primarily the result of lower contract sales and lower capacity rates associated with CES' retail sales obligations. Lower volumes and unit prices primarily resulted from lower contract sales, partially offset by economic purchases and lower wholesale spot market prices, as discussed above.
|
•
|
A $164 million charge associated with estimated losses on long-term coal transportation contract disputes recognized in the first quarter of 2017 as discussed in "Environmental Matters" below.
|
•
|
Fossil operating costs decreased $24 million, primarily due to decreased outage costs.
|
•
|
Nuclear operating costs increased $7 million, primarily as a result of higher refueling outage costs.
|
•
|
Transmission expenses decreased $16 million, primarily due to lower load requirements.
|
•
|
Other operating expenses increased $112 million, primarily due to higher mark-to-market expenses on commodity contract positions.
|
•
|
Depreciation expense decreased
$74 million
, primarily due to a lower asset base resulting from asset impairments recognized in the fourth quarter of 2016.
|
•
|
General taxes decreased $9 million, primarily due to lower gross receipts taxes associated with lower retail sales volumes.
|
Net Regulatory Assets by Source
|
|
March 31,
2017 |
|
December 31,
2016 |
|
Increase
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Regulatory transition costs
|
|
$
|
73
|
|
|
$
|
90
|
|
|
$
|
(17
|
)
|
Customer receivables for future income taxes
|
|
367
|
|
|
444
|
|
|
(77
|
)
|
|||
Nuclear decommissioning and spent fuel disposal costs
|
|
(166
|
)
|
|
(304
|
)
|
|
138
|
|
|||
Asset removal costs
|
|
(477
|
)
|
|
(470
|
)
|
|
(7
|
)
|
|||
Deferred transmission costs
|
|
143
|
|
|
127
|
|
|
16
|
|
|||
Deferred generation costs
|
|
221
|
|
|
215
|
|
|
6
|
|
|||
Deferred distribution costs
|
|
258
|
|
|
296
|
|
|
(38
|
)
|
|||
Contract valuations
|
|
147
|
|
|
153
|
|
|
(6
|
)
|
|||
Storm-related costs
|
|
313
|
|
|
353
|
|
|
(40
|
)
|
|||
Other
|
|
121
|
|
|
110
|
|
|
11
|
|
|||
Net Regulatory Assets included on the Consolidated Balance Sheets
|
|
$
|
1,000
|
|
|
$
|
1,014
|
|
|
$
|
(14
|
)
|
Currently Payable Long-Term Debt
|
|
(In millions)
|
||
Unsecured notes
|
|
$
|
1,330
|
|
FMBs
|
|
575
|
|
|
Unsecured PCRBs
|
|
130
|
|
|
Collateralized lease obligation bonds
|
|
5
|
|
|
Sinking fund requirements
|
|
68
|
|
|
Other notes
|
|
39
|
|
|
|
|
$
|
2,147
|
|
Borrower(s)
|
|
Type
|
|
Maturity
|
|
Commitment
|
|
Available Liquidity
|
||||
|
|
|
|
|
|
(In millions)
|
||||||
FirstEnergy
(1)
|
|
Revolving
|
|
December 2021
|
|
$
|
4,000
|
|
|
$
|
1,240
|
|
FET
(2)
|
|
Revolving
|
|
December 2021
|
|
1,000
|
|
|
1,000
|
|
||
|
|
|
|
Subtotal
|
|
$
|
5,000
|
|
|
$
|
2,240
|
|
|
|
|
|
Cash
|
|
—
|
|
|
164
|
|
||
|
|
|
|
Total
|
|
$
|
5,000
|
|
|
$
|
2,404
|
|
(1)
|
FE and the Utilities.
|
(2)
|
Includes FET, ATSI and TrAIL.
