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Commission
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Registrant; State of Incorporation;
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I.R.S. Employer
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File Number
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Address; and Telephone Number
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Identification No.
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333-21011
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FIRSTENERGY CORP.
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34-1843785
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(An Ohio Corporation)
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76 South Main Street
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Akron, OH 44308
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Telephone (800)736
-
3402
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000-53742
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FIRSTENERGY SOLUTIONS CORP.
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31-1560186
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(An Ohio Corporation)
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c/o FirstEnergy Corp.
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76 South Main Street
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Akron, OH 44308
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Telephone (800)736-3402
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Yes
þ
No
o
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FirstEnergy Corp. and FirstEnergy Solutions Corp.
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Yes
þ
No
o
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|
FirstEnergy Corp. and FirstEnergy Solutions Corp.
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Large Accelerated Filer
þ
|
FirstEnergy Corp.
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|
|
Accelerated Filer
o
|
N/A
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|
|
Non-accelerated Filer (Do not check
if a smaller reporting company) þ |
FirstEnergy Solutions Corp.
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|
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Smaller Reporting Company
o
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N/A
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Emerging Growth Company
o
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N/A
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Yes
o
No
þ
|
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FirstEnergy Corp. and FirstEnergy Solutions Corp.
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|
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OUTSTANDING
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|
CLASS
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AS OF JUNE 30, 2017
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FirstEnergy Corp., $0.10 par value
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444,304,456
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FirstEnergy Solutions Corp., no par value
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7
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•
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The ability to experience growth in the Regulated Distribution and Regulated Transmission segments and the effectiveness of our strategy to transition to a fully regulated business profile.
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•
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The accomplishment of our regulatory and operational goals in connection with our transmission investment plan, including, but not limited to, our planned transition to forward-looking formula rates.
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•
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Changes in assumptions regarding economic conditions within our territories, assessment of the reliability of our transmission system, or the availability of capital or other resources supporting identified transmission investment opportunities.
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•
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The ability to accomplish or realize anticipated benefits from strategic and financial goals, including, but not limited to, the ability to continue to reduce costs and to successfully execute our financial plans designed to improve our credit metrics and strengthen our balance sheet.
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•
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Success of legislative and regulatory solutions for generation assets that recognize their environmental or energy security benefits, including the DOE study.
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•
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The risks and uncertainties associated with the lack of viable alternative strategies regarding the CES segment, thereby causing FES, and likely FENOC, to restructure its debt and other financial obligations with its creditors or seek protection under U.S. bankruptcy laws and the losses, liabilities and claims arising from such bankruptcy proceeding, including any obligations at FirstEnergy.
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•
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The risks and uncertainties at the CES segment, including FES and its subsidiaries and FENOC, related to continued depressed wholesale energy and capacity markets, and the viability and/or success of strategic business alternatives, such as pending and potential CES generating unit asset sales, the potential conversion of the remaining generation fleet from competitive operations to a regulated or regulated-like construct or the potential need to deactivate additional generating units.
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•
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The substantial uncertainty as to FES’ ability to continue as a going concern and substantial risk that it may be necessary for FES, and likely FENOC, to seek protection under U.S. bankruptcy laws.
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•
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The risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments, such as long-term fuel and transportation agreements.
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•
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The uncertainties associated with the deactivation of older regulated and competitive units, including the impact on vendor commitments, such as long-term fuel and transportation agreements, and as it relates to the reliability of the transmission grid, the timing thereof.
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•
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The impact of other future changes to the operational status or availability of our generating units and any capacity performance charges associated with unit unavailability.
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•
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Changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil prices, and their availability and impact on margins.
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•
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Costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices.
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•
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Replacement power costs being higher than anticipated or not fully hedged.
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•
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Our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins.
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•
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The uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including NSR litigation, or potential regulatory initiatives or rulemakings (including that such initiatives or rulemakings could result in our decision to deactivate or idle certain generating units).
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•
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Changes in customers' demand for power, including, but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates.
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•
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Economic or weather conditions affecting future sales and margins such as a polar vortex or other significant weather events, and all associated regulatory events or actions.
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•
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Changes in national and regional economic conditions affecting us, our subsidiaries and/or our major industrial and commercial customers, and other counterparties with which we do business, including fuel suppliers.
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•
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The impact of labor disruptions by our unionized workforce.
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•
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The risks associated with cyber-attacks and other disruptions to our information technology system that may compromise our generation, transmission and/or distribution services and data security breaches of sensitive data, intellectual property and proprietary or personally identifiable information regarding our business, employees, shareholders, customers, suppliers, business partners and other individuals in our data centers and on our networks
.
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•
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The impact of the regulatory process and resulting outcomes on the matters at the federal level and in the various states in which we do business including, but not limited to, matters related to rates.
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•
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The impact of the federal regulatory process on FERC-regulated entities and transactions, in particular FERC regulation of wholesale energy and capacity markets, including PJM markets and FERC-jurisdictional wholesale transactions; FERC
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•
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The uncertainties of various cost recovery and cost allocation issues resulting from ATSI's realignment into PJM.
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•
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The ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates.
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•
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Other legislative and regulatory changes, including the new federal administration's required review and potential revision of environmental requirements, including, but not limited to, the effects of the EPA's CPP, CCR, CSAPR and MATS programs, including our estimated costs of compliance, CWA waste water effluent limitations for power plants, and CWA 316(b) water intake regulation.
|
•
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Adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to, the revocation or non-renewal of necessary licenses, approvals or operating permits by the NRC or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant).
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•
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Issues arising from the indications of cracking in the shield building at Davis-Besse.
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•
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Changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our NDTs, pension trusts and other trust funds, and cause us and/or our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated.
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•
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The impact of changes to significant accounting policies.
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•
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The impact of any changes in tax laws or regulations or adverse tax audit results or rulings.
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•
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The ability to access the public securities and other capital and credit markets in accordance with our financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries.
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•
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Further actions that may be taken by credit rating agencies that could negatively affect us and/or our subsidiaries’ access to financing, increase the costs thereof, increase requirements to post additional collateral to support, or accelerate payments under outstanding commodity positions, LOCs and other financial guarantees, and the impact of these events on the financial condition and liquidity of FirstEnergy and/or its subsidiaries, specifically FES and its subsidiaries.
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•
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Issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business.
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•
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The risks and other factors discussed from time to time in our SEC filings, and other similar factors.
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TABLE OF CONTENTS
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Page
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Part I. Financial Information
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Item 1. Financial Statements
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Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
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Item 2. Management's Discussion and Analysis of Registrant and Subsidiaries
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FirstEnergy Corp.
Management's Discussion and Analysis of Financial Condition and Results of Operations
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Management's Narrative Analysis of Results of Operations
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Item 3.
Defaults Upon Senior Securities
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Item 4.
Mine Safety Disclosures
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Item 5. Other Information
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AE
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Allegheny Energy, Inc., a Maryland utility holding company that merged with a subsidiary of FirstEnergy on February 25, 2011. As of January 1, 2014, AE merged with and into FirstEnergy Corp.
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AESC
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Allegheny Energy Service Corporation, a subsidiary of FirstEnergy Corp.
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AE Supply
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Allegheny Energy Supply Company, LLC, an unregulated generation subsidiary
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AGC
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Allegheny Generating Company, a generation subsidiary of AE Supply and equity method investee of MP
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ATSI
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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
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CEI
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The Cleveland Electric Illuminating Company, an Ohio electric utility operating subsidiary
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CES
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Competitive Energy Services, a reportable operating segment of FirstEnergy
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FE
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FirstEnergy Corp., a public utility holding company
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FENOC
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FirstEnergy Nuclear Operating Company, a subsidiary of FE, which operates NG's nuclear generating facilities
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FES
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FirstEnergy Solutions Corp., together with its consolidated subsidiaries, which provides energy-related products and services
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FESC
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FirstEnergy Service Company, which provides legal, financial and other corporate support services
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FET
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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
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FEV
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FirstEnergy Ventures Corp., which invests in certain unregulated enterprises and business ventures
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FG
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FirstEnergy Generation, LLC, a wholly owned subsidiary of FES, which owns and operates non-nuclear generating facilities
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FirstEnergy
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FirstEnergy Corp., together with its consolidated subsidiaries
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Global Holding
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Global Mining Holding Company, LLC, a joint venture between FEV, WMB Marketing Ventures, LLC and Pinesdale LLC
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Global Rail
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Global Rail Group, LLC, a subsidiary of Global Holding that owns coal transportation operations near Roundup, Montana
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JCP&L
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Jersey Central Power & Light Company, a New Jersey electric utility operating subsidiary
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MAIT
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Mid-Atlantic Interstate Transmission, LLC, a subsidiary of FET, which owns and operates transmission facilities
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ME
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Metropolitan Edison Company, a Pennsylvania electric utility operating subsidiary
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MP
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Monongahela Power Company, a West Virginia electric utility operating subsidiary
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NG
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FirstEnergy Nuclear Generation, LLC, a subsidiary of FES, which owns nuclear generating facilities
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OE
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Ohio Edison Company, an Ohio electric utility operating subsidiary
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Ohio Companies
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CEI, OE and TE
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PATH
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Potomac-Appalachian Transmission Highline, LLC, a joint venture between FE and a subsidiary of AEP
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PATH-Allegheny
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PATH Allegheny Transmission Company, LLC
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PATH-WV
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PATH West Virginia Transmission Company, LLC
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PE
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The Potomac Edison Company, a Maryland and West Virginia electric utility operating subsidiary
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Penn
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Pennsylvania Power Company, a Pennsylvania electric utility operating subsidiary of OE
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Pennsylvania Companies
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ME, PN, Penn and WP
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PN
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Pennsylvania Electric Company, a Pennsylvania electric utility operating subsidiary
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PNBV
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PNBV Capital Trust, a special purpose entity created by OE in 1996
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Signal Peak
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Signal Peak Energy, LLC, an indirect subsidiary of Global Holding that owns mining operations near Roundup, Montana
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TE
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The Toledo Edison Company, an Ohio electric utility operating subsidiary
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TrAIL
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Trans-Allegheny Interstate Line Company, a subsidiary of FET, which owns and operates transmission facilities
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Utilities
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OE, CEI, TE, Penn, JCP&L, ME, PN, MP, PE and WP
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WP
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West Penn Power Company, a Pennsylvania electric utility operating subsidiary
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|
|
The following abbreviations and acronyms are used to identify frequently used terms in this report:
|
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AAA
|
American Arbitration Association
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ADIT
|
Accumulated Deferred Income Taxes
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AEP
|
American Electric Power Company, Inc.
|
AFS
|
Available-for-sale
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AFUDC
|
Allowance for Funds Used During Construction
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ALJ
|
Administrative Law Judge
|
GLOSSARY OF TERMS,
Continued
|
|
AOCI
|
Accumulated Other Comprehensive Income
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ARO
|
Asset Retirement Obligation
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ARR
|
Auction Revenue Right
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ASU
|
Accounting Standards Update
|
BGS
|
Basic Generation Service
|
BNSF
|
BNSF Railway Company
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BRA
|
PJM RPM Base Residual Auction
|
CAA
|
Clean Air Act
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CCR
|
Coal Combustion Residuals
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CDWR
|
California Department of Water Resources
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CERCLA
|
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
|
CFR
|
Code of Federal Regulations
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CO
2
|
Carbon Dioxide
|
CPP
|
EPA's Clean Power Plan
|
CSAPR
|
Cross-State Air Pollution Rule
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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
|
DR
|
Demand Response
|
DSIC
|
Distribution System Improvement Charge
|
DSP
|
Default Service Plan
|
EDC
|
Electric Distribution Company
|
EE&C
|
Energy Efficiency and Conservation
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EGS
|
Electric Generation Supplier
|
ELPC
|
Environmental Law & Policy Center
|
EmPOWER Maryland
|
EmPOWER Maryland Energy Efficiency Act
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ENEC
|
Expanded Net Energy Cost
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EPA
|
United States Environmental Protection Agency
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ERO
|
Electric Reliability Organization
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ESP IV
|
Electric Security Plan IV
|
ESP IV PPA
|
Unit Power Agreement entered into on April 1, 2016 by and between the Ohio Companies and FES
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Facebook®
|
Facebook is a registered trademark of Facebook, Inc.
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FASB
|
Financial Accounting Standards Board
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FERC
|
Federal Energy Regulatory Commission
|
Fitch
|
Fitch Ratings
|
FMB
|
First Mortgage Bond
|
FPA
|
Federal Power Act
|
FTR
|
Financial Transmission Right
|
GAAP
|
Accounting Principles Generally Accepted in the United States of America
|
GHG
|
Greenhouse Gases
|
GWH
|
Gigawatt-hour
|
HB554
|
Ohio House Bill No. 554
|
HCl
|
Hydrochloric Acid
|
ICE
|
Intercontinental Exchange, Inc.
|
IRP
|
Integrated Resource Plan
|
IRS
|
Internal Revenue Service
|
ISO
|
Independent System Operator
|
kV
|
Kilovolt
|
KWH
|
Kilowatt-hour
|
GLOSSARY OF TERMS,
Continued
|
|
LOC
|
Letter of Credit
|
LS Power
|
LS Power Equity Partners III, LP
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LSE
|
Load Serving Entity
|
LTIIPs
|
Long-Term Infrastructure Improvement Plans
|
MATS
|
Mercury and Air Toxics Standards
|
MDPSC
|
Maryland Public Service Commission
|
MISO
|
Midcontinent Independent System Operator, Inc.
|
MLP
|
Master Limited Partnership
|
mmBTU
|
One Million British Thermal Units
|
Moody’s
|
Moody’s Investors Service, Inc.
|
MOPR
|
Minimum Offer Price Rule
|
MVP
|
Multi-Value Project
|
MW
|
Megawatt
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MWH
|
Megawatt-hour
|
NAAQS
|
National Ambient Air Quality Standards
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NDT
|
Nuclear Decommissioning Trust
|
NERC
|
North American Electric Reliability Corporation
|
Ninth Circuit
|
United States Court of Appeals for the Ninth Circuit
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NJBPU
|
New Jersey Board of Public Utilities
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NMB
|
Non-Market Based
|
NOAC
|
Northwestern Ohio Aggregation Coalition
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NOL
|
Net Operating Loss
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NOV
|
Notice of Violation
|
NOx
|
Nitrogen Oxide
|
NPDES
|
National Pollutant Discharge Elimination System
|
NRC
|
Nuclear Regulatory Commission
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NSR
|
New Source Review
|
NUG
|
Non-Utility Generation
|
NYPSC
|
New York State Public Service Commission
|
OCC
|
Ohio Consumers' Counsel
|
OPEB
|
Other Post-Employment Benefits
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OTTI
|
Other Than Temporary Impairments
|
OVEC
|
Ohio Valley Electric Corporation
|
PA DEP
|
Pennsylvania Department of Environmental Protection
|
PCB
|
Polychlorinated Biphenyl
|
PCRB
|
Pollution Control Revenue Bond
|
PJM
|
PJM Interconnection, L.L.C.
|
PJM Region
|
The aggregate of the zones within PJM
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PJM Tariff
|
PJM Open Access Transmission Tariff
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PM
|
Particulate Matter
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POLR
|
Provider of Last Resort
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POR
|
Purchase of Receivables
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PPA
|
Purchase Power Agreement
|
PPB
|
Parts Per Billion
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PPUC
|
Pennsylvania Public Utility Commission
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PSA
|
Power Supply Agreement
|
PSD
|
Prevention of Significant Deterioration
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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
|
GLOSSARY OF TERMS,
Continued
|
|
REIT
|
Real Estate Investment Trust
|
RFC
|
Reliability
First
Corporation
|
RFP
|
Request for Proposal
|
RGGI
|
Regional Greenhouse Gas Initiative
|
ROE
|
Return on Equity
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RPM
|
Reliability Pricing Model
|
RRS
|
Retail Rate Stability
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RSS
|
Rich Site Summary
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RTEP
|
Regional Transmission Expansion Plan
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RTO
|
Regional Transmission Organization
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S&P
|
Standard & Poor’s Ratings Service
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SB221
|
Amended Substitute Ohio Senate Bill No. 221
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SB310
|
Substitute Ohio Senate Bill No. 310
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SB320
|
Ohio Senate Bill No. 320
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SBC
|
Societal Benefits Charge
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SEC
|
United States Securities and Exchange Commission
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Seventh Circuit
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United States Court of Appeals for the Seventh Circuit
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SIP
|
State Implementation Plan(s) Under the Clean Air Act
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SO
2
|
Sulfur Dioxide
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Sixth Circuit
|
United States Court of Appeals for the Sixth Circuit
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SOS
|
Standard Offer Service
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SPE
|
Special Purpose Entity
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SREC
|
Solar Renewable Energy Credit
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SSO
|
Standard Service Offer
|
TDS
|
Total Dissolved Solid
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TMI-2
|
Three Mile Island Unit 2
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TO
|
Transmission Owner
|
Twitter®
|
Twitter is a registered trademark of Twitter, Inc.
