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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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Yes
þ
No
o
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Yes
þ
No
o
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Large Accelerated Filer
þ
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Accelerated Filer
o
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Non-accelerated Filer (Do not check
if a smaller reporting company) o |
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Smaller Reporting Company
o
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Emerging Growth Company
o
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Yes
o
No
þ
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OUTSTANDING
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CLASS
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AS OF MARCH 31, 2018
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FirstEnergy Corp., $0.10 par value
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476,909,318
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•
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The ability to successfully execute an exit of commodity-based generation that minimizes cash outflows and associated liabilities, including, without limitation, the losses, guarantees, claims and other obligations of FirstEnergy as such relate to the entities previously consolidated into FirstEnergy, including FES and FENOC, which have recently filed for bankruptcy protection.
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•
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The potential for litigation and demands for payment against FirstEnergy by FES and FENOC or certain of their creditors.
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•
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The risks associated with the bankruptcy cases of FES and FENOC, including, but not limited to, third-party motions in the cases that could adversely affect FirstEnergy, its liquidity or results of operations.
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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 operate as a fully regulated business.
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•
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The accomplishment of our regulatory and operational goals in connection with our transmission and distribution investment plans, 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 and distribution system, or the availability of capital or other resources supporting identified transmission and distribution 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 grow earnings in our regulated businesses, continue to reduce costs and to successfully execute our financial plans designed to improve our credit metrics and strengthen our balance sheet.
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•
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The risks and uncertainties associated with litigation, arbitration, mediation and like proceedings.
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•
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The uncertainties associated with the deactivation of our remaining commodity-based generating units, including the impact on vendor commitments, and as it relates to the reliability of the transmission grid, the timing thereof.
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•
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Costs being higher than anticipated and the success of our policies to control costs.
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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.
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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 and weather conditions affecting future sales, margins and operations, such as 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 FirstEnergy and/or our major industrial and commercial customers, and other counterparties with which we do business.
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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 PJM wholesale energy and capacity markets and cost-of-service rates, as well as 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 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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•
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Changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our 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, including the Tax Act, 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, LOCs and other financial guarantees, and the impact of these events on the financial condition and liquidity of FE and/or 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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GLOSSARY OF TERMS,
Continued
|
|
AEP
|
American Electric Power Company, Inc.
|
AFS
|
Available-for-sale
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AFUDC
|
Allowance for Funds Used During Construction
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ALJ
|
Administrative Law Judge
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AOCI
|
Accumulated Other Comprehensive Income
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ARO
|
Asset Retirement Obligation
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ARP
|
Alternative Revenue Program
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ARR
|
Auction Revenue Right
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ASC
|
Accounting Standard Codification
|
ASU
|
Accounting Standards Update
|
Bankruptcy Court
|
U.S. Bankruptcy Court in the Northern District of Ohio in Akron
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BGS
|
Basic Generation Service
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BNSF
|
BNSF Railway Company
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BRA
|
PJM RPM Base Residual Auction
|
BSPC
|
Bay Shore Power Company
|
CAA
|
Clean Air Act
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CCR
|
Coal Combustion Residuals
|
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
|
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
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DCR
|
Delivery Capital Recovery
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DMR
|
Distribution Modernization Rider
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DOE
|
United States Department of Energy
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DPM
|
Distribution Platform Modernization
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DR
|
Demand Response
|
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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EDCP
|
Executive Deferred Compensation Plan
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EE&C
|
Energy Efficiency and Conservation
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EGS
|
Electric Generation Supplier
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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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EPS
|
Earnings per Share
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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
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Facebook®
|
Facebook is a registered trademark of Facebook, Inc.
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FASB
|
Financial Accounting Standards Board
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FERC
|
Federal Energy Regulatory Commission
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Fitch
|
Fitch Ratings
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FMB
|
First Mortgage Bond
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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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GLOSSARY OF TERMS,
Continued
|
|
POLR
|
Provider of Last Resort
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POR
|
Purchase of Receivables
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PPA
|
Purchase Power Agreement
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PPB
|
Parts Per Billion
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PPUC
|
Pennsylvania Public Utility Commission
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PSA
|
Power Supply Agreement
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PSD
|
Prevention of Significant Deterioration
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PUCO
|
Public Utilities Commission of Ohio
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PURPA
|
Public Utility Regulatory Policies Act of 1978
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RCRA
|
Resource Conservation and Recovery Act
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REC
|
Renewable Energy Credit
|
Regulation FD
|
Regulation Fair Disclosure promulgated by the SEC
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REIT
|
Real Estate Investment Trust
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RFC
|
Reliability
First
Corporation
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RFP
|
Request for Proposal
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RGGI
|
Regional Greenhouse Gas Initiative
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ROE
|
Return on Equity
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RRS
|
Retail Rate Stability
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RSS
|
Rich Site Summary
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RTEP
|
Regional Transmission Expansion Plan
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RTO
|
Regional Transmission Organization
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RWG
|
Restructuring Working Group
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S&P
|
Standard & Poor’s Ratings Service
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SB310
|
Substitute Ohio Senate Bill No. 310
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SBC
|
Societal Benefits Charge
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SEC
|
United States Securities and Exchange Commission
|
Seventh Circuit
|
United States Court of Appeals for the Seventh Circuit
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SIP
|
State Implementation Plan(s) Under the Clean Air Act
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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
|
Tax Act
|
Tax Cuts and Jobs Act, adopted December 22, 2017
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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
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VEPCO
|
Virginia Electric and Power Company
|
VIE
|
Variable Interest Entity
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VMP
|
Vegetation Management Plan
|
VMS
|
Vegetation Management Surcharge
|
VSCC
|
Virginia State Corporation Commission
|
WVDEP
|
West Virginia Department of Environmental Protection
|
WVPSC
|
Public Service Commission of West Virginia
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|
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For the Three Months Ended March 31,
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||||||
(In millions, except per share amounts)
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2018
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2017
|
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||||
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||||
REVENUES:
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Regulated Distribution
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|
$
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2,576
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|
|
$
|
2,500
|
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|
Regulated Transmission
|
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323
|
|
|
313
|
|
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Other
|
|
77
|
|
|
42
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|
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Total revenues*
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2,976
|
|
|
2,855
|
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||
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|
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|
|
|
||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||
Fuel
|
|
187
|
|
|
204
|
|
|
||
Purchased power
|
|
825
|
|
|
791
|
|
|
||
Other operating expenses
|
|
962
|
|
|
657
|
|
|
||
Provision for depreciation
|
|
294
|
|
|
250
|
|
|
||
Amortization (deferral) of regulatory assets, net
|
|
(148
|
)
|
|
83
|
|
|
||
General taxes
|
|
259
|
|
|
242
|
|
|
||
Total operating expenses
|
|
2,379
|
|
|
2,227
|
|
|
||
|
|
|
|
|
|
|
|
||
OPERATING INCOME
|
|
597
|
|
|
628
|
|
|
||
|
|
|
|
|
|
|
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
||
Miscellaneous income
|
|
67
|
|
|
14
|
|
|
||
Interest expense
|
|
(250
|
)
|
|
(245
