|
Commission
|
|
Registrant; State of Incorporation;
|
|
I.R.S. Employer
|
File Number
|
|
Address; and Telephone Number
|
|
Identification No.
|
|
|
|
|
|
333-21011
|
|
FIRSTENERGY CORP.
|
|
34-1843785
|
|
|
(An Ohio Corporation)
|
|
|
|
|
76 South Main Street
|
|
|
|
|
Akron, OH 44308
|
|
|
|
|
Telephone (800)736
-
3402
|
|
|
|
|
|
|
|
Yes
þ
No
o
|
|
|
Yes
þ
No
o
|
|
|
Large Accelerated Filer
þ
|
|
|
|
Accelerated Filer
o
|
|
|
|
Non-accelerated Filer (Do not check
if a smaller reporting company) o |
|
|
|
Smaller Reporting Company
o
|
|
|
|
Emerging Growth Company
o
|
|
Yes
o
No
þ
|
|
|
|
|
OUTSTANDING
|
|
CLASS
|
|
AS OF JULY 27, 2018
|
|
FirstEnergy Corp., $0.10 par value
|
|
486,021,499
|
|
|
•
|
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 filed for bankruptcy protection.
|
•
|
The potential for litigation and payment demands against FirstEnergy by FES, FENOC or their creditors, and the ability to successfully execute a definitive settlement agreement and obtain approvals from the Bankruptcy Court and others necessary for the comprehensive settlement as agreed to in principle.
|
•
|
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.
|
•
|
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.
|
•
|
The accomplishment of our regulatory and operational goals in connection with our transmission and distribution investment plans.
|
•
|
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.
|
•
|
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 through FE Tomorrow and other initiatives and to successfully execute our financial plans designed to improve our credit metrics and strengthen our balance sheet.
|
•
|
The risks and uncertainties associated with litigation, arbitration, mediation and like proceedings.
|
•
|
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.
|
•
|
Costs being higher than anticipated and the success of our policies to control costs.
|
•
|
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.
|
•
|
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.
|
•
|
Economic and weather conditions affecting future sales, margins and operations, such as significant weather events, and all associated regulatory events or actions.
|
•
|
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.
|
•
|
The impact of labor disruptions by our unionized workforce.
|
•
|
The risks associated with cyber-attacks and other disruptions to our information technology system that may compromise our generation, transmission and/or distribution services and data security breaches of sensitive data, intellectual property and proprietary or personally identifiable information regarding our business, employees, shareholders, customers, suppliers, business partners and other individuals in our data centers and on our networks.
|
•
|
The 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.
|
•
|
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.
|
•
|
The uncertainties of various cost recovery and cost allocation issues resulting from ATSI's realignment into PJM.
|
•
|
The ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates.
|
•
|
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, and CSAPR programs, including our estimated costs of compliance, CWA waste water effluent limitations for power plants, and CWA 316(b) water intake regulation.
|
•
|
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.
|
•
|
The impact of changes to significant accounting policies.
|
•
|
The impact of any changes in tax laws or regulations, including the Tax Act, or adverse tax audit results or rulings.
|
•
|
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.
|
•
|
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.
|
•
|
Issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business.
|
•
|
The risks and other factors discussed from time to time in our SEC filings, and other similar factors.
|
|
|
AE
|
Allegheny Energy, Inc., a Maryland utility holding company that merged with a subsidiary of FirstEnergy on February 25, 2011, which subsequently merged with and into FE on January 1, 2014
|
AESC
|
Allegheny Energy Service Corporation, a subsidiary of FirstEnergy Corp.
|
AE Supply
|
Allegheny Energy Supply Company, LLC, an unregulated generation subsidiary of FE
|
AGC
|
Allegheny Generating Company, formerly a generation subsidiary of AE Supply that became a subsidiary of MP in May 2018.
|
ATSI
|
American Transmission Systems, Incorporated, formerly a direct subsidiary of FE that became a subsidiary of FET in April 2012, which owns and operates transmission facilities
|
BSPC
|
Bay Shore Power Company
|
BU Energy
|
Buchanan Energy Company of Virginia, LLC, a subsidiary of AE Supply, and formerly a 50% owner in a joint venture that owns the Buchanan Generating Facility
|
Buchanan Energy
|
Buchanan Generation, LLC, formerly a joint venture between AE Supply and CNX Gas Corporation
|
CEI
|
The Cleveland Electric Illuminating Company, an Ohio electric utility operating subsidiary
|
CES
|
Competitive Energy Services, formerly a reportable operating segment of FirstEnergy
|
FE
|
FirstEnergy Corp., a public utility holding company
|
FENOC
|
FirstEnergy Nuclear Operating Company, a subsidiary of FE, which operates NG's nuclear generating facilities
|
FES
|
FirstEnergy Solutions Corp., together with its consolidated subsidiaries, FG, NG, FE Aircraft Leasing Corp., Norton Energy Storage L.L.C. and FGMUC, which provides unregulated energy-related products and services
|
FESC
|
FirstEnergy Service Company, which provides legal, financial and other corporate support services
|
FET
|
FirstEnergy Transmission, LLC, formerly known as Allegheny Energy Transmission, LLC, which is the parent of ATSI, TrAIL and MAIT, and has a joint venture in PATH
|
FEV
|
FirstEnergy Ventures Corp., which invests in certain unregulated enterprises and business ventures
|
FG
|
FirstEnergy Generation, LLC, a wholly owned subsidiary of FES, which owns and operates non-nuclear generating facilities
|
FGMUC
|
FirstEnergy Generation Mansfield Unit 1 Corp., a wholly owned subsidiary of FG, which has certain leasehold interests in a portion of Unit 1 at the Bruce Mansfield plant
|
FirstEnergy
|
FirstEnergy Corp., together with its consolidated subsidiaries
|
Global Holding
|
Global Mining Holding Company, LLC, a joint venture between FEV, WMB Marketing Ventures, LLC and Pinesdale LLC
|
Global Rail
|
Global Rail Group, LLC, a subsidiary of Global Holding that owns coal transportation operations near Roundup, Montana
|
GPU
|
GPU, Inc., former parent of JCP&L, ME and PN, that merged with FE on November 7, 2001
|
JCP&L
|
Jersey Central Power & Light Company, a New Jersey electric utility operating subsidiary
|
MAIT
|
Mid-Atlantic Interstate Transmission, LLC, a subsidiary of FET, which owns and operates transmission facilities
|
ME
|
Metropolitan Edison Company, a Pennsylvania electric utility operating subsidiary
|
MP
|
Monongahela Power Company, a West Virginia electric utility operating subsidiary
|
NG
|
FirstEnergy Nuclear Generation, LLC, a wholly owned subsidiary of FES, which owns nuclear generating facilities
|
OE
|
Ohio Edison Company, an Ohio electric utility operating subsidiary
|
Ohio Companies
|
CEI, OE and TE
|
PATH
|
Potomac-Appalachian Transmission Highline, LLC, a joint venture between FE and a subsidiary of AEP
|
PATH-Allegheny
|
PATH Allegheny Transmission Company, LLC
|
PATH-WV
|
PATH West Virginia Transmission Company, LLC
|
PE
|
The Potomac Edison Company, a Maryland and West Virginia electric utility operating subsidiary
|
Penn
|
Pennsylvania Power Company, a Pennsylvania electric utility operating subsidiary of OE
|
Pennsylvania Companies
|
ME, PN, Penn and WP
|
PN
|
Pennsylvania Electric Company, a Pennsylvania electric utility operating subsidiary
|
Signal Peak
|
Signal Peak Energy, LLC, an indirect subsidiary of Global Holding that owns mining operations near Roundup, Montana
|
TE
|
The Toledo Edison Company, an Ohio electric utility operating subsidiary
|
TrAIL
|
Trans-Allegheny Interstate Line Company, a subsidiary of FET, which owns and operates transmission facilities
|
Utilities
|
OE, CEI, TE, Penn, JCP&L, ME, PN, MP, PE and WP
|
WP
|
West Penn Power Company, a Pennsylvania electric utility operating subsidiary
|
|
|
|
|
GLOSSARY OF TERMS,
Continued
|
|
The following abbreviations and acronyms are used to identify frequently used terms in this report:
|
|
AAA
|
American Arbitration Association
|
ADIT
|
Accumulated Deferred Income Taxes
|
AEP
|
American Electric Power Company, Inc.
|
AFS
|
Available-for-sale
|
AFUDC
|
Allowance for Funds Used During Construction
|
ALJ
|
Administrative Law Judge
|
AOCI
|
Accumulated Other Comprehensive Income
|
ARO
|
Asset Retirement Obligation
|
ARP
|
Alternative Revenue Program
|
ARR
|
Auction Revenue Right
|
ASC
|
Accounting Standard Codification
|
ASU
|
Accounting Standards Update
|
Bankruptcy Court
|
U.S. Bankruptcy Court in the Northern District of Ohio in Akron
|
BGS
|
Basic Generation Service
|
BNSF
|
BNSF Railway Company
|
BRA
|
PJM RPM Base Residual Auction
|
CAA
|
Clean Air Act
|
CCR
|
Coal Combustion Residuals
|
CERCLA
|
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
|
CFR
|
Code of Federal Regulations
|
CO
2
|
Carbon Dioxide
|
CPP
|
EPA's Clean Power Plan
|
CSAPR
|
Cross-State Air Pollution Rule
|
CSX
|
CSX Transportation, Inc.
|
CTA
|
Consolidated Tax Adjustment
|
CWA
|
Clean Water Act
|
DCR
|
Delivery Capital Recovery
|
DMR
|
Distribution Modernization Rider
|
DOE
|
United States Department of Energy
|
DPM
|
Distribution Platform Modernization
|
DR
|
Demand Response
|
DSIC
|
Distribution System Improvement Charge
|
DSP
|
Default Service Plan
|
EDC
|
Electric Distribution Company
|
EDCP
|
Executive Deferred Compensation Plan
|
EE&C
|
Energy Efficiency and Conservation
|
EGS
|
Electric Generation Supplier
|
EKPC
|
East Kentucky Power Cooperative, Inc.
|
ELPC
|
Environmental Law & Policy Center
|
EmPOWER Maryland
|
EmPOWER Maryland Energy Efficiency Act
|
ENEC
|
Expanded Net Energy Cost
|
EPA
|
United States Environmental Protection Agency
|
EPS
|
Earnings per Share
|
ERO
|
Electric Reliability Organization
|
ESP IV
|
Electric Security Plan IV
|
ESP IV PPA
|
Unit Power Agreement entered into on April 1, 2016 by and between the Ohio Companies and FES
|
Facebook®
|
Facebook is a registered trademark of Facebook, Inc.
|
FASB
|
Financial Accounting Standards Board
|
FERC
|
Federal Energy Regulatory Commission
|
FE Tomorrow
|
FirstEnergy's initiative launched in late 2016 to identify its optimal organization structure and properly align corporate costs and systems to efficiently support a fully regulated company going forward
|
GLOSSARY OF TERMS,
Continued
|
|
Fitch
|
Fitch Ratings
|
FMB
|
First Mortgage Bond
|
FPA
|
Federal Power Act
|
FRR
|
Fixed Resource Requirement
|
FTR
|
Financial Transmission Right
|
GAAP
|
Accounting Principles Generally Accepted in the United States of America
|
GHG
|
Greenhouse Gases
|
HCl
|
Hydrochloric Acid
|
ICE
|
Intercontinental Exchange, Inc.