|
U.S. Court of Appeals for the D.C. Circuit
|
United States Court of Appeals for the District of Columbia Circuit
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VEPCO
|
Virginia Electric and Power Company
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VIE
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Variable Interest Entity
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VSCC
|
Virginia State Corporation Commission
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WVDEP
|
West Virginia Department of Environmental Protection
|
WVPSC
|
Public Service Commission of West Virginia
|
|
|
For the Three Months Ended June 30
|
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For the Six Months Ended June 30
|
|
||||||||||||
(In millions, except per share amounts)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
REVENUES:
|
|
|
|
|
|
|
|
|
|
||||||||
Regulated Distribution
|
|
$
|
2,262
|
|
|
$
|
2,189
|
|
|
$
|
4,752
|
|
|
$
|
4,699
|
|
|
Regulated Transmission
|
|
327
|
|
|
275
|
|
|
640
|
|
|
561
|
|
|
||||
Unregulated businesses
|
|
720
|
|
|
937
|
|
|
1,469
|
|
|
2,010
|
|
|
||||
Total revenues*
|
|
3,309
|
|
|
3,401
|
|
|
6,861
|
|
|
7,270
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fuel
|
|
343
|
|
|
438
|
|
|
711
|
|
|
819
|
|
|
||||
Purchased power
|
|
735
|
|
|
889
|
|
|
1,598
|
|
|
2,013
|
|
|
||||
Other operating expenses
|
|
957
|
|
|
964
|
|
|
2,099
|
|
|
1,882
|
|
|
||||
Provision for depreciation
|
|
281
|
|
|
334
|
|
|
556
|
|
|
663
|
|
|
||||
Amortization of regulatory assets, net
|
|
65
|
|
|
63
|
|
|
124
|
|
|
124
|
|
|
||||
General taxes
|
|
253
|
|
|
241
|
|
|
524
|
|
|
521
|
|
|
||||
Impairment of assets (Note 14)
|
|
131
|
|
|
1,447
|
|
|
131
|
|
|
1,447
|
|
|
||||
Total operating expenses
|
|
2,765
|
|
|
4,376
|
|
|
5,743
|
|
|
7,469
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
OPERATING INCOME (LOSS)
|
|
544
|
|
|
(975
|
)
|
|
1,118
|
|
|
(199
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment income
|
|
17
|
|
|
19
|
|
|
41
|
|
|
47
|
|
|
||||
Interest expense
|
|
(290
|
)
|
|
(289
|
)
|
|
(577
|
)
|
|
(577
|
)
|
|
||||
Capitalized financing costs
|
|
20
|
|
|
26
|
|
|
40
|
|
|
51
|
|
|
||||
Total other expense
|
|
(253
|
)
|
|
(244
|
)
|
|
(496
|
)
|
|
(479
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
291
|
|
|
(1,219
|
)
|
|
622
|
|
|
(678
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
INCOME TAXES (BENEFITS)
|
|
117
|
|
|
(130
|
)
|
|
243
|
|
|
83
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
NET INCOME (LOSS)
|
|
$
|
174
|
|
|
$
|
(1,089
|
)
|
|
$
|
379
|
|
|
$
|
(761
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
EARNINGS (LOSS) PER SHARE OF COMMON STOCK:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.39
|
|
|
$
|
(2.56
|
)
|
|
$
|
0.86
|
|
|
$
|
(1.79
|
)
|
|
Diluted
|
|
$
|
0.39
|
|
|
$
|
(2.56
|
)
|
|
$
|
0.85
|
|
|
$
|
(1.79
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
444
|
|
|
425
|
|
|
443
|
|
|
424
|
|
|
||||
Diluted
|
|
445
|
|
|
425
|
|
|
444
|
|
|
424
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.72
|
|
|
$
|
0.72
|
|
|
|
|
For the Three Months Ended June 30
|
|
For the Six Months Ended June 30
|
|
||||||||||||
(In millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
NET INCOME (LOSS)
|
|
$
|
174
|
|
|
$
|
(1,089
|
)
|
|
$
|
379
|
|
|
$
|
(761
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pension and OPEB prior service costs
|
|
(18
|
)
|
|
(18
|
)
|
|
(36
|
)
|
|
(36
|
)
|
|
||||
Amortized losses on derivative hedges
|
|
1
|
|
|
2
|
|
|
4
|
|
|
4
|
|
|
||||
Change in unrealized gains on available-for-sale securities
|
|
(2
|
)
|
|
35
|
|
|
14
|
|
|
63
|
|
|
||||
Other comprehensive income (loss)
|
|
(19
|
)
|
|
19
|
|
|
(18
|
)
|
|
31
|
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
(7
|
)
|
|
7
|
|
|
(7
|
)
|
|
11
|
|
|
||||
Other comprehensive income (loss), net of tax
|
|
(12
|
)
|
|
12
|
|
|
(11
|
)
|
|
20
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
162
|
|
|
$
|
(1,077
|
)
|
|
$
|
368
|
|
|
$
|
(741
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except share amounts)
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
|
|
|
|
|
|
||
CURRENT ASSETS:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
114
|
|
|
$
|
199
|
|
Receivables-
|
|
|
|
|
|
|
||
Customers, net of allowance for uncollectible accounts of $52 in 2017 and $53 in 2016
|
|
1,375
|
|
|
1,440
|
|
||
Other, net of allowance for uncollectible accounts of $1 in 2017 and 2016
|
|
161
|
|
|
175
|
|
||
Materials and supplies
|
|
553
|
|
|
564
|
|
||
Prepaid taxes
|
|
227
|
|
|
98
|
|
||
Derivatives
|
|
45
|
|
|
140
|
|
||
Collateral
|
|
129
|
|
|
176
|
|
||
Other
|
|
151
|
|
|
158
|
|
||
|
|
2,755
|
|
|
2,950
|
|
||
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
||
In service
|
|
43,929
|
|
|
43,767
|
|
||
Less — Accumulated provision for depreciation
|
|
15,999
|
|
|
15,731
|
|
||
|
|
27,930
|
|
|
28,036
|
|
||
Construction work in progress
|
|
1,249
|
|
|
1,351
|
|
||
|
|
29,179
|
|
|
29,387
|
|
||
INVESTMENTS:
|
|
|
|
|
|
|
||
Nuclear plant decommissioning trusts
|
|
2,588
|
|
|
2,514
|
|
||
Other
|
|
507
|
|
|
512
|
|
||
|
|
3,095
|
|
|
3,026
|
|
||
|
|
|
|
|
||||
ASSETS HELD FOR SALE (Note 14)
|
|
815
|
|
|
—
|
|
||
|
|
|
|
|
||||
DEFERRED CHARGES AND OTHER ASSETS:
|
|
|
|
|
|
|
||
Goodwill
|
|
5,618
|
|
|
5,618
|
|
||
Regulatory assets
|
|
994
|
|
|
1,014
|
|
||
Other
|
|
871
|
|
|
1,153
|
|
||
|
|
7,483
|
|
|
7,785
|
|
||
|
|
$
|
43,327
|
|
|
$
|
43,148
|
|
LIABILITIES AND CAPITALIZATION
|
|
|
|
|
|
|
||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Currently payable long-term debt
|
|
$
|
2,015
|
|
|
$
|
1,685
|
|
Short-term borrowings
|
|
225
|
|
|
2,675
|
|
||
Accounts payable
|
|
932
|
|
|
1,043
|
|
||
Accrued taxes
|
|
518
|
|
|
580
|
|
||
Accrued compensation and benefits
|
|
293
|
|
|
363
|
|
||
Derivatives
|
|
18
|
|
|
78
|
|
||
Collateral
|
|
27
|
|
|
42
|
|
||
Other
|
|
619
|
|
|
660
|
|
||
|
|
4,647
|
|
|
7,126
|
|
||
CAPITALIZATION:
|
|
|
|
|
|
|
||
Common stockholders’ equity-
|
|
|
|
|
|
|
||
Common stock, $0.10 par value, authorized 490,000,000 shares - 444,304,456 and 442,344,218 shares outstanding as of June 30, 2017 and December 31, 2016, respectively
|
|
44
|
|
|
44
|
|
||
Other paid-in capital
|
|
10,272
|
|
|
10,555
|
|
||
Accumulated other comprehensive income
|
|
163
|
|
|
174
|
|
||
Accumulated deficit
|
|
(4,159
|
)
|
|
(4,532
|
)
|
||
Total common stockholders’ equity
|
|
6,320
|
|
|
6,241
|
|
||
Long-term debt and other long-term obligations
|
|
20,582
|
|
|
18,192
|
|
||
|
|
26,902
|
|
|
24,433
|
|
||
NONCURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Accumulated deferred income taxes
|
|
3,992
|
|
|
3,765
|
|
||
Retirement benefits
|
|
3,784
|
|
|
3,719
|
|
||
Asset retirement obligations
|
|
1,526
|
|
|
1,482
|
|
||
Deferred gain on sale and leaseback transaction
|
|
740
|
|
|
757
|
|
||
Adverse power contract liability
|
|
152
|
|
|
162
|
|
||
Other
|
|
1,584
|
|
|
1,704
|
|
||
|
|
11,778
|
|
|
11,589
|
|
||
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 11)
|
|
|
|
|
|
|
||
|
|
$
|
43,327
|
|
|
$
|
43,148
|
|
|
|
For the Six Months Ended June 30
|
||||||
(In millions)
|
|
2017
|
|
2016
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net Income (Loss)
|
|
$
|
379
|
|
|
$
|
(761
|
)
|
Adjustments to reconcile net income (loss) to net cash from operating activities-
|
|
|
|
|
||||
Depreciation and amortization, including nuclear fuel, regulatory assets, net, intangible assets and deferred debt-related costs
|
|
792
|
|
|
950
|
|
||
Deferred purchased power and other costs
|
|
34
|
|
|
(33
|
)
|
||
Deferred income taxes and investment tax credits, net
|
|
224
|
|
|
72
|
|
||
Impairment of assets (Note 14)
|
|
131
|
|
|
1,447
|
|
||
Investment impairments
|
|
7
|
|
|
10
|
|
||
Deferred costs on sale leaseback transaction, net
|
|
24
|
|
|
24
|
|
||
Retirement benefits, net of payments
|
|
17
|
|
|
31
|
|
||
Pension trust contributions
|
|
—
|
|
|
(160
|
)
|
||
Unrealized loss on derivative transactions (Note 8)
|
|
53
|
|
|
5
|
|
||
Lease payments on sale and leaseback transaction
|
|
(47
|
)
|
|
(94
|
)
|
||
Changes in current assets and liabilities-
|
|
|
|
|
||||
Receivables
|
|
83
|
|
|
101
|
|
||
Materials and supplies
|
|
(10
|
)
|
|
(1
|
)
|
||
Prepaid taxes and other current assets
|
|
(127
|
)
|
|
(91
|
)
|
||
Accounts payable
|
|
—
|
|
|
(22
|
)
|
||
Accrued taxes
|
|
(62
|
)
|
|
(80
|
)
|
||
Accrued compensation and benefits
|
|
(125
|
)
|
|
(50
|
)
|
||
Other current liabilities
|
|
(55
|
)
|
|
16
|
|
||
Collateral, net
|
|
32
|
|
|
21
|
|
||
Other
|
|
132
|
|
|
87
|
|
||
Net cash provided from operating activities
|
|
1,482
|
|
|
1,472
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
New Financing-
|
|
|
|
|
||||
Long-term debt
|
|
3,500
|
|
|
—
|
|
||
Short-term borrowings, net
|
|
—
|
|
|
1,225
|
|
||
Redemptions and Repayments-
|
|
|
|
|
||||
Long-term debt
|
|
(735
|
)
|
|
(581
|
)
|
||
Short-term borrowings, net
|
|
(2,450
|
)
|
|
—
|
|
||
Common stock dividend payments
|
|
(319
|
)
|
|
(305
|
)
|
||
Other
|
|
(52
|
)
|
|
24
|
|
||
Net cash provided from (used for) financing activities
|
|
(56
|
)
|
|
363
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Property additions
|
|
(1,254
|
)
|
|
(1,492
|
)
|
||
Nuclear fuel
|
|
(134
|
)
|
|
(188
|
)
|
||
Sales of investment securities held in trusts
|
|
1,257
|
|
|
1,024
|
|
||
Purchases of investment securities held in trusts
|
|
(1,305
|
)
|
|
(1,073
|
)
|
||
Asset removal costs
|
|
(79
|
)
|
|
(63
|
)
|
||
Other
|
|
4
|
|
|
25
|
|
||
Net cash used for investing activities
|
|
(1,511
|
)
|
|
(1,767
|
)
|
||
|
|
|
|
|
||||
Net change in cash and cash equivalents
|
|
(85
|
)
|
|
68
|
|
||
Cash and cash equivalents at beginning of period
|
|
199
|
|
|
131
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
114
|
|
|
$
|
199
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30
|
|
For the Six Months Ended June 30
|
||||||||||||
(In millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
STATEMENTS OF INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|||||||
REVENUES:
|
|
|
|
|
|
|
|
|
|
|||||||
Electric sales to non-affiliates
|
|
$
|
635
|
|
|
$
|
958
|
|
|
$
|
1,403
|
|
|
$
|
1,965
|
|
Electric sales to affiliates
|
|
80
|
|
|
102
|
|
|
191
|
|
|
249
|
|
||||
Other
|
|
26
|
|
|
42
|
|
|
61
|
|
|
87
|
|
||||
Total revenues
|
|
741
|
|
|
1,102
|
|
|
1,655
|
|
|
2,301
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
||||||
Fuel
|
|
154
|
|
|
228
|
|
|
298
|
|
|
393
|
|
||||
Purchased power from affiliates
|
|
39
|
|
|
167
|
|
|
202
|
|
|
249
|
|
||||
Purchased power from non-affiliates
|
|
156
|
|
|
266
|
|
|
316
|
|
|
643
|
|
||||
Other operating expenses
|
|
286
|
|
|
369
|
|
|
804
|
|
|
609
|
|
||||
Provision for depreciation
|
|
27
|
|
|
84
|
|
|
52
|
|
|
167
|
|
||||
General taxes
|
|
18
|
|
|
19
|
|
|
39
|
|
|
45
|
|
||||
Impairment of assets (Note 14)
|
|
—
|
|
|
540
|
|
|
—
|
|
|
540
|
|
||||
Total operating expenses
|
|
680
|
|
|
1,673
|
|
|
1,711
|
|
|
2,646
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OPERATING INCOME (LOSS)
|
|
61
|
|
|
(571
|
)
|
|
(56
|
)
|
|
(345
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment income
|
|
15
|
|
|
19
|
|
|
35
|
|
|
32
|
|
||||
Miscellaneous income
|
|
—
|
|
|
1
|
|
|
5
|
|
|
3
|
|
||||
Interest expense — affiliates
|
|
(5
|
)
|
|
(1
|
)
|
|
(7
|
)
|
|
(3
|
)
|
||||
Interest expense — other
|
|
(35
|
)
|
|
(37
|
)
|
|
(70
|
)
|
|
(73
|
)
|
||||
Capitalized interest
|
|
6
|
|
|
8
|
|
|
14
|
|
|
18
|
|
||||
Total other expense
|
|
(19
|
)
|
|
(10
|
)
|
|
(23
|
)
|
|
(23
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
42
|
|
|
(581
|
)
|
|
(79
|
)
|
|
(368
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
INCOME TAXES (BENEFITS)
|
|
23
|
|
|
(143
|
)
|
|
(18
|
)
|
|
(61
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
NET INCOME (LOSS)
|
|
$
|
19
|
|
|
$
|
(438
|
)
|
|
$
|
(61
|
)
|
|
$
|
(307
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
NET INCOME (LOSS)
|
|
$
|
19
|
|
|
$
|
(438
|
)
|
|
$
|
(61
|
)
|
|
$
|
(307
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
OTHER COMPREHENSIVE INCOME:
|
|
|
|
|
|
|
|
|
|
|
||||||
Pension and OPEB prior service costs
|
|
(4
|
)
|
|
(3
|
)
|
|
(7
|
)
|
|
(7
|
)
|
||||
Amortized gains on derivative hedges
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Change in unrealized gains on available-for-sale securities
|
|
6
|
|
|
33
|
|
|
22
|
|
|
56
|
|
||||
Other comprehensive income
|
|
2
|
|
|
29
|
|
|
15
|
|
|
48
|
|
||||
Income taxes on other comprehensive income
|
|
—
|
|
|
12
|
|
|
5
|
|
|
19
|
|
||||
Other comprehensive income, net of tax
|
|
2
|
|
|
17
|
|
|
10
|
|
|
29
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
21
|
|
|
$
|
(421
|
)
|
|
$
|
(51
|
)
|
|
$
|
(278
|
)
|
(In millions, except share amounts)
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
|
|
|
|
|
|
||
CURRENT ASSETS:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
2
|
|
|
$
|
2
|
|
Receivables-
|
|
|
|
|
|
|
||
Customers, net of allowance for uncollectible accounts of $3 in 2017 and $5 in 2016
|
|
185
|
|
|
213
|
|
||
Affiliated companies
|
|
385
|
|
|
452
|
|
||
Other
|
|
12
|
|
|
27
|
|
||
Notes receivable from affiliated companies
|
|
—
|
|
|
29
|
|
||
Materials and supplies
|
|
260
|
|
|
267
|
|
||
Derivatives
|
|
41
|
|
|
137
|
|
||
Collateral
|
|
111
|
|
|
157
|
|
||
Prepaid taxes and other
|
|
51
|
|
|
63
|
|
||
|
|
1,047
|
|
|
1,347
|
|
||
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
||
In service
|
|
7,382
|
|
|
7,057
|
|
||
Less — Accumulated provision for depreciation
|
|
6,055
|
|
|
5,929
|
|
||
|
|
1,327
|
|
|
1,128
|
|
||
Construction work in progress
|
|
299
|
|
|
427
|
|
||
|
|
1,626
|
|
|
1,555
|
|
||
INVESTMENTS:
|
|
|
|
|
|
|
||
Nuclear plant decommissioning trusts
|
|
1,793
|
|
|
1,552
|
|
||
Other
|
|
9
|
|
|
10
|
|
||
|
|
1,802
|
|
|
1,562
|
|
||
DEFERRED CHARGES AND OTHER ASSETS:
|
|
|
|
|
|
|
||
Property taxes
|
|
20
|
|
|
40
|
|
||
Accumulated deferred income taxes
|
|
2,108
|
|
|
2,279
|
|
||
Derivatives
|
|
9
|
|
|
77
|
|
||
Other
|
|
379
|
|
|
381
|
|
||
|
|
2,516
|
|
|
2,777
|
|
||
|
|
$
|
6,991
|
|
|
$
|
7,241
|
|
LIABILITIES AND CAPITALIZATION
|
|
|
|
|
|
|
||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Currently payable long-term debt
|
|
$
|
255
|
|
|
$
|
179
|
|
Short-term borrowings - affiliated companies
|
|
275
|
|
|
101
|
|
||
Accounts payable-
|
|
|
|
|
|
|
||
Affiliated companies
|
|
264
|
|
|
550
|
|
||
Other
|
|
91
|
|
|
110
|
|
||
Accrued taxes
|
|
129
|
|
|
143
|
|
||
Derivatives
|
|
18
|
|
|
77
|
|
||
Other
|
|
170
|
|
|
156
|
|
||
|
|
1,202
|
|
|
1,316
|
|
||
CAPITALIZATION:
|
|
|
|
|
|
|
||
Common stockholder's equity-
|
|
|
|
|
|
|
||
Common stock, without par value, authorized 750 shares - 7 shares outstanding as of June 30, 2017 and December 31, 2016
|
|
3,730
|
|
|
3,658
|
|
||
Accumulated other comprehensive income
|
|
79
|
|
|
69
|
|
||
Accumulated deficit
|
|
(3,570
|
)
|
|
(3,509
|
)
|
||
Total common stockholder's equity
|
|
239
|
|
|
218
|
|
||
Long-term debt and other long-term obligations
|
|
2,573
|
|
|
2,813
|
|
||
|
|
2,812
|
|
|
3,031
|
|
||
NONCURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Deferred gain on sale and leaseback transaction
|
|
740
|
|
|
757
|
|
||
Retirement benefits
|
|
205
|
|
|
197
|
|
||
Asset retirement obligations (Note 9)
|
|
975
|
|
|
901
|
|
||
Derivatives
|
|
1
|
|
|
52
|
|
||
Other
|
|
1,056
|
|
|
987
|
|
||
|
|
2,977
|
|
|
2,894
|
|
||
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 11)
|
|
|
|
|
|
|
||
|
|
$
|
6,991
|
|
|
$
|
7,241
|
|
|
|
For the Six Months Ended June 30
|
||||||
(In millions)
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net loss
|
|
$
|
(61
|
)
|
|
$
|
(307
|
)
|
Adjustments to reconcile net loss to net cash from operating activities-
|
|
|
|
|
||||
Depreciation and amortization, including nuclear fuel, intangible assets and deferred debt-related costs
|
|
157
|
|
|
301
|
|
||
Deferred costs on sale and leaseback transaction, net
|
|
24
|
|
|
24
|
|
||
Deferred income taxes and investment tax credits, net
|
|
104
|
|
|
(16
|
)
|
||
Investment impairments
|
|
7
|
|
|
9
|
|
||
Unrealized loss on derivative transactions (Note 8)
|
|
53
|
|
|
5
|
|
||
Lease payments on sale and leaseback transaction
|
|
(47
|
)
|
|
(94
|
)
|
||
Impairment of assets (Note 14)
|
|
—
|
|
|
540
|
|
||
Changes in current assets and liabilities-
|
|
|
|
|
||||
Receivables
|
|
110
|
|
|
110
|
|
||
Materials and supplies
|
|
(10
|
)
|
|
12
|
|
||
Prepaid taxes and other current assets
|
|
12
|
|
|
(13
|
)
|
||
Accounts payable
|
|
(194
|
)
|
|
(79
|
)
|
||
Accrued taxes
|
|
(14
|
)
|
|
2
|
|
||
Other current liabilities
|
|
(8
|
)
|
|
16
|
|
||
Collateral, net
|
|
46
|
|
|
50
|
|
||
Other
|
|
116
|
|
|
(3
|
)
|
||
Net cash provided from operating activities
|
|
295
|
|
|
557
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
New financing-
|
|
|
|
|
||||
Short-term borrowings, net
|
|
174
|
|
|
210
|
|
||
Redemptions and repayments-
|
|
|
|
|
||||
Long-term debt
|
|
(163
|
)
|
|
(245
|
)
|
||
Other
|
|
(4
|
)
|
|
(3
|
)
|
||
Net cash (used for) provided from financing activities
|
|
7
|
|
|
(38
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Property additions
|
|
(169
|
)
|
|
(335
|
)
|
||
Nuclear fuel
|
|
(134
|
)
|
|
(188
|
)
|
||
Sales of investment securities held in trusts
|
|
437
|
|
|
441
|
|
||
Purchases of investment securities held in trusts
|
|
(466
|
)
|
|
(467
|
)
|
||
Cash investments
|
|
—
|
|
|
11
|
|
||
Loans to affiliated companies, net
|
|
29
|
|
|
11
|
|
||
Other
|
|
1
|
|
|
8
|
|
||
Net cash used for investing activities
|
|
(302
|
)
|
|
(519
|
)
|
||
|
|
|
|
|
||||
Net change in cash and cash equivalents
|
|
—
|
|
|
—
|
|
||
Cash and cash equivalents at beginning of period
|
|
2
|
|
|
2
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
2
|
|
|
$
|
2
|
|
|
|
|
|
|
||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
||||
Non-cash transaction: Affiliated net asset transfer (Note 9)
|
|
$
|
73
|
|
|
$
|
28
|
|
Note
Number
|
|
Page
Number
|
|
|
|
|
|
|
2
|
Earnings Per Share of Common Stock
|
|
|
|
|
3
|
||
|
|
|
4
|
Accumulated Other Comprehensive Income
|
|
|
|
|
5
|
Income Taxes
|
|
|
|
|
6
|
Variable Interest Entities
|
|
|
|
|
7
|
Fair Value Measurements
|
|
|
|
|
8
|
Derivative Instruments
|
|
|
|
|
9
|
Asset Retirement Obligations
|
|
|
|
|
10
|
Regulatory Matters
|
|
|
|
|
11
|
Commitments, Guarantees and Contingencies
|
|
|
|
|
12
|
Supplemental Guarantor Information
|
|
|
|
|
13
|
Segment Information
|
|
|
|
|
14
|
Asset Impairments
|
|
|
|
|
•
|
legislative or regulatory solutions for generation assets that recognize their environmental or energy security benefits;
|
•
|
restructuring FES debt with its creditors;
|
•
|
seeking protection under U.S. bankruptcy laws for FES and likely FENOC; and/or
|
•
|
additional asset sales and/or plant deactivations.
|
•
|
The outcome of the recently announced directive by the Secretary of Energy to complete a study that explores critical issues central to protecting the long-term reliability of the electric grid, including the impact of federal policy interventions and the changing nature of electricity fuel mix, compensation of on-site fuel supply and other factors that strengthen grid resilience, and the impact of regulatory burdens, mandates and tax and subsidy policies on the premature retirement of baseload power plants;
|
•
|
The resolution of legislation before the Ohio General Assembly that would create a zero-emission nuclear (ZEN) credit that would compensate nuclear power plants for their environmental attributes and the potential for similar legislative action in Pennsylvania; and/or
|
•
|
The inability to finalize and consummate a settlement agreement with BNSF and NS regarding a previously disclosed long-term coal transportation contract dispute as discussed in Note 11, "Commitments, Guarantees and Contingencies - Environmental Matters" below, whereby FG could be subject to materially higher damages.
|
(In millions, except per share amounts)
|
|
For the Three Months Ended June 30
|
|
For the Six Months Ended June 30
|
||||||||||||
Reconciliation of Basic and Diluted Earnings (Loss) per Share of Common Stock
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
|
$
|
174
|
|
|
$
|
(1,089
|
)
|
|
$
|
379
|
|
|
$
|
(761
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of basic shares outstanding
|
|
444
|
|
|
425
|
|
|
443
|
|
|
424
|
|
||||
Assumed exercise of dilutive stock options and awards
(1)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Weighted average number of diluted shares outstanding
|
|
445
|
|
|
425
|
|
|
444
|
|
|
424
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share of common stock
|
|
$
|
0.39
|
|
|
$
|
(2.56
|
)
|
|
$
|
0.86
|
|
|
$
|
(1.79
|
)
|
Diluted earnings (loss) per share of common stock
|
|
$
|
0.39
|
|
|
$
|
(2.56
|
)
|
|
$
|
0.85
|
|
|
$
|
(1.79
|
)
|
(1)
|
For both the three and
six
months ended
June 30
,
2017
,
one million
shares were excluded from the calculation of diluted shares outstanding, as their inclusion would be antidilutive. For both the three and six months ended June 30, 2016,
three million
shares were excluded from the calculation of diluted shares outstanding, as their inclusion would be antidilutive as a result of the net loss.