|
)
|
|
||
Capitalized financing costs
|
|
15
|
|
|
12
|
|
|
||
Total other expense
|
|
(168
|
)
|
|
(219
|
)
|
|
||
|
|
|
|
|
|
|
|
||
INCOME BEFORE INCOME TAXES
|
|
429
|
|
|
409
|
|
|
||
|
|
|
|
|
|
|
|
||
INCOME TAXES
|
|
252
|
|
|
152
|
|
|
||
|
|
|
|
|
|
|
|
||
INCOME FROM CONTINUING OPERATIONS
|
|
177
|
|
|
257
|
|
|
||
|
|
|
|
|
|
|
|
||
Discontinued operations (net of income tax benefits of $890 and $26) (Note 3)
|
|
1,192
|
|
|
(52
|
)
|
|
||
|
|
|
|
|
|
|
|
||
NET INCOME
|
|
$
|
1,369
|
|
|
$
|
205
|
|
|
|
|
|
|
|
|
||||
INCOME ALLOCATED TO PREFERRED STOCKHOLDERS (Note 4)
|
|
156
|
|
|
—
|
|
|
||
|
|
|
|
|
|
||||
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
|
$
|
1,213
|
|
|
$
|
205
|
|
|
|
|
|
|
|
|
|
|
||
EARNINGS PER SHARE OF COMMON STOCK (Note 4):
|
|
|
|
|
|
|
|
||
Basic - Continuing Operations
|
|
$
|
0.04
|
|
|
$
|
0.58
|
|
|
Basic - Discontinued Operations
|
|
2.51
|
|
|
(0.12
|
)
|
|
||
Basic - Net Income Attributable to Common Stockholders
|
|
$
|
2.55
|
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
|
||
Diluted - Continuing Operations
|
|
$
|
0.04
|
|
|
$
|
0.58
|
|
|
Diluted - Discontinued Operations
|
|
2.50
|
|
|
(0.12
|
)
|
|
||
Diluted - Net Income Attributable to Common Stockholders
|
|
$
|
2.54
|
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
|
|
|
|
|
|
||||
Basic
|
|
476
|
|
|
443
|
|
|
||
Diluted
|
|
478
|
|
|
444
|
|
|
||
|
|
|
|
|
|
||||
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK
|
|
$
|
0.72
|
|
|
$
|
0.72
|
|
|
|
|
For the Three Months Ended March 31,
|
|
||||||
(In millions)
|
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||
NET INCOME
|
|
$
|
1,369
|
|
|
$
|
205
|
|
|
|
|
|
|
|
|
||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
||||
Pension and OPEB prior service costs
|
|
(18
|
)
|
|
(18
|
)
|
|
||
Amortized losses on derivative hedges
|
|
15
|
|
|
3
|
|
|
||
Change in unrealized gains on available-for-sale securities
|
|
(106
|
)
|
|
16
|
|
|
||
Other comprehensive income (loss)
|
|
(109
|
)
|
|
1
|
|
|
||
Income tax benefits on other comprehensive income (loss)
|
|
(53
|
)
|
|
—
|
|
|
||
Other comprehensive income (loss), net of tax
|
|
(56
|
)
|
|
1
|
|
|
||
|
|
|
|
|
|
||||
COMPREHENSIVE INCOME
|
|
$
|
1,313
|
|
|
$
|
206
|
|
|
|
|
|
|
|
|
(In millions, except share amounts)
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
|
|
|
||
CURRENT ASSETS:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
248
|
|
|
$
|
588
|
|
Restricted cash
|
|
51
|
|
|
51
|
|
||
Receivables-
|
|
|
|
|
|
|||
Customers, net of allowance for uncollectible accounts of $50 in 2018 and $49 in 2017
|
|
1,279
|
|
|
1,282
|
|
||
Affiliated companies, net of allowance for uncollectible accounts of $624
|
|
44
|
|
|
—
|
|
||
Other, net of allowance for uncollectible accounts of $1 in 2018 and 2017
|
|
159
|
|
|
170
|
|
||
Materials and supplies, at average cost
|
|
273
|
|
|
262
|
|
||
Prepaid taxes and other
|
|
254
|
|
|
151
|
|
||
Current assets - discontinued operations
|
|
2
|
|
|
606
|
|
||
|
|
2,310
|
|
|
3,110
|
|
||
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
||
In service
|
|
37,717
|
|
|
37,270
|
|
||
Less — Accumulated provision for depreciation
|
|
10,267
|
|
|
10,098
|
|
||
|
|
27,450
|
|
|
27,172
|
|
||
Construction work in progress
|
|
1,120
|
|
|
1,004
|
|
||
|
|
28,570
|
|
|
28,176
|
|
||
|
|
|
|
|
||||
PROPERTY, PLANT AND EQUIPMENT, NET - DISCONTINUED OPERATIONS
|
|
353
|
|
|
1,057
|
|
||
|
|
|
|
|
||||
INVESTMENTS:
|
|
|
|
|
|
|
||
Nuclear plant decommissioning trusts
|
|
800
|
|
|
822
|
|
||
Nuclear fuel disposal trust
|
|
251
|
|
|
251
|
|
||
Other
|
|
252
|
|
|
255
|
|
||
Investments - discontinued operations
|
|
—
|
|
|
1,875
|
|
||
|
|
1,303
|
|
|
3,203
|
|
||
DEFERRED CHARGES AND OTHER ASSETS:
|
|
|
|
|
|
|
||
Goodwill
|
|
5,618
|
|
|
5,618
|
|
||
Regulatory assets
|
|
49
|
|
|
40
|
|
||
Other
|
|
592
|
|
|
697
|
|
||
Deferred charges and other assets - discontinued operations
|
|
—
|
|
|
356
|
|
||
|
|
6,259
|
|
|
6,711
|
|
||
|
|
$
|
38,795
|
|
|
$
|
42,257
|
|
LIABILITIES AND CAPITALIZATION
|
|
|
|
|
|
|
||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Currently payable long-term debt
|
|
$
|
1,157
|
|
|
$
|
558
|
|
Short-term borrowings
|
|
1,200
|
|
|
300
|
|
||
Accounts payable
|
|
1,005
|
|
|
827
|
|
||
Accrued taxes
|
|
530
|
|
|
533
|
|
||
Accrued compensation and benefits
|
|
254
|
|
|
257
|
|
||
Collateral
|
|
37
|
|
|
39
|
|
||
Other
|
|
882
|
|
|
626
|
|
||
Current liabilities - discontinued operations
|
|
—
|
|
|
973
|
|
||
|
|
5,065
|
|
|
4,113
|
|
||
CAPITALIZATION:
|
|
|
|
|
|
|
||
Stockholders’ equity-
|
|
|
|
|
|
|
||
Common stock, $0.10 par value, authorized 700,000,000 shares - 476,909,318 and 445,334,111 shares outstanding as of March 31, 2018 and December 31, 2017, respectively
|
|
48
|
|
|
44
|
|
||
Mandatorily convertible preferred stock, $100 par value, authorized 5,000,000 shares - 1,616,000 shares issued and outstanding as of March 31, 2018
|
|
162
|
|
|
—
|
|
||
Other paid-in capital
|
|
11,937
|
|
|
10,001
|
|
||
Accumulated other comprehensive income
|
|
86
|
|
|
142
|
|
||
Accumulated deficit
|
|
(4,858
|
)
|
|
(6,262
|
)
|
||
Total stockholders’ equity
|
|
7,375
|
|
|
3,925
|
|
||
Long-term debt and other long-term obligations
|
|
16,740
|
|
|
18,816
|
|
||
|
|
24,115
|
|
|
22,741
|
|
||
NONCURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Accumulated deferred income taxes
|
|
2,505
|
|
|
3,171
|
|
||
Retirement benefits
|
|
2,717
|
|
|
3,975
|
|
||
Regulatory liabilities
|
|
2,632
|
|
|
2,720
|
|
||
Asset retirement obligations
|
|
580
|
|
|
570
|
|
||
Adverse power contract liability
|
|
124
|
|
|
130
|
|
||
Other
|
|
1,057
|
|
|
1,438
|
|
||
Noncurrent liabilities - discontinued operations
|
|
—
|
|
|
3,399
|
|
||
|
|
9,615
|
|
|
15,403
|
|
||
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 14)
|
|
|
|
|
|
|
||
|
|
$
|
38,795
|
|
|
$
|
42,257
|
|
|
|
For the Three Months Ended March 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net income
|
|
$
|
1,369
|
|
|
$
|
205
|
|
Adjustments to reconcile net income to net cash from operating activities-
|
|
|
|
|
||||
Gain on deconsolidation, net of tax (Note 3)
|
|
(1,239
|
)
|
|
—
|
|
||
Depreciation and amortization, including nuclear fuel, regulatory assets, net, intangible assets and deferred debt-related costs
|
|
280
|
|
|
416
|
|
||
Deferred income taxes and investment tax credits, net
|
|
278
|
|
|
114
|
|
||
Retirement benefits, net of payments
|
|
(46
|
)
|
|
10
|
|
||
Pension trust contributions
|
|
(1,250
|
)
|
|
—
|
|
||
Unrealized (gain) loss on derivative transactions
|
|
(10
|
)
|
|
47
|
|
||
Changes in current assets and liabilities-
|
|
|
|
|
||||
Receivables
|
|
32
|
|
|
68
|
|
||
Materials and supplies
|
|
36
|
|
|
11
|
|
||
Prepaid taxes and other
|
|
(144
|
)
|
|
(111
|
)
|
||
Accounts payable
|
|
96
|
|
|
45
|
|
||
Accrued taxes
|
|
(145
|
)
|
|
(131
|
)
|
||
Accrued compensation and benefits
|
|
(108
|
)
|
|
(137
|
)
|
||
Other current liabilities
|
|
(15
|
)
|
|
20
|
|
||
Collateral, net
|
|
(7
|
)
|
|
58
|
|
||
Other
|
|
(7
|
)
|
|
170
|
|
||
Net cash provided from (used for) operating activities
|
|
(880
|
)
|
|
785
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
New Financing-
|
|
|
|
|
||||
Long-term debt
|
|
—
|
|
|
250
|
|
||
Short-term borrowings, net
|
|
900
|
|
|
75
|
|
||
Preferred stock issuance
|
|
1,616
|
|
|
—
|
|
||
Common stock issuance
|
|
850
|
|
|
—
|
|
||
Redemptions and Repayments-
|
|
|
|
|
||||
Long-term debt
|
|
(1,476
|
)
|
|
(211
|
)
|
||
Preferred stock dividend payments
|
|
(21
|
)
|
|
—
|
|
||
Common stock dividend payments
|
|
(171
|
)
|
|
(159
|
)
|
||
Other
|
|
(19
|
)
|
|
(13
|
)
|
||
Net cash provided from (used for) financing activities
|
|
1,679
|
|
|
(58
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Property additions
|
|
(583
|
)
|
|
(588
|
)
|
||
Nuclear fuel
|
|
—
|
|
|
(132
|
)
|
||
Proceeds from asset sales
|
|
20
|
|
|
—
|
|
||
Sales of investment securities held in trusts
|
|
300
|
|
|
738
|
|
||
Purchases of investment securities held in trusts
|
|
(322
|
)
|
|
(761
|
)
|
||
Notes receivable from affiliated companies
|
|
(500
|
)
|
|
—
|
|
||
Asset removal costs
|
|
(57
|
)
|
|
(35
|
)
|
||
Other
|
|
(1
|
)
|
|
(1
|
)
|
||
Net cash used for investing activites
|
|
(1,143
|
)
|
|
(779
|
)
|
||
|
|
|
|
|
||||
Net change in cash and cash equivalents and restricted cash
|
|
(344
|
)
|
|
(52
|
)
|
||
Cash and cash equivalents and restricted cash at beginning of period
|
|
643
|
|
|
260
|
|
||
Cash and cash equivalents and restricted cash at end of period
|
|
$
|
299
|
|
|
$
|
208
|
|
|
|
|
|
|
||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
||||
Non-cash transaction, beneficial conversion feature (Note 4)
|
|
$
|
296
|
|
|
$
|
—
|
|
Non-cash transaction, deemed dividend preferred stock (Note 4)
|
|
$
|
(113
|
)
|
|
$
|
—
|
|
|
|
For the Three Months Ended March 31, 2018
|
||||||||||||||
Revenues by Type of Service
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
(1)
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
Distribution services
(2)
|
|
$
|
1,281
|
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
1,269
|
|
Retail generation
|
|
1,040
|
|
|
—
|
|
|
(14
|
)
|
|
1,026
|
|
||||
Wholesale sales
|
|
123
|
|
|
—
|
|
|
120
|
|
|
243
|
|
||||
Transmission
(2)
|
|
—
|
|
|
319
|
|
|
—
|
|
|
319
|
|
||||
Other
|
|
35
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||
Total revenues from contracts with customers
|
|
$
|
2,479
|
|
|
$
|
319
|
|
|
$
|
94
|
|
|
$
|
2,892
|
|
ARP
|
|
64
|
|
|
—
|
|
|
—
|
|
|
64
|
|
||||
Other non-customer revenue
|
|
33
|
|
|
4
|
|
|
(17
|
)
|
|
20
|
|
||||
Total revenues
|
|
$
|
2,576
|
|
|
$
|
323
|
|
|
$
|
77
|
|
|
$
|
2,976
|
|
|
|
For the Three Months Ended March 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
Revenues
|
|
$
|
622
|
|
|
$
|
689
|
|
Fuel
|
|
(116
|
)
|
|
(164
|
)
|
||
Purchased power
|
|
(53
|
)
|
|
(49
|
)
|
||
Other operating expenses
|
|
(347
|
)
|
|
(492
|
)
|
||
Provision for depreciation
|
|
(46
|
)
|
|
(25
|
)
|
||
General taxes
|
|
(18
|
)
|
|
(29
|
)
|
||
Other Income (Expense)
|
|
(60
|
)
|
|
(8
|
)
|
||
Loss from discontinued operations, before tax
|
|
(18
|
)
|
|
(78
|
)
|
||
Income tax expense (benefit)
|
|
29
|
|
|
(26
|
)
|
||
Loss from discontinued operations, net of tax
|
|
(47
|
)
|
|
(52
|
)
|
||
Gain on deconsolidation, net of tax
|
|
1,239
|
|
|
—
|
|
||
Income (loss) from discontinued operations
|
|
$
|
1,192
|
|
|
$
|
(52
|
)
|
(In millions)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
|
|
|
|
||||
Carrying amount of the major classes of assets included in discontinued operations:
|
|
|
|
|
||||
Cash
|
|
$
|
—
|
|
|
$
|
1
|
|
Restricted cash
|
|
—
|
|
|
3
|
|
||
Receivables
|
|
—
|
|
|
202
|
|
||
Materials and supplies
|
|
2
|
|
|
201
|
|
||
Collateral
|
|
—
|
|
|
130
|
|
||
Other current assets
|
|
—
|
|
|
69
|
|
||
Total current assets
|
|
2
|
|
|
606
|
|
||
|
|
|
|
|
||||
Property, plant and equipment
|
|
353
|
|
|
1,057
|
|
||
Investments
|
|
—
|
|
|
1,875
|
|
||
Other non-current assets
|
|
—
|
|
|
356
|
|
||
Total non-current assets
|
|
353
|
|
|
3,288
|
|
||
Total assets included in discontinued operations
|
|
$
|
355
|
|
|
$
|
3,894
|
|
|
|
|
|
|
||||
Carrying amount of the major classes of liabilities included in discontinued operations:
|
|
|
|
|
||||
Currently payable long-term debt
|
|
$
|
—
|
|
|
$
|
524
|
|
Accounts payable
|
|
—
|
|
|
200
|
|
||
Accrued taxes
|
|
—
|
|
|
38
|
|
||
Accrued compensation and benefits
|
|
—
|
|
|
79
|
|
||
Other current liabilities
|
|
—
|
|
|
132
|
|
||
Total current liabilities
|
|
—
|
|
|
973
|
|
||
|
|
|
|
|
||||
Long-term debt and other long-term obligations
|
|
—
|
|
|
2,299
|
|
||
Accumulated deferred income taxes
(1)
|
|
—
|
|
|
(1,812
|
)
|
||
Asset retirement obligations
|
|
—
|
|
|
1,945
|
|
||
Deferred gain on sale and leaseback transaction
|
|
—
|
|
|
723
|
|
||
Other non-current liabilities
|
|
—
|
|
|
244
|
|
||
Total noncurrent liabilities
|
|
—
|
|
|
3,399
|
|
||
Total liabilities included in discontinued operations
|
|
$
|
—
|
|
|
$
|
4,372
|
|
|
|
For the Three Months Ended March 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Income (loss) from discontinued operations
|
|
$
|
1,192
|
|
|
$
|
(52
|
)
|
Depreciation and amortization, including nuclear fuel, regulatory assets, net, intangible assets and deferred debt-related costs
|
|
47
|
|
|
79
|
|
||
Unrealized (gain) loss on derivative transactions
|
|
(10
|
)
|
|
47
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Property additions
|
|
(15
|
)
|
|
(90
|
)
|
||
Nuclear fuel
|
|
—
|
|
|
(132
|
)
|
||
Sales of investment securities held in trusts
|
|
109
|
|
|
231
|
|
||
Purchases of investment securities held in trusts
|
|
(122
|
)
|
|
(245
|
)
|
•
|
preferred share dividends,
|
•
|
deemed dividends for the amortization of the beneficial conversion feature recognized at issuance of the Preferred Stock (if any), and
|
•
|
an allocation of undistributed earnings between the common shares and the participating securities (convertible Preferred Stock) based on their respective rights to receive dividends.