|
IIP
|
Infrastructure Investment Program
|
IRP
|
Integrated Resource Plan
|
IRS
|
Internal Revenue Service
|
JCP&L Reliability Plus
|
JCP&L Reliability Plus Infrastructure Investment Program
|
kV
|
Kilovolt
|
KWH
|
Kilowatt-hour
|
LBR
|
Little Blue Run
|
LOC
|
Letter of Credit
|
LS Power
|
LS Power Equity Partners III, LP
|
LSE
|
Load Serving Entity
|
LTIIPs
|
Long-Term Infrastructure Improvement Plans
|
MATS
|
Mercury and Air Toxics Standards
|
MDPSC
|
Maryland Public Service Commission
|
MISO
|
Midcontinent Independent System Operator, Inc.
|
MLP
|
Master Limited Partnership
|
mmBTU
|
Million British Thermal Units
|
Moody’s
|
Moody’s Investors Service, Inc.
|
MOPR
|
Minimum Offer Price Rule
|
MVP
|
Multi-Value Project
|
MW
|
Megawatt
|
MWH
|
Megawatt-hour
|
NAAQS
|
National Ambient Air Quality Standards
|
NDT
|
Nuclear Decommissioning Trust
|
NERC
|
North American Electric Reliability Corporation
|
NJAPA
|
New Jersey Administrative Procedure Act
|
NJBPU
|
New Jersey Board of Public Utilities
|
NOAC
|
Northwest Ohio Aggregation Coalition
|
NOL
|
Net Operating Loss
|
NOPR
|
Notice of Proposed Rulemaking
|
NOV
|
Notice of Violation
|
NOx
|
Nitrogen Oxide
|
NPDES
|
National Pollutant Discharge Elimination System
|
NRC
|
Nuclear Regulatory Commission
|
NSR
|
New Source Review
|
NUG
|
Non-Utility Generation
|
NYPSC
|
New York State Public Service Commission
|
OCA
|
Office of Consumer Advocate
|
OCC
|
Ohio Consumers' Counsel
|
OMAEG
|
Ohio Manufacturers' Association Energy Group
|
OPEB
|
Other Post-Employment Benefits
|
OPIC
|
Other Paid-in Capital
|
ORC
|
Ohio Revised Code
|
OTTI
|
Other Than Temporary Impairments
|
GLOSSARY OF TERMS,
Continued
|
|
OVEC
|
Ohio Valley Electric Corporation
|
PA DEP
|
Pennsylvania Department of Environmental Protection
|
PCB
|
Polychlorinated Biphenyl
|
PCRB
|
Pollution Control Revenue Bond
|
PJM
|
PJM Interconnection, L.L.C.
|
PJM Region
|
The aggregate of the zones within PJM
|
PJM Tariff
|
PJM Open Access Transmission Tariff
|
PM
|
Particulate Matter
|
POLR
|
Provider of Last Resort
|
POR
|
Purchase of Receivables
|
PPA
|
Purchase Power Agreement
|
PPB
|
Parts Per Billion
|
PPUC
|
Pennsylvania Public Utility Commission
|
PSA
|
Power Supply Agreement
|
PSD
|
Prevention of Significant Deterioration
|
PUCO
|
Public Utilities Commission of Ohio
|
PURPA
|
Public Utility Regulatory Policies Act of 1978
|
RCRA
|
Resource Conservation and Recovery Act
|
REC
|
Renewable Energy Credit
|
Regulation FD
|
Regulation Fair Disclosure promulgated by the SEC
|
REIT
|
Real Estate Investment Trust
|
RFC
|
Reliability
First
Corporation
|
RFP
|
Request for Proposal
|
RGGI
|
Regional Greenhouse Gas Initiative
|
ROE
|
Return on Equity
|
RRS
|
Retail Rate Stability
|
RSS
|
Rich Site Summary
|
RTEP
|
Regional Transmission Expansion Plan
|
RTO
|
Regional Transmission Organization
|
RWG
|
Restructuring Working Group
|
S&P
|
Standard & Poor’s Ratings Service
|
SB310
|
Substitute Ohio Senate Bill No. 310
|
SBC
|
Societal Benefits Charge
|
SEC
|
United States Securities and Exchange Commission
|
Seventh Circuit
|
United States Court of Appeals for the Seventh Circuit
|
SIP
|
State Implementation Plan(s) Under the Clean Air Act
|
SO
2
|
Sulfur Dioxide
|
Sixth Circuit
|
United States Court of Appeals for the Sixth Circuit
|
SOS
|
Standard Offer Service
|
SPE
|
Special Purpose Entity
|
SREC
|
Solar Renewable Energy Credit
|
SSO
|
Standard Service Offer
|
Tax Act
|
Tax Cuts and Jobs Act, adopted December 22, 2017
|
TDS
|
Total Dissolved Solid
|
TMI-2
|
Three Mile Island Unit 2
|
TO
|
Transmission Owner
|
Twitter®
|
Twitter is a registered trademark of Twitter, Inc.
|
UCC
|
Official committee of unsecured creditors appointed in connection with the FES Bankruptcy
|
U.S. Court of Appeals for the D.C. Circuit
|
United States Court of Appeals for the District of Columbia Circuit
|
VEPCO
|
Virginia Electric and Power Company
|
VIE
|
Variable Interest Entity
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
|
||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
NET INCOME
|
|
$
|
299
|
|
|
$
|
174
|
|
|
$
|
1,668
|
|
|
$
|
379
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pension and OPEB prior service costs
|
|
(19
|
)
|
|
(18
|
)
|
|
(37
|
)
|
|
(36
|
)
|
|
||||
Amortized losses on derivative hedges
|
|
2
|
|
|
1
|
|
|
17
|
|
|
4
|
|
|
||||
Change in unrealized gains on available-for-sale securities
|
|
—
|
|
|
(2
|
)
|
|
(106
|
)
|
|
14
|
|
|
||||
Other comprehensive loss
|
|
(17
|
)
|
|
(19
|
)
|
|
(126
|
)
|
|
(18
|
)
|
|
||||
Income tax benefits on other comprehensive loss
|
|
(4
|
)
|
|
(7
|
)
|
|
(57
|
)
|
|
(7
|
)
|
|
||||
Other comprehensive loss, net of tax
|
|
(13
|
)
|
|
(12
|
)
|
|
(69
|
)
|
|
(11
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
COMPREHENSIVE INCOME
|
|
$
|
286
|
|
|
$
|
162
|
|
|
$
|
1,599
|
|
|
$
|
368
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except share amounts)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
|
|
|
||
CURRENT ASSETS:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
256
|
|
|
$
|
588
|
|
Restricted cash
|
|
68
|
|
|
51
|
|
||
Receivables-
|
|
|
|
|
|
|||
Customers, net of allowance for uncollectible accounts of $49 in 2018 and 2017
|
|
1,231
|
|
|
1,282
|
|
||
Affiliated companies, net of allowance for uncollectible accounts of $632
|
|
87
|
|
|
—
|
|
||
Other, net of allowance for uncollectible accounts of $2 in 2018 and $1 in 2017
|
|
177
|
|
|
170
|
|
||
Materials and supplies, at average cost
|
|
281
|
|
|
262
|
|
||
Prepaid taxes and other
|
|
263
|
|
|
151
|
|
||
Current assets - discontinued operations
|
|
—
|
|
|
606
|
|
||
|
|
2,363
|
|
|
3,110
|
|
||
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
||
In service
|
|
38,334
|
|
|
37,270
|
|
||
Less — Accumulated provision for depreciation
|
|
10,463
|
|
|
10,098
|
|
||
|
|
27,871
|
|
|
27,172
|
|
||
Construction work in progress
|
|
1,150
|
|
|
1,004
|
|
||
|
|
29,021
|
|
|
28,176
|
|
||
|
|
|
|
|
||||
PROPERTY, PLANT AND EQUIPMENT, NET - DISCONTINUED OPERATIONS
|
|
—
|
|
|
1,057
|
|
||
|
|
|
|
|
||||
INVESTMENTS:
|
|
|
|
|
|
|
||
Nuclear plant decommissioning trusts
|
|
806
|
|
|
822
|
|
||
Nuclear fuel disposal trust
|
|
252
|
|
|
251
|
|
||
Other
|
|
255
|
|
|
255
|
|
||
Investments - discontinued operations
|
|
—
|
|
|
1,875
|
|
||
|
|
1,313
|
|
|
3,203
|
|
||
DEFERRED CHARGES AND OTHER ASSETS:
|
|
|
|
|
|
|
||
Goodwill
|
|
5,618
|
|
|
5,618
|
|
||
Regulatory assets
|
|
84
|
|
|
40
|
|
||
Other
|
|
572
|
|
|
697
|
|
||
Deferred charges and other assets - discontinued operations
|
|
—
|
|
|
356
|
|
||
|
|
6,274
|
|
|
6,711
|
|
||
|
|
$
|
38,971
|
|
|
$
|
42,257
|
|
LIABILITIES AND CAPITALIZATION
|
|
|
|
|
|
|
||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Currently payable long-term debt
|
|
$
|
1,132
|
|
|
$
|
558
|
|
Short-term borrowings
|
|
1,664
|
|
|
300
|
|
||
Accounts payable
|
|
909
|
|
|
827
|
|
||
Accrued taxes
|
|
508
|
|
|
533
|
|
||
Accrued compensation and benefits
|
|
264
|
|
|
257
|
|
||
Collateral
|
|
34
|
|
|
39
|
|
||
Other
|
|
557
|
|
|
626
|
|
||
Current liabilities - discontinued operations
|
|
—
|
|
|
973
|
|
||
|
|
5,068
|
|
|
4,113
|
|
||
CAPITALIZATION:
|
|
|
|
|
|
|
||
Stockholders’ equity-
|
|
|
|
|
|
|
||
Common stock, $0.10 par value, authorized 700,000,000 shares - 477,513,738 and 445,334,111 shares outstanding as of June 30, 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 June 30, 2018
|
|
162
|
|
|
—
|
|
||
Other paid-in capital
|
|
11,975
|
|
|
10,001
|
|
||
Accumulated other comprehensive income
|
|
73
|
|
|
142
|
|
||
Accumulated deficit
|
|
(4,559
|
)
|
|
(6,262
|
)
|
||
Total stockholders’ equity
|
|
7,699
|
|
|
3,925
|
|
||
Long-term debt and other long-term obligations
|
|
16,461
|
|
|
18,816
|
|
||
|
|
24,160
|
|
|
22,741
|
|
||
NONCURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Accumulated deferred income taxes
|
|
2,622
|
|
|
3,171
|
|
||
Retirement benefits
|
|
2,717
|
|
|
3,975
|
|
||
Regulatory liabilities
|
|
2,537
|
|
|
2,720
|
|
||
Asset retirement obligations
|
|
589
|
|
|
570
|
|
||
Adverse power contract liability
|
|
113
|
|
|
130
|
|
||
Other
|
|
1,165
|
|
|
1,438
|
|
||
Noncurrent liabilities - discontinued operations
|
|
—
|
|
|
3,399
|
|
||
|
|
9,743
|
|
|
15,403
|
|
||
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 14)
|
|
|
|
|
|
|
||
|
|
$
|
38,971
|
|
|
$
|
42,257
|
|
|
|
For the Six Months Ended June 30,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net income
|
|
$
|
1,668
|
|
|
$
|
379
|
|
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
|
|
604
|
|
|
829
|
|
||
Deferred income taxes and investment tax credits, net
|
|
327
|
|
|
224
|
|
||
Impairment of assets and related charges
|
|
—
|
|
|
131
|
|
||
Retirement benefits, net of payments
|
|
(97
|
)
|
|
17
|
|
||
Pension trust contributions
|
|
(1,250
|
)
|
|
—
|
|
||
Unrealized (gain) loss on derivative transactions
|
|
(10
|
)
|
|
53
|
|
||
Changes in current assets and liabilities-
|
|
|
|
|
||||
Receivables
|
|
20
|
|
|
83
|
|
||
Materials and supplies
|
|
28
|
|
|
(10
|
)
|
||
Prepaid taxes and other
|
|
(143
|
)
|
|
(127
|
)
|
||
Accounts payable
|
|
50
|
|
|
—
|
|
||
Accrued taxes
|
|
(58
|
)
|
|
(62
|
)
|
||
Accrued compensation and benefits
|
|
(76
|
)
|
|
(125
|
)
|
||
Other current liabilities
|
|
(152
|
)
|
|
(55
|
)
|
||
Collateral, net
|
|
(15
|
)
|
|
32
|
|
||
Other
|
|
55
|
|
|
113
|
|
||
Net cash provided from (used for) operating activities
|
|
(288
|
)
|
|
1,482
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
New Financing-
|
|
|
|
|
||||
Long-term debt
|
|
450
|
|
|
3,500
|
|
||
Short-term borrowings, net
|
|
1,364
|
|
|
—
|
|
||
Preferred stock issuance
|
|
1,616
|
|
|
—
|
|
||
Common stock issuance
|
|
850
|
|
|
—
|
|
||
Redemptions and Repayments-
|
|
|
|
|
||||
Long-term debt
|
|
(2,251
|
)
|
|
(735
|
)
|
||
Short-term borrowings, net
|
|
—
|
|
|
(2,450
|
)
|
||
Make-whole premiums paid on debt redemptions
|
|
(89
|
)
|
|
—
|
|
||
Preferred stock dividend payments
|
|
(42
|
)
|
|
—
|
|
||
Common stock dividend payments
|
|
(343
|
)
|
|
(319
|
)
|
||
Other
|
|
(21
|
)
|
|
(52
|
)
|
||
Net cash provided from (used for) financing activities
|
|
1,534
|
|
|
(56
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Property additions
|
|
(1,307
|
)
|
|
(1,254
|
)
|
||
Nuclear fuel
|
|
—
|
|
|
(134
|
)
|
||
Proceeds from asset sales
|
|
390
|
|
|
—
|
|
||
Sales of investment securities held in trusts
|
|
475
|
|
|
1,257
|
|
||
Purchases of investment securities held in trusts
|
|
(508
|
)
|
|
(1,305
|
)
|
||
Notes receivable from affiliated companies
|
|
(500
|
)
|
|
—
|
|
||
Asset removal costs
|
|
(118
|
)
|
|
(79
|
)
|
||
Other
|
|
3
|
|
|
—
|
|
||
Net cash used for investing activities
|
|
(1,565
|
)
|
|
(1,515
|
)
|
||
|
|
|
|
|
||||
Net change in cash and cash equivalents and restricted cash
|
|
(319
|
)
|
|
(89
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
|
643
|
|
|
260
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
324
|
|
|
$
|
171
|
|
|
|
|
|
|
||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
||||
Non-cash transaction, beneficial conversion feature (Note 4)
|
|
$
|
296
|
|
|
$
|
—
|
|
Non-cash transaction, deemed dividend preferred stock (Note 4)
|
|
$
|
(261
|
)
|
|
$
|
—
|
|
•
|
FE will pay certain pre-petition FES and FENOC employee-related obligations, which include unfunded pension obligations and other employee benefits, and provides for the waiver of all pre-petition claims against FES and FENOC, including the full borrowings by FES under the
$500 million
secured credit facility, the
$200 million
credit agreement being used to support surety bonds, the BNSF/CSX rail settlement guarantee, and FES’ and FENOC’s unfunded pension obligations.