|
Components of Net Periodic Benefit Costs (Credits)
|
|
Pension
|
OPEB
|
|||||||||||||
For the Three Months Ended June 30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In millions)
|
||||||||||||||
Service costs
|
|
$
|
52
|
|
|
$
|
48
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest costs
|
|
97
|
|
|
99
|
|
|
7
|
|
|
8
|
|
||||
Expected return on plan assets
|
|
(112
|
)
|
|
(100
|
)
|
|
(7
|
)
|
|
(8
|
)
|
||||
Amortization of prior service costs (credits)
|
|
2
|
|
|
2
|
|
|
(20
|
)
|
|
(20
|
)
|
||||
Net periodic costs (credits)
|
|
$
|
39
|
|
|
$
|
49
|
|
|
$
|
(19
|
)
|
|
$
|
(19
|
)
|
Components of Net Periodic Benefit Costs (Credits)
|
|
Pension
|
OPEB
|
|||||||||||||
For the Six Months Ended June 30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In millions)
|
||||||||||||||
Service costs
|
|
$
|
104
|
|
|
$
|
96
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest costs
|
|
194
|
|
|
199
|
|
|
14
|
|
|
15
|
|
||||
Expected return on plan assets
|
|
(224
|
)
|
|
(197
|
)
|
|
(15
|
)
|
|
(16
|
)
|
||||
Amortization of prior service costs (credits)
|
|
4
|
|
|
4
|
|
|
(40
|
)
|
|
(40
|
)
|
||||
Net periodic costs (credits)
|
|
$
|
78
|
|
|
$
|
102
|
|
|
$
|
(39
|
)
|
|
$
|
(39
|
)
|
|
|
Pension
|
OPEB
|
|||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In millions)
|
||||||||||||||
For the Three Months Ended June 30
|
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
For the Six Months Ended June 30
|
|
6
|
|
|
12
|
|
|
(8
|
)
|
|
(8
|
)
|
Net Periodic Benefit Expense (Credit)
|
|
Pension
|
|
OPEB
|
||||||||||||
For the Three Months Ended June 30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In millions)
|
||||||||||||||
FirstEnergy
|
|
$
|
27
|
|
|
$
|
35
|
|
|
$
|
(14
|
)
|
|
$
|
(15
|
)
|
FES
|
|
3
|
|
|
6
|
|
|
(4
|
)
|
|
(4
|
)
|
Net Periodic Benefit Expense (Credit)
|
|
Pension
|
|
OPEB
|
||||||||||||
For the Six Months Ended June 30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In millions)
|
||||||||||||||
FirstEnergy
|
|
$
|
59
|
|
|
$
|
72
|
|
|
$
|
(29
|
)
|
|
$
|
(30
|
)
|
FES
|
|
6
|
|
|
12
|
|
|
(8
|
)
|
|
(8
|
)
|
FirstEnergy
|
|
Gains & Losses on Cash Flow Hedges
|
|
Unrealized Gains on AFS Securities
|
|
Defined Benefit Pension & OPEB Plans
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
AOCI Balance as of April 1, 2017
|
|
$
|
(26
|
)
|
|
$
|
63
|
|
|
$
|
138
|
|
|
$
|
175
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Amounts reclassified from AOCI
|
|
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
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of April 1, 2016
|
|
$
|
(32
|
)
|
|
$
|
36
|
|
|
$
|
175
|
|
|
$
|
179
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
47
|
|
|
—
|
|
|
47
|
|
||||
Amounts reclassified from AOCI
|
|
2
|
|
|
(12
|
)
|
|
(18
|
)
|
|
(28
|
)
|
||||
Other comprehensive income (loss)
|
|
2
|
|
|
35
|
|
|
(18
|
)
|
|
19
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
1
|
|
|
13
|
|
|
(7
|
)
|
|
7
|
|
||||
Other comprehensive income (loss), net of tax
|
|
1
|
|
|
22
|
|
|
(11
|
)
|
|
12
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2016
|
|
$
|
(31
|
)
|
|
$
|
58
|
|
|
$
|
164
|
|
|
$
|
191
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Gains & Losses on Cash Flow Hedges
|
|
Unrealized Gains on AFS Securities
|
|
Defined Benefit Pension & OPEB Plans
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
AOCI Balance as of January 1, 2017
|
|
$
|
(28
|
)
|
|
$
|
52
|
|
|
$
|
150
|
|
|
$
|
174
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
||||
Amounts reclassified from AOCI
|
|
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
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of January 1, 2016
|
|
$
|
(33
|
)
|
|
$
|
18
|
|
|
$
|
186
|
|
|
$
|
171
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
88
|
|
|
—
|
|
|
88
|
|
||||
Amounts reclassified from AOCI
|
|
4
|
|
|
(25
|
)
|
|
(36
|
)
|
|
(57
|
)
|
||||
Other comprehensive income (loss)
|
|
4
|
|
|
63
|
|
|
(36
|
)
|
|
31
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
2
|
|
|
23
|
|
|
(14
|
)
|
|
11
|
|
||||
Other comprehensive income (loss), net of tax
|
|
2
|
|
|
40
|
|
|
(22
|
)
|
|
20
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2016
|
|
$
|
(31
|
)
|
|
$
|
58
|
|
|
$
|
164
|
|
|
$
|
191
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30
|
|
For the Six Months Ended June 30
|
|
Affected Line Item in Consolidated Statements of Income (Loss)
|
||||||||||||
Reclassifications from AOCI
(2)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|||||||||
|
|
(In millions)
|
|
|
||||||||||||||
Gains & losses on cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
Interest expense
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
Income taxes (benefits)
|
||||
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gains on AFS securities
|
|
|
|
|
|
|
|
|
|
|
||||||||
Realized gains on sales of securities
|
|
$
|
(6
|
)
|
|
$
|
(12
|
)
|
|
$
|
(22
|
)
|
|
$
|
(25
|
)
|
|
Investment income
|
|
|
2
|
|
|
4
|
|
|
8
|
|
|
9
|
|
|
Income taxes (benefits)
|
||||
|
|
$
|
(4
|
)
|
|
$
|
(8
|
)
|
|
$
|
(14
|
)
|
|
$
|
(16
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Defined benefit pension and OPEB plans
|
|
|
|
|
|
|
|
|
|
|
||||||||
Prior-service costs
|
|
$
|
(18
|
)
|
|
$
|
(18
|
)
|
|
$
|
(36
|
)
|
|
$
|
(36
|
)
|
|
(1)
|
|
|
8
|
|
|
7
|
|
|
14
|
|
|
14
|
|
|
Income taxes (benefits)
|
||||
|
|
$
|
(10
|
)
|
|
$
|
(11
|
)
|
|
$
|
(22
|
)
|
|
$
|
(22
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
(1)
These AOCI components are included in the computation of net periodic pension cost. See Note 3, "Pension and Other Postemployment Benefits," for additional details.
|
||||||||||||||||||
(2)
Amounts in parenthesis represent credits to the Consolidated Statements of Income (Loss) from AOCI.
|
FES
|
|
|
|
|
|
|
|
|
||||||||
|
|
Gains & Losses on Cash Flow Hedges
|
|
Unrealized Gains on AFS Securities
|
|
Defined Benefit Pension & OPEB Plans
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
AOCI Balance as of April 1, 2017
|
|
$
|
(9
|
)
|
|
$
|
58
|
|
|
$
|
28
|
|
|
$
|
77
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||
Amounts reclassified from AOCI
|
|
—
|
|
|
(6
|
)
|
|
(4
|
)
|
|
(10
|
)
|
||||
Other comprehensive income (loss)
|
|
—
|
|
|
6
|
|
|
(4
|
)
|
|
2
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
—
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
4
|
|
|
(2
|
)
|
|
2
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2017
|
|
$
|
(9
|
)
|
|
$
|
62
|
|
|
$
|
26
|
|
|
$
|
79
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of April 1, 2016
|
|
$
|
(9
|
)
|
|
$
|
30
|
|
|
$
|
37
|
|
|
$
|
58
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
44
|
|
|
—
|
|
|
44
|
|
||||
Amounts reclassified from AOCI
|
|
(1
|
)
|
|
(11
|
)
|
|
(3
|
)
|
|
(15
|
)
|
||||
Other comprehensive income (loss)
|
|
(1
|
)
|
|
33
|
|
|
(3
|
)
|
|
29
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
—
|
|
|
13
|
|
|
(1
|
)
|
|
12
|
|
||||
Other comprehensive income (loss), net of tax
|
|
(1
|
)
|
|
20
|
|
|
(2
|
)
|
|
17
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2016
|
|
$
|
(10
|
)
|
|
$
|
50
|
|
|
$
|
35
|
|
|
$
|
75
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Gains & Losses on Cash Flow Hedges
|
|
Unrealized Gains on AFS Securities
|
|
Defined Benefit Pension & OPEB Plans
|
|
Total
|
||||||||
|
|
(In millions)
|
||||||||||||||
AOCI Balance as of January 1, 2017
|
|
$
|
(9
|
)
|
|
$
|
48
|
|
|
$
|
30
|
|
|
$
|
69
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
||||
Amounts reclassified from AOCI
|
|
—
|
|
|
(21
|
)
|
|
(7
|
)
|
|
(28
|
)
|
||||
Other comprehensive income (loss)
|
|
—
|
|
|
22
|
|
|
(7
|
)
|
|
15
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
—
|
|
|
8
|
|
|
(3
|
)
|
|
5
|
|
||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
14
|
|
|
(4
|
)
|
|
10
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2017
|
|
$
|
(9
|
)
|
|
$
|
62
|
|
|
$
|
26
|
|
|
$
|
79
|
|
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of January 1, 2016
|
|
$
|
(9
|
)
|
|
$
|
16
|
|
|
$
|
39
|
|
|
$
|
46
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income before reclassifications
|
|
—
|
|
|
80
|
|
|
—
|
|
|
80
|
|
||||
Amounts reclassified from AOCI
|
|
(1
|
)
|
|
(24
|
)
|
|
(7
|
)
|
|
(32
|
)
|
||||
Other comprehensive income (loss)
|
|
(1
|
)
|
|
56
|
|
|
(7
|
)
|
|
48
|
|
||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
—
|
|
|
22
|
|
|
(3
|
)
|
|
19
|
|
||||
Other comprehensive income (loss), net of tax
|
|
(1
|
)
|
|
34
|
|
|
(4
|
)
|
|
29
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
AOCI Balance as of June 30, 2016
|
|
$
|
(10
|
)
|
|
$
|
50
|
|
|
$
|
35
|
|
|
$
|
75
|
|
|
|
For the Three Months Ended June 30
|
|
For the Six Months Ended June 30
|
|
Affected Line Item in Consolidated Statements of Income (Loss)
|
||||||||||||
Reclassifications from AOCI
(2)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|||||||||
|
|
(In millions)
|
|
|
||||||||||||||
Gains & losses on cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
Other operating expenses
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Income taxes (benefits)
|
||||
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gains on AFS securities
|
|
|
|
|
|
|
|
|
|
|
||||||||
Realized gains on sales of securities
|
|
$
|
(6
|
)
|
|
$
|
(11
|
)
|
|
$
|
(21
|
)
|
|
$
|
(24
|
)
|
|
Investment income
|
|
|
2
|
|
|
4
|
|
|
8
|
|
|
9
|
|
|
Income taxes (benefits)
|
||||
|
|
$
|
(4
|
)
|
|
$
|
(7
|
)
|
|
$
|
(13
|
)
|
|
$
|
(15
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Defined benefit pension and OPEB plans
|
|
|
|
|
|
|
|
|
|
|
||||||||
Prior-service costs
|
|
$
|
(4
|
)
|
|
$
|
(3
|
)
|
|
$
|
(7
|
)
|
|
$
|
(7
|
)
|
|
(1)
|
|
|
2
|
|
|
1
|
|
|
3
|
|
|
3
|
|
|
Income taxes (benefits)
|
||||
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
(1)
These AOCI components are included in the computation of net periodic pension cost. See Note 3, "Pension and Other Postemployment Benefits," for additional details.
|
||||||||||||||||||
(2)
Amounts in parenthesis represent credits to the Consolidated Statements of Income (Loss) from AOCI.
|
•
|
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, 2017
and
December 31, 2016
,
$327 million
and
$339 million
of the phase-in recovery bonds were outstanding, respectively.
|
•
|
JCP&L Securitization
-
In June 2002, JCP&L Transition Funding sold transition bonds to securitize the recovery of JCP&L’s bondable stranded costs associated with the previously divested Oyster Creek Nuclear Generating Station, which were paid in full at maturity on June 5, 2017. Additionally, 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, 2017
and
December 31, 2016
,
$63 million
and
$85 million
of the transition bonds were outstanding, respectively.
|
•
|
MP and PE Environmental Funding Companies
-
The entities issued bonds, the proceeds of which were used to construct environmental control facilities. The 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, 2017
and
December 31, 2016
,
$395 million
and
$406 million
of the environmental control bonds were outstanding, respectively.
|
•
|
Global Holding
-
FEV holds a
33-1/3%
equity ownership in Global Holding, the holding company for a joint venture in the Signal Peak mining and coal transportation operations with coal sales in U.S. and international markets. FEV is not the primary beneficiary of the joint venture, as it does not have control over the significant activities affecting the joint venture's economic performance. FEV's ownership interest is subject to the equity method of accounting.
|
•
|
PATH WV
-
PATH, a proposed transmission line from West Virginia through Virginia into Maryland which PJM 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.
|
•
|
Purchase Power Agreements
-
FirstEnergy evaluated its PPAs and determined that certain NUG entities at its Regulated Distribution segment may be VIEs to the extent that they own a plant that sells substantially all of its output to the applicable utilities and the contract price for power is correlated with the plant’s variable costs of production.
|
•
|
Sale and Leaseback Transactions
-
FES
has obligations that are not included on its Consolidated Balance Sheet related to the 2007 Bruce Mansfield Unit 1 sale and leaseback arrangement, which are satisfied through operating lease payments. FirstEnergy is not the primary beneficiary of these interests as it does not have control over the significant activities affecting the economics of the arrangements. As of
June 30, 2017
,
FES' leasehold interest was
93.83%
of Bruce Mansfield Unit 1.
|
|
Maximum
Exposure
|
|
Discounted Lease
Payments, net
|
|
Net
Exposure
|
||||||
|
(In millions)
|
||||||||||
FirstEnergy and FES
|
$
|
1,081
|
|
|
$
|
859
|
|
|
$
|
222
|
|
Level 1
|
-
|
Quoted prices for identical instruments in active market
|
|
|
|
Level 2
|
-
|
Quoted prices for similar instruments in active market
|
|
-
|
Quoted prices for identical or similar instruments in markets that are not active
|
|
-
|
Model-derived valuations for which all significant inputs are observable market data
|
Level 3
|
-
|
Valuation inputs are unobservable and significant to the fair value measurement
|
FirstEnergy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Recurring Fair Value Measurements
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
(In millions)
|
||||||||||||||||||||||||||||||
Corporate debt securities
|
$
|
—
|
|
|
$
|
1,216
|
|
|
$
|
—
|
|
|
$
|
1,216
|
|
|
$
|
—
|
|
|
$
|
1,247
|
|
|
$
|
—
|
|
|
$
|
1,247
|
|
Derivative assets - commodity contracts
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
|
10
|
|
|
200
|
|
|
—
|
|
|
210
|
|
||||||||
Derivative assets - FTRs
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
||||||||
Derivative assets - NUG contracts
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||||
Equity securities
(2)
|
1,002
|
|
|
—
|
|
|
—
|
|
|
1,002
|
|
|
925
|
|
|
—
|
|
|
—
|
|
|
925
|
|
||||||||
Foreign government debt securities
|
—
|
|
|
95
|
|
|
—
|
|
|
95
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
78
|
|
||||||||
U.S. government debt securities
|
—
|
|
|
156
|
|
|
—
|
|
|
156
|
|
|
—
|
|
|
161
|
|
|
—
|
|
|
161
|
|
||||||||
U.S. state debt securities
|
—
|
|
|
258
|
|
|
—
|
|
|
258
|
|
|
—
|
|
|
246
|
|
|
—
|
|
|
246
|
|
||||||||
Other
(3)
|
114
|
|
|
150
|
|
|
—
|
|
|
264
|
|
|
199
|
|
|
123
|
|
|
—
|
|
|
322
|
|
||||||||
Total assets
|
$
|
1,116
|
|
|
$
|
1,925
|
|
|
$
|
4
|
|
|
$
|
3,045
|
|
|
$
|
1,134
|
|
|
$
|
2,055
|
|
|
$
|
8
|
|
|
$
|
3,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities - commodity contracts
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
$
|
(6
|
)
|
|
$
|
(118
|
)
|
|
$
|
—
|
|
|
$
|
(124
|
)
|
Derivative liabilities - FTRs
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||||||
Derivative liabilities - NUG contracts
(1)
|
—
|
|
|
—
|
|
|
(99
|
)
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
(108
|
)
|
|
(108
|
)
|
||||||||
Total liabilities
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
$
|
(101
|
)
|
|
$
|
(119
|
)
|
|
$
|
(6
|
)
|
|
$
|
(118
|
)
|
|
$
|
(114
|
)
|
|
$
|
(238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net assets (liabilities)
(4)
|
$
|
1,116
|
|
|
$
|
1,907
|
|
|
$
|
(97
|
)
|
|
$
|
2,926
|
|
|
$
|
1,128
|
|
|
$
|
1,937
|
|
|
$
|
(106
|
)
|
|
$
|
2,959
|
|
(1)
|
NUG contracts are subject to regulatory accounting treatment and do not impact earnings.
|
(2)
|
NDT funds hold equity portfolios whose performance is benchmarked against the Alerian MLP Index or the Wells Fargo Hybrid and Preferred Securities REIT index.
|
(3)
|
Primarily consists of short-term cash investments.
|
(4)
|
Excludes
$(18) million
and
$(3) million
as of
June 30, 2017
and
December 31, 2016
, respectively, of receivables, payables, taxes and accrued income associated with financial instruments reflected within the fair value table.
|
|
NUG Contracts
(1)
|
|
FTRs
|
||||||||||||||||||||
|
Derivative Assets
|
|
Derivative Liabilities
|
|
Net
|
|
Derivative Assets
|
|
Derivative Liabilities
|
|
Net
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
January 1, 2016 Balance
|
$
|
1
|
|
|
$
|
(137
|
)
|
|
$
|
(136
|
)
|
|
$
|
8
|
|
|
$
|
(13
|
)
|
|
$
|
(5
|
)
|
Unrealized gain (loss)
|
2
|
|
|
(17
|
)
|
|
(15
|
)
|
|
(6
|
)
|
|
(4
|
)
|
|
(10
|
)
|
||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
(7
|
)
|
|
9
|
|
||||||
Settlements
|
(2
|
)
|
|
46
|
|
|
44
|
|
|
(11
|
)
|
|
18
|
|
|
7
|
|
||||||
December 31, 2016 Balance
|
$
|
1
|
|
|
$
|
(108
|
)
|
|
$
|
(107
|
)
|
|
$
|
7
|
|
|
$
|
(6
|
)
|
|
$
|
1
|
|
Unrealized loss
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
(1
|
)
|
|
3
|
|
||||||
Settlements
|
(1
|
)
|
|
19
|
|
|
18
|
|
|
(7
|
)
|
|
7
|
|
|
—
|
|
||||||
June 30, 2017 Balance
|
$
|
—
|
|
|
$
|
(99
|
)
|
|
$
|
(99
|
)
|
|
$
|
4
|
|
|
$
|
(2
|
)
|
|
$
|
2
|
|
(1)
|
NUG contracts are subject to regulatory accounting treatment and do not impact earnings.
|
|
|
Fair Value, Net (In millions)
|
|
Valuation
Technique |
|
Significant Input
|
|
Range
|
|
Weighted Average
|
|
Units
|
|||
FTRs
|
|
$
|
2
|
|
|
Model
|
|
RTO auction clearing prices
|
|
$(2.00) to $4.10
|
|
$0.60
|
|
Dollars/MWH
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
NUG Contracts
|
|
$
|
(99
|
)
|
|
Model
|
|
Generation
|
|
400 to 2,545,000
|
|
515,000
|
|
|
MWH
|
|
|
|
Regional electricity prices
|
|
$31.20 to $33.60
|
|
$31.30
|
|
Dollars/MWH
|
FES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Recurring Fair Value Measurements
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
(In millions)
|
||||||||||||||||||||||||||||||
Corporate debt securities
|
$
|
—
|
|
|
$
|
761
|
|
|
$
|
—
|
|
|
$
|
761
|
|
|
$
|
—
|
|
|
$
|
726
|
|
|
$
|
—
|
|
|
$
|
726
|
|
Derivative assets - commodity contracts
|
—
|
|
|
49
|
|
|
—
|
|
|
49
|
|
|
10
|
|
|
200
|
|
|
—
|
|
|
210
|
|
||||||||
Derivative assets - FTRs
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
||||||||
Equity securities
(1)
|
720
|
|
|
—
|
|
|
—
|
|
|
720
|
|
|
634
|
|
|
—
|
|
|
—
|
|
|
634
|
|
||||||||
Foreign government debt securities
|
—
|
|
|
66
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
58
|
|
|
—
|
|
|
58
|
|
||||||||
U.S. government debt securities
|
—
|
|
|
137
|
|
|
—
|
|
|
137
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
48
|
|
||||||||
U.S. state debt securities
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||||
Other
(2)
|
2
|
|
|
108
|
|
|
—
|
|
|
110
|
|
|
2
|
|
|
81
|
|
|
—
|
|
|
83
|
|
||||||||
Total assets
|
$
|
722
|
|
|
$
|
1,125
|
|
|
$
|
1
|
|
|
$
|
1,848
|
|
|
$
|
646
|
|
|
$
|
1,116
|
|
|
$
|
4
|
|
|
$
|
1,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities - commodity contracts
|
$
|
—
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
$
|
(17
|
)
|
|
$
|
(6
|
)
|
|
$
|
(118
|
)
|
|
$
|
—
|
|
|
$
|
(124
|
)
|
Derivative liabilities - FTRs
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||||
Total liabilities
|
$
|
—
|
|
|
$
|
(17
|
)
|
|
$
|
(2
|
)
|
|
$
|
(19
|
)
|
|
$
|
(6
|
)
|
|
$
|
(118
|
)
|
|
$
|
(5
|
)
|
|
$
|
(129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net assets (liabilities)
(3)
|
$
|
722
|
|
|
$
|
1,108
|
|
|
$
|
(1
|
)
|
|
$
|
1,829
|
|
|
$
|
640
|
|
|
$
|
998
|
|
|
$
|
(1
|
)
|
|
$
|
1,637
|
|
(1)
|
NDT funds hold equity portfolios whose performance is benchmarked against the Alerian MLP Index or the Wells Fargo Hybrid and Preferred Securities REIT index.