|
Type
|
|
Commitment
|
|
Available Liquidity
|
||||
|
|
(In millions)
|
||||||
Two-year secured credit facility with FE
|
|
$
|
500
|
|
|
$
|
500
|
|
Cash
|
|
—
|
|
|
2
|
|
||
|
|
$
|
500
|
|
|
$
|
502
|
|
Borrower
|
|
FirstEnergy Revolving
Credit Facility
Sub-Limit
|
|
FET Revolving
Credit Facility
Sub-Limit
|
|
Regulatory and
Other Short-Term Debt Limitations
|
|
|
|||||||||
|
|
(In millions)
|
|
|
|||||||||||||
FE
|
|
|
$
|
4,000
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
(1)
|
|
FET
|
|
|
—
|
|
|
|
1,000
|
|
|
|
—
|
|
(1)
|
|
|||
OE
|
|
|
500
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
CEI
|
|
|
500
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
TE
|
|
|
500
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
JCP&L
|
|
|
600
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
ME
|
|
|
300
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
PN
|
|
|
300
|
|
|
|
—
|
|
|
|
300
|
|
(2)
|
|
|||
WP
|
|
|
200
|
|
|
|
—
|
|
|
|
200
|
|
(2)
|
|
|||
MP
|
|
|
500
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
PE
|
|
|
150
|
|
|
|
—
|
|
|
|
150
|
|
(2)
|
|
|||
ATSI
|
|
|
—
|
|
|
|
500
|
|
|
|
500
|
|
(2)
|
|
|||
Penn
|
|
|
50
|
|
|
|
—
|
|
|
|
100
|
|
(2)
|
|
|||
TrAIL
|
|
|
—
|
|
|
|
400
|
|
|
|
400
|
|
(2)
|
|
|||
MAIT
|
|
|
—
|
|
|
|
400
|
|
|
|
400
|
|
(2)(3)
|
|
(1)
|
No limitations.
|
(2)
|
Includes amounts which may be borrowed under the regulated companies' money pool.
|
(3)
|
Pending PPUC approval with respect to the money pool and pending receipt of credit ratings with respect to the FET Facility.
|
|
|
Senior Secured
|
|
Senior Unsecured
|
||||||||
Issuer
|
|
S&P
|
|
Moody’s
|
|
Fitch
|
|
S&P
|
|
Moody’s
|
|
Fitch
|
FE
|
|
—
|
|
—
|
|
—
|
|
BB+
|
|
Baa3
|
|
BBB-
|
FES
|
|
B
|
|
B1
|
|
—
|
|
CCC+
|
|
Caa1
|
|
C
|
AE Supply
|
|
BB
|
|
—
|
|
BB
|
|
BB-
|
|
B1
|
|
BB-
|
AGC
|
|
—
|
|
—
|
|
—
|
|
BB-
|
|
Baa3
|
|
BB
|
ATSI
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
Baa2
|
|
BBB+
|
CEI
|
|
BBB+
|
|
Baa1
|
|
A-
|
|
BBB-
|
|
Baa3
|
|
BBB+
|
FET
|
|
—
|
|
—
|
|
—
|
|
BB+
|
|
Baa3
|
|
BBB-
|
JCP&L
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
Baa2
|
|
BBB
|
ME
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
A3
|
|
BBB+
|
MP
|
|
BBB+
|
|
A3
|
|
BBB+
|
|
—
|
|
—
|
|
—
|
OE
|
|
BBB+
|
|
A2
|
|
A-
|
|
BBB-
|
|
Baa1
|
|
BBB+
|
PN
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
Baa1
|
|
BBB+
|
Penn
|
|
—
|
|
A2
|
|
A-
|
|
—
|
|
—
|
|
—
|
PE
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
TE
|
|
BBB+
|
|
Baa1
|
|
A-
|
|
—
|
|
—
|
|
—
|
TrAIL
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
A3
|
|
BBB+
|
WP
|
|
BBB+
|
|
A1
|
|
A-
|
|
—
|
|
—
|
|
—
|
•
|
The absence of cash contributions to the qualified pension plan that occurred in 2016;
|
•
|
Higher distribution services revenues reflecting implementation of approved rates in Ohio, Pennsylvania, and New Jersey, as further described above; partially offset by
|
•
|
Lower capacity revenues at CES.