|
(1)
|
Undistributed earnings were not allocated to participating securities as income from continuing operations less dividends declared (common and preferred) and deemed dividends was a net loss.
|
Components of Net Periodic Benefit Costs (Credits)
|
|
Pension
|
OPEB
|
|||||||||||||
For the Three Months Ended March 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In millions)
|
||||||||||||||
Service costs
|
|
$
|
56
|
|
|
$
|
52
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest costs
|
|
93
|
|
|
97
|
|
|
6
|
|
|
7
|
|
||||
Expected return on plan assets
|
|
(144
|
)
|
|
(112
|
)
|
|
(8
|
)
|
|
(8
|
)
|
||||
Amortization of prior service costs (credits)
|
|
2
|
|
|
2
|
|
|
(20
|
)
|
|
(20
|
)
|
||||
Net periodic costs (credits)
|
|
$
|
7
|
|
|
$
|
39
|
|
|
$
|
(21
|
)
|
|
$
|
(20
|
)
|
Net Periodic Benefit Expense (Credit)
|
|
Pension
|
|
OPEB
|
||||||||||||
For the Three Months Ended March 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In millions)
|
||||||||||||||
FirstEnergy
|
|
$
|
(14
|
)
|
|
$
|
32
|
|
|
$
|
(21
|
)
|
|
$
|
(15
|
)
|
|
|
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, 2
018
|
|
$
|
(22
|
)
|
|
$
|
67
|
|
|
$
|
97
|
|
|
$
|
142
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
||||
Amounts reclassified from AOCI
|
|
2
|
|
|
(1
|
)
|
|
(18
|
)
|
|
(17
|
)
|
||||
Deconsolidation of FES and FENOC
|
|
13
|
|
|
(8
|
)
|
|
—
|
|
|
5
|
|
||||
Other comprehensive income (loss)
|
|
15
|
|
|
(106
|
)
|
|
(18
|
)
|
|
(109
|
)
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
8
|
|
|
(39
|
)
|
|
(22
|
)
|
|
(53
|
)
|
||||
Other comprehensive income (loss), net of tax
|
|
7
|
|
|
(67
|
)
|
|
4
|
|
|
(56
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of March 31, 2018
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
101
|
|
|
$
|
86
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI balance as of January 1, 2
017
|
|
$
|
(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
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
•
|
Ohio Securitization
- In September 2012, the Ohio Companies created separate, wholly owned limited liability company 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
|
•
|
JCP&L Securitization
-
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 II and are collateralized by its equity and assets, which consist primarily of bondable transition property. As of
March 31, 2018
and
December 31, 2017
,
$52 million
and
$56 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 limited liability company SPEs 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 limited liability company SPEs, have no recourse to any assets or revenues of the special purpose limited liability companies. As of
March 31, 2018
and
December 31, 2017
,
$371 million
and
$383 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. In 2015, FirstEnergy fully impaired the value of its investment in Global Holding.
|
•
|
PATH WV
-
PATH, a proposed transmission line from West Virginia through Virginia into Maryland which PJM cancelled in 2012, 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. As of
March 31, 2018
, the carrying value of the equity method investment was
$17 million
.
|
•
|
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.
|
•
|
FES and FENOC -
As a result of the Chapter 11 bankruptcy filing discussed in Note 3, "Discontinued Operations," FE evaluated its investments in FES and FENOC and determined they are VIEs. FE is not the primary beneficiary because it lacks a controlling interest in FES and FENOC, which are subject to the control of the Bankruptcy Court as of March 31, 2018. The carrying values of the equity investments in FES and FENOC were zero at
March 31, 2018
.
|
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, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
(In millions)
|
||||||||||||||||||||||||||||||
Corporate debt securities
|
$
|
—
|
|
|
$
|
468
|
|
|
$
|
—
|
|
|
$
|
468
|
|
|
$
|
—
|
|
|
$
|
476
|
|
|
$
|
—
|
|
|
$
|
476
|
|
Derivative assets - FTRs
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||||||
Equity securities
(2)
|
288
|
|
|
—
|
|
|
—
|
|
|
288
|
|
|
297
|
|
|
—
|
|
|
—
|
|
|
297
|
|
||||||||
Foreign government debt securities
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
||||||||
U.S. government debt securities
|
—
|
|
|
28
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
||||||||
U.S. state debt securities
|
—
|
|
|
245
|
|
|
—
|
|
|
245
|
|
|
—
|
|
|
247
|
|
|
—
|
|
|
247
|
|
||||||||
Other
(3)
|
248
|
|
|
30
|
|
|
—
|
|
|
278
|
|
|
588
|
|
|
38
|
|
|
—
|
|
|
626
|
|
||||||||
Total assets
|
$
|
536
|
|
|
$
|
795
|
|
|
$
|
1
|
|
|
$
|
1,332
|
|
|
$
|
885
|
|
|
$
|
805
|
|
|
$
|
3
|
|
|
$
|
1,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities - commodity contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
Derivative liabilities - NUG contracts
(1)
|
—
|
|
|
—
|
|
|
(74
|
)
|
|
(74
|
)
|
|
—
|
|
|
—
|
|
|
(79
|
)
|
|
(79
|
)
|
||||||||
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(74
|
)
|
|
$
|
(74
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
(79
|
)
|
|
$
|
(83
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net assets (liabilities)
(4)
|
$
|
536
|
|
|
$
|
795
|
|
|
$
|
(73
|
)
|
|
$
|
1,258
|
|
|
$
|
885
|
|
|
$
|
801
|
|
|
$
|
(76
|
)
|
|
$
|
1,610
|
|
(1)
|
NUG contracts are subject to regulatory accounting treatment and changes in market values 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
$(15) million
and
$(11) million
as of
March 31, 2018
and
December 31, 2017
, 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, 2017 Balance
|
$
|
1
|
|
|
$
|
(108
|
)
|
|
$
|
(107
|
)
|
|
$
|
3
|
|
|
$
|
(1
|
)
|
|
$
|
2
|
|
Unrealized gain (loss)
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||
Settlements
|
(1
|
)
|
|
39
|
|
|
38
|
|
|
(4
|
)
|
|
2
|
|
|
(2
|
)
|
||||||
December 31, 2017 Balance
|
$
|
—
|
|
|
$
|
(79
|
)
|
|
$
|
(79
|
)
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Unrealized gain (loss)
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Settlements
|
—
|
|
|
7
|
|
|
7
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||||
March 31, 2018 Balance
|
$
|
—
|
|
|
$
|
(74
|
)
|
|
$
|
(74
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
(1)
|
NUG contracts are subject to regulatory accounting treatment and changes in market values do not impact earnings.
|
|
|
Fair Value, Net (In millions)
|
|
Valuation
Technique |
|
Significant Input
|
|
Range
|
|
Weighted Average
|
|
Units
|
|||
FTRs
|
|
$
|
1
|
|
|
Model
|
|
RTO auction clearing prices
|
|
$0.50 to $5.10
|
|
$1.20
|
|
Dollars/MWH
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
NUG Contracts
|
|
$
|
(74
|
)
|
|
Model
|
|
Generation
|
|
400 to 1,881,000
|
|
382,000
|
|
|
MWH
|
|
|
|
Regional electricity prices
|
|
$29.10 to $30.90
|
|
$30.00
|
|
Dollars/MWH
|
|
|
March 31, 2018
|
|
December 31, 2017
(1)
|
||||||||||||||||||||||||||||
|
|
Cost Basis
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
|
Cost Basis
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Debt securities
|
|
$
|
783
|
|
|
$
|
5
|
|
|
$
|
(22
|
)
|
|
$
|
766
|
|
|
$
|
774
|
|
|
$
|
11
|
|
|
$
|
(17
|
)
|
|
$
|
768
|
|
Equity securities
|
|
$
|
263
|
|
|
$
|
24
|
|
|
$
|
(2
|
)
|
|
$
|
285
|
|
|
$
|
254
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
294
|
|
(1)
|
Excludes short-term cash investments of
$11 million
.
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In millions)
|
||||||
Sale Proceeds
|
|
$
|
191
|
|
|
$
|
507
|
|
Realized Gains
|
|
19
|
|
|
21
|
|
||
Realized Losses
|
|
(16
|
)
|
|
(15
|
)
|
||
Interest and Dividend Income
|
|
10
|
|
|
9
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
(In millions)
|
||||||
Carrying Value
|
$
|
17,949
|
|
|
$
|
19,425
|
|
Fair Value
|
$
|
19,487
|
|
|
$
|
21,551
|
|
•
|
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.
|
Potential Collateral Obligations
|
|
|
AE Supply
|
|
Utilities and FET
|
|
FE Corp
|
|
Total
|
||||||||
|
|
(In millions)
|
|||||||||||||||
Contractual Obligations for Additional Collateral
|
|
|
|
|
|
|
|
|
|
||||||||
At Current Credit Rating
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Upon Further Downgrade
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
46
|
|
||||
Surety Bonds (Collateralized Amount)
|
|
|
1
|
|
|
109
|
|
|
236
|
|
|
346
|
|
||||
Total Exposure from Contractual Obligations
|
|
|
$
|
2
|
|
|
$
|
155
|
|
|
$
|
236
|
|
|
$
|
393
|
|
For the Three Months Ended
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/ Other
|
|
Reconciling Adjustments
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
2,576
|
|
|
$
|
323
|
|
|
$
|
125
|
|
|
$
|
(48
|
)
|
|
$
|
2,976
|
|
Depreciation
|
|
196
|
|
|
61
|
|
|
19
|
|
|
18
|
|
|
294
|
|
|||||
Amortization (deferral) of regulatory assets, net
|
|
(152
|
)
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(148
|
)
|
|||||
Miscellaneous income
|
|
56
|
|
|
4
|
|
|
16
|
|
|
(9
|
)
|
|
67
|
|
|||||
Interest expense
|
|
128
|
|
|
39
|
|
|
92
|
|
|
(9
|
)
|
|
250
|
|
|||||
Income taxes
|
|
93
|
|
|
32
|
|
|
127
|
|
|
—
|
|
|
252
|
|
|||||
Income (loss) from continuing operations
|
|
322
|
|
|
99
|
|
|
(244
|
)
|
|
—
|
|
|
177
|
|
|||||
Total assets
|
|
27,504
|
|
|
9,681
|
|
|
1,255
|
|
|
355
|
|
|
38,795
|
|
|||||
Total goodwill
|
|
5,004
|
|
|
614
|
|
|
—
|
|
|
—
|
|
|
5,618
|
|
|||||
Property additions
|
|
264
|
|
|
292
|
|
|
12
|
|
|
15
|
|
|
583
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
2,500
|
|
|
$
|
313
|
|
|
$
|
92
|
|
|
$
|
(50
|
)
|
|
$
|
2,855
|
|
Depreciation
|
|
178
|
|
|
51
|
|
|
4
|
|
|
17
|
|
|
250
|
|
|||||
Amortization of regulatory assets, net
|
|
81
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|||||
Miscellaneous income
|
|
15
|
|
|
—
|
|
|
6
|
|
|
(7
|
)
|
|
14
|
|
|||||
Interest expense
|
|
138
|
|
|
39
|
|
|
75
|
|
|
(7
|
)
|
|
245
|
|
|||||
Income taxes (benefits)
|
|
138
|
|
|
52
|
|
|
(38
|
)
|
|
—
|
|
|
152
|
|
|||||