|
(2)
|
Primarily consists of short-term cash investments.
|
(3)
|
Excludes
$(3) million
and
$2 million
as of
June 30, 2017
and
December 31, 2016
, respectively, of receivables, payables, taxes and accrued income associated with the financial instruments reflected within the fair value table.
|
|
|
Derivative Asset
|
|
Derivative Liability
|
|
Net Asset (Liability)
|
||||||
|
|
(In millions)
|
||||||||||
January 1, 2016 Balance
|
|
$
|
5
|
|
|
$
|
(11
|
)
|
|
$
|
(6
|
)
|
Unrealized loss
|
|
(4
|
)
|
|
(3
|
)
|
|
(7
|
)
|
|||
Purchases
|
|
10
|
|
|
(5
|
)
|
|
5
|
|
|||
Settlements
|
|
(7
|
)
|
|
14
|
|
|
7
|
|
|||
December 31, 2016 Balance
|
|
$
|
4
|
|
|
$
|
(5
|
)
|
|
$
|
(1
|
)
|
Unrealized loss
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Purchases
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|||
Settlements
|
|
(4
|
)
|
|
5
|
|
|
1
|
|
|||
June 30, 2017 Balance
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
|
|
Fair Value, Net (In millions)
|
|
Valuation
Technique |
|
Significant Input
|
|
Range
|
|
Weighted Average
|
|
Units
|
||
FTRs
|
|
$
|
(1
|
)
|
|
Model
|
|
RTO auction clearing prices
|
|
($2.00) to $4.10
|
|
$0.20
|
|
Dollars/MWH
|
|
|
June 30, 2017
(1)
|
|
December 31, 2016
(2)
|
||||||||||||||||||||
|
|
Cost Basis
|
|
Unrealized Gains
|
|
Fair Value
|
|
Cost Basis
|
|
Unrealized Gains
|
|
Fair Value
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
Debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FirstEnergy
|
|
$
|
1,708
|
|
|
$
|
44
|
|
|
$
|
1,752
|
|
|
$
|
1,735
|
|
|
$
|
38
|
|
|
$
|
1,773
|
|
FES
|
|
961
|
|
|
32
|
|
|
993
|
|
|
847
|
|
|
27
|
|
|
874
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FirstEnergy
|
|
$
|
876
|
|
|
$
|
126
|
|
|
$
|
1,002
|
|
|
$
|
822
|
|
|
$
|
103
|
|
|
$
|
925
|
|
FES
|
|
629
|
|
|
91
|
|
|
720
|
|
|
564
|
|
|
70
|
|
|
634
|
|
(1)
|
Excludes short-term cash investments: FirstEnergy -
$87 million
; FES -
$80 million
.
|
(2)
|
Excludes short-term cash investments: FirstEnergy -
$61 million
; FES -
$44 million
.
|
For the Three Months Ended
|
||||||||||||||||||||
June 30, 2017
|
|
Sale Proceeds
|
|
Realized Gains
|
|
Realized Losses
|
|
OTTI
|
|
Interest and
Dividend Income
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
FirstEnergy
|
|
$
|
519
|
|
|
$
|
98
|
|
|
$
|
(91
|
)
|
|
$
|
(4
|
)
|
|
$
|
25
|
|
FES
|
|
206
|
|
|
69
|
|
|
(62
|
)
|
|
(4
|
)
|
|
15
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
June 30, 2016
|
|
Sale Proceeds
|
|
Realized Gains
|
|
Realized Losses
|
|
OTTI
|
|
Interest and Dividend Income
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
FirstEnergy
|
|
$
|
559
|
|
|
$
|
34
|
|
|
$
|
(24
|
)
|
|
$
|
(2
|
)
|
|
$
|
25
|
|
FES
|
|
303
|
|
|
25
|
|
|
(15
|
)
|
|
(2
|
)
|
|
13
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Six Months Ended
|
||||||||||||||||||||
June 30, 2017
|
|
Sale Proceeds
|
|
Realized Gains
|
|
Realized Losses
|
|
OTTI
|
|
Interest and
Dividend Income
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
FirstEnergy
|
|
$
|
1,257
|
|
|
$
|
183
|
|
|
$
|
(154
|
)
|
|
$
|
(7
|
)
|
|
$
|
48
|
|
FES
|
|
437
|
|
|
133
|
|
|
(110
|
)
|
|
(7
|
)
|
|
29
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
June 30, 2016
|
|
Sale Proceeds
|
|
Realized Gains
|
|
Realized Losses
|
|
OTTI
|
|
Interest and Dividend Income
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
FirstEnergy
|
|
$
|
1,024
|
|
|
$
|
95
|
|
|
$
|
(73
|
)
|
|
$
|
(10
|
)
|
|
$
|
48
|
|
FES
|
|
441
|
|
|
67
|
|
|
(43
|
)
|
|
(9
|
)
|
|
26
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
|
(In millions)
|
||||||||||||||
FirstEnergy
|
$
|
22,646
|
|
|
$
|
23,164
|
|
|
$
|
19,885
|
|
|
$
|
19,829
|
|
FES
|
2,837
|
|
|
1,518
|
|
|
3,000
|
|
|
1,555
|
|
•
|
Changes in the fair value of derivative instruments that are designated and qualify as cash flow hedges are recorded to AOCI with subsequent reclassification to earnings in the period during which the hedged forecasted transaction affects earnings.
|
•
|
Changes in the fair value of derivative instruments that are designated and qualify as fair value hedges are recorded as an adjustment to the item being hedged. When fair value hedges are discontinued, the adjustment recorded to the item being hedged is amortized into earnings.
|
•
|
Changes in the fair value of derivative instruments that are not designated in a hedging relationship are recorded in earnings on a mark-to-market basis, unless otherwise noted.
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||
|
Fair Value
|
|
|
Fair Value
|
||||||||||||
|
June 30,
2017 |
|
December 31,
2016 |
|
|
June 30,
2017 |
|
December 31,
2016 |
||||||||
|
(In millions)
|
|
|
(In millions)
|
||||||||||||
Current Assets - Derivatives
|
|
|
|
|
Current Liabilities - Derivatives
|
|
|
|
||||||||
Commodity Contracts
|
$
|
41
|
|
|
$
|
133
|
|
|
Commodity Contracts
|
$
|
(16
|
)
|
|
$
|
(72
|
)
|
FTRs
|
4
|
|
|
7
|
|
|
FTRs
|
(2
|
)
|
|
(6
|
)
|
||||
|
45
|
|
|
140
|
|
|
|
(18
|
)
|
|
(78
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
Noncurrent Liabilities - Adverse Power Contract Liability
|
|
|
|
||||||||
|
|
|
|
|
NUGs
(1)
|
(99
|
)
|
|
(108
|
)
|
||||||
Deferred Charges and Other Assets - Other
|
|
|
|
|
Noncurrent Liabilities - Other
|
|
|
|
||||||||
Commodity Contracts
|
9
|
|
|
77
|
|
|
Commodity Contracts
|
(2
|
)
|
|
(52
|
)
|
||||
NUGs
(1)
|
—
|
|
|
1
|
|
|
|
|
|
|
||||||
|
9
|
|
|
78
|
|
|
|
(101
|
)
|
|
(160
|
)
|
||||
Derivative Assets
|
$
|
54
|
|
|
$
|
218
|
|
|
Derivative Liabilities
|
$
|
(119
|
)
|
|
$
|
(238
|
)
|
(1)
|
NUG contracts are subject to regulatory accounting treatment and do not impact earnings.
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||
|
Fair Value
|
|
|
Fair Value
|
||||||||||||
|
June 30,
2017 |
|
December 31,
2016 |
|
|
June 30,
2017 |
|
December 31,
2016 |
||||||||
|
(In millions)
|
|
|
(In millions)
|
||||||||||||
Current Assets - Derivatives
|
|
|
|
|
Current Liabilities - Derivatives
|
|
|
|
||||||||
Commodity Contracts
|
$
|
40
|
|
|
$
|
133
|
|
|
Commodity Contracts
|
$
|
(16
|
)
|
|
$
|
(72
|
)
|
FTRs
|
1
|
|
|
4
|
|
|
FTRs
|
(2
|
)
|
|
(5
|
)
|
||||
|
41
|
|
|
137
|
|
|
|
(18
|
)
|
|
(77
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Deferred Charges and Other Assets - Other
|
|
|
|
|
Noncurrent Liabilities - Other
|
|
|
|
||||||||
Commodity Contracts
|
9
|
|
|
77
|
|
|
Commodity Contracts
|
(1
|
)
|
|
(52
|
)
|
||||
|
9
|
|
|
77
|
|
|
|
(1
|
)
|
|
(52
|
)
|
||||
Derivative Assets
|
$
|
50
|
|
|
$
|
214
|
|
|
Derivative Liabilities
|
$
|
(19
|
)
|
|
$
|
(129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Not Offset in Consolidated Balance Sheet
|
|
|
||||||||||
June 30, 2017
|
|
Fair Value
|
|
Derivative Instruments
|
|
Cash Collateral Pledged
|
|
Net Fair Value
|
||||||||
|
|
(In millions)
|
||||||||||||||
Derivative Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
50
|
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
35
|
|
FTRs
|
|
4
|
|
|
(2
|
)
|
|
—
|
|
|
2
|
|
||||
|
|
$
|
54
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
$
|
37
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
(18
|
)
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
FTRs
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
||||
NUG contracts
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
||||
|
|
$
|
(119
|
)
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
(102
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Not Offset in Consolidated Balance Sheet
|
|
|
||||||||||
December 31, 2016
|
|
Fair Value
|
|
Derivative Instruments
|
|
Cash Collateral Pledged
|
|
Net Fair Value
|
||||||||
|
|
(In millions)
|
||||||||||||||
Derivative Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
210
|
|
|
$
|
(117
|
)
|
|
$
|
—
|
|
|
$
|
93
|
|
FTRs
|
|
7
|
|
|
(6
|
)
|
|
—
|
|
|
1
|
|
||||
NUG contracts
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
|
|
$
|
218
|
|
|
$
|
(123
|
)
|
|
$
|
—
|
|
|
$
|
95
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
(124
|
)
|
|
$
|
117
|
|
|
$
|
1
|
|
|
$
|
(6
|
)
|
FTRs
|
|
(6
|
)
|
|
6
|
|
|
—
|
|
|
—
|
|
||||
NUG contracts
|
|
(108
|
)
|
|
—
|
|
|
—
|
|
|
(108
|
)
|
||||
|
|
$
|
(238
|
)
|
|
$
|
123
|
|
|
$
|
1
|
|
|
$
|
(114
|
)
|
|
|
|
|
Amounts Not Offset in Consolidated Balance Sheet
|
|
|
||||||||||
June 30, 2017
|
|
Fair Value
|
|
Derivative Instruments
|
|
Cash Collateral Pledged
|
|
Net Fair Value
|
||||||||
|
|
(In millions)
|
||||||||||||||
Derivative Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
49
|
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
34
|
|
FTRs
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
50
|
|
|
$
|
(16
|
)
|
|
$
|
—
|
|
|
$
|
34
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
(17
|
)
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
FTRs
|
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
||||
|
|
$
|
(19
|
)
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Not Offset in Consolidated Balance Sheet
|
|
|
||||||||||
December 31, 2016
|
|
Fair Value
|
|
Derivative Instruments
|
|
Cash Collateral Pledged
|
|
Net Fair Value
|
||||||||
|
|
(In millions)
|
||||||||||||||
Derivative Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
210
|
|
|
$
|
(117
|
)
|
|
$
|
—
|
|
|
$
|
93
|
|
FTRs
|
|
4
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
214
|
|
|
$
|
(121
|
)
|
|
$
|
—
|
|
|
$
|
93
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
$
|
(124
|
)
|
|
$
|
117
|
|
|
$
|
1
|
|
|
$
|
(6
|
)
|
FTRs
|
|
(5
|
)
|
|
4
|
|
|
1
|
|
|
—
|
|
||||
|
|
$
|
(129
|
)
|
|
$
|
121
|
|
|
$
|
2
|
|
|
$
|
(6
|
)
|
|
Purchases
|
|
Sales
|
|
Net
|
|
Units
|
|||
|
(In millions)
|
|||||||||
Power Contracts
|
2
|
|
|
11
|
|
|
(9
|
)
|
|
MWH
|
FTRs
|
19
|
|
|
—
|
|
|
19
|
|
|
MWH
|
NUGs
|
3
|
|
|
—
|
|
|
3
|
|
|
MWH
|
|
Purchases
|
|
Sales
|
|
Net
|
|
Units
|
|||
|
(In millions)
|
|||||||||
Power Contracts
|
2
|
|
|
11
|
|
|
(9
|
)
|
|
MWH
|
FTRs
|
10
|
|
|
—
|
|
|
10
|
|
|
MWH
|
|
For the Three Months Ended June 30
|
||||||||||
|
Commodity Contracts
|
|
FTRs
|
|
Total
|
||||||
|
(In millions)
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|||
Unrealized Gain (Loss) Recognized in:
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
(8
|
)
|
|
$
|
2
|
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
||||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
15
|
|
|
$
|
1
|
|
|
$
|
16
|
|
Purchased Power Expense
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|||
Fuel Expense
|
1
|
|
|
—
|
|
|
1
|
|
|||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
For the Three Months Ended June 30
|
||||||||||
|
Commodity Contracts
|
|
FTRs
|
|
Total
|
||||||
|
(In millions)
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|||
Unrealized Gain (Loss) Recognized in:
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
(79
|
)
|
|
$
|
9
|
|
|
$
|
(70
|
)
|
|
|
|
|
|
|
||||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
59
|
|
|
$
|
1
|
|
|
$
|
60
|
|
Purchased Power Expense
|
(37
|
)
|
|
—
|
|
|
(37
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(9
|
)
|
|
(9
|
)
|
|||
|
|
|
|
|
|
|
For the Six Months Ended June 30
|
||||||||||
|
Commodity Contracts
|
|
FTRs
|
|
Total
|
||||||
|
(In millions)
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|||
Unrealized Gain (Loss) Recognized in:
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
(54
|
)
|
|
$
|
1
|
|
|
$
|
(53
|
)
|
|
|
|
|
|
|
||||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
40
|
|
|
$
|
1
|
|
|
$
|
41
|
|
Purchased Power Expense
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(13
|
)
|
|
(13
|
)
|
|||
Fuel Expense
|
5
|
|
|
—
|
|
|
5
|
|
|||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
For the Six Months Ended June 30
|
||||||||||
|
Commodity Contracts
|
|
FTRs
|
|
Total
|
||||||
|
(In millions)
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|||
Unrealized Gain (Loss) Recognized in:
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
(17
|
)
|
|
$
|
12
|
|
|
$
|
(5
|
)
|
|
|
|
|
|
|
||||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
130
|
|
|
$
|
3
|
|
|
$
|
133
|
|
Purchased Power Expense
|
(83
|
)
|
|
—
|
|
|
(83
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(22
|
)
|
|
(22
|
)
|
|||
Fuel Expense
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
For the Three Months Ended June 30
|
|||||||||||
|
Commodity
Contracts
|
|
FTRs
|
|
|
Total
|
||||||
2017
|
(In millions)
|
|||||||||||
Unrealized Gain (Loss) Recognized in:
|
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
(8
|
)
|
|
$
|
2
|
|
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
|
|
|||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
15
|
|
|
$
|
1
|
|
|
|
$
|
16
|
|
Purchased Power Expense
|
(4
|
)
|
|
—
|
|
|
|
(4
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|||
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
|
For the Three Months Ended June 30
|
|||||||||||
|
Commodity
Contracts
|
|
FTRs
|
|
|
Total
|
||||||
|
(In millions)
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|||
Unrealized Gain (Loss) Recognized in:
|
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
(79
|
)
|
|
$
|
9
|
|
|
|
$
|
(70
|
)
|
|
|
|
|
|
|
|
||||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
59
|
|
|
$
|
1
|
|
|
|
$
|
60
|
|
Purchased Power Expense
|
(37
|
)
|
|
—
|
|
|
|
(37
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(9
|
)
|
|
|
(9
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
For the Six Months Ended June 30
|
|||||||||||
|
Commodity
Contracts
|
|
FTRs
|
|
|
Total
|
||||||
2017
|
(In millions)
|
|||||||||||
Unrealized Gain (Loss) Recognized in:
|
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
(54
|
)
|
|
$
|
1
|
|
|
|
$
|
(53
|
)
|
|
|
|
|
|
|
|
|
|||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
40
|
|
|
$
|
1
|
|
|
|
$
|
41
|
|
Purchased Power Expense
|
(11
|
)
|
|
—
|
|
|
|
(11
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(13
|
)
|
|
|
(13
|
)
|
|||
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
|
For the Six Months Ended June 30
|
|||||||||||
|
Commodity
Contracts
|
|
FTRs
|
|
|
Total
|
||||||
|
(In millions)
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|||
Unrealized Gain (Loss) Recognized in:
|
|
|
|
|
|
|
|
|
|
|||
Other Operating Expense
|
$
|
(17
|
)
|
|
$
|
12
|
|
|
|
$
|
(5
|
)
|
|
|
|
|
|
|
|
||||||
Realized Gain (Loss) Reclassified to:
|
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
130
|
|
|
$
|
3
|
|
|
|
$
|
133
|
|
Purchased Power Expense
|
(83
|
)
|
|
—
|
|
|
|
(83
|
)
|
|||
Other Operating Expense
|
—
|
|
|
(22
|
)
|
|
|
(22
|
)
|
|||
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30
|
||||||||||
Derivatives Not in a Hedging Relationship with Regulatory Offset
|
|
NUGs
|
|
Regulated FTRs
|
|
Total
|
||||||
|
|
(In millions)
|
||||||||||
Outstanding net liability as of April 1, 2017
|
|
$
|
(103
|
)
|
|
$
|
(2
|
)
|
|
$
|
(105
|
)
|
Unrealized loss
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||
Purchases
|
|
—
|
|
|
3
|
|
|
3
|
|
|||
Settlements
|
|
10
|
|
|
2
|
|
|
12
|
|
|||
Outstanding net asset (liability) as of June 30, 2017
|
|
$
|
(98
|
)
|
|
$
|
3
|
|
|
$
|
(95
|
)
|
|
|
|
|
|
|
|
||||||
Outstanding net liability as of April 1, 2016
|
|
$
|
(135
|
)
|
|
$
|
(2
|
)
|
|
$
|
(137
|
)
|
Purchases
|
|
—
|
|
|
4
|
|
|
4
|
|
|||
Settlements
|
|
11
|
|
|
2
|
|
|
13
|
|
|||
Outstanding net asset (liability) as of June 30, 2016
|
|
$
|
(124
|
)
|
|
$
|
4
|
|
|
$
|
(120
|
)
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30
|
||||||||||||
Derivatives Not in a Hedging Relationship with Regulatory Offset
|
|
NUGs
|
|
|
Regulated FTRs
|
|
|
Total
|
||||||
|
|
(In millions)
|
||||||||||||
Outstanding net asset (liability) as of January 1, 2017
|
|
$
|
(107
|
)
|
|
|
$
|
2
|
|
|
|
$
|
(105
|
)
|
Unrealized loss
|
|
(10
|
)
|
|
|
(1
|
)
|
|
|
(11
|
)
|
|||
Purchases
|
|
—
|
|
|
|
3
|
|
|
|
3
|
|
|||
Settlements
|
|
19
|
|
|
|
(1
|
)
|
|
|
18
|
|
|||
Outstanding net asset (liability) as of June 30, 2017
|
|
$
|
(98
|
)
|
|
|
$
|
3
|
|
|
|
$
|
(95
|
)
|
|
|
|
|
|
|
|
|
|
||||||
Outstanding net asset (liability) as of January 1, 2016
|
|
$
|
(136
|
)
|
|
|
$
|
1
|
|
|
|
$
|
(135
|
)
|
Unrealized loss
|
|
(12
|
)
|
|
|
—
|
|
|
|
(12
|
)
|
|||
Purchases
|
|
—
|
|
|
|
4
|
|
|
|
4
|
|
|||
Settlements
|
|
24
|
|
|
|
(1
|
)
|
|
|
23
|
|
|||
Outstanding net asset (liability) as of June 30, 2016
|
|
$
|
(124
|
)
|
|
|
$
|
4
|
|
|
|
$
|
(120
|
)
|
|
|
|
|
|
|
|
|
|
Potential Collateral Obligations
|
|
FES
|
|
AE Supply
|
|
Regulated
|
|
FE Corp
|
|
Total
|
||||||||||
|
|
|
(in millions)
|
|||||||||||||||||
Contractual Obligations for Additional Collateral
|
|
|
|
|
|
|
|
|
|
|
||||||||||
At Current Credit Rating
|
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
Upon Further Downgrade
|
|
—
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
|||||
Surety Bonds (Collateralized Amount)
(1)
|
|
65
|
|
|
25
|
|
|
92
|
|
|
187
|
|
|
369
|
|
|||||
Total Exposure from Contractual Obligations
|
|
$
|
71
|
|
|
$
|
27
|
|
|
$
|
135
|
|
|
$
|
187
|
|
|
$
|
420
|
|
FIRSTENERGY SOLUTIONS CORP.