|
|
|
For the Three Months Ended March 31
|
||||||
Securities Issued or Redeemed / Repaid
|
|
2017
|
|
2016
|
||||
|
|
(In millions)
|
||||||
New Issues
|
|
|
|
|
|
|
||
Term Loan
|
|
$
|
250
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Redemptions / Repayments
|
|
|
|
|
|
|
||
PCRBs
|
|
(29
|
)
|
|
—
|
|
||
FMBs
|
|
(150
|
)
|
|
—
|
|
||
Senior secured notes
|
|
(32
|
)
|
|
(31
|
)
|
||
|
|
$
|
(211
|
)
|
|
$
|
(31
|
)
|
|
|
|
|
|
||||
Short-term borrowings, net
|
|
$
|
75
|
|
|
$
|
425
|
|
|
|
|
|
|
||||
Common stock dividend payments
|
|
$
|
(159
|
)
|
|
$
|
(152
|
)
|
|
|
For the Three Months Ended March 31
|
|
|
||||||||
Cash Used for Investing Activities
|
|
2017
|
|
2016
|
|
Increase (Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Property Additions:
|
|
|
|
|
|
|
||||||
Regulated Distribution
|
|
$
|
264
|
|
|
$
|
241
|
|
|
$
|
23
|
|
Regulated Transmission
|
|
224
|
|
|
279
|
|
|
(55
|
)
|
|||
Competitive Energy Services
|
|
92
|
|
|
169
|
|
|
(77
|
)
|
|||
Corporate / Other
|
|
8
|
|
|
9
|
|
|
(1
|
)
|
|||
Nuclear fuel
|
|
132
|
|
|
149
|
|
|
(17
|
)
|
|||
Investments
|
|
23
|
|
|
23
|
|
|
—
|
|
|||
Asset removal costs
|
|
35
|
|
|
34
|
|
|
1
|
|
|||
Other
|
|
(16
|
)
|
|
(39
|
)
|
|
23
|
|
|||
|
|
$
|
762
|
|
|
$
|
865
|
|
|
$
|
(103
|
)
|
•
|
a decrease of $77 million at CES, resulting from lower capital investments associated with outages, MATS compliance, and the Mansfield dewatering facility,
|
•
|
a decrease of $55 million at Regulated Transmission due to timing of capital investments associated with its
Energizing the Future
investment program
;
partially offset by,
|
•
|
an increase of $23 million at Regulated Distribution due to an increase in storm restoration work and smart meter investments in Pennsylvania.
|
Guarantees and Other Assurances
|
|
Maximum Exposure
|
||
|
|
(In millions)
|
||
FE's Guarantees on Behalf of its Subsidiaries
|
|
|
|
|
Energy and Energy-Related Contracts
(1)
|
|
$
|
5
|
|
Deferred compensation arrangements
(2)
|
|
568
|
|
|
Other
(3)
|
|
9
|
|
|
|
|
582
|
|
|
Subsidiaries’ Guarantees
|
|
|
||
Energy and Energy-Related Contracts
(4)
|
|
265
|
|
|
FES' guarantee of nuclear decommissioning costs
(5)(6)
|
|
21
|
|
|
FES’ guarantee of FG’s sale and leaseback obligations
|
|
1,647
|
|
|
|
|
1,933
|
|
|
|
|
|
||
FE's Guarantees on Behalf of Business Ventures
|
|
|
||
Global Holding facility
|
|
300
|
|
|
|
|
|
||
Other Assurances
|
|
|
||
Surety Bonds - Wholly Owned Subsidiaries
(7)
|
|
195
|
|
|
Surety Bonds
|
|
191
|
|
|
Sale leaseback indemnity
|
|
58
|
|
|
LOCs
(8)
|
|
12
|
|
|
|
|
456
|
|
|
Total Guarantees and Other Assurances
|
|
$
|
3,271
|
|
(1)
|
Issued for open-ended terms, with a 10-day termination right by FirstEnergy.
|
(2)
|
CES related portion is $144 million, including $56 million and $88 million at FES and FENOC, respectively.
|
(3)
|
Includes guarantees of
$4 million
for nuclear decommissioning funding assurances,
$2 million
for railcar leases and $
3 million
for various leases.
|
(4)
|
Includes energy and energy-related contracts associated with FES.
|
(5)
|
NG funded a $10 million supplemental trust in December 2016 to replace these guarantees, which terminated in April 2017.
|
(6)
|
FES provides a parental support agreement to NG of up to $400 million that may be required in the event of extraordinary circumstances.
|
(7)
|
Effective January 2017, FE is a guarantor for $169 million of FG surety bonds for the benefit of the PA DEP with respect to LBR under the surety support provisions of FE's credit facility to FES as discussed above. As of March 31, 2017, an additional $31 million of surety credit support remains available to FES from FE.