|
•
|
The full release of all claims against FirstEnergy by FES, FENOC and their creditors.
|
•
|
A
$225 million
cash payment from FirstEnergy.
|
•
|
Up to a
$628 million
note from FirstEnergy, which is intended to represent the initial estimated value of the worthless stock deduction associated with the FES Bankruptcy and was designed to trade at par value when issued.
|
•
|
Transfer of the Pleasants Power Station to FES for the benefit of FES’ creditors. Prior to transfer and beginning no later than January 1, 2019, FES to have an economic lease in Pleasants; AE Supply will operate Pleasants until transfer.
|
•
|
FirstEnergy agrees to credit nine-months of FES’ and FENOC’s shared service costs beginning as of April 1, 2018, in an amount not to exceed
$112.5 million
, and FirstEnergy agrees to extend the availability of shared services until no later than June 30, 2020.
|
•
|
FirstEnergy agrees to fund through its pension plan a pension enhancement should FES offer a voluntary enhanced retirement package in 2019, which is estimated to cost
$15 million
, and approximately
$3 million
for other employee benefits.
|
|
|
For the Three Months Ended June 30, 2018
|
||||||||||||||
Revenues by Type of Service
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
(1)
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
Distribution services
(2)
|
|
$
|
1,228
|
|
|
$
|
—
|
|
|
$
|
(43
|
)
|
|
$
|
1,185
|
|
Retail generation
|
|
882
|
|
|
—
|
|
|
(14
|
)
|
|
868
|
|
||||
Wholesale sales
(2)
|
|
121
|
|
|
—
|
|
|
84
|
|
|
205
|
|
||||
Transmission
(2)
|
|
—
|
|
|
336
|
|
|
—
|
|
|
336
|
|
||||
Other
|
|
35
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||
Total revenues from contracts with customers
|
|
$
|
2,266
|
|
|
$
|
336
|
|
|
$
|
27
|
|
|
$
|
2,629
|
|
ARP
|
|
60
|
|
|
—
|
|
|
—
|
|
|
60
|
|
||||
Other non-customer revenue
|
|
26
|
|
|
5
|
|
|
(16
|
)
|
|
15
|
|
||||
Total revenues
|
|
$
|
2,352
|
|
|
$
|
341
|
|
|
$
|
11
|
|
|
$
|
2,704
|
|
|
|
For the Six Months Ended June 30, 2018
|
||||||||||||||
Revenues by Type of Service
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
(1)
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
Distribution services
(2)
|
|
$
|
2,509
|
|
|
$
|
—
|
|
|
$
|
(55
|
)
|
|
$
|
2,454
|
|
Retail generation
|
|
1,922
|
|
|
—
|
|
|
(28
|
)
|
|
1,894
|
|
||||
Wholesale sales
(2)
|
|
244
|
|
|
—
|
|
|
204
|
|
|
448
|
|
||||
Transmission
(2)
|
|
—
|
|
|
655
|
|
|
—
|
|
|
655
|
|
||||
Other
|
|
70
|
|
|
—
|
|
|
|
|
70
|
|
|||||
Total revenues from contracts with customers
|
|
$
|
4,745
|
|
|
$
|
655
|
|
|
$
|
121
|
|
|
$
|
5,521
|
|
ARP
|
|
124
|
|
|
—
|
|
|
—
|
|
|
124
|
|
||||
Other non-customer revenue
|
|
59
|
|
|
9
|
|
|
(33
|
)
|
|
35
|
|
||||
Total revenues
|
|
$
|
4,928
|
|
|
$
|
664
|
|
|
$
|
88
|
|
|
$
|
5,680
|
|
|
|
For the Three Months Ended June 30, 2018
|
|
For the Six Months Ended June 30, 2018
|
||||
Revenues by Customer Class
|
|
|||||||
|
|
(In millions)
|
||||||
Residential
|
|
$
|
1,255
|
|
|
$
|
2,718
|
|
Commercial
|
|
570
|
|
|
1,150
|
|
||
Industrial
|
|
262
|
|
|
516
|
|
||
Other
|
|
23
|
|
|
47
|
|
||
Total Revenues
|
|
$
|
2,110
|
|
|
$
|
4,431
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
11
|
|
|
$
|
680
|
|
|
$
|
633
|
|
|
$
|
1,369
|
|
Fuel
|
|
(5
|
)
|
|
(180
|
)
|
|
(121
|
)
|
|
(344
|
)
|
||||
Purchased power
|
|
—
|
|
|
(74
|
)
|
|
(53
|
)
|
|
(123
|
)
|
||||
Other operating expenses
|
|
—
|
|
|
(282
|
)
|
|
(347
|
)
|
|
(774
|
)
|
||||
Provision for depreciation
|
|
—
|
|
|
(27
|
)
|
|
(46
|
)
|
|
(52
|
)
|
||||
General taxes
|
|
—
|
|
|
(23
|
)
|
|
(18
|
)
|
|
(52
|
)
|
||||
Impairment of assets
|
|
—
|
|
|
(131
|
)
|
|
—
|
|
|
(131
|
)
|
||||
Other expense, net
|
|
(4
|
)
|
|
(23
|
)
|
|
(64
|
)
|
|
(31
|
)
|
||||
Income (Loss) from discontinued operations, before tax
|
|
2
|
|
|
(60
|
)
|
|
(16
|
)
|
|
(138
|
)
|
||||
Income tax benefit
(1)
|
|
(30
|
)
|
|
(15
|
)
|
|
(1
|
)
|
|
(41
|
)
|
||||
Income (Loss) from discontinued operations, net of tax
|
|
32
|
|
|
(45
|
)
|
|
(15
|
)
|
|
(97
|
)
|
||||
Gain on deconsolidation, net of tax
|
|
—
|
|
|
—
|
|
|
1,239
|
|
|
—
|
|
||||
Income (loss) from discontinued operations
|
|
$
|
32
|
|
|
$
|
(45
|
)
|
|
$
|
1,224
|
|
|
$
|
(97
|
)
|
(In millions)
|
|
For the Six Months Ended June 30, 2018
|
||
Removal of investment in FES and FENOC
|
|
$
|
2,193
|
|
Assumption of benefit obligations retained at FE (including Pension, OPEB and EDCP)
|
|
(820
|
)
|
|
Guarantees and credit support provided by FE
|
|
(139
|
)
|
|
Reserve on receivables and allocated Pension/OPEB mark-to-market
|
|
(914
|
)
|
|
Gain on deconsolidation of FES and FENOC, before tax
|
|
320
|
|
|
Income tax benefit, including estimated worthless stock deduction
|
|
919
|
|
|
Gain on deconsolidation of FES and FENOC, net of tax
|
|
$
|
1,239
|
|
(In millions)
|
|
June 30, 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
|
|
—
|
|
|
201
|
|
||
Collateral
|
|
—
|
|
|
130
|
|
||
Other current assets
|
|
—
|
|
|
69
|
|
||
Total current assets
|
|
—
|
|
|
606
|
|
||
|
|
|
|
|
||||
Property, plant and equipment
|
|
—
|
|
|
1,057
|
|
||
Investments
|
|
—
|
|
|
1,875
|
|
||
Other non-current assets
|
|
—
|
|
|
356
|
|
||
Total non-current assets
|
|
—
|
|
|
3,288
|
|
||
Total assets included in discontinued operations
|
|
$
|
—
|
|
|
$
|
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 Six Months Ended June 30,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Income (loss) from discontinued operations
|
|
$
|
1,224
|
|
|
$
|
(97
|
)
|
Depreciation and amortization, including nuclear fuel, regulatory assets, net, intangible assets and deferred debt-related costs
|
|
47
|
|
|
157
|
|
||
Unrealized (gain) loss on derivative transactions
|
|
(10
|
)
|
|
53
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Property additions
|
|
(15
|
)
|
|
(178
|
)
|
||
Nuclear fuel
|
|
—
|
|
|
(134
|
)
|
||
Sales of investment securities held in trusts
|
|
109
|
|
|
437
|
|
||
Purchases of investment securities held in trusts
|
|
(122
|
)
|
|
(466
|
)
|
•
|
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.