Income (loss) from continuing operations
|
|
237
|
|
|
88
|
|
|
(68
|
)
|
|
—
|
|
|
257
|
|
|||||
Total assets
|
|
27,826
|
|
|
8,938
|
|
|
1,160
|
|
|
5,288
|
|
|
43,212
|
|
|||||
Total goodwill
|
|
5,004
|
|
|
614
|
|
|
—
|
|
|
—
|
|
|
5,618
|
|
|||||
Property additions
|
|
264
|
|
|
224
|
|
|
10
|
|
|
90
|
|
|
588
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts)
|
|
For the Three Months Ended March 31,
|
|||||||||||||
|
|
2018
|
|
2017
|
|
Change
|
|||||||||
|
|
|
|
|
|
|
|
|
|||||||
Revenues
|
|
$
|
2,976
|
|
|
$
|
2,855
|
|
|
$
|
121
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Operating expenses
|
|
2,379
|
|
|
2,227
|
|
|
152
|
|
|
7
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Operating income
|
|
597
|
|
|
628
|
|
|
(31
|
)
|
|
(5
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Other expenses, net
|
|
(168
|
)
|
|
(219
|
)
|
|
51
|
|
|
(23
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Income before income taxes
|
|
429
|
|
|
409
|
|
|
20
|
|
|
5
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Income taxes
|
|
252
|
|
|
152
|
|
|
100
|
|
|
66
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Income from continuing operations
|
|
177
|
|
|
257
|
|
|
(80
|
)
|
|
(31
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Discontinued operations
|
|
1,192
|
|
|
(52
|
)
|
|
1,244
|
|
|
NM
|
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Net income
|
|
$
|
1,369
|
|
|
$
|
205
|
|
|
$
|
1,164
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
First Three Months 2018 Financial Result
s
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||
|
|
(In millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Electric
|
|
$
|
2,508
|
|
|
$
|
319
|
|
|
$
|
94
|
|
|
$
|
2,921
|
|
Other
|
|
68
|
|
|
4
|
|
|
(17
|
)
|
|
55
|
|
||||
Total Revenues
|
|
2,576
|
|
|
323
|
|
|
77
|
|
|
2,976
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuel
|
|
139
|
|
|
—
|
|
|
48
|
|
|
187
|
|
||||
Purchased power
|
|
819
|
|
|
—
|
|
|
6
|
|
|
825
|
|
||||
Other operating expenses
|
|
898
|
|
|
54
|
|
|
10
|
|
|
962
|
|
||||
Provision for depreciation
|
|
196
|
|
|
61
|
|
|
37
|
|
|
294
|
|
||||
Amortization (deferral) of regulatory assets, net
|
|
(152
|
)
|
|
4
|
|
|
—
|
|
|
(148
|
)
|
||||
General taxes
|
|
195
|
|
|
47
|
|
|
17
|
|
|
259
|
|
||||
Total Operating Expenses
|
|
2,095
|
|
|
166
|
|
|
118
|
|
|
2,379
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss)
|
|
481
|
|
|
157
|
|
|
(41
|
)
|
|
597
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Miscellaneous income
|
|
56
|
|
|
4
|
|
|
7
|
|
|
67
|
|
||||
Interest expense
|
|
(128
|
)
|
|
(39
|
)
|
|
(83
|
)
|
|
(250
|
)
|
||||
Capitalized financing costs
|
|
6
|
|
|
9
|
|
|
—
|
|
|
15
|
|
||||
Total Other Expense
|
|
(66
|
)
|
|
(26
|
)
|
|
(76
|
)
|
|
(168
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes
|
|
415
|
|
|
131
|
|
|
(117
|
)
|
|
429
|
|
||||
Income taxes
|
|
93
|
|
|
32
|
|
|
127
|
|
|
252
|
|
||||
Income (Loss) From Continuing Operations
|
|
322
|
|
|
99
|
|
|
(244
|
)
|
|
177
|
|
||||
Discontinued Operations, net of tax
|
|
—
|
|
|
—
|
|
|
1,192
|
|
|
1,192
|
|
||||
Net Income
|
|
$
|
322
|
|
|
$
|
99
|
|
|
$
|
948
|
|
|
$
|
1,369
|
|
|
||||||||||||||||
First Three Months 2017 Financial Result
s
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||
|
|
(In millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Electric
|
|
$
|
2,434
|
|
|
$
|
308
|
|
|
$
|
59
|
|
|
$
|
2,801
|
|
Other
|
|
66
|
|
|
5
|
|
|
(17
|
)
|
|
54
|
|
||||
Total Revenues
|
|
2,500
|
|
|
313
|
|
|
42
|
|
|
2,855
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuel
|
|
141
|
|
|
—
|
|
|
63
|
|
|
204
|
|
||||
Purchased power
|
|
790
|
|
|
—
|
|
|
1
|
|
|
791
|
|
||||
Other operating expenses
|
|
634
|
|
|
45
|
|
|
(22
|
)
|
|
657
|
|
||||
Provision for depreciation
|
|
178
|
|
|
51
|
|
|
21
|
|
|
250
|
|
||||
Amortization of regulatory assets, net
|
|
81
|
|
|
2
|
|
|
—
|
|
|
83
|
|
||||
General taxes
|
|
184
|
|
|
42
|
|
|
16
|
|
|
242
|
|
||||
Total Operating Expenses
|
|
2,008
|
|
|
140
|
|
|
79
|
|
|
2,227
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss)
|
|
492
|
|
|
173
|
|
|
(37
|
)
|
|
628
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Miscellaneous income (loss)
|
|
15
|
|
|
—
|
|
|
(1
|
)
|
|
14
|
|
||||
Interest expense
|
|
(138
|
)
|
|
(39
|
)
|
|
(68
|
)
|
|
(245
|
)
|
||||
Capitalized financing costs
|
|
6
|
|
|
6
|
|
|
—
|
|
|
12
|
|
||||
Total Other Expense
|
|
(117
|
)
|
|
(33
|
)
|
|
(69
|
)
|
|
(219
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
375
|
|
|
140
|
|
|
(106
|
)
|
|
409
|
|
||||
Income taxes (benefits)
|
|
138
|
|
|
52
|
|
|
(38
|
)
|
|
152
|
|
||||
Income (Loss) From Continuing Operations
|
|
237
|
|
|
88
|
|
|
(68
|
)
|
|
257
|
|
||||
Discontinued Operations, net of tax
|
|
—
|
|
|
—
|
|
|
(52
|
)
|
|
(52
|
)
|
||||
Net Income (Loss)
|
|
$
|
237
|
|
|
$
|
88
|
|
|
$
|
(120
|
)
|
|
$
|
205
|
|
|
||||||||||||||||
Changes Between First Three Months 2018 and First Three Months 2017 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||
|
|
(In millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Electric
|
|
$
|
74
|
|
|
$
|
11
|
|
|
$
|
35
|
|
|
$
|
120
|
|
Other
|
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
||||
Total Revenues
|
|
76
|
|
|
10
|
|
|
35
|
|
|
121
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuel
|
|
(2
|
)
|
|
—
|
|
|
(15
|
)
|
|
(17
|
)
|
||||
Purchased power
|
|
29
|
|
|
—
|
|
|
5
|
|
|
34
|
|
||||
Other operating expenses
|
|
264
|
|
|
9
|
|
|
32
|
|
|
305
|
|
||||
Provision for depreciation
|
|
18
|
|
|
10
|
|
|
16
|
|
|
44
|
|
||||
Amortization (deferral) of regulatory assets, net
|
|
(233
|
)
|
|
2
|
|
|
—
|
|
|
(231
|
)
|
||||
General taxes
|
|
11
|
|
|
5
|
|
|
1
|
|
|
17
|
|
||||
Total Operating Expenses
|
|
87
|
|
|
26
|
|
|
39
|
|
|
152
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss)
|
|
(11
|
)
|
|
(16
|
)
|
|
(4
|
)
|
|
(31
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Miscellaneous income
|
|
41
|
|
|
4
|
|
|
8
|
|
|
53
|
|
||||
Interest expense
|
|
10
|
|
|
—
|
|
|
(15
|
)
|
|
(5
|
)
|
||||
Capitalized financing costs
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Total Other Expense
|
|
51
|
|
|
7
|
|
|
(7
|
)
|
|
51
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes
|
|
40
|
|
|
(9
|
)
|
|
(11
|
)
|
|
20
|
|
||||
Income taxes
|
|
(45
|
)
|
|
(20
|
)
|
|
165
|
|
|
100
|
|
||||
Income (Loss) From Continuing Operations
|
|
85
|
|
|
11
|
|
|
(176
|
)
|
|
(80
|
)
|
||||
Discontinued Operations, net of tax
|
|
—
|
|
|
—
|
|
|
1,244
|
|
|
1,244
|
|
||||
Net Income (Loss)
|
|
$
|
85
|
|
|
$
|
11
|
|
|
$
|
1,068
|
|
|
$
|
1,164
|
|
|
|
For the Three Months Ended March 31,
|
|
|
||||||||
Revenues by Type of Service
|
|
2018
|
|
2017
|
|
Increase
|
||||||
|
|
(In millions)
|
||||||||||
Distribution services
(1)
|
|
$
|
1,345
|
|
|
$
|
1,308
|
|
|
$
|
37
|
|
|
|
|
|
|
|
|
||||||
Generation sales:
|
|
|
|
|
|
|
||||||
Retail
|
|
1,040
|
|
|
1,005
|
|
|
35
|
|
|||
Wholesale
|
|
123
|
|
|
121
|
|
|
2
|
|
|||
Total generation sales
|
|
1,163
|
|
|
1,126
|
|
|
37
|
|
|||
|
|
|
|
|
|
|
||||||
Other
|
|
68
|
|
|
66
|
|
|
2
|
|
|||
Total Revenues
|
|
$
|
2,576
|
|
|
$
|
2,500
|
|
|
$
|
76
|
|
|
|
For the Three Months Ended March 31,
|
|
Increase
|
|||||
Electric Distribution MWH Deliveries
|
|
2018
|
|
2017
|
|
(Decrease)
|
|||
|
|
(In thousands)
|
|
|
|||||
Residential
|
|
14,999
|
|
|
13,869
|
|
|
8.1
|
%
|
Commercial
|
|
10,526
|
|
|
10,162
|
|
|
3.6
|
%
|
Industrial
|
|
13,075
|
|
|
12,716
|
|
|
2.8
|
%
|
Other
|
|
140
|
|
|
143
|
|
|
(2.1
|
)%
|
Total Electric Distribution MWH Deliveries
|
|
38,740
|
|
|
36,890
|
|
|
5.0
|
%
|
Source of Change in Generation Revenues
|
|
Increase (Decrease)
|
||
|
|
(In millions)
|
||
Retail:
|
|
|
|
|
Effect of increase in sales volumes
|
|
$
|
73
|
|
Change in prices
|
|
(38
|
)
|
|
|
|
35
|
|
|
Wholesale:
|
|
|
||
Effect of decrease in sales volumes
|
|
(22
|
)
|
|
Change in prices
|
|
19
|
|
|
Capacity Revenue
|
|
5
|
|
|
|
|
2
|
|
|
Increase in Generation Revenues
|
|
$
|
37
|
|
•
|
Purchased power costs increased
$29 million
during the first
thre
e
months of
2018
, as compared to the same period of
2017
, primarily due to increased volumes resulting from higher customer weather-related usage, as described above, and higher capacity expense, partially offset by 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
|
|
$
|
(19
|
)
|
|
Change due to volumes
|
|
41
|
|
||
|
|
22
|
|
||
Purchases from affiliates:
|
|
|
|||
Change due to decreased unit costs
|
|
(4
|
)
|
||
Change due to volumes
|
|
(4
|
)
|
||
|
|
(8
|
)
|
||
Capacity Expense
|
|
15
|
|
||
Increase in Purchased Power Costs
|
|
$
|
29
|
|
•
|
Other operating expenses increased
$264 million
primarily due to:
|
•
|
Increased storm restoration costs of $184 million, primarily associated with the March 2018 east coast storms, which were deferred for future recovery, resulting in no material impact on current period earnings.
|
•
|
Higher network transmission expenses of $44 million. The difference between current revenues and transmission costs incurred are deferred for future recovery or refund, resulting in no material impact on current period earnings.
|
•
|
Higher energy efficiency program costs of $24 million, which are deferred for future recovery, resulting in no material impact on current period earnings.
|
•
|
Higher operating and maintenance expenses of $8 million associated with the timing of maintenance activities and fossil outages.
|
•
|
Depreciation expense increased
$18 million
, primarily due to a higher rate base.
|
•
|
Amortization expense decreased
$233 million
, primarily due to increased deferral of storm restoration costs, transmission and generation expenses, and energy efficiency program costs.
|
•
|
General taxes expense increased
$11 million
, primarily due to higher property taxes and revenue-related taxes associated with increased sales volumes.