|
(8)
|
Includes
$10 million
issued for various terms pursuant to LOC capacity available under FirstEnergy’s revolving credit facilities and
$2 million
pledged in connection with the sale and leaseback of Beaver Valley Unit 2 by OE.
|
Potential Collateral Obligations
|
|
FES
|
|
AE Supply
|
|
Regulated
|
|
FE Corp
|
|
Total
|
||||||||||
|
|
|
(in millions)
|
|||||||||||||||||
Contractual Obligations for Additional Collateral
|
|
|
|
|
|
|
|
|
|
|
||||||||||
At Current Credit Rating
|
|
$
|
8
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
Upon Further Downgrade
|
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
|||||
Surety Bonds (Collateralized Amount)
(1)
|
|
233
|
|
|
25
|
|
|
93
|
|
|
7
|
|
|
358
|
|
|||||
Total Exposure from Contractual Obligations
|
|
$
|
241
|
|
|
$
|
28
|
|
|
$
|
143
|
|
|
$
|
7
|
|
|
$
|
419
|
|
Source of Information-
Fair Value by Contract Year
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||||||
Other external sources
(1)
|
|
$
|
(3
|
)
|
|
$
|
(19
|
)
|
|
$
|
(33
|
)
|
|
$
|
(11
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(66
|
)
|
Prices based on models
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||||
Total
(2)
|
|
$
|
(9
|
)
|
|
$
|
(19
|
)
|
|
$
|
(33
|
)
|
|
$
|
(11
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(72
|
)
|
(1)
|
Primarily represents contracts based on broker and ICE quotes.
|
(2)
|
Includes
$(104) 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.
|
•
|
ASU 2017-03, "Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update),”
|
•
|
ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,”
|
•
|
ASU 2017-05, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets" and
|
•
|
ASU 2017-08, "Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities."
|
•
|
Legislative or regulatory solutions for generation assets that recognize their environmental or energy security benefits,
|
•
|
Additional asset sales and/or plant deactivations,
|
•
|
Restructuring FES debt with its creditors, and/or
|
•
|
Seeking protection under U.S. bankruptcy laws for FES and possibly FENOC.
|
•
|
The FES debt maturities, interest payments and sale-leaseback commitments due in June 2017.
|
•
|
The outcome of the recently announced directive by the Secretary of Energy to complete a study by mid-June 2017 that explores critical issues central to protecting the long-term reliability of the electric grid, including the impact of federal policy interventions and the changing nature of electricity fuel mix, compensation of on-site fuel supply and other factors that strengthen grid resilience, and the impact of regulatory burdens, mandates and tax and subsidy policies on the premature retirement of baseload power plants.
|
•
|
The resolution of recently introduced legislation before the Ohio General Assembly that would create a zero-emission nuclear (ZEN) credit that would compensate nuclear power plants for their environmental attributes and the potential for ZEN legislative action in Pennsylvania.
|
•
|
The inability to finalize and consummate settlement agreements with the parties to the previously disclosed disputes regarding long-term coal transportation contracts as discussed in "Environmental Matters" above, whereby FG could be subject to materially higher damages owed to CSX, BNSF and NS.
|
|
|
For the Three Months Ended March 31
|
|
Increase
|
|||||
MWH Sales by Channel
|
|
2017
|
|
2016
|
|
(Decrease)
|
|||
|
|
(In thousands)
|
|
|
|||||
Contract Sales:
|
|
|
|
|
|
|
|||
Direct
|
|
3,939
|
|
|
3,794
|
|
|
3.8
|
%
|
Governmental Aggregation
|
|
2,137
|
|
|
3,569
|
|
|
(40.1
|
)%
|
Mass Market
|
|
543
|
|
|
703
|
|
|
(22.8
|
)%
|
POLR
|
|
2,764
|
|
|
2,552
|
|
|
8.3
|
%
|
Structured Sales
|
|
1,839
|
|
|
3,779
|
|
|
(51.3
|
)%
|
Total Contract Sales
|
|
11,222
|
|
|
14,397
|
|
|
(22.1
|
)%
|
Wholesale
|
|
4,534
|
|
|
363
|
|
|
1,149.0
|
%
|
Total MWH Sales
|
|
15,756
|
|
|
14,760
|
|
|
6.7
|
%
|
|
|
Source of Change in Revenues
|
||||||||||||||||||
|
|
Increase (Decrease)
|
||||||||||||||||||
MWH Sales Channel:
|
|
Sales Volumes
|
|
Prices
|
|
Gain on Settled Contracts
|
|
Capacity Revenue
|
|
Total
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Direct