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
Reconciliation of Basic and Diluted EPS of Common Stock
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
||||||||||
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
||||||||
EPS of Common Stock
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
|
$
|
267
|
|
|
$
|
219
|
|
|
$
|
444
|
|
|
$
|
476
|
|
Less: Preferred dividends
|
|
—
|
|
|
—
|
|
|
(43
|
)
|
|
—
|
|
||||
Less: Amortization of beneficial conversion feature
|
|
(148
|
)
|
|
—
|
|
|
(261
|
)
|
|
—
|
|
||||
Less: Undistributed earnings allocated to preferred stockholders
(1)
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Income from continuing operations available to common stockholders
|
|
106
|
|
|
219
|
|
|
140
|
|
|
476
|
|
||||
Discontinued operations, net of tax
|
|
32
|
|
|
(45
|
)
|
|
1,224
|
|
|
(97
|
)
|
||||
Less: Undistributed earnings allocated to preferred stockholders
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Income (loss) from discontinued operations available to common stockholders
|
|
28
|
|
|
(45
|
)
|
|
1,224
|
|
|
(97
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income available to common stockholders, basic and diluted
|
|
$
|
134
|
|
|
$
|
174
|
|
|
$
|
1,364
|
|
|
$
|
379
|
|
|
|
|
|
|
|
|
|
|
||||||||
Share Count information:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of basic shares outstanding
|
|
477
|
|
|
444
|
|
|
477
|
|
|
443
|
|
||||
Assumed exercise of dilutive stock options and awards
|
|
2
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Weighted average number of diluted shares outstanding
|
|
479
|
|
|
445
|
|
|
478
|
|
|
444
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income available to common stockholders, per common share:
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations, basic
|
|
$
|
0.22
|
|
|
$
|
0.49
|
|
|
$
|
0.29
|
|
|
$
|
1.07
|
|
Discontinued operations, basic
|
|
0.06
|
|
|
(0.10
|
)
|
|
2.57
|
|
|
(0.21
|
)
|
||||
Income available to common stockholders, basic
|
|
$
|
0.28
|
|
|
$
|
0.39
|
|
|
$
|
2.86
|
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations, diluted
|
|
$
|
0.22
|
|
|
$
|
0.49
|
|
|
$
|
0.29
|
|
|
$
|
1.07
|
|
Discontinued operations, diluted
|
|
0.06
|
|
|
(0.10
|
)
|
|
2.56
|
|
|
(0.22
|
)
|
||||
Income available to common stockholders, diluted
|
|
$
|
0.28
|
|
|
$
|
0.39
|
|
|
$
|
2.85
|
|
|
$
|
0.85
|
|
(1)
|
Undistributed earnings were not allocated to participating securities for the six months ended June 30, 2018 as income from continuing operations less dividends declared (common and preferred) and deemed dividends were a net loss.
|
Components of Net Periodic Benefit Costs (Credits)
|
|
Pension
|
OPEB
|
|||||||||||||
For the Three Months Ended June 30,
|
|
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
|
)
|
|
(7
|
)
|
|
(7
|
)
|
||||
Amortization of prior service costs (credits)
|
|
2
|
|
|
2
|
|
|
(20
|
)
|
|
(20
|
)
|
||||
Net periodic costs (credits)
|
|
$
|
7
|
|
|
$
|
39
|
|
|
$
|
(20
|
)
|
|
$
|
(19
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Components of Net Periodic Benefit Costs (Credits)
|
|
Pension
|
OPEB
|
|||||||||||||
For the Six Months Ended June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In millions)
|
||||||||||||||
Service costs
|
|
$
|
112
|
|
|
$
|
104
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest costs
|
|
186
|
|
|
194
|
|
|
12
|
|
|
14
|
|
||||
Expected return on plan assets
|
|
(288
|
)
|
|
(224
|
)
|
|
(15
|
)
|
|
(15
|
)
|
||||
Amortization of prior service costs (credits)
|
|
4
|
|
|
4
|
|
|
(40
|
)
|
|
(40
|
)
|
||||
Net periodic costs (credits)
|
|
$
|
14
|
|
|
$
|
78
|
|
|
$
|
(41
|
)
|
|
$
|
(39
|
)
|
|
|
Pension
|
|
OPEB
|
||||||||||||
Net Periodic Benefit Expense (Credit)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In millions)
|
||||||||||||||
For the Three Months Ended June 30,
|
|
$
|
(18
|
)
|
|
$
|
27
|
|
|
$
|
(21
|
)
|
|
$
|
(14
|
)
|
For the Six Months Ended June 30,
|
|
$
|
(32
|
)
|
|
$
|
59
|
|
|
$
|
(42
|
)
|
|
$
|
(29
|
)
|
|
|
Gains & Losses on Cash Flow Hedges
|
|
Unrealized Gains on AFS Securities
|
|
Defined Benefit Pension & OPEB Plans
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
AOCI balance as of April 1, 201
8
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
101
|
|
|
$
|
86
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts reclassified from AOCI
(1)
|
|
2
|
|
|
—
|
|
|
(19
|
)
|
|
(17
|
)
|
||||
Other comprehensive income (loss)
|
|
2
|
|
|
—
|
|
|
(19
|
)
|
|
(17
|
)
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
1
|
|
|
—
|
|
|
(5
|
)
|
|
(4
|
)
|
||||
Other comprehensive income (loss), net of tax
|
|
1
|
|
|
—
|
|
|
(14
|
)
|
|
(13
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2018
|
|
$
|
(14
|
)
|
|
$
|
—
|
|
|
$
|
87
|
|
|
$
|
73
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI balance as of April 1, 201
7
|
|
$
|
(26
|
)
|
|
$
|
63
|
|
|
$
|
138
|
|
|
$
|
175
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Amounts reclassified from AOCI
(1)
|
|
1
|
|
|
(6
|
)
|
|
(18
|
)
|
|
(23
|
)
|
||||
Other comprehensive income (loss)
|
|
1
|
|
|
(2
|
)
|
|
(18
|
)
|
|
(19
|
)
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
1
|
|
|
—
|
|
|
(8
|
)
|
|
(7
|
)
|
||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
(2
|
)
|
|
(10
|
)
|
|
(12
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2017
|
|
$
|
(26
|
)
|
|
$
|
61
|
|
|
$
|
128
|
|
|
$
|
163
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
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, 2018
|
|
$
|
(22
|
)
|
|
$
|
67
|
|
|
$
|
97
|
|
|
$
|
142
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
||||
Amounts reclassified from AOCI
(1)(3)
|
|
4
|
|
|
(1
|
)
|
|
(37
|
)
|
|
(34
|
)
|
||||
Deconsolidation of FES and FENOC
|
|
13
|
|
|
(8
|
)
|
|
—
|
|
|
5
|
|
||||
Other comprehensive income (loss)
|
|
17
|
|
|
(106
|
)
|
|
(37
|
)
|
|
(126
|
)
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
9
|
|
|
(39
|
)
|
|
(27
|
)
|
|
(57
|
)
|
||||
Other comprehensive income (loss), net of tax
|
|
8
|
|
|
(67
|
)
|
|
(10
|
)
|
|
(69
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2018
|
|
$
|
(14
|
)
|
|
$
|
—
|
|
|
$
|
87
|
|
|
$
|
73
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of January 1, 2017
|
|
$
|
(28
|
)
|
|
$
|
52
|
|
|
$
|
150
|
|
|
$
|
174
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
||||
Amounts reclassified from AOCI
(1)
|
|
4
|
|
|
(22
|
)
|
|
(36
|
)
|
|
(54
|
)
|
||||
Other comprehensive income (loss)
|
|
4
|
|
|
14
|
|
|
(36
|
)
|
|
(18
|
)
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
2
|
|
|
5
|
|
|
(14
|
)
|
|
(7
|
)
|
||||
Other comprehensive income (loss), net of tax
|
|
2
|
|
|
9
|
|
|
(22
|
)
|
|
(11
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2017
|
|
$
|
(26
|
)
|
|
$
|
61
|
|
|
$
|
128
|
|
|
$
|
163
|
|
|
|
|
|
|
|
|
|
|
||||||||
(1)
Amounts in parenthesis represent credits to the Consolidated Statements of Income from AOCI.
|
||||||||||||||||
(2)
Components are included in the computation of net periodic pension cost. See Note 5, "Pension and Other Postemployment Benefits," for additional details.
|
||||||||||||||||
(3)
Includes stranded tax amounts reclassified from AOCI in connection with the adoption of ASU 2018-02, "
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
".
|
•
|
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 the Ohio Companies. Each of the Ohio Companies, as servicer of its respective SPE, manages and administers the phase-in recovery property including the billing, collection and remittance of usage-based charges payable by retail electric customers. In the aggregate, the Ohio Companies are entitled to annual servicing fees of
$445 thousand
that are recoverable through the usage-based charges. The SPEs are considered VIEs and each one is consolidated into its applicable utility. As of
June 30, 2018
and
December 31, 2017
,
$304 million
and
$315 million
of the phase-in recovery bonds were outstanding, respectively.
|
•
|
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
June 30, 2018
and
December 31, 2017
,
$49 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
June 30, 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
|
•
|
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
June 30, 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 jurisdiction of the Bankruptcy Court as of March 31, 2018. The carrying values of the equity investments in FES and FENOC were
zero
at
June 30, 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
(In millions)
|
||||||||||||||||||||||||||||||
Corporate debt securities
|
$
|
—
|
|
|
$
|
474
|
|
|
$
|
—
|
|
|
$
|
474
|
|
|
$
|
—
|
|
|
$
|
476
|
|
|
$
|
—
|
|
|
$
|
476
|
|
Derivative assets - FTRs
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||||||
Equity securities
(2)
|
298
|
|
|
—
|
|
|
—
|
|
|
298
|
|
|
297
|
|
|
—
|
|
|
—
|
|
|
297
|
|
||||||||
Foreign government debt securities
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
||||||||
U.S. government debt securities
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
||||||||
U.S. state debt securities
|
—
|
|
|
248
|
|
|
—
|
|
|
248
|
|
|
—
|
|
|
247
|
|
|
—
|
|
|
247
|
|
||||||||
Other
(3)
|
256
|
|
|
33
|
|
|
—
|
|
|
289
|
|
|
588
|
|
|
38
|
|
|
—
|
|
|
626
|
|
||||||||
Total assets
|
$
|
554
|
|
|
$
|
790
|
|
|
$
|
5
|
|
|
$
|
1,349
|
|
|
$
|
885
|
|
|
$
|
805
|
|
|
$
|
3
|
|
|
$
|
1,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities - commodity contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
Derivative liabilities - FTRs
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Derivative liabilities - NUG contracts
(1)
|
—
|
|
|
—
|
|
|
(65
|
)
|
|
(65
|
)
|
|
—
|
|
|
—
|
|
|
(79
|
)
|
|
(79
|
)
|
||||||||
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(70
|
)
|
|
$
|
(70
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
(79
|
)
|
|
$
|
(83
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net assets (liabilities)
(4)
|
$
|
554
|
|
|
$
|
790
|
|
|
$
|
(65
|
)
|
|
$
|
1,279
|
|
|
$
|
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 S&P 500 Low Volatility High Dividend Index, S&P 500 Index, MSCI World Index and MSCI AC World IMI Index.
|
(3)
|
Primarily consists of short-term cash investments.