|
||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Three Months Ended June 30, 2017
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
STATEMENTS OF INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
REVENUES
|
|
$
|
717
|
|
|
$
|
474
|
|
|
$
|
360
|
|
|
$
|
(810
|
)
|
|
$
|
741
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
—
|
|
|
106
|
|
|
48
|
|
|
—
|
|
|
154
|
|
|||||
Purchased power from affiliates
|
|
811
|
|
|
—
|
|
|
38
|
|
|
(810
|
)
|
|
39
|
|
|||||
Purchased power from non-affiliates
|
|
156
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
156
|
|
|||||
Other operating expenses
|
|
63
|
|
|
58
|
|
|
153
|
|
|
12
|
|
|
286
|
|
|||||
Provision for depreciation
|
|
3
|
|
|
9
|
|
|
16
|
|
|
(1
|
)
|
|
27
|
|
|||||
General taxes
|
|
5
|
|
|
5
|
|
|
8
|
|
|
—
|
|
|
18
|
|
|||||
Total operating expenses
|
|
1,038
|
|
|
178
|
|
|
263
|
|
|
(799
|
)
|
|
680
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS)
|
|
(321
|
)
|
|
296
|
|
|
97
|
|
|
(11
|
)
|
|
61
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss), including net income from equity investees
|
|
247
|
|
|
10
|
|
|
21
|
|
|
(263
|
)
|
|
15
|
|
|||||
Interest expense — affiliates
|
|
(20
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
19
|
|
|
(5
|
)
|
|||||
Interest expense — other
|
|
(12
|
)
|
|
(26
|
)
|
|
(11
|
)
|
|
14
|
|
|
(35
|
)
|
|||||
Capitalized interest
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|||||
Total other income (expense)
|
|
215
|
|
|
(19
|
)
|
|
15
|
|
|
(230
|
)
|
|
(19
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
(106
|
)
|
|
277
|
|
|
112
|
|
|
(241
|
)
|
|
42
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
INCOME TAXES (BENEFITS)
|
|
(125
|
)
|
|
102
|
|
|
45
|
|
|
1
|
|
|
23
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
NET INCOME (LOSS)
|
|
$
|
19
|
|
|
$
|
175
|
|
|
$
|
67
|
|
|
$
|
(242
|
)
|
|
$
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
NET INCOME (LOSS)
|
|
$
|
19
|
|
|
$
|
175
|
|
|
$
|
67
|
|
|
$
|
(242
|
)
|
|
$
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Pension and OPEB prior service costs
|
|
(4
|
)
|
|
(4
|
)
|
|
—
|
|
|
4
|
|
|
(4
|
)
|
|||||
Change in unrealized gains on available-for-sale securities
|
|
6
|
|
|
—
|
|
|
6
|
|
|
(6
|
)
|
|
6
|
|
|||||
Other comprehensive income (loss)
|
|
2
|
|
|
(4
|
)
|
|
6
|
|
|
(2
|
)
|
|
2
|
|
|||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
—
|
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
|||||
Other comprehensive income (loss), net of tax
|
|
2
|
|
|
(2
|
)
|
|
4
|
|
|
(2
|
)
|
|
2
|
|
|||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
21
|
|
|
$
|
173
|
|
|
$
|
71
|
|
|
$
|
(244
|
)
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
FIRSTENERGY SOLUTIONS CORP.
|
||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Six Months Ended June 30, 2017
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
STATEMENTS OF INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
REVENUES
|
|
$
|
1,597
|
|
|
$
|
710
|
|
|
$
|
696
|
|
|
$
|
(1,348
|
)
|
|
$
|
1,655
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
—
|
|
|
204
|
|
|
94
|
|
|
—
|
|
|
298
|
|
|||||
Purchased power from affiliates
|
|
1,474
|
|
|
—
|
|
|
76
|
|
|
(1,348
|
)
|
|
202
|
|
|||||
Purchased power from non-affiliates
|
|
316
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
316
|
|
|||||
Other operating expenses
|
|
177
|
|
|
283
|
|
|
320
|
|
|
24
|
|
|
804
|
|
|||||
Provision for depreciation
|
|
6
|
|
|
16
|
|
|
31
|
|
|
(1
|
)
|
|
52
|
|
|||||
General taxes
|
|
11
|
|
|
13
|
|
|
15
|
|
|
—
|
|
|
39
|
|
|||||
Total operating expenses
|
|
1,984
|
|
|
516
|
|
|
536
|
|
|
(1,325
|
)
|
|
1,711
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS)
|
|
(387
|
)
|
|
194
|
|
|
160
|
|
|
(23
|
)
|
|
(56
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss), including net income (loss) from equity investees
|
|
229
|
|
|
20
|
|
|
48
|
|
|
(262
|
)
|
|
35
|
|
|||||
Miscellaneous income
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
Interest expense — affiliates
|
|
(38
|
)
|
|
(6
|
)
|
|
(2
|
)
|
|
39
|
|
|
(7
|
)
|
|||||
Interest expense — other
|
|
(23
|
)
|
|
(53
|
)
|
|
(22
|
)
|
|
28
|
|
|
(70
|
)
|
|||||
Capitalized interest
|
|
—
|
|
|
1
|
|
|
13
|
|
|
—
|
|
|
14
|
|
|||||
Total other income (expense)
|
|
168
|
|
|
(38
|
)
|
|
42
|
|
|
(195
|
)
|
|
(23
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
(219
|
)
|
|
156
|
|
|
202
|
|
|
(218
|
)
|
|
(79
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME TAXES (BENEFITS)
|
|
(158
|
)
|
|
60
|
|
|
78
|
|
|
2
|
|
|
(18
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(61
|
)
|
|
$
|
96
|
|
|
$
|
124
|
|
|
$
|
(220
|
)
|
|
$
|
(61
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(61
|
)
|
|
$
|
96
|
|
|
$
|
124
|
|
|
$
|
(220
|
)
|
|
$
|
(61
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and OPEB prior service costs
|
|
(7
|
)
|
|
(7
|
)
|
|
—
|
|
|
7
|
|
|
(7
|
)
|
|||||
Change in unrealized gains on available-for-sale securities
|
|
22
|
|
|
—
|
|
|
22
|
|
|
(22
|
)
|
|
22
|
|
|||||
Other comprehensive income (loss)
|
|
15
|
|
|
(7
|
)
|
|
22
|
|
|
(15
|
)
|
|
15
|
|
|||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
5
|
|
|
(3
|
)
|
|
8
|
|
|
(5
|
)
|
|
5
|
|
|||||
Other comprehensive income (loss), net of tax
|
|
10
|
|
|
(4
|
)
|
|
14
|
|
|
(10
|
)
|
|
10
|
|
|||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(51
|
)
|
|
$
|
92
|
|
|
$
|
138
|
|
|
$
|
(230
|
)
|
|
$
|
(51
|
)
|
FIRSTENERGY SOLUTIONS CORP.
|
||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Three Months Ended June 30, 2016
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
STATEMENTS OF INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
REVENUES
|
|
$
|
1,061
|
|
|
$
|
400
|
|
|
$
|
473
|
|
|
$
|
(832
|
)
|
|
$
|
1,102
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fuel
|
|
—
|
|
|
181
|
|
|
47
|
|
|
—
|
|
|
228
|
|
|||||
Purchased power from affiliates
|
|
950
|
|
|
—
|
|
|
49
|
|
|
(832
|
)
|
|
167
|
|
|||||
Purchased power from non-affiliates
|
|
266
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
266
|
|
|||||
Other operating expenses
|
|
119
|
|
|
88
|
|
|
148
|
|
|
14
|
|
|
369
|
|
|||||
Provision for depreciation
|
|
3
|
|
|
32
|
|
|
50
|
|
|
(1
|
)
|
|
84
|
|
|||||
General taxes
|
|
7
|
|
|
6
|
|
|
6
|
|
|
—
|
|
|
19
|
|
|||||
Impairment of assets
|
|
23
|
|
|
517
|
|
|
—
|
|
|
—
|
|
|
540
|
|
|||||
Total operating expenses
|
|
1,368
|
|
|
824
|
|
|
300
|
|
|
(819
|
)
|
|
1,673
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS)
|
|
(307
|
)
|
|
(424
|
)
|
|
173
|
|
|
(13
|
)
|
|
(571
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss), including net income from equity investees
|
|
(163
|
)
|
|
7
|
|
|
22
|
|
|
153
|
|
|
19
|
|
|||||
Miscellaneous income
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Interest expense — affiliates
|
|
(12
|
)
|
|
(2
|
)
|
|
—
|
|
|
13
|
|
|
(1
|
)
|
|||||
Interest expense — other
|
|
(13
|
)
|
|
(26
|
)
|
|
(13
|
)
|
|
15
|
|
|
(37
|
)
|
|||||
Capitalized interest
|
|
—
|
|
|
2
|
|
|
6
|
|
|
—
|
|
|
8
|
|
|||||
Total other income (expense)
|
|
(187
|
)
|
|
(19
|
)
|
|
15
|
|
|
181
|
|
|
(10
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
(494
|
)
|
|
(443
|
)
|
|
188
|
|
|
168
|
|
|
(581
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME TAXES (BENEFITS)
|
|
(56
|
)
|
|
(149
|
)
|
|
61
|
|
|
1
|
|
|
(143
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(438
|
)
|
|
$
|
(294
|
)
|
|
$
|
127
|
|
|
$
|
167
|
|
|
$
|
(438
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(438
|
)
|
|
$
|
(294
|
)
|
|
$
|
127
|
|
|
$
|
167
|
|
|
$
|
(438
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and OPEB prior service costs
|
|
(3
|
)
|
|
(4
|
)
|
|
—
|
|
|
4
|
|
|
(3
|
)
|
|||||
Amortized gains on derivative hedges
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Change in unrealized gains on available for sale securities
|
|
33
|
|
|
—
|
|
|
32
|
|
|
(32
|
)
|
|
33
|
|
|||||
Other comprehensive income (loss)
|
|
29
|
|
|
(4
|
)
|
|
32
|
|
|
(28
|
)
|
|
29
|
|
|||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
12
|
|
|
(2
|
)
|
|
13
|
|
|
(11
|
)
|
|
12
|
|
|||||
Other comprehensive income (loss), net of tax
|
|
17
|
|
|
(2
|
)
|
|
19
|
|
|
(17
|
)
|
|
17
|
|
|||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(421
|
)
|
|
$
|
(296
|
)
|
|
$
|
146
|
|
|
$
|
150
|
|
|
$
|
(421
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
FIRSTENERGY SOLUTIONS CORP.
|
||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the Six Months Ended June 30, 2016
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
STATEMENTS OF INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
REVENUES
|
|
$
|
2,216
|
|
|
$
|
815
|
|
|
$
|
1,004
|
|
|
$
|
(1,734
|
)
|
|
$
|
2,301
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
—
|
|
|
300
|
|
|
93
|
|
|
—
|
|
|
393
|
|
|||||
Purchased power from affiliates
|
|
1,877
|
|
|
—
|
|
|
106
|
|
|
(1,734
|
)
|
|
249
|
|
|||||
Purchased power from non-affiliates
|
|
643
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
643
|
|
|||||
Other operating expenses
|
|
123
|
|
|
159
|
|
|
301
|
|
|
26
|
|
|
609
|
|
|||||
Provision for depreciation
|
|
6
|
|
|
63
|
|
|
100
|
|
|
(2
|
)
|
|
167
|
|
|||||
General taxes
|
|
15
|
|
|
16
|
|
|
14
|
|
|
—
|
|
|
45
|
|
|||||
Impairment of assets
|
|
23
|
|
|
517
|
|
|
—
|
|
|
—
|
|
|
540
|
|
|||||
Total operating expenses
|
|
2,687
|
|
|
1,055
|
|
|
614
|
|
|
(1,710
|
)
|
|
2,646
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS)
|
|
(471
|
)
|
|
(240
|
)
|
|
390
|
|
|
(24
|
)
|
|
(345
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income, including net income from equity investees
|
|
86
|
|
|
13
|
|
|
39
|
|
|
(106
|
)
|
|
32
|
|
|||||
Miscellaneous income
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Interest expense — affiliates
|
|
(21
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
24
|
|
|
(3
|
)
|
|||||
Interest expense — other
|
|
(26
|
)
|
|
(52
|
)
|
|
(24
|
)
|
|
29
|
|
|
(73
|
)
|
|||||
Capitalized interest
|
|
—
|
|
|
4
|
|
|
14
|
|
|
—
|
|
|
18
|
|
|||||
Total other income (expense)
|
|
42
|
|
|
(39
|
)
|
|
27
|
|
|
(53
|
)
|
|
(23
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
(429
|
)
|
|
(279
|
)
|
|
417
|
|
|
(77
|
)
|
|
(368
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INCOME TAXES (BENEFITS)
|
|
(122
|
)
|
|
(88
|
)
|
|
147
|
|
|
2
|
|
|
(61
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(307
|
)
|
|
$
|
(191
|
)
|
|
$
|
270
|
|
|
$
|
(79
|
)
|
|
$
|
(307
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME (LOSS)
|
|
$
|
(307
|
)
|
|
$
|
(191
|
)
|
|
$
|
270
|
|
|
$
|
(79
|
)
|
|
$
|
(307
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and OPEB prior service costs
|
|
(7
|
)
|
|
(7
|
)
|
|
—
|
|
|
7
|
|
|
(7
|
)
|
|||||
Amortized gains on derivative hedges
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Change in unrealized gains on available-for-sale securities
|
|
56
|
|
|
—
|
|
|
55
|
|
|
(55
|
)
|
|
56
|
|
|||||
Other comprehensive income (loss)
|
|
48
|
|
|
(7
|
)
|
|
55
|
|
|
(48
|
)
|
|
48
|
|
|||||
Income taxes (benefits) on other comprehensive income (loss)
|
|
19
|
|
|
(3
|
)
|
|
21
|
|
|
(18
|
)
|
|
19
|
|
|||||
Other comprehensive income (loss), net of tax
|
|
29
|
|
|
(4
|
)
|
|
34
|
|
|
(30
|
)
|
|
29
|
|
|||||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(278
|
)
|
|
$
|
(195
|
)
|
|
$
|
304
|
|
|
$
|
(109
|
)
|
|
$
|
(278
|
)
|
As of June 30, 2017
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Receivables-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Customers
|
|
185
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
185
|
|
|||||
Affiliated companies
|
|
300
|
|
|
240
|
|
|
237
|
|
|
(392
|
)
|
|
385
|
|
|||||
Other
|
|
10
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|||||
Notes receivable from affiliated companies
|
|
361
|
|
|
1,599
|
|
|
1,366
|
|
|
(3,326
|
)
|
|
—
|
|
|||||
Materials and supplies
|
|
41
|
|
|
137
|
|
|
82
|
|
|
—
|
|
|
260
|
|
|||||
Derivatives
|
|
41
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|||||
Collateral
|
|
98
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
111
|
|
|||||
Prepayments and other
|
|
40
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|||||
|
|
1,076
|
|
|
2,004
|
|
|
1,685
|
|
|
(3,718
|
)
|
|
1,047
|
|
|||||
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
In service
|
|
121
|
|
|
2,561
|
|
|
4,981
|
|
|
(281
|
)
|
|
7,382
|
|
|||||
Less — Accumulated provision for depreciation
|
|
59
|
|
|
1,936
|
|
|
4,248
|
|
|
(188
|
)
|
|
6,055
|
|
|||||
|
|
62
|
|
|
625
|
|
|
733
|
|
|
(93
|
)
|
|
1,327
|
|
|||||
Construction work in progress
|
|
2
|
|
|
55
|
|
|
242
|
|
|
—
|
|
|
299
|
|
|||||
|
|
64
|
|
|
680
|
|
|
975
|
|
|
(93
|
)
|
|
1,626
|
|
|||||
INVESTMENTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Nuclear plant decommissioning trusts
|
|
—
|
|
|
—
|
|
|
1,793
|
|
|
—
|
|
|
1,793
|
|
|||||
Investment in affiliated companies
|
|
3,230
|
|
|
—
|
|
|
—
|
|
|
(3,230
|
)
|
|
—
|
|
|||||
Other
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||
|
|
3,230
|
|
|
9
|
|
|
1,793
|
|
|
(3,230
|
)
|
|
1,802
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
DEFERRED CHARGES AND OTHER ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Property taxes
|
|
—
|
|
|
6
|
|
|
14
|
|
|
—
|
|
|
20
|
|
|||||
Accumulated deferred income tax benefits
|
|
440
|
|
|
1,203
|
|
|
738
|
|
|
(273
|
)
|
|
2,108
|
|
|||||
Derivatives
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||
Other
|
|
32
|
|
|
329
|
|
|
—
|
|
|
18
|
|
|
379
|
|
|||||
|
|
481
|
|
|
1,538
|
|
|
752
|
|
|
(255
|
)
|
|
2,516
|
|
|||||
|
|
$
|
4,851
|
|
|
$
|
4,231
|
|
|
$
|
5,205
|
|
|
$
|
(7,296
|
)
|
|
$
|
6,991
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND CAPITALIZATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Currently payable long-term debt
|
|
$
|
—
|
|
|
$
|
183
|
|
|
$
|
99
|
|
|
$
|
(27
|
)
|
|
$
|
255
|
|
Short-term borrowings - affiliated companies
|
|
3,241
|
|
|
360
|
|
|
—
|
|
|
(3,326
|
)
|
|
275
|
|
|||||
Accounts payable-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Affiliated companies
|
|
477
|
|
|
92
|
|
|
168
|
|
|
(473
|
)
|
|
264
|
|
|||||
Other
|
|
17
|
|
|
74
|
|
|
—
|
|
|
—
|
|
|
91
|
|
|||||
Accrued taxes
|
|
48
|
|
|
51
|
|
|
59
|
|
|
(29
|
)
|
|
129
|
|
|||||
Derivatives
|
|
15
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||
Other
|
|
47
|
|
|
80
|
|
|
10
|
|
|
33
|
|
|
170
|
|
|||||
|
|
3,845
|
|
|
843
|
|
|
336
|
|
|
(3,822
|
)
|
|
1,202
|
|
|||||
CAPITALIZATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total equity
|
|
239
|
|
|
914
|
|
|
2,217
|
|
|
(3,131
|
)
|
|
239
|
|
|||||
Long-term debt and other long-term obligations
|
|
691
|
|
|
1,938
|
|
|
1,022
|
|
|
(1,078
|
)
|
|
2,573
|
|
|||||
|
|
930
|
|
|
2,852
|
|
|
3,239
|
|
|
(4,209
|
)
|
|
2,812
|
|
|||||
NONCURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Deferred gain on sale and leaseback transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
740
|
|
|
740
|
|
|||||
Accumulated deferred income taxes
|
|
5
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|||||
Retirement benefits
|
|
27
|
|
|
178
|
|
|
—
|
|
|
—
|
|
|
205
|
|
|||||
Asset retirement obligations
|
|
—
|
|
|
188
|
|
|
787
|
|
|
—
|
|
|
975
|
|
|||||
Derivatives
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Other
|
|
43
|
|
|
170
|
|
|
843
|
|
|
—
|
|
|
1,056
|
|
|||||
|
|
76
|
|
|
536
|
|
|
1,630
|
|
|
735
|
|
|
2,977
|
|
|||||
|
|
$
|
4,851
|
|
|
$
|
4,231
|
|
|
$
|
5,205
|
|
|
$
|
(7,296
|
)
|
|
$
|
6,991
|
|
As of December 31, 2016
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Receivables-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Customers
|
|
213
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
213
|
|
|||||
Affiliated companies
|
|
332
|
|
|
315
|
|
|
417
|
|
|
(612
|
)
|
|
452
|
|
|||||
Other
|
|
17
|
|
|
2
|
|
|
8
|
|
|
—
|
|
|
27
|
|
|||||
Notes receivable from affiliated companies
|
|
501
|
|
|
1,585
|
|
|
1,294
|
|
|
(3,351
|
)
|
|
29
|
|
|||||
Materials and supplies
|
|
45
|
|
|
142
|
|
|
80
|
|
|
—
|
|
|
267
|
|
|||||
Derivatives
|
|
137
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
137
|
|
|||||
Collateral
|
|
157
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
157
|
|
|||||
Prepayments and other
|
|
38
|
|
|
24
|
|
|
1
|
|
|
—
|
|
|
63
|
|
|||||
|
|
1,440
|
|
|
2,070
|
|
|
1,800
|
|
|
(3,963
|
)
|
|
1,347
|
|
|||||
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
In service
|
|
120
|
|
|
2,524
|
|
|
4,703
|
|
|
(290
|
)
|
|
7,057
|
|
|||||
Less — Accumulated provision for depreciation
|
|
52
|
|
|
1,920
|
|
|
4,144
|
|
|
(187
|
)
|
|
5,929
|
|
|||||
|
|
68
|
|
|
604
|
|
|
559
|
|
|
(103
|
)
|
|
1,128
|
|
|||||
Construction work in progress
|
|
2
|
|
|
67
|
|
|
358
|
|
|
—
|
|
|
427
|
|
|||||
|
|
70
|
|
|
671
|
|
|
917
|
|
|
(103
|
)
|
|
1,555
|
|
|||||
INVESTMENTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Nuclear plant decommissioning trusts
|
|
—
|
|
|
—
|
|
|
1,552
|
|
|
—
|
|
|
1,552
|
|
|||||
Investment in affiliated companies
|
|
2,923
|
|
|
—
|
|
|
—
|
|
|
(2,923
|
)
|
|
—
|
|
|||||
Other
|
|
—
|
|
|
9
|
|
|
1
|
|
|
—
|
|
|
10
|
|
|||||
|
|
2,923
|
|
|
9
|
|
|
1,553
|
|
|
(2,923
|
)
|
|
1,562
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
DEFERRED CHARGES AND OTHER ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Property taxes
|
|
—
|
|
|
12
|
|
|
28
|
|
|
—
|
|
|
40
|
|
|||||
Accumulated deferred income tax benefits
|
|
395
|
|
|
1,271
|
|
|
883
|
|
|
(270
|
)
|
|
2,279
|
|
|||||
Derivatives
|
|
77
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|||||
Other
|
|
33
|
|
|
327
|
|
|
—
|
|
|
21
|
|
|
381
|
|
|||||
|
|
505
|
|
|
1,610
|
|
|
911
|
|
|
(249
|
)
|
|
2,777
|
|
|||||
|
|
$
|
4,938
|
|
|
$
|
4,360
|
|
|
$
|
5,181
|
|
|
$
|
(7,238
|
)
|
|
$
|
7,241
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND CAPITALIZATION