|
|
|
For the Three Months Ended March 31,
|
|
Increase
|
||||||||
Revenues by Transmission Asset Owner
|
|
2018
|
|
2017
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
ATSI
|
|
$
|
159
|
|
|
$
|
153
|
|
|
$
|
6
|
|
TrAIL
|
|
62
|
|
|
71
|
|
|
(9
|
)
|
|||
MAIT
|
|
31
|
|
|
25
|
|
|
6
|
|
|||
Other
|
|
71
|
|
|
64
|
|
|
7
|
|
|||
Total Revenues
|
|
$
|
323
|
|
|
$
|
313
|
|
|
$
|
10
|
|
Net Regulatory Assets (Liabilities) by Source
|
|
March 31,
2018 |
|
December 31,
2017 |
|
Increase
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Regulatory transition costs
(1)
|
|
$
|
20
|
|
|
$
|
46
|
|
|
$
|
(26
|
)
|
Customer payables for future income taxes
|
|
(2,813
|
)
|
|
(2,765
|
)
|
|
(48
|
)
|
|||
Nuclear decommissioning and spent fuel disposal costs
|
|
(301
|
)
|
|
(323
|
)
|
|
22
|
|
|||
Asset removal costs
|
|
(769
|
)
|
|
(774
|
)
|
|
5
|
|
|||
Deferred transmission costs
(1)
|
|
181
|
|
|
187
|
|
|
(6
|
)
|
|||
Deferred generation costs
(1)
|
|
191
|
|
|
198
|
|
|
(7
|
)
|
|||
Deferred distribution costs
|
|
246
|
|
|
258
|
|
|
(12
|
)
|
|||
Contract valuations
|
|
106
|
|
|
118
|
|
|
(12
|
)
|
|||
Storm-related costs
(1)
|
|
502
|
|
|
329
|
|
|
173
|
|
|||
Other
(1)
|
|
54
|
|
|
46
|
|
|
8
|
|
|||
Net Regulatory Liabilities included on the Consolidated Balance Sheets
|
|
$
|
(2,583
|
)
|
|
$
|
(2,680
|
)
|
|
$
|
97
|
|
(1)
|
Approximately $342 million and $201 million of regulatory assets, primarily related to storm damage costs, do not earn a current return as of March 31, 2018 and December 31, 2017, respectively, and are currently being recovered through rates.
|
Currently Payable Long-Term Debt
|
|
(In millions)
|
||
Unsecured notes
|
|
$
|
750
|
|
FMBs
|
|
325
|
|
|
Sinking fund requirements
|
|
62
|
|
|
Other notes
|
|
20
|
|
|
|
|
$
|
1,157
|
|
Borrower(s)
|
|
Type
|
|
Maturity
|
|
Commitment
|
|
Available Liquidity
|
||||
|
|
|
|
|
|
(In millions)
|
||||||
FirstEnergy
(1)
|
|
Revolving
|
|
December 2021
|
|
$
|
4,000
|
|
|
$
|
2,790
|
|
FET
(2)
|
|
Revolving
|
|
December 2021
|
|
1,000
|
|
|
1,000
|
|
||
|
|
|
|
Subtotal
|
|
$
|
5,000
|
|
|
$
|
3,790
|
|
|
|
Cash and cash equivalents
|
|
—
|
|
|
248
|
|
||||
|
|
|
|
Total
|
|
$
|
5,000
|
|
|
$
|
4,038
|
|
(1)
|
FE and the Utilities. Available liquidity includes impact of $10 million of LOCs issued under various terms.
|
(2)
|
Includes FET, ATSI, MAIT and TrAIL.
|
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
|
|
|
|
—
|
|
|
|
300
|
|
(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)
|
|
(1)
|
No limitations.
|
(2)
|
Includes amounts which may be borrowed under the regulated companies' money pool.
|
|
|
Senior Secured
|
|
Senior Unsecured
|
||||||||
Issuer
|
|
S&P
|
|
Moody’s
|
|
Fitch
|
|
S&P
|
|
Moody’s
|
|
Fitch
|
FE
|
|
—
|
|
—
|
|
—
|
|
BB+
|
|
Baa3
|
|
BBB-
|
AE Supply
|
|
BB
|
|
—
|
|
BB
|
|
BB-
|
|
B1
|
|
BB-
|
AGC
|
|
—
|
|
—
|
|
—
|
|
BB-
|
|
Baa3
|
|
BB
|
ATSI
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
Baa1
|
|
BBB+
|
CEI
|
|
BBB+
|
|
Baa1
|
|
A-
|
|
BBB-
|
|
Baa3
|
|
BBB+
|
FET
|
|
—
|
|
—
|
|
—
|
|
BB+
|
|
Baa2
|
|
BBB-
|
JCP&L
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
Baa2
|
|
BBB
|
ME
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
A3
|
|
BBB+
|
MAIT
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
Baa1
|
|
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-
|
|
—
|
|
—
|
|
—
|
|
|
For the Three Months Ended March 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Income (loss) from discontinued operations
|
|
$
|
1,192
|
|
|
$
|
(52
|
)
|
Depreciation and amortization, including nuclear fuel, regulatory assets, net, intangible assets and deferred debt-related costs
|
|
47
|
|
|
79
|
|
||
Unrealized (gain) loss on derivative transactions
|
|
(10
|
)
|
|
47
|
|
||
|
|
|
|
|
•
|
a $1.25 billion increase in cash contributions to the qualified pension plan; partially offset by
|
•
|
higher transmission revenue, reflecting recovery of incremental operating expenses, a higher rate base at ATSI and MAIT, and the implementation of new rates at JCP&L; and
|
•
|
higher distribution services retail receipts reflecting implementation of approved rates in Ohio and Pennsylvania.
|
|
|
For the Three Months Ended March 31,
|
||||||
Securities Issued or Redeemed / Repaid
|
|
2018
|
|
2017
|
||||
|
|
(In millions)
|
||||||
New Issues
|
|
|
|
|
|
|
||
Term Loan
|
|
$
|
—
|
|
|
$
|
250
|
|
|
|
|
|
|
||||
Preferred stock issuance
|
|
$
|
1,616
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Common stock issuance
|
|
$
|
850
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Redemptions / Repayments
|
|
|
|
|
|
|
||
Term Loan
|
|
$
|
(1,450
|
)
|
|
$
|
—
|
|
PCRBs
|
|
—
|
|
|
(29
|
)
|
||
FMBs
|
|
—
|
|
|
(150
|
)
|
||
Senior secured notes
|
|
(26
|
)
|
|
(32
|
)
|
||
|
|
$
|
(1,476
|
)
|
|
$
|
(211
|
)
|
|
|
|
|
|
||||
Short-term borrowings, net
|
|
$
|
900
|
|
|
$
|
75
|
|
|
|
|
|
|
||||
Preferred stock dividend payments
|
|
$
|
(21
|
)
|
|
$
|
—
|
|
|
|
|
|
|
||||
Common stock dividend payments
|
|
$
|
(171
|
)
|
|
$
|
(159
|
)
|
|
|
For the Three Months Ended March 31,
|
|
|
||||||||
Cash Used for Investing Activities
(1)
|
|
2018
|
|
2017
|
|
Increase (Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Property Additions:
|
|
|
|
|
|
|
||||||
Regulated Distribution
|
|
$
|
264
|
|
|
$
|
264
|
|
|
$
|
—
|
|
Regulated Transmission
|
|
292
|
|
|
224
|
|
|
68
|
|
|||
Corporate / Other
|
|
27
|
|
|
100
|
|
|
(73
|
)
|
|||
Nuclear fuel
|
|
—
|
|
|
132
|
|
|
(132
|
)
|
|||
Proceeds from asset sales
|
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
|||
Investments
|
|
22
|
|
|
23
|
|
|
(1
|
)
|
|||
Notes receivable from affiliated companies
|
|
500
|
|
|
—
|
|
|
500
|
|
|||
Asset removal costs
|
|
57
|
|
|
35
|
|
|
22
|
|
|||
Other
|
|
1
|
|
|
1
|
|
|
—
|
|
|||
|
|
$
|
1,143
|
|
|
$
|
779
|
|
|
$
|
364
|
|
•
|
an increase of $500 million in notes receivable from affiliated companies resulting from FES' borrowings from the committed line of credit available under the secured credit facility with FE;
|
•
|
an increase of $68 million at Regulated Transmission due to timing of capital investments associated with its
Energizing the Future
investment program
;
partially offset by
|
•
|
a decrease of $73 million at Corporate/Other due to lower generation investments.
|
Guarantees and Other Assurances
|
|
Maximum Exposure
|
||
|
|
(In millions)
|
||
FE's Guarantees and Assurances on Behalf of FES and FENOC
|
|
|
|
|
Energy and Energy-Related Contracts
(1)
|
|
$
|
7
|
|
Surety Bonds - FG
(2)
|
|
200
|
|
|
Deferred compensation arrangements
(3)
|
|
147
|
|
|
Sale leaseback indemnity
(4)
|
|
58
|
|
|
Fuel Related
(5)
|
|
72
|
|
|
|
|
484
|
|
|
FE's Guarantees on Behalf of its Consolidated Subsidiaries
|
|
|
||
AE Supply asset sales
(6)
|
|
555
|
|
|
Deferred compensation arrangements
|
|
449
|
|
|
Other
|
|
3
|
|
|
|
|
1,007
|
|
|
|
|
|
||
FE's Guarantees on Behalf of Business Ventures
|
|
|
||
Global Holding facility
|
|
255
|
|
|
|
|
|
||
Other Assurances
|
|
|
||
Surety Bonds
|
|
168
|
|
|
LOCs
(7)
|
|
10
|
|
|
|
|
178
|
|
|
Total Guarantees and Other Assurances
|
|
$
|
1,924
|
|
(1)
|
Issued for open-ended terms, with a 10-day termination right by FirstEnergy. As of March 31, 2018, FE recorded an obligation for these guarantees in other non-current liabilities with a corresponding loss from discontinued operations.
|
(2)
|
FE provides credit support for FG surety bonds of $169 million and $31 million for the benefit of the PA DEP with respect to LBR and the Hatfield's Ferry disposal site, respectively.
|
(3)
|
As of March 31, 2018, FE recorded a benefit obligation of $147 million for the FES and FENOC amounts in other non-current liabilities with a corresponding loss from discontinued operations.
|
(4)
|
As of March 31, 2018, FE recorded an obligation for this guarantee in other current liabilities with a corresponding loss from discontinued operations.
|
(5)
|
FE is the guarantor of the remaining payments due to CSX/BNSF in connection with the definitive settlement of a dispute regarding a transportation agreement. As of March 31, 2018, FE recorded an obligation for these guarantees in other current liabilities with a corresponding loss from discontinued operations. On April 6, 2018, FE paid the remaining $72 million under the settlement agreement as a result of the FES Bankruptcy.
|
(6)
|
As a condition to closing AE Supply's sale of four natural gas plants in December 2017, FE provided the purchaser two limited three-year guarantees totaling $555 million of certain obligations of AE Supply and AGC.
|
(7)
|
Includes
$10 million
issued for various terms pursuant to LOC capacity available under FirstEnergy’s revolving credit facilities.
|
Potential Collateral Obligations
|
|
|
AE Supply
|
|
Utilities and FET
|
|
FE Corp
|
|
Total
|
||||||||
|
|
(In millions)
|
|||||||||||||||
Contractual Obligations for Additional Collateral
|
|
|
|
|
|
|
|
|
|
||||||||
At Current Credit Rating
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Upon Further Downgrade
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
46
|
|
||||
Surety Bonds (Collateralized Amount)
|
|
|
1
|
|
|
109
|
|
|
236
|
|
|
346
|
|
||||
Total Exposure from Contractual Obligations
|
|
|
$
|
2
|
|
|
$
|
155
|
|
|
$
|
236
|
|
|
$
|
393
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
•
|
the risk that we may not be able to complete our planned disposition of our competitive generation assets;
|
•
|
the risk that FirstEnergy could be required to satisfy or otherwise elect to guarantee significant financial obligations related to such sales, which could adversely affect the financial condition and cash flows of FirstEnergy; and
|
•
|
the risk that AE Supply is unable to adequately address the capacity coverage risk for shutting Pleasants Power Station down early.
|
Period
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs
(2)
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
(2)
|
|||||
|
|
|
|
|
|
|
|
|
|||||
January 1-31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
February 1-28, 2018
|
|
1,118
|
|
|
$
|
33.01
|
|
|
—
|
|
|
—
|
|
March 1-31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||||
First Quarter of 2018
|
|
1,118
|
|
|
$
|
33.01
|
|
|
—
|
|
|
—
|
|
(1)
|
Share amounts reflect shares that were surrendered to FirstEnergy by a participant under our 2015 Incentive Compensation Plan to satisfy tax withholding obligations relating to the vesting of a restricted stock award. The total number of shares repurchased represents the net shares surrendered to FirstEnergy to satisfy tax withholding. All such repurchased shares are now held as treasury shares.