|
(4)
|
Excludes
$(12) million
and
$(11) million
as of
June 30, 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
|
|
||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
(5
|
)
|
|
—
|
|
||||||
Settlements
|
—
|
|
|
16
|
|
|
16
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
||||||
June 30, 2018 Balance
|
$
|
—
|
|
|
$
|
(65
|
)
|
|
$
|
(65
|
)
|
|
$
|
5
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
|
Fair Value, Net (In millions)
|
|
Valuation
Technique |
|
Significant Input
|
|
Range
|
|
Weighted Average
|
|
Units
|
|||
FTRs
|
|
$
|
—
|
|
|
Model
|
|
RTO auction clearing prices
|
|
$(1.70) to $5.40
|
|
$0.80
|
|
Dollars/MWH
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
NUG Contracts
|
|
$
|
(65
|
)
|
|
Model
|
|
Generation
|
|
400 to 1,660,000
|
|
338,000
|
|
|
MWH
|
|
|
|
Regional electricity prices
|
|
$29.20 to $31.10
|
|
$30.20
|
|
Dollars/MWH
|
|
|
June 30, 2018
(1)
|
|
December 31, 2017
(2)
|
||||||||||||||||||||||||||||
|
|
Cost Basis
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
|
Cost Basis
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Debt securities
|
|
$
|
783
|
|
|
$
|
2
|
|
|
$
|
(27
|
)
|
|
$
|
758
|
|
|
$
|
774
|
|
|
$
|
11
|
|
|
$
|
(17
|
)
|
|
$
|
768
|
|
Equity securities
|
|
$
|
265
|
|
|
$
|
31
|
|
|
$
|
(1
|
)
|
|
$
|
295
|
|
|
$
|
254
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
294
|
|
(1)
|
Excludes short-term cash investments of $
5 million
|
(2)
|
Excludes short-term cash investments of
$11 million
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In millions)
|
||||||||||||||
Sale Proceeds
|
|
$
|
175
|
|
|
$
|
313
|
|
|
$
|
366
|
|
|
$
|
820
|
|
Realized Gains
|
|
9
|
|
|
29
|
|
|
28
|
|
|
50
|
|
||||
Realized Losses
|
|
(11
|
)
|
|
(29
|
)
|
|
(27
|
)
|
|
(44
|
)
|
||||
Interest and Dividend Income
|
|
10
|
|
|
10
|
|
|
20
|
|
|
19
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
(In millions)
|
||||||
Carrying Value
|
$
|
17,650
|
|
|
$
|
19,425
|
|
Fair Value
|
$
|
18,876
|
|
|
$
|
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
|
|
Total
|
||||||||
|
|
(In millions)
|
|||||||||||||||
Contractual Obligations for Additional Collateral
|
|
|
|
|
|
|
|
|
|
||||||||
At Current Credit Rating
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Upon Further Downgrade
|
|
|
—
|
|
|
56
|
|
|
—
|
|
|
56
|
|
||||
Surety Bonds (Collateralized Amount)
|
|
|
1
|
|
|
59
|
|
|
235
|
|
|
295
|
|
||||
Total Exposure from Contractual Obligations
|
|
|
$
|
2
|
|
|
$
|
115
|
|
|
$
|
235
|
|
|
$
|
352
|
|
For the Three Months Ended
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/ Other
|
|
Reconciling Adjustments
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
2,352
|
|
|
$
|
341
|
|
|
$
|
86
|
|
|
$
|
(75
|
)
|
|
$
|
2,704
|
|
Depreciation
|
|
200
|
|
|
62
|
|
|
19
|
|
|
18
|
|
|
299
|
|
|||||
Deferral of regulatory assets, net
|
|
(107
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(107
|
)
|
|||||
Miscellaneous income (expense), net
|
|
56
|
|
|
3
|
|
|
(1
|
)
|
|
(10
|
)
|
|
48
|
|
|||||
Interest expense
|
|
129
|
|
|
42
|
|
|
208
|
|
|
(10
|
)
|
|
369
|
|
|||||
Income taxes
|
|
138
|
|
|
38
|
|
|
(61
|
)
|
|
—
|
|
|
115
|
|
|||||
Income (loss) from continuing operations
|
|
377
|
|
|
104
|
|
|
(214
|
)
|
|
—
|
|
|
267
|
|
|||||
Total assets
|
|
28,088
|
|
|
9,833
|
|
|
1,050
|
|
|
—
|
|
|
38,971
|
|
|||||
Total goodwill
|
|
5,004
|
|
|
614
|
|
|
—
|
|
|
—
|
|
|
5,618
|
|
|||||
Property additions
|
|
391
|
|
|
282
|
|
|
51
|
|
|
—
|
|
|
724
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
2,271
|
|
|
$
|
327
|
|
|
$
|
77
|
|
|
$
|
(51
|
)
|
|
$
|
2,624
|
|
Depreciation
|
|
179
|
|
|
54
|
|
|
3
|
|
|
18
|
|
|
254
|
|
|||||
Amortization of regulatory assets, net
|
|
75
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|||||
Miscellaneous income (expense), net
|
|
14
|
|
|
—
|
|
|
10
|
|
|
(13
|
)
|
|
11
|
|
|||||
Interest expense
|
|
134
|
|
|
39
|
|
|
88
|
|
|
(13
|
)
|
|
248
|
|
|||||
Income taxes (benefits)
|
|
121
|
|
|
53
|
|
|
(42
|
)
|
|
—
|
|
|
132
|
|
|||||
Income (loss) from continuing operations
|
|
205
|
|
|
92
|
|
|
(78
|
)
|
|
—
|
|
|
219
|
|
|||||
Total assets
|
|
27,660
|
|
|
9,142
|
|
|
1,190
|
|
|
5,335
|
|
|
43,327
|
|
|||||
Total goodwill
|
|
5,004
|
|
|
614
|
|
|
—
|
|
|
—
|
|
|
5,618
|
|
|||||
Property additions
|
|
304
|
|
|
245
|
|
|
29
|
|
|
88
|
|
|
666
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
4,928
|
|
|
$
|
664
|
|
|
$
|
211
|
|
|
$
|
(123
|
)
|
|
$
|
5,680
|
|
Depreciation
|
|
396
|
|
|
123
|
|
|
38
|
|
|
36
|
|
|
593
|
|
|||||
Amortization (deferral) of regulatory assets, net
|
|
(259
|
)
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(255
|
)
|
|||||
Miscellaneous income (expense), net
|
|
112
|
|
|
7
|
|
|
15
|
|
|
(19
|
)
|
|
115
|
|
|||||
Interest expense
|
|
257
|
|
|
81
|
|
|
300
|
|
|
(19
|
)
|
|
619
|
|
|||||
Income taxes
|
|
231
|
|
|
70
|
|
|
66
|
|
|
—
|
|
|
367
|
|
|||||
Income (loss) from continuing operations
|
|
699
|
|
|
203
|
|
|
(458
|
)
|
|
—
|
|
|
444
|
|
|||||
Property additions
|
|
655
|
|
|
574
|
|
|
63
|
|
|
15
|
|
|
1,307
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
4,771
|
|
|
$
|
640
|
|
|
$
|
169
|
|
|
$
|
(101
|
)
|
|
$
|
5,479
|
|
Depreciation
|
|
357
|
|
|
105
|
|
|
7
|
|
|
35
|
|
|
504
|
|
|||||
Amortization of regulatory assets, net
|
|
156
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
161
|
|
|||||
Miscellaneous income (expense), net
|
|
29
|
|
|
—
|
|
|
16
|
|
|
(20
|
)
|
|
25
|
|
|||||
Interest expense
|
|
272
|
|
|
78
|
|
|
163
|
|
|
(20
|
)
|
|
493
|
|
|||||
Income taxes (benefits)
|
|
259
|
|
|
105
|
|
|
(80
|
)
|
|
—
|
|
|
284
|
|
|||||
Income (loss) from continuing operations
|
|
442
|
|
|
180
|
|
|
(146
|
)
|
|
—
|
|
|
476
|
|
|||||
Property additions
|
|
568
|
|
|
469
|
|
|
39
|
|
|
178
|
|
|
1,254
|
|
•
|
FE will pay certain pre-petition FES and FENOC employee-related obligations, which include unfunded pension obligations and other employee benefits, and provides for the waiver of all pre-petition claims against FES and FENOC, including the full borrowings by FES under the $500 million secured credit facility, the $200 million credit agreement being used to support surety bonds, the BNSF/CSX rail settlement guarantee, and FES’ and FENOC’s unfunded pension obligations.
|
•
|
The full release of all claims against FirstEnergy by FES, FENOC and their creditors.
|
•
|
A $225 million cash payment from FirstEnergy.
|
•
|
Up to a $628 million note from FirstEnergy, which is intended to represent the initial estimated value of the worthless stock deduction associated with the FES Bankruptcy and was designed to trade at par value when issued.
|
•
|
Transfer of the Pleasants Power Station to FES for the benefit of FES’ creditors. Prior to transfer and beginning no later than January 1, 2019, FES to have an economic lease in Pleasants; AE Supply will operate Pleasants until transfer.
|
•
|
FirstEnergy agrees to credit nine-months of FES’ and FENOC’s shared service costs beginning as of April 1, 2018, in an amount not to exceed $112.5 million, and FirstEnergy agrees to extend the availability of shared services until no later than June 30, 2020.
|
•
|
FirstEnergy agrees to fund through its pension plan a pension enhancement should FES offer a voluntary enhanced retirement package in 2019, which is estimated to cost $15 million, and approximately $3 million for other employee benefits.