|
|
|
|
|
|
|
|
|
|
|
||||||||||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Currently payable long-term debt
|
|
$
|
—
|
|
|
$
|
200
|
|
|
$
|
5
|
|
|
$
|
(26
|
)
|
|
$
|
179
|
|
Short-term borrowings - affiliated companies
|
|
2,969
|
|
|
483
|
|
|
—
|
|
|
(3,351
|
)
|
|
101
|
|
|||||
Accounts payable-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Affiliated companies
|
|
743
|
|
|
107
|
|
|
406
|
|
|
(706
|
)
|
|
550
|
|
|||||
Other
|
|
17
|
|
|
93
|
|
|
—
|
|
|
—
|
|
|
110
|
|
|||||
Accrued taxes
|
|
50
|
|
|
48
|
|
|
61
|
|
|
(16
|
)
|
|
143
|
|
|||||
Derivatives
|
|
71
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|||||
Other
|
|
56
|
|
|
54
|
|
|
10
|
|
|
36
|
|
|
156
|
|
|||||
|
|
3,906
|
|
|
991
|
|
|
482
|
|
|
(4,063
|
)
|
|
1,316
|
|
|||||
CAPITALIZATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total equity
|
|
218
|
|
|
828
|
|
|
2,006
|
|
|
(2,834
|
)
|
|
218
|
|
|||||
Long-term debt and other long-term obligations
|
|
691
|
|
|
2,093
|
|
|
1,120
|
|
|
(1,091
|
)
|
|
2,813
|
|
|||||
|
|
909
|
|
|
2,921
|
|
|
3,126
|
|
|
(3,925
|
)
|
|
3,031
|
|
|||||
NONCURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Deferred gain on sale and leaseback transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
757
|
|
|
757
|
|
|||||
Accumulated deferred income taxes
|
|
4
|
|
|
3
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|||||
Retirement benefits
|
|
25
|
|
|
172
|
|
|
—
|
|
|
—
|
|
|
197
|
|
|||||
Asset retirement obligations
|
|
—
|
|
|
188
|
|
|
713
|
|
|
—
|
|
|
901
|
|
|||||
Derivatives
|
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|||||
Other
|
|
42
|
|
|
85
|
|
|
860
|
|
|
—
|
|
|
987
|
|
|||||
|
|
123
|
|
|
448
|
|
|
1,573
|
|
|
750
|
|
|
2,894
|
|
|||||
|
|
$
|
4,938
|
|
|
$
|
4,360
|
|
|
$
|
5,181
|
|
|
$
|
(7,238
|
)
|
|
$
|
7,241
|
|
For the Six Months Ended June 30, 2017
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET CASH PROVIDED FROM (USED FOR) OPERATING ACTIVITIES
|
|
$
|
(411
|
)
|
|
$
|
340
|
|
|
$
|
379
|
|
|
$
|
(13
|
)
|
|
$
|
295
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
New Financing-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Short-term borrowings, net
|
|
272
|
|
|
—
|
|
|
—
|
|
|
(98
|
)
|
|
174
|
|
|||||
Redemptions and Repayments-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Long-term debt
|
|
—
|
|
|
(171
|
)
|
|
(5
|
)
|
|
13
|
|
|
(163
|
)
|
|||||
Short-term borrowings, net
|
|
—
|
|
|
(122
|
)
|
|
—
|
|
|
122
|
|
|
—
|
|
|||||
Other
|
|
(1
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
Net cash provided from (used for) financing activities
|
|
271
|
|
|
(296
|
)
|
|
(5
|
)
|
|
37
|
|
|
7
|
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Property additions
|
|
—
|
|
|
(30
|
)
|
|
(139
|
)
|
|
—
|
|
|
(169
|
)
|
|||||
Nuclear fuel
|
|
—
|
|
|
—
|
|
|
(134
|
)
|
|
—
|
|
|
(134
|
)
|
|||||
Sales of investment securities held in trusts
|
|
—
|
|
|
—
|
|
|
437
|
|
|
—
|
|
|
437
|
|
|||||
Purchases of investment securities held in trusts
|
|
—
|
|
|
—
|
|
|
(466
|
)
|
|
—
|
|
|
(466
|
)
|
|||||
Loans to affiliated companies, net
|
|
140
|
|
|
(14
|
)
|
|
(73
|
)
|
|
(24
|
)
|
|
29
|
|
|||||
Other
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Net cash provided from (used for) investing activities
|
|
140
|
|
|
(44
|
)
|
|
(374
|
)
|
|
(24
|
)
|
|
(302
|
)
|
|||||
Net change in cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash and cash equivalents at beginning of period
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
For the Six Months Ended June 30, 2016
|
|
FES
|
|
FG
|
|
NG
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET CASH PROVIDED FROM (USED FOR) OPERATING ACTIVITIES
|
|
$
|
(335
|
)
|
|
$
|
308
|
|
|
$
|
596
|
|
|
$
|
(12
|
)
|
|
$
|
557
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
New Financing-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Short-term borrowings, net
|
|
322
|
|
|
89
|
|
|
8
|
|
|
(209
|
)
|
|
210
|
|
|||||
Redemptions and Repayments-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Long-term debt
|
|
—
|
|
|
(12
|
)
|
|
(245
|
)
|
|
12
|
|
|
(245
|
)
|
|||||
Other
|
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Net cash provided from (used for) financing activities
|
|
321
|
|
|
75
|
|
|
(237
|
)
|
|
(197
|
)
|
|
(38
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Property additions
|
|
(27
|
)
|
|
(126
|
)
|
|
(182
|
)
|
|
—
|
|
|
(335
|
)
|
|||||
Nuclear fuel
|
|
—
|
|
|
—
|
|
|
(188
|
)
|
|
—
|
|
|
(188
|
)
|
|||||
Sales of investment securities held in trusts
|
|
—
|
|
|
—
|
|
|
441
|
|
|
—
|
|
|
441
|
|
|||||
Purchases of investment securities held in trusts
|
|
—
|
|
|
—
|
|
|
(467
|
)
|
|
—
|
|
|
(467
|
)
|
|||||
Cash Investments
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||
Loans to affiliated companies, net
|
|
22
|
|
|
(257
|
)
|
|
37
|
|
|
209
|
|
|
11
|
|
|||||
Other
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Net cash provided from (used for) investing activities
|
|
14
|
|
|
(383
|
)
|
|
(359
|
)
|
|
209
|
|
|
(519
|
)
|
|||||
Net change in cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash and cash equivalents at beginning of period
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
For the Three Months Ended
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive Energy Services
|
|
Corporate/ Other
|
|
Reconciling Adjustments
|
|
Consolidated
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
External revenues
|
|
$
|
2,262
|
|
|
$
|
327
|
|
|
$
|
778
|
|
|
$
|
—
|
|
|
$
|
(58
|
)
|
|
$
|
3,309
|
|
Internal revenues
|
|
—
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
(86
|
)
|
|
—
|
|
||||||
Total revenues
|
|
2,262
|
|
|
327
|
|
|
864
|
|
|
—
|
|
|
(144
|
)
|
|
3,309
|
|
||||||
Depreciation
|
|
179
|
|
|
54
|
|
|
29
|
|
|
19
|
|
|
—
|
|
|
281
|
|
||||||
Amortization of regulatory assets, net
|
|
62
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65
|
|
||||||
Impairment of assets (Note 14)
|
|
—
|
|
|
—
|
|
|
131
|
|
|
—
|
|
|
—
|
|
|
131
|
|
||||||
Investment income
|
|
14
|
|
|
—
|
|
|
12
|
|
|
2
|
|
|
(11
|
)
|
|
17
|
|
||||||
Interest expense
|
|
134
|
|
|
39
|
|
|
47
|
|
|
70
|
|
|
—
|
|
|
290
|
|
||||||
Income taxes (benefits)
|
|
121
|
|
|
53
|
|
|
(30
|
)
|
|
(27
|
)
|
|
—
|
|
|
117
|
|
||||||
Net income (loss)
|
|
205
|
|
|
92
|
|
|
(56
|
)
|
|
(67
|
)
|
|
—
|
|
|
174
|
|
||||||
Total assets
|
|
27,660
|
|
|
9,142
|
|
|
5,887
|
|
|
638
|
|
|
—
|
|
|
43,327
|
|
||||||
Total goodwill
|
|
5,004
|
|
|
614
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,618
|
|
||||||
Property additions
|
|
304
|
|
|
245
|
|
|
96
|
|
|
21
|
|
|
—
|
|
|
666
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
External revenues
|
|
$
|
2,189
|
|
|
$
|
275
|
|
|
$
|
1,008
|
|
|
$
|
—
|
|
|
$
|
(71
|
)
|
|
$
|
3,401
|
|
Internal revenues
|
|
—
|
|
|
—
|
|
|
108
|
|
|
—
|
|
|
(108
|
)
|
|
—
|
|
||||||
Total revenues
|
|
2,189
|
|
|
275
|
|
|
1,116
|
|
|
—
|
|
|
(179
|
)
|
|
3,401
|
|
||||||
Depreciation
|
|
168
|
|
|
46
|
|
|
103
|
|
|
17
|
|
|
—
|
|
|
334
|
|
||||||
Amortization of regulatory assets, net
|
|
61
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63
|
|
||||||
Impairment of assets (Note 14)
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|
—
|
|
|
—
|
|
|
1,447
|
|
||||||
Investment income
|
|
13
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
(12
|
)
|
|
19
|
|
||||||
Interest expense
|
|
148
|
|
|
39
|
|
|
48
|
|
|
54
|
|
|
—
|
|
|
289
|
|
||||||
Income taxes (benefits)
|
|
80
|
|
|
46
|
|
|
(230
|
)
|
|
(26
|
)
|
|
—
|
|
|
(130
|
)
|
||||||
Net income (loss)
|
|
139
|
|
|
78
|
|
|
(1,259
|
)
|
|
(47
|
)
|
|
—
|
|
|
(1,089
|
)
|
||||||
Total assets
|
|
27,448
|
|
|
8,314
|
|
|
15,464
|
|
|
175
|
|
|
—
|
|
|
51,401
|
|
||||||
Total goodwill
|
|
5,004
|
|
|
614
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,618
|
|
||||||
Property additions
|
|
287
|
|
|
277
|
|
|
213
|
|
|
17
|
|
|
—
|
|
|
794
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
For the Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
External revenues
|
|
$
|
4,752
|
|
|
$
|
640
|
|
|
$
|
1,592
|
|
|
$
|
—
|
|
|
$
|
(123
|
)
|
|
$
|
6,861
|
|
Internal revenues
|
|
—
|
|
|
—
|
|
|
203
|
|
|
—
|
|
|
(203
|
)
|
|
—
|
|
||||||
Total revenues
|
|
4,752
|
|
|
640
|
|
|
1,795
|
|
|
—
|
|
|
(326
|
)
|
|
6,861
|
|
||||||
Depreciation
|
|
357
|
|
|
105
|
|
|
57
|
|
|
37
|
|
|
—
|
|
|
556
|
|
||||||
Amortization of regulatory assets, net
|
|
119
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
124
|
|
||||||
Impairment of assets (Note 14)
|
|
—
|
|
|
—
|
|
|
131
|
|
|
—
|
|
|
—
|
|
|
131
|
|
||||||
Investment income
|
|
28
|
|
|
—
|
|
|
32
|
|
|
5
|
|
|
(24
|
)
|
|
41
|
|
||||||
Interest expense
|
|
272
|
|
|
78
|
|
|
92
|
|
|
135
|
|
|
—
|
|
|
577
|
|
||||||
Income taxes (benefits)
|
|
259
|
|
|
105
|
|
|
(65
|
)
|
|
(56
|
)
|
|
—
|
|
|
243
|
|
||||||
Net income (loss)
|
|
442
|
|
|
180
|
|
|
(123
|
)
|
|
(120
|
)
|
|
—
|
|
|
379
|
|
||||||
Property additions
|
|
568
|
|
|
469
|
|
|
188
|
|
|
29
|
|
|
—
|
|
|
1,254
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
External revenues
|
|
$
|
4,699
|
|
|
$
|
561
|
|
|
$
|
2,160
|
|
|
$
|
—
|
|
|
$
|
(150
|
)
|
|
$
|
7,270
|
|
Internal revenues
|
|
—
|
|
|
—
|
|
|
260
|
|
|
—
|
|
|
(260
|
)
|
|
—
|
|
||||||
Total revenues
|
|
4,699
|
|
|
561
|
|
|
2,420
|
|
|
—
|
|
|
(410
|
)
|
|
7,270
|
|
||||||
Depreciation
|
|
335
|
|
|
91
|
|
|
205
|
|
|
32
|
|
|
—
|
|
|
663
|
|
||||||
Amortization of regulatory assets, net
|
|
120
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
124
|
|
||||||
Impairment of assets (Note 14)
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|
—
|
|
|
—
|
|
|
1,447
|
|
||||||
Investment income
|
|
24
|
|
|
—
|
|
|
33
|
|
|
11
|
|
|
(21
|
)
|
|
47
|
|
||||||
Interest expense
|
|
298
|
|
|
79
|
|
|
95
|
|
|
105
|
|
|
—
|
|
|
577
|
|
||||||
Income taxes (benefits)
|
|
174
|
|
|
93
|
|
|
(145
|
)
|
|
(39
|
)
|
|
—
|
|
|
83
|
|
||||||
Net income (loss)
|
|
297
|
|
|
159
|
|
|
(1,115
|
)
|
|
(102
|
)
|
|
—
|
|
|
(761
|
)
|
||||||
Property additions
|
|
528
|
|
|
556
|
|
|
382
|
|
|
26
|
|
|
—
|
|
|
1,492
|
|
•
|
Future Energy and Capacity Prices:
Observable market information for near-term forward power prices, PJM auction results for near term capacity pricing, and a longer-term fundamental pricing model for energy and capacity that considered the impact of key factors such as load growth, plant retirements, carbon and other environmental regulations, and natural gas pipeline construction, as well as coal and natural gas pricing.
|
•
|
Retail Sales and Margin:
CES' current retail targeted portfolio to estimate future retail sales volume as well as historical financial results to estimate retail margins.
|
•
|
Operating and Capital Costs:
Estimated future operating and capital costs, including the estimated impact on costs of pending carbon and other environmental regulations, as well as costs associated with capacity performance reforms in the PJM market.
|
•
|
Discount Rate:
A discount rate of
9.50%
, based on selected comparable companies' capital structure, return on debt and return on equity.
|
•
|
Terminal Value:
A terminal value of
7.0
x earnings before interest, taxes, depreciation and amortization based on consideration of peer group data and analyst consensus expectations.
|
•
|
legislative or regulatory solutions for generation assets that recognize their environmental or energy security benefits;
|
•
|
restructuring FES debt with its creditors;
|
•
|
seeking protection under U.S. bankruptcy laws for FES and likely FENOC; and/or
|
•
|
additional asset sales and/or plant deactivations.
|
•
|
The outcome of the recently announced directive by the Secretary of Energy to complete a study that explores critical issues central to protecting the long-term reliability of the electric grid, including the impact of federal policy interventions and the changing nature of electricity fuel mix, compensation of on-site fuel supply and other factors that strengthen grid resilience, and the impact of regulatory burdens, mandates and tax and subsidy policies on the premature retirement of baseload power plants;
|
•
|
The resolution of legislation before the Ohio General Assembly that would create a zero-emission nuclear (ZEN) credit that would compensate nuclear power plants for their environmental attributes and the potential for similar legislative action in Pennsylvania; and/or
|
•
|
The inability to finalize and consummate a settlement agreement with BNSF and NS regarding a previously disclosed long-term coal transportation contract dispute as discussed in "Outlook - Environmental Matters" below, whereby FG could be subject to materially higher damages.
|
(In millions, except per share amounts)
|
|
For the Three Months Ended June 30
|
|
For the Six Months Ended June 30
|
||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
REVENUES:
|
|
$
|
3,309
|
|
|
$
|
3,401
|
|
|
$
|
(92
|
)
|
|
(3
|
)%
|
|
$
|
6,861
|
|
|
$
|
7,270
|
|
|
$
|
(409
|
)
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fuel
|
|
343
|
|
|
438
|
|
|
(95
|
)
|
|
(22
|
)%
|
|
711
|
|
|
819
|
|
|
(108
|
)
|
|
(13
|
)%
|
||||||
Purchased power
|
|
735
|
|
|
889
|
|
|
(154
|
)
|
|
(17
|
)%
|
|
1,598
|
|
|
2,013
|
|
|
(415
|
)
|
|
(21
|
)%
|
||||||
Other operating expenses
|
|
957
|
|
|
964
|
|
|
(7
|
)
|
|
(1
|
)%
|
|
2,099
|
|
|
1,882
|
|
|
217
|
|
|
12
|
%
|
||||||
Provision for depreciation
|
|
281
|
|
|
334
|
|
|
(53
|
)
|
|
(16
|
)%
|
|
556
|
|
|
663
|
|
|
(107
|
)
|
|
(16
|
)%
|
||||||
Amortization of regulatory assets, net
|
|
65
|
|
|
63
|
|
|
2
|
|
|
3
|
%
|
|
124
|
|
|
124
|
|
|
—
|
|
|
—
|
%
|
||||||
General taxes
|
|
253
|
|
|
241
|
|
|
12
|
|
|
5
|
%
|
|
524
|
|
|
521
|
|
|
3
|
|
|
1
|
%
|
||||||
Impairment of assets
|
|
131
|
|
|
1,447
|
|
|
(1,316
|
)
|
|
(91
|
)%
|
|
131
|
|
|
1,447
|
|
|
(1,316
|
)
|
|
(91
|
)%
|
||||||
Total operating expenses
|
|
2,765
|
|
|
4,376
|
|
|
(1,611
|
)
|
|
(37
|
)%
|
|
5,743
|
|
|
7,469
|
|
|
(1,726
|
)
|
|
(23
|
)%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
OPERATING INCOME (LOSS)
|
|
544
|
|
|
(975
|
)
|
|
1,519
|
|
|
NM
|
|
|
1,118
|
|
|
(199
|
)
|
|
1,317
|
|
|
NM
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment income
|
|
17
|
|
|
19
|
|
|
(2
|
)
|
|
(11
|
)%
|
|
41
|
|
|
47
|
|
|
(6
|
)
|
|
(13
|
)%
|
||||||
Interest expense
|
|
(290
|
)
|
|
(289
|
)
|
|
(1
|
)
|
|
—
|
%
|
|
(577
|
)
|
|
(577
|
)
|
|
—
|
|
|
—
|
%
|
||||||
Capitalized financing costs
|
|
20
|
|
|
26
|
|
|
(6
|
)
|
|
(23
|
)%
|
|
40
|
|
|
51
|
|
|
(11
|
)
|
|
(22
|
)%
|
||||||
Total other expense
|
|
(253
|
)
|
|
(244
|
)
|
|
(9
|
)
|
|
4
|
%
|
|
(496
|
)
|
|
(479
|
)
|
|
(17
|
)
|
|
4
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)
|
|
291
|
|
|
(1,219
|
)
|
|
1,510
|
|
|
NM
|
|
|
622
|
|
|
(678
|
)
|
|
1,300
|
|
|
NM
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
INCOME TAXES (BENEFITS)
|
|
117
|
|
|
(130
|
)
|
|
247
|
|
|
NM
|
|
|
243
|
|
|
83
|
|
|
160
|
|
|
NM
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
NET INCOME (LOSS)
|
|
$
|
174
|
|
|
$
|
(1,089
|
)
|
|
$
|
1,263
|
|
|
NM
|
|
|
$
|
379
|
|
|
$
|
(761
|
)
|
|
$
|
1,140
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
EARNINGS (LOSS) PER SHARE OF COMMON STOCK:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic
|
|
$
|
0.39
|
|
|
$
|
(2.56
|
)
|
|
$
|
2.95
|
|
|
NM
|
|
|
$
|
0.86
|
|
|
$
|
(1.79
|
)
|
|
$
|
2.65
|
|
|
NM
|
|
Diluted
|
|
$
|
0.39
|
|
|
$
|
(2.56
|
)
|
|
$
|
2.95
|
|
|
NM
|
|
|
$
|
0.85
|
|
|
$
|
(1.79
|
)
|
|
$
|
2.64
|
|
|
NM
|
|
•
|
Non-cash impairment charges of $800 million associated with goodwill at CES,
|
•
|
Non-cash impairment charges of $647 million associated with the announced plan to exit operations by 2020 of Units 1-4 of the W.H. Sammis generating station (720 MW) and the Bay Shore Unit 1 generating station (136 MW),
|
•
|
Coal contract settlement and termination costs of $58 million, and
|
•
|
Valuation allowances against state and local NOL carryforwards of $159 million.
|
•
|
The decrease in revenue at CES was due to lower capacity revenues from lower capacity auction prices and lower contract sales volumes.
|
•
|
The increase in revenue at Regulated Distribution primarily resulted from the implementation of the Ohio Companies' DMR effective January 1, 2017, higher revenues from approved base distribution rate increases in Pennsylvania and New Jersey, both effective in January 2017, as well as higher revenues associated with the Ohio Companies' DCR. Distribution deliveries were slightly lower year-over-year mainly from lower weather-related usage and retail generation sales decreased as compared to 2016 resulting from higher customer shopping.
|
•
|
The increase in revenue at Regulated Transmission resulted from a higher rate base at ATSI and TrAIL as well as recovery of incremental operating expenses.
|
•
|
Impairment of assets at CES decreased
$1,316 million
as further described above.
|
•
|
Fuel expense decreased
$95 million
, primarily due to the absence of approximately $58 million in settlement and termination costs on coal contracts in the second quarter of 2016 and lower generation associated with outages and economic dispatch of fossil units resulting from low wholesale spot market energy prices.
|
•
|
Purchased power decreased
$154 million
, primarily at CES, due to lower capacity rates as well as lower volumes and market prices. The decline in purchased power at Regulated Distribution was the result of lower volumes from increased customer shopping as well as lower costs reflecting lower default service auction prices.
|
•
|
Depreciation expense decreased
$53 million
, primarily due to a lower asset base at CES resulting from asset impairments recognized in 2016.
|
•
|
The decrease in revenue at CES was primarily due to lower contract sales volumes at lower prices and lower capacity revenues, partially offset by an increase in wholesale sales.