|
(2)
|
FirstEnergy does not currently have any publicly announced plan or program for share purchases.
|
•
|
Air Quality Facilities Loan Agreement, dated as of December 1, 2006, between the Ohio Air Quality Development Authority (“OAQDA”) and FG, relating to $234.5 million of pollution control refunding bonds (“PCRBs”) due 2023;
|
•
|
Exempt Facilities Loan Agreement, dated as of November 1, 2006, between the Pennsylvania Economic Development Financing Authority (“PEDFA”) and FG, relating to $26 million of PCRBs due 2041;
|
•
|
Exempt Facilities Loan Agreement, dated as of December 1, 2005, between PEDFA and FG, relating to $43 million of PCRBs due 2040;
|
•
|
Exempt Facilities Loan Agreement, dated as of July 1, 2002, as amended, between PEDFA and FG, relating to $15 million of PCRBs due 2028 and certain related first mortgage bonds (“FMBs”) issued and outstanding under the FG Mortgage (as defined below);
|
•
|
Pollution Control Facilities Loan Agreement, dated as of November 1, 2008, as amended, between the Beaver County Industrial Development Authority (“BCIDA”) and FG, relating to $25 million of PCRBs due 2028 and certain related FMBs issued and outstanding under the FG Mortgage;
|
•
|
Waste Water Facilities Loan Agreement, dated as of April 1, 2006, between the Ohio Water Development Authority (“OWDA”) and FG, relating to $90.1 million of PCRBs due 2019;
|
•
|
Pollution Control Facilities Loan Agreement, dated as of September 1, 2008, between BCIDA and FG, relating to $46.3 million of PCRBs due 2047 and certain related FMBs issued and outstanding under the FG Mortgage;
|
•
|
Pollution Control Facilities Loan Agreement, dated as of April 1, 2006 between BCIDA and FG, relating to $56.6 million of PCRBs due 2041;
|
•
|
Air Quality Facilities Loan Agreement, dated as of August 1, 2009, between OAQDA and FG, relating to $177 million of PCRBs due 2020;
|
•
|
Air Quality Facilities Loan Agreement, dated as of March 1, 2009, between OAQDA and FG, relating to $50 million of PCRBs due 2023;
|
•
|
Air Quality Facilities Loan Agreement, dated as of June 1, 2009, between OAQDA and FG, relating to $100 million of PCRBs due 2029 and certain related FMBs issued and outstanding under the FG Mortgage;
|
•
|
Air Quality Facilities Loan Agreement dated as of June 1, 2009, between OAQDA and FG, relating to $141.3 million of PCRBs due 2018 and certain related FMBs issued and outstanding under the FG Mortgage;
|
•
|
Guaranty, dated as of March 26, 2007, of FG relating to indebtedness of FirstEnergy Solutions Corp.; and
|
•
|
Open-End Mortgage, General Mortgage Indenture and Deed of Trust, dated as of June 19, 2008, as amended and supplemented (the “FG Mortgage”), by and between FG and UMB Bank, National Association, as successor trustee under which FG’s FMBs are issued and outstanding, including but not limited to $250 million of FMBs supporting the Parent Credit Facility (as defined below).
|
•
|
Pollution Control Facilities Loan Agreement, dated as of December 1, 2005, between BCIDA and NG, relating to $72.7 million of PCRBs due 2035;
|
•
|
Air Quality Facilities Loan Agreement, dated as of December 1, 2005, between OAQDA and NG, relating to $7.2 million of PCRBs due 2034;
|
•
|
Air Quality Facilities Loan Agreement, dated as of November 1, 2008, between OAQDA and NG, relating to $23 million of PCRBs due 2032;
|
•
|
Air Quality Facilities Loan Agreement, dated as of September 15, 2010, between OAQDA and NG, relating to $8 million of PCRBs due 2033;
|
•
|
Waste Water Facilities and Solid Waste Facilities Loan Agreement, dated as of December 1, 2005, between OWDA and NG, relating to $82.8 million of PCRBs due 2034;
|
•
|
Waste Water Facilities and Solid Waste Facilities Loan Agreement, dated as of November 1, 2008, between OWDA and NG, relating to $33 million of PCRBs due 2032;
|
•
|
Waste Water Facilities and Solid Waste Facilities Loan Agreement, dated as of September 15, 2010, between OWDA and NG, relating to $99.1 million of PCRBs due 2033;
|
•
|
Waste Water Facilities and Solid Waste Facilities Loan Agreement, dated as of June 1, 2009, between OWDA and NG, relating to $107.5 million of PCRBs due 2033 and certain related FMBs issued and outstanding under the NG Mortgage (as defined below);
|
•
|
Pollution Control Facilities Loan Agreement, dated as of December 1, 2006, between BCIDA and NG, relating to $164 million of PCRBs due 2035;
|
•
|
Air Quality Facilities Loan Agreement, dated as of December 1, 2006, between OAQDA and NG, relating to $15.5 million of PCRBs due 2033;
|
•
|
Air Quality Facilities Loan Agreement, dated as of November 15, 2010, between OAQDA and NG, relating to $26 million of PCRBs due 2033;
|
•
|
Waste Water Facilities and Solid Waste Facilities Loan Agreement, dated as of December 1, 2006, between OWDA and NG, relating to $135.6 million of PCRBs due 2033;
|
•
|
Waste Water Facilities and Solid Waste Facilities Loan Agreement, dated as of September 1, 2008, between OWDA and NG, relating to $20.5 million of PCRBs due 2033;
|
•
|
Waste Water Facilities and Solid Waste Facilities Loan Agreement, dated as of November 15, 2010, between OWDA and NG, relating to $46.5 million of PCRBs due 2033;
|
•
|
Waste Water Facilities and Solid Waste Facilities Loan Agreement, dated as of November 15, 2010, between OWDA and NG, relating to $54.6 million of PCRBs due 2033 and certain related FMBs issued and outstanding under the NG Mortgage;
|
•
|
Air Quality Facilities Loan Agreement, dated as of September 1, 2008, between OAQDA and NG, relating to $9.1 million of PCRBs due 2033;
|
•
|
Air Quality Facilities Loan Agreement, dated as of April 1, 2009, between the Company and the OAQDA and NG (as amended or supplemented from time to time) relating to $62.5 million of PCRBs due 2033 and certain related FMBs issued and outstanding under the NG Mortgage;
|
•
|
Pollution Control Facilities Loan Agreement, dated as of April 1, 2006, as amended, between BCIDA and NG, relating to $60 million of PCRBs due 2035 and certain related FMBs issued and outstanding under the NG Mortgage;
|
•
|
Pollution Control Facilities Loan Agreement, dated as of June 1, 2008, as amended, between BCIDA and NG, relating to $98.9 million of PCRBs due 2035;
|
•
|
Guaranty, dated as of March 26, 2007, of NG relating to indebtedness of FirstEnergy Solutions Corp.; and
|
•
|
Open-End Mortgage, General Mortgage Indenture and Deed of Trust, dated as of June 1, 2009, as amended and supplemented (the “NG Mortgage”), by and between NG and UMB Bank, National Association, as successor trustee under which NG’s FMBs are issued and outstanding, including but not limited to $450 million of FMBs supporting the Parent Credit Facility;
|
•
|
Indenture, dated as of August 1, 2009, and the First Supplemental Indenture thereto, dated as of August 1, 2009, between FirstEnergy Solutions Corp. and The Bank of New York Mellon Trust Company, N.A., as trustee, under which $332 million and $363 million, respectively, of FirstEnergy Solutions Corp. 6.05% senior notes due 2021 and 6.80% senior notes due 2039 are issued and outstanding;
|
•
|
U.S. $700 million Credit Agreement, dated as of December 6, 2016, among FirstEnergy Solutions Corp., as borrower, FG and NG, as guarantors, and FE, as lender under which $700 million is currently utilized (the “Parent Credit Facility”);
|
•
|
Revolving Credit Note, dated June 29, 2016, issued by FirstEnergy Solutions Corp. to Allegheny Energy Supply Company, LLC, under which $102 million is currently outstanding;
|
•
|
Guaranty, dated as of March 26, 2007, of FirstEnergy Solutions Corp. relating to indebtedness of FG;
|
•
|
Guaranty, dated as of March 26, 2007, of FirstEnergy Solutions Corp. relating to indebtedness of NG; and
|
•
|
Guaranty, dated as of July 1, 2007, of FirstEnergy Solutions Corp. relating to the FG Leases.
|
Exhibit Number
|
Description
|
||
|
|
|
|
|
4
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
(A) (B)
|
10.3
|
|
|
(A) (B)
|
10.4
|
|
|
(A) (B)
|
10.5
|
|
|
(A) (B)
|
10.6
|
|
|
(A) (B)
|
10.7
|
|
|
(A) (B)
|
10.8
|
|
|
(A) (B)
|
10.9
|
|
|
(A) (B)
|
10.10
|
|
|
(A) (B)
|
10.11
|
|
|
(A) (B)
|
10.12
|
|
|
(A) (B)
|
10.13
|
|
|
(A) (B)
|
10.14
|
|
|
(A)
|
12
|
|
|
(A)
|
31.1
|
|
|
(A)
|
31.2
|
|
|
(A)
|
32
|
|
|
|
101
|
|
The following materials from the Quarterly Report on Form 10-Q of FirstEnergy Corp. for the period ended March 31, 2018, 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.
|
|
|
|
|
|
FIRSTENERGY CORP.
|
|
Registrant
|
|
|
|
/s/ Jason J. Lisowski
|
|
Jason J. Lisowski
|
|
Vice President, Controller
and Chief Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Purpose
. This FirstEnergy Solutions Corp. (the “Company”) 2016 Key Employee Retention Plan (the “Plan” or “KERP”) is designed to motivate eligible key employees of the Company and its subsidiaries to remain continuously employed by the Company and its subsidiaries.
|
2.
|
Adoption of the Plan
. The Company, intending to be legally bound, hereby adopts the Plan effective as of December 1, 2016 (the “Effective Date”). The Plan shall be in effect from the Effective Date and shall continue until the Termination Date.
|
3.
|
General
. The compensation provided under the Plan is intended to be in addition to all other compensation payable to Participants, including payments provided under the FirstEnergy Corp. 2015 Incentive Plan and the FirstEnergy Corp. Short Term Incentive Program in effect with the Company’s parent company and its direct or indirect subsidiaries.
|
4.
|
Definitions
. For the purposes of the Plan:
|
a.
|
“Cause”
means that within the sole discretion of the Company (i) the Participant fails to perform the duties of his or her position in a satisfactory manner, (ii) the Participant violates a material policy or rule of the Company, (iii) the Participant intentionally commits an act materially detrimental to the Company, or (iv) the Participant loses his or her unescorted access.
|
b.
|
“
President
” means the President of FirstEnergy Solutions Corp.
|
c.
|
“
Committee
” means a committee authorized by the President to administer the Plan comprised of officers of Company and its subsidiaries.
|
d.
|
“
Company Group
” means the Company and its direct and indirect subsidiaries.
|
e.
|
“
KERP Payment
” shall mean, in the case of any Participant, the amount set forth on Schedule A. Said amount will be determined by multiplying the percentage set forth on Schedule A by the Participant’s salary as of December 1, 2016.
|
f.
|
“
Participant
” shall have the meaning ascribed thereto in Section 5 hereof.
|
g.
|
“
Termination Date
” shall mean the earlier of (i) midnight on November 30, 2018 (ii) the date on which Company terminates the Plan or (iii) such date as all amounts payable hereunder shall have been paid.
|
5.
|
Eligible Participants
. Each person listed on Schedule A shall be a Participant under the Plan and eligible to receive a KERP Payment in an amount set forth on Schedule A.
|
6.
|
Term of Participation
. Effective December 1, 2016, subject to the provisions of the Plan, each Participant shall be eligible to earn a KERP Payment which shall be the amount set forth on schedule A for that Participant. Any KERP Payment required to be made under this Section 6
|
7.
|
Termination of Employment; Forfeitures
.
|
a.