|
(In millions, except per share amounts)
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenues
|
|
$
|
2,704
|
|
|
$
|
2,624
|
|
|
$
|
80
|
|
|
3
|
%
|
|
$
|
5,680
|
|
|
$
|
5,479
|
|
|
$
|
201
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating expenses
|
|
2,017
|
|
|
2,050
|
|
|
(33
|
)
|
|
(2
|
)%
|
|
4,396
|
|
|
4,277
|
|
|
119
|
|
|
3
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating income
|
|
687
|
|
|
574
|
|
|
113
|
|
|
20
|
%
|
|
1,284
|
|
|
1,202
|
|
|
82
|
|
|
7
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Other expenses, net
|
|
(305
|
)
|
|
(223
|
)
|
|
(82
|
)
|
|
37
|
%
|
|
(473
|
)
|
|
(442
|
)
|
|
(31
|
)
|
|
7
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Income before income taxes
|
|
382
|
|
|
351
|
|
|
31
|
|
|
9
|
%
|
|
811
|
|
|
760
|
|
|
51
|
|
|
7
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Income taxes
|
|
115
|
|
|
132
|
|
|
(17
|
)
|
|
(13
|
)%
|
|
367
|
|
|
284
|
|
|
83
|
|
|
29
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Income from continuing operations
|
|
267
|
|
|
219
|
|
|
48
|
|
|
22
|
%
|
|
444
|
|
|
476
|
|
|
(32
|
)
|
|
(7
|
)%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Discontinued operations
|
|
32
|
|
|
(45
|
)
|
|
77
|
|
|
NM
|
|
|
1,224
|
|
|
(97
|
)
|
|
1,321
|
|
|
NM
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income
|
|
$
|
299
|
|
|
$
|
174
|
|
|
$
|
125
|
|
|
72
|
%
|
|
$
|
1,668
|
|
|
$
|
379
|
|
|
$
|
1,289
|
|
|
340
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2018 Financial Result
s
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||
|
|
(In millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Electric
|
|
$
|
2,291
|
|
|
$
|
336
|
|
|
$
|
31
|
|
|
$
|
2,658
|
|
Other
|
|
61
|
|
|
5
|
|
|
(20
|
)
|
|
46
|
|
||||
Total Revenues
|
|
2,352
|
|
|
341
|
|
|
11
|
|
|
2,704
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuel
|
|
128
|
|
|
—
|
|
|
49
|
|
|
177
|
|
||||
Purchased power
|
|
699
|
|
|
—
|
|
|
(1
|
)
|
|
698
|
|
||||
Other operating expenses
|
|
666
|
|
|
60
|
|
|
(21
|
)
|
|
705
|
|
||||
Provision for depreciation
|
|
200
|
|
|
62
|
|
|
37
|
|
|
299
|
|
||||
Deferral of regulatory assets, net
|
|
(107
|
)
|
|
—
|
|
|
—
|
|
|
(107
|
)
|
||||
General taxes
|
|
184
|
|
|
48
|
|
|
13
|
|
|
245
|
|
||||
Total Operating Expenses
|
|
1,770
|
|
|
170
|
|
|
77
|
|
|
2,017
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss)
|
|
582
|
|
|
171
|
|
|
(66
|
)
|
|
687
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Miscellaneous income (expense), net
|
|
56
|
|
|
3
|
|
|
(11
|
)
|
|
48
|
|
||||
Interest expense
|
|
(129
|
)
|
|
(42
|
)
|
|
(198
|
)
|
|
(369
|
)
|
||||
Capitalized financing costs
|
|
6
|
|
|
10
|
|
|
—
|
|
|
16
|
|
||||
Total Other Expense
|
|
(67
|
)
|
|
(29
|
)
|
|
(209
|
)
|
|
(305
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
515
|
|
|
142
|
|
|
(275
|
)
|
|
382
|
|
||||
Income taxes (benefits)
|
|
138
|
|
|
38
|
|
|
(61
|
)
|
|
115
|
|
||||
Income (Loss) From Continuing Operations
|
|
377
|
|
|
104
|
|
|
(214
|
)
|
|
267
|
|
||||
Discontinued Operations, net of tax
|
|
—
|
|
|
—
|
|
|
32
|
|
|
32
|
|
||||
Net Income (Loss)
|
|
$
|
377
|
|
|
$
|
104
|
|
|
$
|
(182
|
)
|
|
$
|
299
|
|
Second Quarter 2017 Financial Result
s
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||
|
|
(In millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Electric
|
|
$
|
2,206
|
|
|
$
|
323
|
|
|
$
|
32
|
|
|
$
|
2,561
|
|
Other
|
|
65
|
|
|
4
|
|
|
(6
|
)
|
|
63
|
|
||||
Total Revenues
|
|
2,271
|
|
|
327
|
|
|
26
|
|
|
2,624
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuel
|
|
121
|
|
|
—
|
|
|
42
|
|
|
163
|
|
||||
Purchased power
|
|
646
|
|
|
—
|
|
|
4
|
|
|
650
|
|
||||
Other operating expenses
|
|
634
|
|
|
50
|
|
|
(9
|
)
|
|
675
|
|
||||
Provision for depreciation
|
|
179
|
|
|
54
|
|
|
21
|
|
|
254
|
|
||||
Amortization of regulatory assets, net
|
|
75
|
|
|
3
|
|
|
—
|
|
|
78
|
|
||||
General taxes
|
|
175
|
|
|
43
|
|
|
12
|
|
|
230
|
|
||||
Total Operating Expenses
|
|
1,830
|
|
|
150
|
|
|
70
|
|
|
2,050
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss)
|
|
441
|
|
|
177
|
|
|
(44
|
)
|
|
574
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Miscellaneous income (expense), net
|
|
14
|
|
|
—
|
|
|
(3
|
)
|
|
11
|
|
||||
Interest expense
|
|
(134
|
)
|
|
(39
|
)
|
|
(75
|
)
|
|
(248
|
)
|
||||
Capitalized financing costs
|
|
5
|
|
|
7
|
|
|
2
|
|
|
14
|
|
||||
Total Other Expense
|
|
(115
|
)
|
|
(32
|
)
|
|
(76
|
)
|
|
(223
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
326
|
|
|
145
|
|
|
(120
|
)
|
|
351
|
|
||||
Income taxes (benefits)
|
|
121
|
|
|
53
|
|
|
(42
|
)
|
|
132
|
|
||||
Income (Loss) From Continuing Operations
|
|
205
|
|
|
92
|
|
|
(78
|
)
|
|
219
|
|
||||
Discontinued Operations, net of tax
|
|
—
|
|
|
—
|
|
|
(45
|
)
|
|
(45
|
)
|
||||
Net Income (Loss)
|
|
$
|
205
|
|
|
$
|
92
|
|
|
$
|
(123
|
)
|
|
$
|
174
|
|
Changes Between Second Quarter 2018 and Second Quarter 2017 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||
|
|
(In millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Electric
|
|
$
|
85
|
|
|
$
|
13
|
|
|
$
|
(1
|
)
|
|
$
|
97
|
|
Other
|
|
(4
|
)
|
|
1
|
|
|
(14
|
)
|
|
(17
|
)
|
||||
Total Revenues
|
|
81
|
|
|
14
|
|
|
(15
|
)
|
|
80
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuel
|
|
7
|
|
|
—
|
|
|
7
|
|
|
14
|
|
||||
Purchased power
|
|
53
|
|
|
—
|
|
|
(5
|
)
|
|
48
|
|
||||
Other operating expenses
|
|
32
|
|
|
10
|
|
|
(12
|
)
|
|
30
|
|
||||
Provision for depreciation
|
|
21
|
|
|
8
|
|
|
16
|
|
|
45
|
|
||||
Amortization (deferral) of regulatory assets, net
|
|
(182
|
)
|
|
(3
|
)
|
|
—
|
|
|
(185
|
)
|
||||
General taxes
|
|
9
|
|
|
5
|
|
|
1
|
|
|
15
|
|
||||
Total Operating Expenses
|
|
(60
|
)
|
|
20
|
|
|
7
|
|
|
(33
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss)
|
|
141
|
|
|
(6
|
)
|
|
(22
|
)
|
|
113
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Miscellaneous income (expense), net
|
|
42
|
|
|
3
|
|
|
(8
|
)
|
|
37
|
|
||||
Interest expense
|
|
5
|
|
|
(3
|
)
|
|
(123
|
)
|
|
(121
|
)
|
||||
Capitalized financing costs
|
|
1
|
|
|
3
|
|
|
(2
|
)
|
|
2
|
|
||||
Total Other Expense
|
|
48
|
|
|
3
|
|
|
(133
|
)
|
|
(82
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
189
|
|
|
(3
|
)
|
|
(155
|
)
|
|
31
|
|
||||
Income taxes (benefits)
|
|
17
|
|
|
(15
|
)
|
|
(19
|
)
|
|
(17
|
)
|
||||
Income (Loss) From Continuing Operations
|
|
172
|
|
|
12
|
|
|
(136
|
)
|
|
48
|
|
||||
Discontinued Operations, net of tax
|
|
—
|
|
|
—
|
|
|
77
|
|
|
77
|
|
||||
Net Income (Loss)
|
|
$
|
172
|
|
|
$
|
12
|
|
|
$
|
(59
|
)
|
|
$
|
125
|
|
|
|
For the Three Months Ended June 30,
|
|
Increase
|
||||||||
Revenues by Type of Service
|
|
2018
|
|
2017
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Distribution services
(1)
|
|
$
|
1,288
|
|
|
$
|
1,255
|
|
|
$
|
33
|
|
|
|
|
|
|
|
|
||||||
Generation sales:
|
|
|
|
|
|
|
||||||
Retail
|
|
882
|
|
|
839
|
|
|
43
|
|
|||
Wholesale
|
|
121
|
|
|
112
|
|
|
9
|
|
|||
Total generation sales
|
|
1,003
|
|
|
951
|
|
|
52
|
|
|||
|
|
|
|
|
|
|
||||||
Other
|
|
61
|
|
|
65
|
|
|
(4
|
)
|
|||
Total Revenues
|
|
$
|
2,352
|
|
|
$
|
2,271
|
|
|
$
|
81
|
|
|
|
For the Three Months Ended June 30,
|
|
|
|||||
Electric Distribution MWH Deliveries
|
|
2018
|
|
2017
|
|
Increase
|
|||
|
|
(In thousands)
|
|
|
|||||
Residential
|
|
12,074
|
|
|
11,115
|
|
|
8.6
|
%
|
Commercial
|
|
10,197
|
|
|
10,039
|
|
|
1.6
|
%
|
Industrial
|
|
13,201
|
|
|
12,946
|
|
|
2.0
|
%
|
Other
|
|
140
|
|
|
138
|
|
|
1.4
|
%
|
Total Electric Distribution MWH Deliveries
|
|
35,612
|
|
|
34,238
|
|
|
4.0
|
%
|
Source of Change in Generation Revenues
|
|
Increase (Decrease)
|
||
|
|
(In millions)
|
||
Retail:
|
|
|
|
|
Effect of increase in sales volumes
|
|
$
|
50
|
|
Change in prices
|
|
(7
|
)
|
|
|
|
43
|
|
|
Wholesale:
|
|
|
||
Effect of decrease in sales volumes
|
|
(8
|
)
|
|
Change in prices
|
|
11
|
|
|
Capacity Revenue
|
|
6
|
|
|
|
|
9
|
|
|
Increase in Generation Revenues
|
|
$
|
52
|
|
•
|
Purchased power costs were
$53 million
higher in the
secon
d
quarter of 2018, as compared to the same period in 2017,
primarily due to increased volumes resulting from higher customer weather-related usage.
|
Source of Change in Purchased Power
|
|
Increase (Decrease)
|
|||
|
|
(In millions)
|
|||
Purchases from non-affiliates:
|
|
|
|||
Change due to increased unit costs
|
|
$
|
14
|
|
|
Change due to volumes
|
|
35
|
|
||
|
|
49
|
|
||
Purchases from affiliates:
|
|
|
|||
Change due to decreased unit costs
|
|
(3
|
)
|
||
Change due to volumes
|
|
(6
|
)
|
||
|
|
(9
|
)
|
||
Capacity
|
|
13
|
|
||
Increase in Purchased Power Costs
|
|
$
|
53
|
|
•
|
Other operating expenses increased
$32 million
, primarily due to:
|
•
|
Increased storm restoration costs of $17 million, which were deferred for future recovery, resulting in no material impact on current period earnings.
|
•
|
Net network transmission expenses were flat reflecting increased transmission costs offset by a FERC settlement during the second quarter of 2018 that reallocated certain transmission costs across utilities in PJM and resulted in a refund to the Ohio Companies. Except for certain transmission costs and credits at the Ohio Companies, the difference between current revenues and transmission costs incurred are deferred for future recovery or refund, resulting in no material impact on current period earnings.
|
•
|
Higher operating and maintenance expenses of $15 million, primarily due to higher benefit costs.
|
•
|
Depreciation expense increased
$21 million
, primarily due to a higher asset base.
|
•
|
Amortization expense decreased
$182 million
, primarily due to the reversal of a liability at the Ohio Companies for an Ohio Supreme Court ruling regarding purchase of RECs, as well as higher deferrals of transmission expenses associated with the FERC settlement discussed above, and increased deferral of storm restoration costs.