|
|
$
|
8
|
|
|
$
|
(14
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
Governmental Aggregation
|
|
(96
|
)
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
(130
|
)
|
|||||
Mass Market
|
|
(11
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|||||
POLR
|
|
13
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Structured Sales
|
|
(79
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(81
|
)
|
|||||
Wholesale
|
|
115
|
|
|
8
|
|
|
(46
|
)
|
|
(113
|
)
|
|
$
|
(36
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Source of Change
|
||||||||||||||||||
|
|
Increase (Decrease)
|
||||||||||||||||||
Operating Expenses
|
|
Volumes
|
|
Prices
|
|
Loss on Settled Contracts
|
|
Capacity Expense
|
|
Total
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Fossil Fuel
|
|
$
|
(15
|
)
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
Nuclear Fuel
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Affiliated Purchased Power
|
|
155
|
|
|
(49
|
)
|
|
(25
|
)
|
|
—
|
|
|
81
|
|
|||||
Non-affiliated Purchased Power
|
|
(58
|
)
|
|
17
|
|
|
(38
|
)
|
|
(138
|
)
|
|
(217
|
)
|
•
|
A $164 million charge associated with estimated losses on long-term coal transportation contract disputes recognized in the first quarter of 2017 as discussed in "Environmental Matters" above.
|
•
|
Fossil operating costs decreased $15 million, primarily due to decreased outage costs.
|
•
|
Nuclear operating costs increased $7 million, primarily as a result of higher refueling outage costs.
|
•
|
Transmission expenses decreased $8
million, primarily due to lower load requirements.
|
•
|
Other operating expenses increased $130 million, primarily due to higher mark-to-market expenses on commodity contract positions.
|
|
|
For the Three Months Ended March 31
|
||||||
Securities Issued or Redeemed / Repaid
|
|
2017
|
|
2016
|
||||
|
|
(In millions)
|
||||||
Redemptions / Repayments
|
|
|
|
|
|
|
||
PCRBs
|
|
$
|
(29
|
)
|
|
$
|
—
|
|
|
|
|
|
|
||||
Short-term borrowings, net
|
|
$
|
13
|
|
|
$
|
49
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31
|
||||||
Cash Used for Investing Activities
|
|
2017
|
|
2016
|
||||
|
|
(In millions)
|
||||||
Property Additions
|
|
$
|
85
|
|
|
$
|
143
|
|
Nuclear fuel
|
|
132
|
|
|
149
|
|
||
Loans to affiliated companies, net
|
|
(29
|
)
|
|
(11
|
)
|
||
Investments
|
|
14
|
|
|
3
|
|
||
Other
|
|
—
|
|
|
(9
|
)
|
||
|
|
$
|
202
|
|
|
$
|
275
|
|
Source of Information-
Fair Value by Contract Year
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||||||
Other external sources
(1)
|
|
$
|
23
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
36
|
|
Prices based on models
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||||
Total
|
|
$
|
19
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32
|
|
(1)
|
Primarily represents contracts based on broker and ICE quotes.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
Exhibit Number
|
|
||
FirstEnergy
|
|
|
|
(A)
|
10.1
|
|
FirstEnergy Solutions Corp. Replacement 2017 Long-Term Incentive Program (LTIP), effective March 6, 2017
|
(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 March 31, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) related notes to these financial statements and (v) document and entity information.
|
FES
|
|
|
|
|
3.1
|
|
Amended and Restated Code of Regulations of FirstEnergy Solutions Corp., dated as of March 31, 2017 (incorporated by reference to FES' Form 8-K filed April 6, 2017, Exhibit 3.1, File No. 000-53742).
|
(A)
|
31.1
|
|
Certification of principal executive officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
31.2
|
|
Certification of principal financial officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
32
|
|
Certification of principal executive officer and principal 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 March 31, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income (Loss) and 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.
|
|
FIRSTENERGY CORP.
|
|
Registrant
|
|
|
|
/s/ K. Jon Taylor
|
|
K. Jon Taylor
|
|
Vice President, Controller
and Chief Accounting Officer
|
|
|
|
FIRSTENERGY SOLUTIONS CORP.