|
Upon involuntary termination of a Participant by the Company for cause, or voluntary termination by the Participant prior to earning his or her KERP Payment, such Participant’s KERP Payment shall be forfeited. For any other terminations prior to the Termination Date (i.e., death, disability, involuntary termination by the Company without cause such as a termination due to the completion of a wind down process or a sale), the Participant will be paid his or her KERP Payment.
|
b.
|
If, at any time prior to the Termination Date, the Company transfers a Participant to a different position within the Company Group or to an affiliate of FirstEnergy Corp., then the KERP Payment shall be paid as set forth in Schedule A as if earned on November 30, 2018. If the Participant transfers to another position without Company permission, his or her KERP Payment will be forfeited.
|
c.
|
Any KERP Payment that becomes payable to a Participant following termination of employment under this Section 7 shall be paid no later than the 15
th
day of the second month in the year following the date of the Participant’s termination.
|
8.
|
Plan Administration
. The Plan shall be administered by the Committee. The Committee is given full authority and discretion within the limits of the Plan to establish such administrative measures as may be necessary to administer and attain the objectives of the Plan and may delegate the authority to administer the Plan to an officer of the Company. The Committee (or its delegate) shall have full power and authority to construe and interpret the Plan and any interpretation by the Committee (or its delegate) shall be binding on all Participants and shall be accorded the maximum deference permitted by law.
|
a.
|
General
. All rights and interests of Participants under the Plan shall be non-assignable and nontransferable, and otherwise not subject to pledge or encumbrance, whether voluntary or involuntary, other than by will or by the laws of descent and distribution. In connection with any sale, transfer or other disposition of all or substantially all of the Company’s assets or business, whether by merger, stock sale, consolidation or otherwise, the Company may assign the Plan’s sponsorship, in whole or in part.
|
b.
|
Receipt
and
Release
. Any payment to a Participant in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Company Group, and the Company may require Employee, as a condition precedent to such payment, to execute a receipt and release to such effect. Such release must be executed and become irrevocable no later than fifty-two (52) days following the date on which Employee becomes entitled to the KERP Payment (i.e., November 30, 2018 or the date of Employee’s termination of employment, as applicable). If the release is not effective and irrevocable by such fifty-second (52nd) day, Employee shall forfeit his or her right to the KERP Payment.
|
c.
|
Form
of
Payment
;
Withholding
. Payment of amounts due under the Plan shall be provided to a Participant in the same manner as such Participant receives his or her regular paycheck or by mail at the last known address of Participant in the possession of the Company, at the discretion of Committee. The Company will withhold all applicable taxes and any other required withholdings to be withheld with respect to the payment of any award pursuant to the Plan.
|
d.
|
Unfunded
Arrangement
;
Exclusion
of
Compensation
. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to ensure the payment of any award provided for hereunder. KERP Payments shall not be considered as extraordinary, special incentive compensation, and will not be included as “earnings,” “wages,” “salary,” or “compensation” in any pension, savings plan, welfare, life insurance, or other employee benefit plan or arrangement of the Company Group, except as otherwise provided in any such other benefit plan. A discretionary pool of Five-hundred thousand ($500,000.00) shall be available under this Plan for KERP Payments (or portion thereof) to Participants not yet identified as being eligible, any additional Participants will be identified by the Committee and Schedule A will be amended to add such additional Participants.
|
e.
|
Amendment
and
Termination
. The Company, in its sole discretion, shall have the right to modify, supplement, suspend or terminate the Plan at any time; provided that in no event shall any amendment or termination adversely affect the rights of any existing Participants regarding any KERP Payment without the prior written consent of the affected Participants. Subject to the foregoing, the Plan shall terminate upon the satisfaction of all obligations of the Company or its successor entities hereunder and a Participant shall be entitled to payment of any KERP earned as of the Termination Date.
|
f.
|
No
Right
to
Continued
Employment
. Nothing contained in the Plan shall in any way affect the right and power of the Company to discharge any Participant or otherwise terminate his or her employment at any time or for any reason or to change the terms of his or her employment in any manner.
|
g.
|
Expenses
of
Plan
. Except as otherwise provided under the Plan, any expense incurred in administering the Plan shall be borne by the Company.
|
h.
|
Captions
. Captions preceding the sections hereof are inserted solely as a matter of convenience and in no way define or limit the scope or intent of any provision hereof.
|
i.
|
Administration
. The administration of the Plan shall be governed by the substantive laws of the State of Ohio, without regard to principles of conflicts of laws. Any persons or corporations who now are or shall subsequently become parties to the Plan shall be deemed to consent to this provision. Any litigation that arises under the Plan or which in any way relates to the Plan may only be brought in the Summit County Court of Common Pleas in Ohio or the Federal District Court of the Northern District of Ohio.
|
j.
|
Section
409A
. The Plan is intended to either comply with, or be exempt from, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Code Section 409A”). To the extent that the Plan is not exempt from the requirements of Code
|
FIRSTENERGY SOLUTIONS CORP.
|
|
|
|
By:
/s/ Donald R. Schneider
|
Donald R. Schneider
|
President, FirstEnergy Solutions Corp.
|
1.
|
Section 5 of the Plan is amended by adding the following sentence to the end thereof:
|
2.
|
Section 8 of the Plan is hereby amended by adding a new subsection (k) after subsection (j) as follows:
|
3.
|
Except with respect to the changes made by this Amendment, the other provisions of the Plan remain in full force and effect.
|
4.
|
Any capitalized terms used in this Amendment that are not defined herein shall have the same meaning ascribed to such terms in the Plan.
|
1.
|
Section 4 (e) of the Plan is amended by deleting its current language and replacing it with the following:
|
e.
|
“
KERP Payment
” shall mean, in the case of any Participant, the amount set forth on Schedule A. Said amount will be determined by multiplying the percentage set forth on Schedule A by the Participant’s salary as of December 1, 2016. The amount for any KERP issued on or after December 1, 2017 for a newly Eligible Participant shall be determined by multiplying the percentage set forth on Schedule A by the Participant’s salary at the time the KERP is issued, but will be prorated by a percentage where the numerator is the number of months in which the Eligible Participant worked the majority of the month, from the date that the KERP was issued, through and including November, 2018, and the denominator is twenty-four (24). The amount for any KERP issued on or after December 1, 2017 for someone who is already an Eligible Participant, but is issued a new KERP due to a change in position such that the Company determines the amount should be modified, shall equal a prorated amount of their prior KERP and a prorated amount of the newly issued KERP, which will be calculated by multiplying the amount of their salary for their new position, by the percentage set forth on Schedule A.
|
2.
|
Schedule A of the Plan shall be amended by deleting the Plan’s current Schedule A and replacing it with the Schedule A attached hereto. Any additional Eligible Participants or increase in KERP amounts to an Eligible Participant shall be paid from the discretionary fund established in Section 8 (d) of the Plan.
|
|
|
|
|
|
Leadership Name
|
|
Signature
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
Signature
|
|
Date
|
|
|
|
|
|
1.
|
Purpose
. This FirstEnergy Nuclear Operating Company (the “Company”) 2016 Key Employee Retention Plan (the “Plan” or “KERP”) is designed to motivate eligible key employees of the Company and its subsidiaries to remain continuously employed by the Company and its subsidiaries.
|
2.
|
Adoption of the Plan
. The Company, intending to be legally bound, hereby adopts the Plan effective as of December 1, 2016 (the “Effective Date”). The Plan shall be in effect from the Effective Date and shall continue until the Termination Date.
|
3.
|
General
. The compensation provided under the Plan is intended to be in addition to all other compensation payable to Participants, including payments provided under the FirstEnergy Corp. 2015 Incentive Plan and the FirstEnergy Corp. Short Term Incentive Program in effect with the Company’s parent company and its direct or indirect subsidiaries.
|
4.
|
Definitions
. For the purposes of the Plan:
|
a.
|
“Cause”
means that within the sole discretion of the Company (i) the Participant fails to perform the duties of his or her position in a satisfactory manner, (ii) the Participant violates a material policy or rule of the Company, (iii) the Participant intentionally commits an act materially detrimental to the Company, or (iv) the Participant loses his or her unescorted access.
|
b.
|
“
President
” means the President and Chief Nuclear Officer of FirstEnergy Nuclear Operating Company.
|
c.
|
“
Committee
” means a committee authorized by the President to administer the Plan comprised of officers of Company and its subsidiaries.
|
d.
|
“
KERP Payment
” shall mean, in the case of any Participant, the amount set forth on Schedule A. Said amount will be determined by multiplying the percentage set forth on Schedule A by the Participant’s salary as of December 1, 2016.
|
e.
|
“
Participant
” shall have the meaning ascribed thereto in Section 5 hereof.
|
f.
|
“
Termination Date
” shall mean the earliest of (i) midnight on November 30, 2018 (ii) the date on which Company terminates the Plan or (iii) such date as all amounts payable hereunder shall have been paid.
|
5.
|
Eligible Participants
. Each person listed on Schedule A shall be a Participant under the Plan and eligible to receive a KERP Payment in an amount set forth on Schedule A.
|
6.
|
Term of Participation
. Effective December 1, 2016, subject to the provisions of the Plan, each Participant shall be eligible to earn a KERP Payment which shall be the amount set forth on schedule A for that Participant. Any KERP Payment required to be made under this Section 6
|
7.
|
Termination of Employment; Forfeitures
.
|
a.
|
Upon involuntary termination of a Participant by the Company for cause, or voluntary termination by the Participant prior to earning his or her KERP Payment, such Participant’s KERP Payment shall be forfeited. For any other terminations prior to the Termination Date (i.e., death, disability, involuntary termination by the Company without cause such as a termination due to the completion of a wind down process or a sale), the Participant will be paid his or her full KERP Payment.
|
b.
|
If, at any time prior to the Termination Date, the Company transfers a Participant to a different position within the Company or to another affiliate of FirstEnergy Corp., then the KERP Payment shall be paid as set forth in Schedule A as if earned on November 30, 2018. If the Participant transfers to another position without Company permission, his or her KERP Payment will be forfeited.
|
c.
|
Any KERP Payment that becomes payable to a Participant following termination of employment under this Section 7 shall be paid no later than the 15
th
day of the second month in the year following the date of the Participant’s termination.
|
8.
|
Plan Administration
. The Plan shall be administered by the Committee. The Committee is given full authority and discretion within the limits of the Plan to establish such administrative measures as may be necessary to administer and attain the objectives of the Plan and may delegate the authority to administer the Plan to an officer of the Company. The Committee (or its delegate) shall have full power and authority to construe and interpret the Plan and any interpretation by the Committee (or its delegate) shall be binding on all Participants and shall be accorded the maximum deference permitted by law.
|
a.
|
General
. All rights and interests of Participants under the Plan shall be non-assignable and nontransferable, and otherwise not subject to pledge or encumbrance, whether voluntary or involuntary, other than by will or by the laws of descent and distribution. In connection with any sale, transfer or other disposition of all or substantially all of the Company’s assets or business, whether by merger, stock sale, consolidation or otherwise, the Company may assign the Plan’s sponsorship, in whole or in part.
|
b.
|
Receipt
and
Release
. Any payment to a Participant in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Company, and the Company may require Employee, as a condition precedent to such payment, to execute a receipt and release to such effect. Such release must be executed and become irrevocable no later than fifty-two (52) days following the date on which Employee becomes entitled to the KERP Payment (i.e., November 30, 2018 or the date of Employee’s termination of employment, as applicable). If the release is not effective and irrevocable by such fifty-second (52nd) day, Employee shall forfeit his or her right to the KERP Payment.
|
c.
|
Form
of
Payment
;
Withholding
. Payment of amounts due under the Plan shall be provided to a Participant in the same manner as such Participant receives his or her regular paycheck or by mail at the last known address of Participant in the possession of the Company, at the discretion of Committee. The Company will withhold all applicable taxes and any other required withholdings to be withheld with respect to the payment of any award pursuant to the Plan.
|
d.
|
Unfunded
Arrangement
;
Exclusion
of
Compensation
. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to ensure the payment of any award provided for hereunder. KERP Payments shall not be considered as extraordinary, special incentive compensation, and will not be included as “earnings,” “wages,” “salary,” or “compensation” in any pension, savings plan, welfare, life insurance, or other employee benefit plan or arrangement of the Company, except as otherwise provided in any such other benefit plan. A discretionary pool of Five-hundred thousand ($500,000.00) shall be available under this Plan for KERP Payments (or portion thereof) to Participants not yet identified as being eligible, any additional Participants will be identified by the Committee and Schedule A will be amended to add such additional Participants.