|
•
|
The increase in revenue at Regulated Distribution primarily resulted from the implementation of the Ohio Companies' DMR effective January 1, 2017, higher revenues from approved base distribution rate increases in Pennsylvania and New Jersey, both effective January 2017, as well as higher revenues associated with the Ohio Companies' DCR. These increases were partially offset by lower generation revenues mainly related to increased customer shopping in Ohio, Pennsylvania, and New Jersey. Additionally, distribution deliveries were slightly lower year-over-year mainly from lower weather-related usage.
|
•
|
The increase in revenue at Regulated Transmission resulted from a higher rate base at ATSI and TrAIL as well as recovery of incremental operating expenses. Additionally, JCP&L's forward-looking formula rate on transmission assets was implemented on June 1, 2017, subject to refund.
|
•
|
Impairment of assets at CES decreased
$1,316 million
as further described above.
|
•
|
Fuel expense decreased
$108 million
, primarily due to the absence of approximately $58 million in settlement and termination costs on coal contracts in 2016 and lower generation associated with outages and economic dispatch of fossil units resulting from low wholesale spot market energy prices and a lower unit costs.
|
•
|
Purchased power decreased
$415 million
, primarily at CES, due to lower capacity expense as a result of lower contract sales and lower capacity rates as well as lower volumes and market prices. At Regulated Distribution, the decline in purchased power was the result of lower volumes from increased customer shopping as well as lower costs reflecting lower default service auction prices.
|
•
|
Other operating expenses increased
$217 million
, reflecting an increase of
$160 million
at CES primarily associated with estimated losses on long-term coal transportation contract disputes recognized in the first quarter of 2017 and higher non-cash mark-to-market losses on commodity contract positions. Operating expenses increased
$25 million
at Regulated Distribution resulting primarily from higher operating and maintenance expenses, including increased storm restoration costs.
|
•
|
Depreciation expense decreased
$107 million
, primarily due to a lower asset base at CES resulting from asset impairments recognized in 2016.
|
Second Quarter 2017 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
2,215
|
|
|
$
|
327
|
|
|
$
|
750
|
|
|
$
|
(42
|
)
|
|
$
|
3,250
|
|
Other
|
|
47
|
|
|
—
|
|
|
28
|
|
|
(16
|
)
|
|
59
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
86
|
|
|
(86
|
)
|
|
—
|
|
|||||
Total Revenues
|
|
2,262
|
|
|
327
|
|
|
864
|
|
|
(144
|
)
|
|
3,309
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
121
|
|
|
—
|
|
|
222
|
|
|
—
|
|
|
343
|
|
|||||
Purchased power
|
|
657
|
|
|
—
|
|
|
164
|
|
|
(86
|
)
|
|
735
|
|
|||||
Other operating expenses
|
|
627
|
|
|
50
|
|
|
349
|
|
|
(69
|
)
|
|
957
|
|
|||||
Provision for depreciation
|
|
179
|
|
|
54
|
|
|
29
|
|
|
19
|
|
|
281
|
|
|||||
Amortization of regulatory assets, net
|
|
62
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|||||
General taxes
|
|
175
|
|
|
43
|
|
|
27
|
|
|
8
|
|
|
253
|
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
131
|
|
|
—
|
|
|
131
|
|
|||||
Total Operating Expenses
|
|
1,821
|
|
|
150
|
|
|
922
|
|
|
(128
|
)
|
|
2,765
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
441
|
|
|
177
|
|
|
(58
|
)
|
|
(16
|
)
|
|
544
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss)
|
|
14
|
|
|
—
|
|
|
12
|
|
|
(9
|
)
|
|
17
|
|
|||||
Interest expense
|
|
(134
|
)
|
|
(39
|
)
|
|
(47
|
)
|
|
(70
|
)
|
|
(290
|
)
|
|||||
Capitalized financing costs
|
|
5
|
|
|
7
|
|
|
7
|
|
|
1
|
|
|
20
|
|
|||||
Total Other Expense
|
|
(115
|
)
|
|
(32
|
)
|
|
(28
|
)
|
|
(78
|
)
|
|
(253
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
326
|
|
|
145
|
|
|
(86
|
)
|
|
(94
|
)
|
|
291
|
|
|||||
Income taxes (benefits)
|
|
121
|
|
|
53
|
|
|
(30
|
)
|
|
(27
|
)
|
|
117
|
|
|||||
Net Income (Loss)
|
|
$
|
205
|
|
|
$
|
92
|
|
|
$
|
(56
|
)
|
|
$
|
(67
|
)
|
|
$
|
174
|
|
Second Quarter 2016 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
2,136
|
|
|
$
|
275
|
|
|
$
|
963
|
|
|
$
|
(43
|
)
|
|
$
|
3,331
|
|
Other
|
|
53
|
|
|
—
|
|
|
45
|
|
|
(28
|
)
|
|
70
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
108
|
|
|
(108
|
)
|
|
—
|
|
|||||
Total Revenues
|
|
2,189
|
|
|
275
|
|
|
1,116
|
|
|
(179
|
)
|
|
3,401
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
141
|
|
|
—
|
|
|
297
|
|
|
—
|
|
|
438
|
|
|||||
Purchased power
|
|
721
|
|
|
—
|
|
|
276
|
|
|
(108
|
)
|
|
889
|
|
|||||
Other operating expenses
|
|
579
|
|
|
37
|
|
|
432
|
|
|
(84
|
)
|
|
964
|
|
|||||
Provision for depreciation
|
|
168
|
|
|
46
|
|
|
103
|
|
|
17
|
|
|
334
|
|
|||||
Amortization of regulatory assets, net
|
|
61
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|||||
General taxes
|
|
170
|
|
|
36
|
|
|
29
|
|
|
6
|
|
|
241
|
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|
—
|
|
|
1,447
|
|
|||||
Total Operating Expenses
|
|
1,840
|
|
|
121
|
|
|
2,584
|
|
|
(169
|
)
|
|
4,376
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
349
|
|
|
154
|
|
|
(1,468
|
)
|
|
(10
|
)
|
|
(975
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss)
|
|
13
|
|
|
—
|
|
|
18
|
|
|
(12
|
)
|
|
19
|
|
|||||
Interest expense
|
|
(148
|
)
|
|
(39
|
)
|
|
(48
|
)
|
|
(54
|
)
|
|
(289
|
)
|
|||||
Capitalized financing costs
|
|
5
|
|
|
9
|
|
|
9
|
|
|
3
|
|
|
26
|
|
|||||
Total Other Expense
|
|
(130
|
)
|
|
(30
|
)
|
|
(21
|
)
|
|
(63
|
)
|
|
(244
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
219
|
|
|
124
|
|
|
(1,489
|
)
|
|
(73
|
)
|
|
(1,219
|
)
|
|||||
Income taxes (benefits)
|
|
80
|
|
|
46
|
|
|
(230
|
)
|
|
(26
|
)
|
|
(130
|
)
|
|||||
Net Income (Loss)
|
|
$
|
139
|
|
|
$
|
78
|
|
|
$
|
(1,259
|
)
|
|
$
|
(47
|
)
|
|
$
|
(1,089
|
)
|
Changes Between Second Quarter 2017 and Second Quarter 2016 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
79
|
|
|
$
|
52
|
|
|
$
|
(213
|
)
|
|
$
|
1
|
|
|
$
|
(81
|
)
|
Other
|
|
(6
|
)
|
|
—
|
|
|
(17
|
)
|
|
12
|
|
|
(11
|
)
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
22
|
|
|
—
|
|
|||||
Total Revenues
|
|
73
|
|
|
52
|
|
|
(252
|
)
|
|
35
|
|
|
(92
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
(20
|
)
|
|
—
|
|
|
(75
|
)
|
|
—
|
|
|
(95
|
)
|
|||||
Purchased power
|
|
(64
|
)
|
|
—
|
|
|
(112
|
)
|
|
22
|
|
|
(154
|
)
|
|||||
Other operating expenses
|
|
48
|
|
|
13
|
|
|
(83
|
)
|
|
15
|
|
|
(7
|
)
|
|||||
Provision for depreciation
|
|
11
|
|
|
8
|
|
|
(74
|
)
|
|
2
|
|
|
(53
|
)
|
|||||
Amortization of regulatory assets, net
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
General taxes
|
|
5
|
|
|
7
|
|
|
(2
|
)
|
|
2
|
|
|
12
|
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
(1,316
|
)
|
|
—
|
|
|
(1,316
|
)
|
|||||
Total Operating Expenses
|
|
(19
|
)
|
|
29
|
|
|
(1,662
|
)
|
|
41
|
|
|
(1,611
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
92
|
|
|
23
|
|
|
1,410
|
|
|
(6
|
)
|
|
1,519
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss)
|
|
1
|
|
|
—
|
|
|
(6
|
)
|
|
3
|
|
|
(2
|
)
|
|||||
Interest expense
|
|
14
|
|
|
—
|
|
|
1
|
|
|
(16
|
)
|
|
(1
|
)
|
|||||
Capitalized financing costs
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|||||
Total Other Expense
|
|
15
|
|
|
(2
|
)
|
|
(7
|
)
|
|
(15
|
)
|
|
(9
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
107
|
|
|
21
|
|
|
1,403
|
|
|
(21
|
)
|
|
1,510
|
|
|||||
Income taxes (benefits)
|
|
41
|
|
|
7
|
|
|
200
|
|
|
(1
|
)
|
|
247
|
|
|||||
Net Income (Loss)
|
|
$
|
66
|
|
|
$
|
14
|
|
|
$
|
1,203
|
|
|
$
|
(20
|
)
|
|
$
|
1,263
|
|
|
|
For the Three Months Ended June 30
|
|
Increase
|
||||||||
Revenues by Type of Service
|
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Distribution services
|
|
$
|
1,254
|
|
|
$
|
1,080
|
|
|
$
|
174
|
|
|
|
|
|
|
|
|
||||||
Generation sales:
|
|
|
|
|
|
|
||||||
Retail
|
|
848
|
|
|
936
|
|
|
(88
|
)
|
|||
Wholesale
|
|
113
|
|
|
120
|
|
|
(7
|
)
|
|||
Total generation sales
|
|
961
|
|
|
1,056
|
|
|
(95
|
)
|
|||
|
|
|
|
|
|
|
||||||
Other
|
|
47
|
|
|
53
|
|
|
(6
|
)
|
|||
Total Revenues
|
|
$
|
2,262
|
|
|
$
|
2,189
|
|
|
$
|
73
|
|
|
|
For the Three Months Ended June 30
|
|
Increase
|
|||||
Electric Distribution MWH Deliveries
|
|
2017
|
|
2016
|
|
(Decrease)
|
|||
|
|
(In thousands)
|
|
|
|||||
Residential
|
|
11,115
|
|
|
11,656
|
|
|
(4.6
|
)%
|
Commercial
|
|
10,190
|
|
|
10,349
|
|
|
(1.5
|
)%
|
Industrial
|
|
12,795
|
|
|
12,346
|
|
|
3.6
|
%
|
Other
|
|
138
|
|
|
145
|
|
|
(4.8
|
)%
|
Total Electric Distribution MWH Deliveries
|
|
34,238
|
|
|
34,496
|
|
|
(0.7
|
)%
|
Source of Change in Generation Revenues
|
|
Increase (Decrease)
|
||
|
|
(In millions)
|
||
Retail:
|
|
|
|
|
Effect of decrease in sales volumes
|
|
$
|
(47
|
)
|
Change in prices
|
|
(41
|
)
|
|
|
|
(88
|
)
|
|
Wholesale:
|
|
|
||
Effect of decrease in sales volumes
|
|
(3
|
)
|
|
Change in prices
|
|
3
|
|
|
Capacity Revenue
|
|
(7
|
)
|
|
|
|
(7
|
)
|
|
Decrease in Generation Revenues
|
|
$
|
(95
|
)
|
•
|
Fuel expense decreased
$20 million
in the
second
quarter of 2017, as compared to the same period in 2016, primarily related to lower unit costs.
|
•
|
Purchased power costs were
$64 million
lower in the
second
quarter of 2017, as compared to the same period in 2016, primarily due to lower unit costs reflecting lower default service auction prices as well as decreased volumes resulting from increased customer shopping, as described above.
|
Source of Change in Purchased Power
|
|
Increase(Decrease)
|
|||
|
|
(In millions)
|
|||
Purchases from non-affiliates:
|
|
|
|||
Change due to decreased unit costs
|
|
$
|
(51
|
)
|
|
Change due to decreased volumes
|
|
(20
|
)
|
||
|
|
(71
|
)
|
||
Purchases from affiliates:
|
|
|
|||
Change due to decreased unit costs
|
|
(6
|
)
|
||
Change due to decreased volumes
|
|
(15
|
)
|
||
|
|
(21
|
)
|
||
Capacity Expense
|
|
(5
|
)
|
||
Amortization of deferred costs
|
|
33
|
|
||
Decrease in Purchased Power Costs
|
|
$
|
(64
|
)
|
•
|
Other operating expenses increased
$48 million
primarily due to:
|
•
|
Higher operating and maintenance expenses of $39 million, including increased storm restoration costs, which were deferred for future recovery, resulting in no material impact on current period earnings, and increased expenses in Pennsylvania recovered through new base distribution rates effective January 27, 2017.
|
•
|
Higher transmission expenses of $7 million primarily due to an increase in network transmission expenses. 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.
|
•
|
Depreciation expense increased
$11 million
primarily due to a higher asset base as well as increased rates in Pennsylvania.
|
|
|
For the Three Months Ended June 30
|
|
|
||||||||
Revenues by Transmission Asset Owner
|
|
2017
|
|
2016
|
|
Increase (Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
ATSI
|
|
$
|
164
|
|
|
$
|
128
|
|
|
$
|
36
|
|
TrAIL
|
|
73
|
|
|
59
|
|
|
14
|
|
|||
MAIT
(1)
|
|
24
|
|
|
26
|
|
|
(2
|
)
|
|||
JCP&L
|
|
27
|
|
|
23
|
|
|
4
|
|
|||
Other
|
|
39
|
|
|
39
|
|
|
—
|
|
|||
Total Revenues
|
|
$
|
327
|
|
|
$
|
275
|
|
|
$
|
52
|
|
(1)
|
Revenues in 2016 represent transmission revenues under stated rates at ME and PN.
|
|
|
For the Three Months Ended June 30
|
|
Decrease
|
||||||||
Revenues by Type of Service
|
|
2017
|
|
2016
|
|
|||||||
|
|
(In millions)
|
||||||||||
Contract Sales:
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
187
|
|
|
$
|
196
|
|
|
$
|
(9
|
)
|
Governmental Aggregation
|
|
83
|
|
|
191
|
|
|
(108
|
)
|
|||
Mass Market
|
|
28
|
|
|
37
|
|
|
(9
|
)
|
|||
POLR
|
|
114
|
|
|
125
|
|
|
(11
|
)
|
|||
Structured Sales
|
|
79
|
|
|
115
|
|
|
(36
|
)
|
|||
Total Contract Sales
|
|
491
|
|
|
664
|
|
|
(173
|
)
|
|||
Wholesale
|
|
332
|
|
|
389
|
|
|
(57
|
)
|
|||
Transmission
|
|
13
|
|
|
18
|
|
|
(5
|
)
|
|||
Other
|
|
28
|
|
|
45
|
|
|
(17
|
)
|
|||
Total Revenues
|
|
$
|
864
|
|
|
$
|
1,116
|
|
|
$
|
(252
|
)
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30
|
|
Increase (Decrease)
|
|||||
MWH Sales by Channel
|
|
2017
|
|
2016
|
|
||||
|
|
(In thousands)
|
|||||||
Contract Sales:
|
|
|
|
|
|
|
|||
Direct
|
|
3,919
|
|
|
3,684
|
|
|
6.4
|
%
|
Governmental Aggregation
|
|
1,617
|
|
|
2,991
|
|
|
(45.9
|
)%
|
Mass Market
|
|
404
|
|
|
536
|
|
|
(24.6
|
)%
|
POLR
|
|
2,049
|
|
|
2,081
|
|
|
(1.5
|
)%
|
Structured Sales
|
|
1,956
|
|
|
2,842
|
|
|
(31.2
|
)%
|
Total Contract Sales
|
|
9,945
|
|
|
12,134
|
|
|
(18.0
|
)%
|
Wholesale
|
|
5,934
|
|
|
3,577
|
|
|
65.9
|
%
|
Total MWH Sales
|
|
15,879
|
|
|
15,711
|
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|
Source of Change in Revenues
|
||||||||||||||||||
|
|
Increase (Decrease)
|
||||||||||||||||||
MWH Sales Channel:
|
|
Sales Volumes
|
|
Prices
|
|
Gain on Settled Contracts
|
|
Capacity Revenue
|
|
Total
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Direct
|
|
$
|
13
|
|
|
$
|
(22
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(9
|
)
|
Governmental Aggregation
|
|
(88
|
)
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
(108
|
)
|
|||||
Mass Market
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|||||
POLR
|
|
(2
|
)
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|||||
Structured Sales
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|||||
Wholesale
|
|
59
|
|
|
23
|
|
|
(44
|
)
|
|
(95
|
)
|
|
(57
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
•
|
Fuel costs decreased
$75 million
, primarily due to the absence of approximately $58 million in settlement and termination costs on coal contracts in the second quarter of 2016, as well as lower generation associated with outages and economic dispatch of fossil units resulting from low wholesale spot market energy prices, as described above, partially offset by higher unit costs on fossil fuel contracts.
|
•
|
Purchased power costs decreased
$112 million
due to lower capacity expense ($96 million) and lower unit costs ($42 million), partially offset by higher volumes ($26 million). The decrease in capacity expense, which is a component of CES' retail price, was primarily the result of lower contract sales and lower capacity rates associated with CES' retail sales obligation. Higher volumes primarily resulted from increased economic purchases at lower unit costs.
|
•
|
Fossil operating and maintenance expenses decreased $19 million, primarily due to lower outage costs.
|
•
|
Nuclear operating and maintenance expenses increased $17 million, primarily as a result of higher refueling outage costs. There were two refueling outages during the second quarter of 2017, as compared to one refueling outage during the same period of 2016.
|
•
|
Transmission expenses decreased $11 million, primarily due to lower load requirements.
|
•
|
Other operating expenses decreased $68 million, primarily due to lower non-cash mark-to-market losses on commodity contract positions.
|
•
|
Depreciation expense decreased $74 million, primarily due to a lower asset base resulting from asset impairments recognized in 2016.
|
•
|
Impairment of assets decreased $1,316 million primarily due to the absence of an $800 million impairment of goodwill and a $647 million impairment of Units 1-4 of the W.H. Sammis generating station and the Bay Shore Unit 1 generating station in 2016, partially offset by a $131 million impairment charge recognized in the second quarter of 2017 resulting from the status of ongoing negotiations regarding the asset purchase agreement between AE Supply, AGC, and a subsidiary of LS Power and reflecting the impact of prevailing market conditions as further discussed under "Outlook - Asset Impairment - Competitive Generation Asset Sale" below.