|
|
Registrant
|
|
|
|
/s/ Jason J. Lisowski
|
|
Jason J. Lisowski
|
|
Controller and Treasurer
|
|
(Principal Financial Officer)
|
Exhibit Number
|
|
||
|
|
|
|
FirstEnergy
|
|
|
|
(A)
|
10.1
|
|
FirstEnergy Solutions Corp. Replacement 2017 Long-Term Incentive Program (LTIP), effective March 6, 2017
|
(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 March 31, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) related notes to these financial statements and (v) document and entity information.
|
|
|
|
|
FES
|
|
|
|
|
3.1
|
|
Amended and Restated Code of Regulations of FirstEnergy Solutions Corp., dated as of March 31, 2017 (incorporated by reference to FES' Form 8-K filed April 6, 2017, Exhibit 3.1, File No. 000-53742).
|
(A)
|
31.1
|
|
Certification of principal executive officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
31.2
|
|
Certification of principal financial officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
32
|
|
Certification of principal executive officer and principal 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 March 31, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income (Loss) and 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.
|
Financial - FES, Fossil and Nuclear O&M and Capital Spend
|
Safety - FES, Fossil & FENOC OSHA incident rate
|
Nuclear Unit Capability Factor
|
•
|
50% of the award earned for results for the first and second quarter of the performance period will be calculated and paid no later than the last day in August.
|
•
|
50% of the award earned for the results for the third quarter of the performance period will be calculated and paid on or about December 1st.
|
Annual Targets for the FES-Fossil and FENOC R-LTIP
2017 Index |
||||
|
|
|
|
|
Index Score
|
FES Fossil and Nuclear O&M and Capital Spend ($M)
|
Nuclear Unit Capability Factor (UCF)
|
FES, Fossil & FENOC OSHA
|
|
Threshold
|
0.50
|
1,124
|
89.30
|
0.44
|
|
0.55
|
1,119
|
89.35
|
0.43
|
|
0.60
|
1,113
|
89.40
|
0.41
|
|
0.65
|
1,108
|
89.45
|
0.40
|
|
0.70
|
1,103
|
89.50
|
0.39
|
|
0.75
|
1,098
|
89.55
|
0.38
|
|
0.80
|
1,092
|
89.60
|
0.36
|
|
0.85
|
1,087
|
89.65
|
0.35
|
|
0.90
|
1,082
|
89.70
|
0.34
|
|
0.95
|
1,076
|
89.75
|
0.32
|
Target
|
1.00
|
1,071
|
89.80
|
0.31
|
|
1.05
|
1,066
|
89.85
|
0.29
|
|
1.10
|
1,060
|
89.90
|
0.27
|
|
1.15
|
1,055
|
89.95
|
0.26
|
|
1.20
|
1,049
|
90.00
|
0.24
|
|
1.25
|
1,044
|
90.05
|
0.22
|
|
1.30
|
1,039
|
90.10
|
0.20
|
|
1.35
|
1,033
|
90.15
|
0.18
|
|
1.40
|
1,028
|
90.20
|
0.17
|
|
1.45
|
1,022
|
90.25
|
0.15
|
Stretch
|
1.50
|
1,017
|
90.30
|
0.13
|
|
|
|
|
|
Total Points Earned
|
|
|
||
|
|
|
Payout:
|
|
|
|
|
Points
|
Payout
|
|
|
4.50
|
200%
|
|
|
4.05
|
200%
|
||
|
2.70
|
150%
|
||
|
2.25
|
100%
|
||
|
1.80
|
50%
|
||
|
0.00
|
0%
|
(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 year ended December 31, 2016, resulting from pre-tax impairment charges of $10,665 million. Additional earnings of $9,298 million would be required 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
|
|
|
(Principal Executive Officer)
|
|
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/ Jason J. Lisowski
|
|
|
Jason J. Lisowski
|
|
|
Controller and Treasurer
|
|
|
(Principal Financial Officer)
|
|
|
/s/ Charles E. Jones
|
|
|
Charles E. Jones
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
/s/ James F. Pearson
|
|
|
James F. Pearson
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
/s/ Donald R. Schneider
|
|
|
Donald R. Schneider
|
|
|
President
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
/s/ Jason J. Lisowski
|
|
|
Jason J. Lisowski
|
|
|
Controller and Treasurer
|
|
|
(Principal Financial Officer)
|
|