|
e.
|
Amendment
and
Termination
. The Company, in its sole discretion, shall have the right to modify, supplement, suspend or terminate the Plan at any time; provided that in no event shall any amendment or termination adversely affect the rights of any existing Participants regarding any KERP Payment without the prior written consent of the affected Participants. Subject to the foregoing, the Plan shall terminate upon the satisfaction of all obligations of the Company or its successor entities hereunder and a Participant shall be entitled to payment of any KERP earned as of the Termination Date.
|
f.
|
No
Right
to
Continued
Employment
. Nothing contained in the Plan shall in any way affect the right and power of the Company to discharge any Participant or otherwise terminate his or her employment at any time or for any reason or to change the terms of his or her employment in any manner.
|
g.
|
Expenses
of
Plan
. Except as otherwise provided under the Plan, any expense incurred in administering the Plan shall be borne by the Company.
|
h.
|
Captions
. Captions preceding the sections hereof are inserted solely as a matter of convenience and in no way define or limit the scope or intent of any provision hereof.
|
i.
|
Administration
. The administration of the Plan shall be governed by the substantive laws of the State of Ohio, without regard to principles of conflicts of laws. Any persons or corporations who now are or shall subsequently become parties to the Plan shall be deemed to consent to this provision. Any litigation that arises under the Plan or which in any way relates to the Plan may only be brought in the Summit County Court of Common Pleas in Ohio or the Federal District Court of the Northern District of Ohio.
|
j.
|
Section
409A
. The Plan is intended to either comply with, or be exempt from, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Code Section 409A”). To the extent that the Plan is not exempt from the requirements of Code
|
FIRSTENERGY NUCLEAR OPERATING COMPANY
|
|
|
|
By:
/s/ Samuel L. Belcher
|
Samuel L. Belcher
|
President and Chief Nuclear Officer
|
1.
|
Section 5 of the Plan is amended by adding the following sentence to the end thereof:
|
2.
|
Section 8 of the Plan is hereby amended by adding a new subsection (k) after subsection (j) as follows:
|
3.
|
Except with respect to the changes made by this Amendment, the other provisions of the Plan remain in full force and effect.
|
4.
|
Any capitalized terms used in this Amendment that are not defined herein shall have the same meaning ascribed to such terms in the Plan.
|
1.
|
Section 4 (e) of the Plan is amended by deleting its current language and replacing it with the following:
|
e.
|
“
KERP Payment
” shall mean, in the case of any Participant, the amount set forth on Schedule A. Said amount will be determined by multiplying the percentage set forth on Schedule A by the Participant’s salary as of December 1, 2016. The amount for any KERP issued on or after December 1, 2017 for a newly Eligible Participant shall be determined by multiplying the percentage set forth on Schedule A by the Participant’s salary at the time the KERP is issued, but will be prorated by a percentage where the numerator is the number of months in which the Eligible Participant worked the majority of the month, from the date that the KERP was issued, through and including November, 2018, and the denominator is twenty-four (24). The amount for any KERP issued on or after December 1, 2017 for someone who is already an Eligible Participant, but is issued a new KERP due to a change in position such that the Company determines the amount should be modified, shall equal a prorated amount of their prior KERP and a prorated amount of the newly issued KERP, which will be calculated by multiplying the amount of their salary for their new position, by the percentage set forth on Schedule A.
|
2.
|
Schedule A of the Plan shall be amended by deleting the Plan’s current Schedule A and replacing it with the Schedule A attached hereto. Any additional Eligible Participants or increase in KERP amounts to an Eligible Participant shall be paid from the discretionary fund established in Section 8 (d) of the Plan.
|
FIRSTENERGY NUCLEAR OPERATING COMPANY
|
|
|
/s/ Samuel L. Belcher
|
BY: Samuel L. Belcher
|
TITLE: President and Chief Nuclear Officer
|
|
|
|
FIRSTENERGY SERVICE COMPANY
|
|
|
/s/ Charles E. Jones
|
BY: Charles E. Jones
|
TITLE: President and Chief Executive Officer, FirstEnergy Corp.
|
|
|
|
|
|
|
Leadership Name
|
|
Signature
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
Signature
|
|
Date
|
|
|
|
|
|
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
|
|
Meets Target
|
||
|
Payout:
|
|||
|
Points
|
Payout
|
||
|
|
4.50
|
200%
|
|
|
4.05
|
200%
|
||
|
2.70
|
150%
|
||
|
2.25
|
100%
|
||
|
1.80
|
50%
|
||
|
0.00
|
0%
|
(a)
|
Vesting
. Except as otherwise provided in Sections 6 and 7 below, if and to the extent the performance goals set forth on
Exhibit A
attached to this Agreement (the “Performance Goals”) are achieved during the performance period set forth on
Exhibit A
(the “Performance Period”), the RSUs will vest on March 1, 2020 (the “Vesting Date”), as long as the Grantee remains continuously employed by the Company or a Subsidiary until such Vesting Date. The number of RSUs that shall vest will range from 0% to 200% of the Target Number, as determined by the extent to which the Performance Goals are achieved. The Grantee will have no rights to the Shares underlying the RSUs until the RSUs have vested (each RSU that vests pursuant to this Section 4 or Sections 6 and 7 below, a “Vested RSU”). Prior to settlement, each RSU (whether or not a Vested RSU) represents an unfunded and unsecured obligation of the Company.
|
(b)
|
Settlement
. Except as otherwise provided in Sections 6, 7 and 11 below, the Company shall settle each Vested RSU by delivering one Share per Vested RSU to the Grantee as soon as administratively practicable (and no later than 60 days) after the RSU’s Vesting Date. Notwithstanding the foregoing or any provision in Sections 6 or 7 to the contrary, if the Grantee elects to defer the settlement of the RSUs pursuant to the Company’s Executive Deferred Compensation Plan (or any other non-qualified deferred compensation plan providing for the ability to defer settlement of the RSUs), then the time, form and medium of payment with respect to any deferred RSUs shall be made pursuant to the terms and conditions of the Executive Deferred Compensation Plan (or similar non-qualified deferred compensation plan). Fractional RSUs, if any, will be settled in cash.
|
(a)
|
Death
. If, at least one month after the Grant Date but prior to the Vesting Date, the Grantee dies, a prorated number of RSUs shall become Vested RSUs. For purposes of this Section 6(a), the number of RSUs that shall become Vested RSUs due to the Grantee’s death shall be equal to (i) the Target Number of RSUs
multiplied by
(ii) a fraction, where the numerator is the number of full calendar months the Grantee remained employed after the Grant Date and the denominator is 24. The Company shall settle any RSUs that become Vested RSUs under this Section 6(a) by delivering to the Grantee’s estate one Share for each Vested RSU as soon as administratively practicable after the date of the Grantee’s death, but in any event, by March 15th of the year following the year in which the Grantee’s death occurred.
|
(b)
|
Disability
. If, at least one month after the Grant Date but prior to the Vesting Date, the Grantee’s employment is terminated due to the Grantee’s Disability, then, after the end of the Performance Period, a Prorated Number of RSUs shall become Vested RSUs (as determined in Section 6(f) below). The Company shall settle any RSUs that become Vested RSUs under this Section 6(b) by delivering to the Grantee one Share for each Vested RSU as soon as administratively practicable after the last day of the Performance Period, but in any event, by March 15th of the year following the year in which the Performance Period ends.
|
(c)
|
Termination without Cause
. If, at least one month after the Grant Date but prior to the Vesting Date, the Grantee’s employment is terminated by the Company or a Subsidiary without Cause, then, after the end of the Performance Period, a Prorated Number of RSUs shall become Vested RSUs (as determined in Section 6(f) below). The Company shall settle any RSUs that become Vested RSUs under this Section 6(c) by delivering to the Grantee one Share for each Vested RSU as soon as administratively practicable after the last day of the Performance Period, but in any event, by March 15th of the year following the year in which the Performance Period ends.
|
(d)
|
Retirement
. If, at least one month after the Grant Date but prior to the Vesting Date, the Grantee’s employment is terminated due to the Grantee’s Retirement, then, after the end of the Performance Period, a Prorated Number of RSUs shall become Vested RSUs (as determined in Section 6(f) below). The Company shall settle any RSUs that become Vested RSUs under this Section 6(d) by delivering to the Grantee one Share for each Vested RSU as soon as administratively practicable after the last day of the Performance Period, but in any event, by March 15th of the year following the year in which the Performance Period ends.
|
(e)
|
Change in Position
. If, at least one month after the Grant Date but prior to the Vesting Date, the Grantee is transferred to a position with the Company or a Subsidiary that is not an executive position eligible for such an award, then, after the end of the Performance Period, a Prorated Number of RSUs shall become Vested RSUs (as determined in Section
|
(f)
|
Prorated Vesting
. The Prorated Number of RSUs described in Section 6(b), (c), (d) or (e) above (the “Prorated Number”) shall be determined as follows:
|
(g)
|
Release Requirement
. Notwithstanding any provision herein to the contrary, except as otherwise determined by the Company, in order for the Grantee to receive Shares pursuant to the settlement of Vested RSUs under Section 6(a), (b), (c), (d) or (e) above, the Grantee (or the representative of his or her estate) must execute and deliver to the Company a general release and waiver of claims against the Company, its Subsidiaries and their directors, officers, employees, shareholders and other affiliates in a form that is satisfactory to the Company (the “Release”). The Release must become effective and irrevocable under applicable law no later than 60 days following the date of the Grantee’s death, termination of employment or transfer of position, as applicable.
|
(i)
|
in any case permitted by the terms of the Plan or this Agreement;
|
(ii)
|
except with respect to an adjustment made pursuant to the last paragraph of this Section 15(h), with the written consent of the Grantee; or
|
(iii)
|
without the consent of the Grantee if the amendment is either not materially adverse to the interests of the Grantee or is necessary or appropriate in the view of the Committee to conform with, or to take into account, applicable law, including either exemption from or compliance with any applicable tax law.
|
Financial — FES, Competitive FES Fossil, and Nuclear O&M and Capital Spend
|
Safety
1
— Either FES, Competitive FES Fossil & FENOC OSHA incident rate or Competitive FES Fossil OSHA (depending upon business unit); either FES, Competitive FES Fossil and FENOC Days Away/Restricted or Job Transfer Rate (“DART”) or Competitive FES Fossil DART (depending on business unit); FES, Competitive FES Fossil and FENOC Life Changing Events (“LCE”) or Competitive FES Fossil LCE (depending on business unit)
|
Nuclear Unit Capability Factor
|
Competitive Generation Environmental Excursions
|
–
|
75% of the award earned for results for the first quarter of the performance period will be calculated and paid no later than the last day in May;
|
–
|
75% of the award earned for results for the second quarter of the performance period will be calculated and paid no later than the last day in July; and
|
–
|
75% of the award earned for the results for the third quarter of the performance period will be calculated and paid no later than the last day in October.
|
Financial — FES, Competitive FES Fossil, and Nuclear O&M and Capital Spend
|
Safety — Either FES, Competitive FES Fossil & FENOC OSHA incident rate or Competitive FES Fossil OSHA (depending upon business unit); either FES, Competitive FES Fossil and FENOC Days Away/Restricted or Job Transfer Rate (“DART”) or Competitive FES Fossil DART (depending on business unit); FES, Competitive FES Fossil and FENOC Life Changing Events (“LCE”) or Competitive FES Fossil LCE (depending on business unit)
|
Nuclear Unit Capability Factor
|
Competitive Generation Environmental Excursions
|
–
|
75% of the award earned for results for the first quarter of the performance period will be calculated and paid no later than the last day in May;
|
–
|
75% of the award earned for results for the second quarter of the performance period will be calculated and paid no later than the last day in July; and
|
–
|
75% of the award earned for the results for the third quarter of the performance period will be calculated and paid no later than the last day in October.
|
(1)
|
Includes the interest element of rentals where determinable plus 1/3 of rental expense where no readily defined interest element can be determined.
|
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 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/ Steven E. Strah
|
|
|
Steven E. Strah
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
/s/ Charles E. Jones
|
|
|
Charles E. Jones
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
/s/ Steven E. Strah
|
|
|
Steven E. Strah
|
|
|
Senior Vice President and Chief Financial Officer
|
|