|
|
|
For the Three Months Ended June 30,
|
|
Increase
|
||||||||
Revenues by Transmission Asset Owner
|
|
2018
|
|
2017
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
ATSI
|
|
$
|
168
|
|
|
$
|
164
|
|
|
$
|
4
|
|
TrAIL
|
|
65
|
|
|
73
|
|
|
(8
|
)
|
|||
MAIT
|
|
35
|
|
|
24
|
|
|
11
|
|
|||
Other
|
|
73
|
|
|
66
|
|
|
7
|
|
|||
Total Revenues
|
|
$
|
341
|
|
|
$
|
327
|
|
|
$
|
14
|
|
First Six Months 2018 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||
|
|
(In millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Electric
|
|
$
|
4,799
|
|
|
$
|
655
|
|
|
$
|
125
|
|
|
$
|
5,579
|
|
Other
|
|
129
|
|
|
9
|
|
|
(37
|
)
|
|
101
|
|
||||
Total Revenues
|
|
4,928
|
|
|
664
|
|
|
88
|
|
|
5,680
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuel
|
|
267
|
|
|
—
|
|
|
97
|
|
|
364
|
|
||||
Purchased power
|
|
1,518
|
|
|
—
|
|
|
5
|
|
|
1,523
|
|
||||
Other operating expenses
|
|
1,564
|
|
|
114
|
|
|
(11
|
)
|
|
1,667
|
|
||||
Provision for depreciation
|
|
396
|
|
|
123
|
|
|
74
|
|
|
593
|
|
||||
Amortization (deferral) of regulatory assets, net
|
|
(259
|
)
|
|
4
|
|
|
—
|
|
|
(255
|
)
|
||||
General taxes
|
|
379
|
|
|
95
|
|
|
30
|
|
|
504
|
|
||||
Total Operating Expenses
|
|
3,865
|
|
|
336
|
|
|
195
|
|
|
4,396
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss)
|
|
1,063
|
|
|
328
|
|
|
(107
|
)
|
|
1,284
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Miscellaneous income (expense), net
|
|
112
|
|
|
7
|
|
|
(4
|
)
|
|
115
|
|
||||
Interest expense
|
|
(257
|
)
|
|
(81
|
)
|
|
(281
|
)
|
|
(619
|
)
|
||||
Capitalized financing costs
|
|
12
|
|
|
19
|
|
|
—
|
|
|
31
|
|
||||
Total Other Expense
|
|
(133
|
)
|
|
(55
|
)
|
|
(285
|
)
|
|
(473
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes
|
|
930
|
|
|
273
|
|
|
(392
|
)
|
|
811
|
|
||||
Income taxes
|
|
231
|
|
|
70
|
|
|
66
|
|
|
367
|
|
||||
Income (Loss) From Continuing Operations
|
|
699
|
|
|
203
|
|
|
(458
|
)
|
|
444
|
|
||||
Discontinued Operations, net of tax
|
|
—
|
|
|
—
|
|
|
1,224
|
|
|
1,224
|
|
||||
Net Income
|
|
$
|
699
|
|
|
$
|
203
|
|
|
$
|
766
|
|
|
$
|
1,668
|
|
|
||||||||||||||||
First Six Months 2017 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||
|
|
(In millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Electric
|
|
$
|
4,640
|
|
|
$
|
631
|
|
|
$
|
91
|
|
|
$
|
5,362
|
|
Other
|
|
131
|
|
|
9
|
|
|
(23
|
)
|
|
117
|
|
||||
Total Revenues
|
|
4,771
|
|
|
640
|
|
|
68
|
|
|
5,479
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuel
|
|
262
|
|
|
—
|
|
|
105
|
|
|
367
|
|
||||
Purchased power
|
|
1,436
|
|
|
—
|
|
|
5
|
|
|
1,441
|
|
||||
Other operating expenses
|
|
1,268
|
|
|
95
|
|
|
(31
|
)
|
|
1,332
|
|
||||
Provision for depreciation
|
|
357
|
|
|
105
|
|
|
42
|
|
|
504
|
|
||||
Amortization of regulatory assets, net
|
|
156
|
|
|
5
|
|
|
—
|
|
|
161
|
|
||||
General taxes
|
|
359
|
|
|
85
|
|
|
28
|
|
|
472
|
|
||||
Total Operating Expenses
|
|
3,838
|
|
|
290
|
|
|
149
|
|
|
4,277
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss)
|
|
933
|
|
|
350
|
|
|
(81
|
)
|
|
1,202
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Miscellaneous income (loss), net
|
|
29
|
|
|
—
|
|
|
(4
|
)
|
|
25
|
|
||||
Interest expense
|
|
(272
|
)
|
|
(78
|
)
|
|
(143
|
)
|
|
(493
|
)
|
||||
Capitalized financing costs
|
|
11
|
|
|
13
|
|
|
2
|
|
|
26
|
|
||||
Total Other Expense
|
|
(232
|
)
|
|
(65
|
)
|
|
(145
|
)
|
|
(442
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
701
|
|
|
285
|
|
|
(226
|
)
|
|
760
|
|
||||
Income taxes (benefits)
|
|
259
|
|
|
105
|
|
|
(80
|
)
|
|
284
|
|
||||
Income (Loss) From Continuing Operations
|
|
442
|
|
|
180
|
|
|
(146
|
)
|
|
476
|
|
||||
Discontinued Operations, net of tax
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
(97
|
)
|
||||
Net Income (Loss)
|
|
$
|
442
|
|
|
$
|
180
|
|
|
$
|
(243
|
)
|
|
$
|
379
|
|
|
||||||||||||||||
Changes Between First Six Months 2018 and First Six Months 2017 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||
|
|
(In millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Electric
|
|
$
|
159
|
|
|
$
|
24
|
|
|
$
|
34
|
|
|
$
|
217
|
|
Other
|
|
(2
|
)
|
|
—
|
|
|
(14
|
)
|
|
(16
|
)
|
||||
Total Revenues
|
|
157
|
|
|
24
|
|
|
20
|
|
|
201
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuel
|
|
5
|
|
|
—
|
|
|
(8
|
)
|
|
(3
|
)
|
||||
Purchased power
|
|
82
|
|
|
—
|
|
|
—
|
|
|
82
|
|
||||
Other operating expenses
|
|
296
|
|
|
19
|
|
|
20
|
|
|
335
|
|
||||
Provision for depreciation
|
|
39
|
|
|
18
|
|
|
32
|
|
|
89
|
|
||||
Amortization (deferral) of regulatory assets, net
|
|
(415
|
)
|
|
(1
|
)
|
|
—
|
|
|
(416
|
)
|
||||
General taxes
|
|
20
|
|
|
10
|
|
|
2
|
|
|
32
|
|
||||
Total Operating Expenses
|
|
27
|
|
|
46
|
|
|
46
|
|
|
119
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss)
|
|
130
|
|
|
(22
|
)
|
|
(26
|
)
|
|
82
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Miscellaneous income, net
|
|
83
|
|
|
7
|
|
|
—
|
|
|
90
|
|
||||
Interest expense
|
|
15
|
|
|
(3
|
)
|
|
(138
|
)
|
|
(126
|
)
|
||||
Capitalized financing costs
|
|
1
|
|
|
6
|
|
|
(2
|
)
|
|
5
|
|
||||
Total Other Expense
|
|
99
|
|
|
10
|
|
|
(140
|
)
|
|
(31
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
229
|
|
|
(12
|
)
|
|
(166
|
)
|
|
51
|
|
||||
Income taxes (benefits)
|
|
(28
|
)
|
|
(35
|
)
|
|
146
|
|
|
83
|
|
||||
Income (Loss) From Continuing Operations
|
|
257
|
|
|
23
|
|
|
(312
|
)
|
|
(32
|
)
|
||||
Discontinued Operations, net of tax
|
|
—
|
|
|
—
|
|
|
1,321
|
|
|
1,321
|
|
||||
Net Income (Loss)
|
|
$
|
257
|
|
|
$
|
23
|
|
|
$
|
1,009
|
|
|
$
|
1,289
|
|
|
|
For the Six Months Ended June 30,
|
|
Increase
|
||||||||
Revenues by Type of Service
|
|
2018
|
|
2017
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Distribution services
(1)
|
|
$
|
2,633
|
|
|
$
|
2,563
|
|
|
$
|
70
|
|
|
|
|
|
|
|
|
||||||
Generation sales:
|
|
|
|
|
|
|
||||||
Retail
|
|
1,922
|
|
|
1,844
|
|
|
78
|
|
|||
Wholesale
|
|
244
|
|
|
233
|
|
|
11
|
|
|||
Total generation sales
|
|
2,166
|
|
|
2,077
|
|
|
89
|
|
|||
|
|
|
|
|
|
|
||||||
Other
|
|
129
|
|
|
131
|
|
|
(2
|
)
|
|||
Total Revenues
|
|
$
|
4,928
|
|
|
$
|
4,771
|
|
|
$
|
157
|
|
|
|
For the Six Months Ended June 30,
|
|
|
|||||
Electric Distribution MWH Deliveries
|
|
2018
|
|
2017
|
|
Increase
|
|||
|
|
(In thousands)
|
|
|
|||||
Residential
|
|
27,073
|
|
|
24,983
|
|
|
8.4
|
%
|
Commercial
|
|
20,723
|
|
|
20,201
|
|
|
2.6
|
%
|
Industrial
|
|
26,275
|
|
|
25,663
|
|
|
2.4
|
%
|
Other
|
|
281
|
|
|
281
|
|
|
—
|
%
|
Total Electric Distribution MWH Deliveries
|
|
74,352
|
|
|
71,128
|
|
|
4.5
|
%
|
Source of Change in Generation Revenues
|
|
Increase (Decrease)
|
||
|
|
(In millions)
|
||
Retail:
|
|
|
|
|
Effect of increase in sales volumes
|
|
$
|
123
|
|
Change in prices
|
|
(45
|
)
|
|
|
|
78
|
|
|
Wholesale:
|
|
|
||
Effect of decrease in sales volumes
|
|
(28
|
)
|
|
Change in prices
|
|
28
|
|
|
Capacity Revenue
|
|
11
|
|
|
|
|
11
|
|
|
Increase in Generation Revenues
|
|
$
|
89
|
|
•
|
Purchased power costs increased
$82 million
during the first
six
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, 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
|
|
$
|
(6
|
)
|
|
Change due to volumes
|
|
77
|
|
||
|
|
71
|
|
||
Purchases from affiliates:
|
|
|
|||
Change due to decreased unit costs
|
|
(7
|
)
|
||
Change due to volumes
|
|
(10
|
)
|
||
|
|
(17
|
)
|
||
Capacity
|
|
28
|
|
||
Increase in Purchased Power Costs
|
|
$
|
82
|
|
•
|
Other operating expenses increased
$296 million
, primarily due to:
|
•
|
Increased storm restoration costs of $201 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 net network transmission expenses of $44 million reflecting increased transmission costs, partially offset by a FERC settlement during the second quarter of 2018 that reallocated certain transmission costs across utilities in PJM and resulted in a refund to the Ohio Companies. Except for certain transmission costs and credits at the Ohio Companies, the difference between current revenues and transmission costs incurred are deferred for future recovery or refund, resulting in no material impact on current period earnings.
|
•
|
Higher energy efficiency program costs of $28 million, which are deferred for future recovery, resulting in no material impact on current period earnings.
|
•
|
Higher operating and maintenance expenses of $23 million, primarily due to higher benefit costs.
|
•
|
Depreciation expense increased
$39 million
, primarily due to a higher rate base.
|
•
|
Amortization expense decreased
$415 million
, primarily due to increased deferral of storm restoration costs, the Ohio Supreme Court ruling regarding purchase of RECs, higher deferral of transmission and generation expenses including the net impact of the FERC settlement discussed above, and higher deferral of energy efficiency program costs.
|
•
|
General taxes expense increased
$20 million
, primarily due to revenue-related taxes associated with increased sales volumes and higher property taxes.
|
|
|
For the Six Months Ended June 30,
|
|
|
||||||||
Revenues by Transmission Asset Owner
|
|
2018
|
|
2017
|
|
Increase (Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
ATSI
|
|
$
|
327
|
|
|
$
|
317
|
|
|
$
|
10
|
|
TrAIL
|
|
127
|
|
|
144
|
|
|
(17
|
)
|
|||
MAIT
|
|
66
|
|
|
49
|
|
|
17
|
|
|||
Other
|
|
144
|
|
|
130
|
|
|
14
|
|
|||
Total Revenues
|
|
$
|
664
|
|
|
$
|
640
|
|
|
$
|
24
|
|
(In millions)
|
For the Six Months Ended June 30, 2018
|
||
Removal of investment in FES and FENOC
|
$
|
2,193
|
|
Assumption of benefit obligations retained at FE (including Pension, OPEB and EDCP)
|
(820
|
)
|
|
Guarantees and credit support provided by FE
|
(139
|
)
|
|
Reserve on receivables and allocated Pension/OPEB mark-to-market
|
(914
|
)
|
|
Income tax benefit, including estimated worthless stock deduction
|
919
|
|
|
Gain on deconsolidation of FES and FENOC, net of tax
|
$
|
1,239
|
|
Net Regulatory Assets (Liabilities) by Source
|
|
June 30,
2018 |
|
December 31,
2017 |
|
Increase
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Regulatory transition costs
|
|
$
|
33
|
|
|
$
|
46
|
|
|
$
|
(13
|
)
|
Customer payables for future income taxes
|
|
(2,765
|
)
|
|
(2,765
|
)
|
|
—
|
|
|||
Nuclear decommissioning and spent fuel disposal costs
|
|
(300
|
)
|
|
(323
|
)
|
|
23
|
|
|||
Asset removal costs
|
|
(753
|
)
|
|
(774
|
)
|
|
21
|
|
|||
Deferred transmission costs
|
|
233
|
|
|
187
|
|
|
46
|
|
|||
Deferred generation costs
|
|
228
|
|
|
198
|
|
|
30
|
|
|||
Deferred distribution costs
|
|
233
|
|
|
258
|
|
|
(25
|
)
|
|||
Contract valuations
|
|
95
|
|
|
118
|
|
|
(23
|
)
|
|||
Storm-related costs
|
|
508
|
|
|
329
|
|
|
179
|
|
|||
Other
|
|
35
|
|
|
46
|
|
|
(11
|
)
|
|||
Net Regulatory Liabilities included on the Consolidated Balance Sheets
|
|
$
|
(2,453
|
)
|
|
$
|
(2,680
|
)
|
|
$
|
227
|
|
•
|
FE will pay certain pre-petition FES and FENOC employee-related obligations, which include unfunded pension obligations and other employee benefits, and provides for the waiver of all pre-petition claims against FES and FENOC, including the full borrowings by FES under the $500 million secured credit facility, the $200 million credit agreement being used to support surety bonds, the BNSF/CSX rail settlement guarantee, and FES’ and FENOC’s unfunded pension obligations.
|
•
|
The full release of all claims against FirstEnergy by FES, FENOC and their creditors.
|
•
|
A $225 million cash payment from FirstEnergy.
|
•
|
Up to a $628 million note from FirstEnergy, which is intended to represent the initial estimated value of the worthless stock deduction associated with the FES Bankruptcy and was designed to trade at par value when issued.
|
•
|
Transfer of the Pleasants Power Station to FES for the benefit of FES’ creditors. Prior to transfer and beginning no later than January 1, 2019, FES to have an economic lease in Pleasants; AE Supply will operate Pleasants until transfer.
|
•
|
FirstEnergy agrees to credit nine-months of FES’ and FENOC’s shared service costs beginning as of April 1, 2018, in an amount not to exceed $112.5 million, and FirstEnergy agrees to extend the availability of shared services until no later than June 30, 2020.
|
•
|
FirstEnergy agrees to fund through its pension plan a pension enhancement should FES offer a voluntary enhanced retirement package in 2019, which is estimated to cost $15 million, and approximately $3 million for other employee benefits.
|
Currently Payable Long-Term Debt
|
|
(In millions)
|
||
Unsecured notes
|
|
$
|
725
|
|
FMBs
|
|
325
|
|
|
Sinking fund requirements
|
|
63
|
|
|
Other notes
|
|
19
|
|
|
|
|
$
|
1,132
|
|
Borrower(s)
|
|
Type
|
|
Maturity
|
|
Commitment
|
|
Available Liquidity
|
||||
|
|
|
|
|
|
(In millions)
|
||||||
FirstEnergy
(1)
|
|
Revolving
|
|
December 2021
|
|
$
|
4,000
|
|
|
$
|
2,326
|
|
FET
(2)
|
|
Revolving
|
|
December 2021
|
|
1,000
|
|
|
1,000
|
|
||
|
|
|
|
Subtotal
|
|
$
|
5,000
|
|
|
$
|
3,326
|
|
|
|
Cash and cash equivalents
|
|
—
|
|
|
256
|
|
||||
|
|
|
|
Total
|
|
$
|
5,000
|
|
|
$
|
3,582
|
|
(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-
|
AGC
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
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+
|
|
BBB-
|
|
Baa2
|
|
—
|
OE
|
|
BBB+
|
|
A2
|
|
A-
|
|
BBB-
|
|
Baa1
|
|
BBB+
|
PN
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
Baa1
|
|
BBB+
|
Penn
|
|
—
|
|
A2
|
|
A-
|
|
—
|
|
—
|
|
—
|
PE
|
|
—
|
|
—
|
|
BBB+
|
|
—
|
|
—
|
|
—
|
TE
|
|
BBB+
|
|
Baa1
|
|
A-
|
|
—
|
|
—
|
|
—
|
TrAIL
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
A3
|
|
BBB+
|
WP
|
|
—
|
|
—
|
|
A-
|
|
—
|
|
—
|
|
—
|
|
|
For the Six Months Ended June 30,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Income (loss) from discontinued operations
|
|
$
|
1,224
|
|
|
$
|
(97
|
)
|
Depreciation and amortization, including nuclear fuel, regulatory assets, net, intangible assets and deferred debt-related costs
|
|
47
|
|
|
157
|
|
||
Unrealized (gain) loss on derivative transactions
|
|
(10
|
)
|
|
53
|
|
•
|
a $1.25 billion increase in cash contributions to the qualified pension plan;
|
•
|
a $93 million coal supply agreement settlement payment by AE Supply in the first quarter of 2018;
|
•
|
the absence of FES' cash from operations in the second quarter of 2018; 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 higher weather-related usage and the implementation of approved rates in Ohio and Pennsylvania.
|
|
|
For the Six Months Ended June 30,
|
||||||
Securities Issued or Redeemed / Repaid
|
|
2018
|
|
2017
|
||||
|
|
(In millions)
|
||||||
New Issues
|
|
|
|
|
|
|
||
Unsecured notes
|
|
$
|
450
|
|
|
$
|
3,000
|
|
FMBs
|
|
—
|
|
|
250
|
|
||
Term Loan
|
|
—
|
|
|
250
|
|
||
|
|
$
|
450
|
|
|
$
|
3,500
|
|
|
|
|
|
|
||||
Preferred stock issuance
|
|
$
|
1,616
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Common stock issuance
|
|
$
|
850
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Redemptions / Repayments
|
|
|
|
|
|
|
||
Unsecured notes
|
|
$
|
(555
|
)
|
|
$
|
(380
|
)
|
FMBs
|
|
—
|
|
|
(150
|
)
|
||
Term Loan
|
|
(1,450
|
)
|
|
—
|
|
||
PCRBs
|
|
(216
|
)
|
|
(158
|
)
|
||
Senior secured notes
|
|
(30
|
)
|
|
(47
|
)
|
||
|
|
$
|
(2,251
|
)
|
|
$
|
(735
|
)
|
|
|
|
|
|
||||
Make-whole premiums paid on debt redemptions
|
|
$
|
(89
|
)
|
|
$
|
—
|
|
|
|
|
|
|
||||
Short-term borrowings (repayments), net
|
|
$
|
1,364
|
|
|
$
|
(2,450
|
)
|
|
|
|
|
|
||||
Preferred stock dividend payments
|
|
$
|
(42
|
)
|
|
$
|
—
|
|
|
|
|
|
|
||||
Common stock dividend payments
|
|
$
|
(343
|
)
|
|
$
|
(319
|
)
|
|
|
For the Six Months Ended June 30,
|
|
Increase
|
||||||||
Cash Used for Investing Activities
(1)
|
|
2018
|
|
2017
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Property Additions:
|
|
|
|
|
|
|
||||||
Regulated Distribution
|
|
$
|
655
|
|
|
$
|
568
|
|
|
$
|
87
|
|
Regulated Transmission
|
|
574
|
|
|
469
|
|
|
105
|
|
|||
Corporate / Other
|
|
78
|
|
|
217
|
|
|
(139
|
)
|
|||
Nuclear fuel
|
|
—
|
|
|
134
|
|
|
(134
|
)
|
|||
Proceeds from asset sales
|
|
(390
|
)
|
|
—
|
|
|
(390
|
)
|
|||
Investments
|
|
33
|
|
|
48
|
|
|
(15
|
)
|
|||
Notes receivable from affiliated companies
|
|
500
|
|
|
—
|
|
|
500
|
|
|||
Asset removal costs
|
|
118
|
|
|
79
|
|
|
39
|
|
|||
Other
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||
|
|
$
|
1,565
|
|
|
$
|
1,515
|
|
|
$
|
50
|
|
•
|
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 $87 million at Regulated Distribution due to an increase in storm restoration work;
|
•
|
an increase of $105 million at Regulated Transmission due to timing of capital investments associated with its
Energizing the Future
investment program
;
partially offset by
|
•
|
a decrease of $139 million at Corporate/Other due to lower competitive 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
|
|
147
|
|
|
|
|
354
|
|
|
FE's Guarantees on Behalf of its Consolidated Subsidiaries
|
|
|
||
AE Supply asset sales
(3)
|
|
555
|
|
|
Deferred compensation arrangements
|
|
450
|
|
|
Other
|
|
5
|
|
|
|
|
1,010
|
|
|
FE's Guarantees on Behalf of Business Ventures
|
|
|
||
Global Holding facility
|
|
235
|
|
|
|
|
|
||
Other Assurances
|
|
|
||
Surety Bonds
|
|
118
|
|
|
LOCs
(4)
|
|
10
|
|
|
|
|
128
|
|
|
Total Guarantees and Other Assurances
|
|
$
|
1,727
|
|
(1)
|
Issued for open-ended terms, with a 10-day termination right by FirstEnergy. As of June 30, 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 CCR impoundment closure and post-closure activities and the Hatfield's Ferry CCR disposal site, respectively.
|
(3)
|
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.
|
(4)
|
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
|
|
Total
|
||||||||
|
|
(In millions)
|
|||||||||||||||
Contractual Obligations for Additional Collateral
|
|
|
|
|
|
|
|
|
|
||||||||
At Current Credit Rating
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Upon Further Downgrade
|
|
|
—
|
|
|
56
|
|
|
—
|
|
|
56
|
|
||||
Surety Bonds (Collateralized Amount)
|
|
|
1
|
|
|
59
|
|
|
235
|
|
|
295
|
|
||||
Total Exposure from Contractual Obligations
|
|
|
$
|
2
|
|
|
$
|
115
|
|
|
$
|
235
|
|
|
$
|
352
|
|
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 remaining 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.
|
Exhibit Number
|
Description
|
||
|
|
|
|
(A)
|
3
|
|
|
(B)
|
10.1
|
|
|
(B)
|
10.2
|
|
|
(A)
|
12
|
|
|
(A)
|
31.1
|
|
|
(A)
|
31.2
|
|
|
(A)
|
32
|
|
|
(A)
|
99
|
|
|
|
101
|
|
The following materials from the Quarterly Report on Form 10-Q of FirstEnergy Corp. for the period ended June 30, 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)
|
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
|
|
|
|
|
|
|
|
•
|
the right of the board of directors to establish the terms of unissued shares or to authorize our acquisition of our outstanding shares;
|
•
|
the absence of cumulative voting and preemptive rights; or
|
•
|
the requirement that at least 80% of the voting power of our outstanding shares must approve the foregoing.
|
•
|
the time and place of shareholders’ meetings, the manner in which special meetings of shareholders are called or the way business is conducted at such meetings;
|
•
|
the number, election and terms of directors, the manner of filling vacancies on the board of directors, the removal of directors or the manner in which directors are nominated;
|
•
|
the indemnification of officers, directors, employees or agents; or
|
•
|
the requirement that at least 80% of the voting power of our outstanding shares must approve the foregoing.
|
|
|
|
|
|
|
•
|
the payment of dividends or distributions, the making of distributions of assets to shareholders or the purchase or redemption of the corporation’s shares, contrary to the law or the corporation’s articles;
|
•
|
the distribution of assets to shareholders during the winding up of our affairs by dissolution or otherwise, if creditors are not adequately provided for; and
|
•
|
the making of certain loans to officers, directors or shareholders, other than in the usual course of business, without approval by a majority of the disinterested directors of the corporation who determined that the loan could reasonably be expected to benefit the corporation.
|
|
|
|
|