|
First Six Months 2017 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
4,659
|
|
|
$
|
640
|
|
|
$
|
1,523
|
|
|
$
|
(84
|
)
|
|
$
|
6,738
|
|
Other
|
|
93
|
|
|
—
|
|
|
69
|
|
|
(39
|
)
|
|
123
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
203
|
|
|
(203
|
)
|
|
—
|
|
|||||
Total Revenues
|
|
4,752
|
|
|
640
|
|
|
1,795
|
|
|
(326
|
)
|
|
6,861
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
262
|
|
|
—
|
|
|
449
|
|
|
—
|
|
|
711
|
|
|||||
Purchased power
|
|
1,470
|
|
|
—
|
|
|
331
|
|
|
(203
|
)
|
|
1,598
|
|
|||||
Other operating expenses
|
|
1,251
|
|
|
95
|
|
|
913
|
|
|
(160
|
)
|
|
2,099
|
|
|||||
Provision for depreciation
|
|
357
|
|
|
105
|
|
|
57
|
|
|
37
|
|
|
556
|
|
|||||
Amortization of regulatory assets, net
|
|
119
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
124
|
|
|||||
General taxes
|
|
359
|
|
|
85
|
|
|
57
|
|
|
23
|
|
|
524
|
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
131
|
|
|
—
|
|
|
131
|
|
|||||
Total Operating Expenses
|
|
3,818
|
|
|
290
|
|
|
1,938
|
|
|
(303
|
)
|
|
5,743
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
934
|
|
|
350
|
|
|
(143
|
)
|
|
(23
|
)
|
|
1,118
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss)
|
|
28
|
|
|
—
|
|
|
32
|
|
|
(19
|
)
|
|
41
|
|
|||||
Interest expense
|
|
(272
|
)
|
|
(78
|
)
|
|
(92
|
)
|
|
(135
|
)
|
|
(577
|
)
|
|||||
Capitalized financing costs
|
|
11
|
|
|
13
|
|
|
15
|
|
|
1
|
|
|
40
|
|
|||||
Total Other Expense
|
|
(233
|
)
|
|
(65
|
)
|
|
(45
|
)
|
|
(153
|
)
|
|
(496
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
701
|
|
|
285
|
|
|
(188
|
)
|
|
(176
|
)
|
|
622
|
|
|||||
Income taxes (benefits)
|
|
259
|
|
|
105
|
|
|
(65
|
)
|
|
(56
|
)
|
|
243
|
|
|||||
Net Income (Loss)
|
|
$
|
442
|
|
|
$
|
180
|
|
|
$
|
(123
|
)
|
|
$
|
(120
|
)
|
|
$
|
379
|
|
|
||||||||||||||||||||
First Six Months 2016 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
4,567
|
|
|
$
|
561
|
|
|
$
|
2,064
|
|
|
$
|
(89
|
)
|
|
$
|
7,103
|
|
Other
|
|
132
|
|
|
—
|
|
|
96
|
|
|
(61
|
)
|
|
167
|
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
260
|
|
|
(260
|
)
|
|
—
|
|
|||||
Total Revenues
|
|
4,699
|
|
|
561
|
|
|
2,420
|
|
|
(410
|
)
|
|
7,270
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
280
|
|
|
—
|
|
|
539
|
|
|
—
|
|
|
819
|
|
|||||
Purchased power
|
|
1,647
|
|
|
—
|
|
|
626
|
|
|
(260
|
)
|
|
2,013
|
|
|||||
Other operating expenses
|
|
1,226
|
|
|
74
|
|
|
753
|
|
|
(171
|
)
|
|
1,882
|
|
|||||
Provision for depreciation
|
|
335
|
|
|
91
|
|
|
205
|
|
|
32
|
|
|
663
|
|
|||||
Amortization of regulatory assets, net
|
|
120
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
124
|
|
|||||
General taxes
|
|
355
|
|
|
77
|
|
|
68
|
|
|
21
|
|
|
521
|
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
1,447
|
|
|
—
|
|
|
1,447
|
|
|||||
Total Operating Expenses
|
|
3,963
|
|
|
246
|
|
|
3,638
|
|
|
(378
|
)
|
|
7,469
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
736
|
|
|
315
|
|
|
(1,218
|
)
|
|
(32
|
)
|
|
(199
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss)
|
|
24
|
|
|
—
|
|
|
33
|
|
|
(10
|
)
|
|
47
|
|
|||||
Interest expense
|
|
(298
|
)
|
|
(79
|
)
|
|
(95
|
)
|
|
(105
|
)
|
|
(577
|
)
|
|||||
Capitalized financing costs
|
|
9
|
|
|
16
|
|
|
20
|
|
|
6
|
|
|
51
|
|
|||||
Total Other Expense
|
|
(265
|
)
|
|
(63
|
)
|
|
(42
|
)
|
|
(109
|
)
|
|
(479
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
471
|
|
|
252
|
|
|
(1,260
|
)
|
|
(141
|
)
|
|
(678
|
)
|
|||||
Income taxes (benefits)
|
|
174
|
|
|
93
|
|
|
(145
|
)
|
|
(39
|
)
|
|
83
|
|
|||||
Net Income (Loss)
|
|
$
|
297
|
|
|
$
|
159
|
|
|
$
|
(1,115
|
)
|
|
$
|
(102
|
)
|
|
$
|
(761
|
)
|
|
||||||||||||||||||||
Changes Between First Six Months 2017 and First Six Months 2016 Financial Results
|
|
Regulated Distribution
|
|
Regulated Transmission
|
|
Competitive
Energy Services |
|
Corporate/Other and Reconciling Adjustments
|
|
FirstEnergy Consolidated
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
External
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
|
$
|
92
|
|
|
$
|
79
|
|
|
$
|
(541
|
)
|
|
$
|
5
|
|
|
$
|
(365
|
)
|
Other
|
|
(39
|
)
|
|
—
|
|
|
(27
|
)
|
|
22
|
|
|
(44
|
)
|
|||||
Internal
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
|
57
|
|
|
—
|
|
|||||
Total Revenues
|
|
53
|
|
|
79
|
|
|
(625
|
)
|
|
84
|
|
|
(409
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fuel
|
|
(18
|
)
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
(108
|
)
|
|||||
Purchased power
|
|
(177
|
)
|
|
—
|
|
|
(295
|
)
|
|
57
|
|
|
(415
|
)
|
|||||
Other operating expenses
|
|
25
|
|
|
21
|
|
|
160
|
|
|
11
|
|
|
217
|
|
|||||
Provision for depreciation
|
|
22
|
|
|
14
|
|
|
(148
|
)
|
|
5
|
|
|
(107
|
)
|
|||||
Amortization of regulatory assets, net
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
General taxes
|
|
4
|
|
|
8
|
|
|
(11
|
)
|
|
2
|
|
|
3
|
|
|||||
Impairment of assets
|
|
—
|
|
|
—
|
|
|
(1,316
|
)
|
|
—
|
|
|
(1,316
|
)
|
|||||
Total Operating Expenses
|
|
(145
|
)
|
|
44
|
|
|
(1,700
|
)
|
|
75
|
|
|
(1,726
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Income (Loss)
|
|
198
|
|
|
35
|
|
|
1,075
|
|
|
9
|
|
|
1,317
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income (loss)
|
|
4
|
|
|
—
|
|
|
(1
|
)
|
|
(9
|
)
|
|
(6
|
)
|
|||||
Interest expense
|
|
26
|
|
|
1
|
|
|
3
|
|
|
(30
|
)
|
|
—
|
|
|||||
Capitalized financing costs
|
|
2
|
|
|
(3
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(11
|
)
|
|||||
Total Other Expense
|
|
32
|
|
|
(2
|
)
|
|
(3
|
)
|
|
(44
|
)
|
|
(17
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) Before Income Taxes (Benefits)
|
|
230
|
|
|
33
|
|
|
1,072
|
|
|
(35
|
)
|
|
1,300
|
|
|||||
Income taxes (benefits)
|
|
85
|
|
|
12
|
|
|
80
|
|
|
(17
|
)
|
|
160
|
|
|||||
Net Income (Loss)
|
|
$
|
145
|
|
|
$
|
21
|
|
|
$
|
992
|
|
|
$
|
(18
|
)
|
|
$
|
1,140
|
|
|
|
For the Six Months Ended June 30
|
|
Increase
|
||||||||
Revenues by Type of Service
|
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Distribution services
|
|
$
|
2,562
|
|
|
$
|
2,236
|
|
|
$
|
326
|
|
|
|
|
|
|
|
|
||||||
Generation sales:
|
|
|
|
|
|
|
||||||
Retail
|
|
1,860
|
|
|
2,089
|
|
|
(229
|
)
|
|||
Wholesale
|
|
237
|
|
|
242
|
|
|
(5
|
)
|
|||
Total generation sales
|
|
2,097
|
|
|
2,331
|
|
|
(234
|
)
|
|||
|
|
|
|
|
|
|
||||||
Other
|
|
93
|
|
|
132
|
|
|
(39
|
)
|
|||
Total Revenues
|
|
$
|
4,752
|
|
|
$
|
4,699
|
|
|
$
|
53
|
|
|
|
For the Six Months Ended June 30
|
|
Increase
|
|||||
Electric Distribution MWH Deliveries
|
|
2017
|
|
2016
|
|
(Decrease)
|
|||
|
|
(In thousands)
|
|
|
|||||
Residential
|
|
24,983
|
|
|
25,992
|
|
|
(3.9
|
)%
|
Commercial
|
|
20,465
|
|
|
20,908
|
|
|
(2.1
|
)%
|
Industrial
|
|
25,399
|
|
|
24,724
|
|
|
2.7
|
%
|
Other
|
|
281
|
|
|
292
|
|
|
(3.8
|
)%
|
Total Electric Distribution MWH Deliveries
|
|
71,128
|
|
|
71,916
|
|
|
(1.1
|
)%
|
Source of Change in Generation Revenues
|
|
Increase (Decrease)
|
||
|
|
(In millions)
|
||
Retail:
|
|
|
|
|
Effect of decrease in sales volumes
|
|
$
|
(137
|
)
|
Change in prices
|
|
(92
|
)
|
|
|
|
(229
|
)
|
|
Wholesale:
|
|
|
||
Effect of increase in sales volumes
|
|
17
|
|
|
Change in prices
|
|
(2
|
)
|
|
Capacity Revenue
|
|
(20
|
)
|
|
|
|
(5
|
)
|
|
Decrease in Generation Revenues
|
|
$
|
(234
|
)
|
•
|
Fuel expense decreased
$18 million
in the
six
months of 2017, as compared to the same period in 2016, primarily related to lower unit costs.
|
•
|
Purchased power costs decreased
$177 million
during the first
six
months of
2017
, as compared to the same period of
2016
primarily due to decreased volumes resulting from increased customer shopping, as described above, as well as lower unit costs reflecting lower default service auction prices.
|
Source of Change in Purchased Power
|
|
Increase (Decrease)
|
|||
|
|
(In millions)
|
|||
Purchases from non-affiliates:
|
|
|
|||
Change due to decreased unit costs
|
|
$
|
(97
|
)
|
|
Change due to volumes
|
|
(75
|
)
|
||
|
|
(172
|
)
|
||
Purchases from affiliates:
|
|
|
|||
Change due to decreased unit costs
|
|
(16
|
)
|
||
Change due to volumes
|
|
(40
|
)
|
||
|
|
(56
|
)
|
||
Capacity Expense
|
|
(16
|
)
|
||
Amortization of deferred costs
|
|
67
|
|
||
Decrease in Purchased Power Costs
|
|
$
|
(177
|
)
|
•
|
Other operating expenses increased
$25 million
primarily due to:
|
•
|
Higher operating and maintenance expenses of $67 million, including increased storm restoration costs of $25 million, which were deferred for future recovery, resulting in no material impact on current period earnings, and increased operating and maintenance expenses in Pennsylvania recovered through the new base distribution rates effective January 27, 2017.
|
•
|
Higher transmission expenses of $8 million primarily due to an increase in network transmission expenses. 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.
|
•
|
Lower regulatory costs of $51 million resulting from the recognition in 2016 of economic development and energy efficiency obligations in accordance with the PUCO's March 31, 2016 Opinion and Order adopting and approving, with modifications, the Ohio Companies' ESP IV.
|
•
|
Depreciation expense increased
$22 million
primarily due to a higher rate base as well as increased rates in Pennsylvania.
|
|
|
For the Six Months Ended June 30
|
|
Increase
|
||||||||
Revenues by Transmission Asset Owner
|
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
ATSI
|
|
$
|
317
|
|
|
$
|
262
|
|
|
$
|
55
|
|
TrAIL
|
|
144
|
|
|
120
|
|
|
24
|
|
|||
MAIT
(1)
|
|
49
|
|
|
53
|
|
|
(4
|
)
|
|||
JCP&L
|
|
50
|
|
|
46
|
|
|
4
|
|
|||
Other
|
|
80
|
|
|
80
|
|
|
—
|
|
|||
Total Revenues
|
|
$
|
640
|
|
|
$
|
561
|
|
|
$
|
79
|
|
(1)
|
Revenues in 2016 represent transmission revenues under stated rates at ME and PN.
|
|
|
For the Six Months Ended June 30
|
|
Decrease
|
||||||||
Revenues by Type of Service
|
|
2017
|
|
2016
|
|
|||||||
|
|
(In millions)
|
||||||||||
Contract Sales:
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
387
|
|
|
$
|
403
|
|
|
$
|
(16
|
)
|
Governmental Aggregation
|
|
194
|
|
|
432
|
|
|
(238
|
)
|
|||
Mass Market
|
|
65
|
|
|
85
|
|
|
(20
|
)
|
|||
POLR
|
|
268
|
|
|
282
|
|
|
(14
|
)
|
|||
Structured Sales
|
|
159
|
|
|
277
|
|
|
(118
|
)
|
|||
Total Contract Sales
|
|
1,073
|
|
|
1,479
|
|
|
(406
|
)
|
|||
Wholesale
|
|
628
|
|
|
806
|
|
|
(178
|
)
|
|||
Transmission
|
|
25
|
|
|
39
|
|
|
(14
|
)
|
|||
Other
|
|
69
|
|
|
96
|
|
|
(27
|
)
|
|||
Total Revenues
|
|
$
|
1,795
|
|
|
$
|
2,420
|
|
|
$
|
(625
|
)
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30
|
|
Increase (Decrease)
|
|||||
MWH Sales by Channel
|
|
2017
|
|
2016
|
|
||||
|
|
(In thousands)
|
|
|
|||||
Contract Sales:
|
|
|
|
|
|
|
|||
Direct
|
|
7,859
|
|
|
7,478
|
|
|
5.1
|
%
|
Governmental Aggregation
|
|
3,754
|
|
|
6,560
|
|
|
(42.8
|
)%
|
Mass Market
|
|
947
|
|
|
1,239
|
|
|
(23.6
|
)%
|
POLR
|
|
4,813
|
|
|
4,633
|
|
|
3.9
|
%
|
Structured Sales
|
|
3,907
|
|
|
6,738
|
|
|
(42.0
|
)%
|
Total Contract Sales
|
|
21,280
|
|
|
26,648
|
|
|
(20.1
|
)%
|
Wholesale
|
|
10,389
|
|
|
5,490
|
|
|
89.2
|
%
|
Total MWH Sales
|
|
31,669
|
|
|
32,138
|
|
|
(1.5
|
)%
|
|
|
|
|
|
|
|
|
|
Source of Change in Revenues
|
||||||||||||||||||
|
|
Increase (Decrease)
|
||||||||||||||||||
MWH Sales Channel:
|
|
Sales Volumes
|
|
Prices
|
|
Gain on Settled Contracts
|
|
Capacity Revenue
|
|
Total
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Direct
|
|
$
|
20
|
|
|
$
|
(36
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(16
|
)
|
Governmental Aggregation
|
|
(185
|
)
|
|
(53
|
)
|
|
—
|
|
|
—
|
|
|
(238
|
)
|
|||||
Mass Market
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|||||
POLR
|
|
11
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|||||
Structured Sales
|
|
(116
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(118
|
)
|
|||||
Wholesale
|
|
132
|
|
|
24
|
|
|
(90
|
)
|
|
(244
|
)
|
|
(178
|
)
|
•
|
Fuel costs decreased
$90 million
, primarily due to the absence of approximately $58 million in settlement and termination costs on coal contracts in 2016, as well as lower generation associated with outages and economic dispatch of fossil units resulting from low wholesale spot market energy prices, as described above, partially offset by higher unit costs on fossil fuel contracts.
|
•
|
Purchased power costs decreased
$295 million
, primarily due to lower capacity expenses ($234 million) and lower unit costs ($66 million), partially offset by higher volumes ($5 million). The decrease in capacity expense, which is a component of CES' retail price, was primarily the result of lower contract sales and lower capacity rates associated with CES' retail sales obligations. Lower unit costs primarily resulted from lower wholesale spot market prices and increased economic purchases, as discussed above.
|
•
|
A $164 million charge associated with estimated losses on long-term coal transportation contract disputes recognized in the first quarter of 2017 as discussed in "Outlook - Environmental Matters" below.
|
•
|
Fossil operating and maintenance expenses decreased $43 million, primarily due to lower outage costs.
|
•
|
Nuclear operating and maintenance expenses increased $24 million, primarily as a result of higher refueling outage costs. There were two refueling outages during the first six months of 2017, as compared to one refueling outage during the same period of 2016.
|
•
|
Transmission expenses decreased $26 million, primarily due to lower load requirements.
|
•
|
Other operating expenses increased $43 million, primarily due to higher non-cash mark-to-market losses on commodity contract positions.
|
•
|
Depreciation expense decreased
$148 million
, primarily due to a lower asset base resulting from asset impairments recognized in 2016.
|
•
|
General taxes decreased $11 million, primarily due to lower gross receipts taxes associated with lower retail sales volumes.
|
•
|
Impairment of assets decreased $1,316 million primarily due to the absence of an $800 million impairment of goodwill and a $647 million impairment of Units 1-4 of the W.H. Sammis generating station and the Bay Shore Unit 1 generating station in 2016, partially offset by a $131 million impairment charge recognized in the second quarter of 2017 resulting from the status of ongoing negotiations regarding the asset purchase agreement between AE Supply, AGC, and a subsidiary of LS Power and reflecting the impact of prevailing market conditions as further discussed under "Outlook - Asset Impairment - Competitive Generation Asset Sale" below.
|
Net Regulatory Assets by Source
|
|
June 30,
2017 |
|
December 31,
2016 |
|
Increase
(Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Regulatory transition costs
|
|
$
|
58
|
|
|
$
|
90
|
|
|
$
|
(32
|
)
|
Customer receivables for future income taxes
|
|
370
|
|
|
444
|
|
|
(74
|
)
|
|||
Nuclear decommissioning and spent fuel disposal costs
|
|
(170
|
)
|
|
(304
|
)
|
|
134
|
|
|||
Asset removal costs
|
|
(340
|
)
|
|
(470
|
)
|
|
130
|
|
|||
Deferred transmission costs
|
|
163
|
|
|
127
|
|
|
36
|
|
|||
Deferred generation costs
|
|
216
|
|
|
215
|
|
|
1
|
|
|||
Deferred distribution costs
|
|
248
|
|
|
296
|
|
|
(48
|
)
|
|||
Contract valuations
|
|
99
|
|
|
153
|
|
|
(54
|
)
|
|||
Storm-related costs
|
|
305
|
|
|
353
|
|
|
(48
|
)
|
|||
Other
|
|
45
|
|
|
110
|
|
|
(65
|
)
|
|||
Net Regulatory Assets included on the Consolidated Balance Sheets
|
|
$
|
994
|
|
|
$
|
1,014
|
|
|
$
|
(20
|
)
|
Currently Payable Long-Term Debt
|
|
(In millions)
|
||
Unsecured notes
|
|
$
|
1,100
|
|
FMBs
|
|
575
|
|
|
Secured PCRBs
|
|
141
|
|
|
Unsecured PCRBs
|
|
99
|
|
|
Sinking fund requirements
|
|
60
|
|
|
Other notes
|
|
40
|
|
|
|
|
$
|
2,015
|
|
Borrower(s)
|
|
Type
|
|
Maturity
|
|
Commitment
|
|
Available Liquidity
(3)
|
||||
|
|
|
|
|
|
(In millions)
|
||||||
FirstEnergy
(1)
|
|
Revolving
|
|
December 2021
|
|
$
|
4,000
|
|
|
$
|
3,840
|
|
FET
(2)
|
|
Revolving
|
|
December 2021
|
|
1,000
|
|
|
925
|
|
||
|
|
|
|
Subtotal
|
|
$
|
5,000
|
|
|
$
|
4,765
|
|
|
|
|
|
Cash
|
|
—
|
|
|
114
|
|
||
|
|
|
|
Total
|
|
$
|
5,000
|
|
|
$
|
4,879
|
|
(1)
|
FE and the Utilities. Available liquidity includes impact of $10 million of LOCs issued under various terms.
|
(2)
|
Includes FET, ATSI, TrAIL and MAIT.
|
(3)
|
As disclosed in "Long-term Debt Capacity" below, debt capacity is subject to the consolidated debt to total capitalization limits of each borrower as defined under each of the Facilities. As of
June 30, 2017
, FE and its subsidiaries could issue additional debt of approximately $4.4 billion and remain within the limitations of the financial covenants required by the FE Facility.
|
Type
|
|
Commitment
|
|
Available Liquidity
|
||||
|
|
(In millions)
|
||||||
Two-year secured credit facility with FE
|
|
$
|
500
|
|
|
$
|
500
|
|
Cash
|
|
—
|
|
|
2
|
|
||
Total
|
|
$
|
500
|
|
|
$
|
502
|
|
Borrower
|
|
FirstEnergy Revolving
Credit Facility
Sub-Limit
|
|
FET Revolving
Credit Facility
Sub-Limit
|
|
Regulatory and
Other Short-Term Debt Limitations
|
|
|
|||||||||
|
|
(In millions)
|
|
|
|||||||||||||
FE
|
|
|
$
|
4,000
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
(1)
|
|
FET
|
|
|
—
|
|
|
|
1,000
|
|
|
|
—
|
|
(1)
|
|
|||
OE
|
|
|
500
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
CEI
|
|
|
500
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
TE
|
|
|
500
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
JCP&L
|
|
|
600
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
ME
|
|
|
300
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
PN
|
|
|
300
|
|
|
|
—
|
|
|
|
300
|
|
(2)
|
|
|||
WP
|
|
|
200
|
|
|
|
—
|
|
|
|
200
|
|
(2)
|
|
|||
MP
|
|
|
500
|
|
|
|
—
|
|
|
|
500
|
|
(2)
|
|
|||
PE
|
|
|
150
|
|
|
|
—
|
|
|
|
150
|
|
(2)
|
|
|||
ATSI
|
|
|
—
|
|
|
|
500
|
|
|
|
500
|
|
(2)
|
|
|||
Penn
|
|
|
50
|
|
|
|
—
|
|
|
|
100
|
|
(2)
|
|
|||
TrAIL
|
|
|
—
|
|
|
|
400
|
|
|
|
400
|
|
(2)
|
|
|||
MAIT
|
|
|
—
|
|
|
|
400
|
|
|
|
400
|
|
(2)
|
|
(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-
|
FES
|
|
B-
|
|
B1
|
|
—
|
|
CCC
|
|
Caa1
|
|
C
|
AE Supply
|
|
BB
|
|
—
|
|
BB
|
|
BB-
|
|
B1
|
|
BB-
|
AGC
|
|
—
|
|
—
|
|
—
|
|
BB-
|
|
Baa3
|
|
BB
|
ATSI
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
Baa1
|
|
BBB+
|
CEI
|
|
BBB+
|
|
Baa1
|
|
A-
|
|
BBB-
|
|
Baa3
|
|
BBB+
|
FET
|
|
—
|
|
—
|
|
—
|
|
BB+
|
|
Baa2
|
|
BBB-
|
JCP&L
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
Baa2
|
|
BBB
|
ME
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
A3
|
|
BBB+
|
MAIT
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
Baa1
|
|
—
|
MP
|
|
BBB+
|
|
A3
|
|
BBB+
|
|
—
|
|
—
|
|
—
|
OE
|
|
BBB+
|
|
A2
|
|
A-
|
|
BBB-
|
|
Baa1
|
|
BBB+
|
PN
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
Baa1
|
|
BBB+
|
Penn
|
|
—
|
|
A2
|
|
A-
|
|
—
|
|
—
|
|
—
|
PE
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
TE
|
|
BBB+
|
|
Baa1
|
|
A-
|
|
—
|
|
—
|
|
—
|
TrAIL
|
|
—
|
|
—
|
|
—
|
|
BBB-
|
|
A3
|
|
BBB+
|
WP
|
|
BBB+
|
|
A1
|
|
A-
|
|
—
|
|
—
|
|
—
|
•
|
The absence of $160 million contribution to the qualified pension plan in 2016;
|
•
|
Higher distribution services retail receipts reflecting implementation of approved rates in Ohio, Pennsylvania, and New Jersey, as further described above; partially offset by
|
•
|
Lower collections of capacity revenue at CES.
|
|
|
For the Six Months Ended June 30
|
||||||
Securities Issued or Redeemed / Repaid
|
|
2017
|
|
2016
|
||||
|
|
(In millions)
|
||||||
New Issues
|
|
|
|
|
|
|
||
Term Loan
|
|
$
|
250
|
|
|
$
|
—
|
|
Unsecured Notes
|
|
3,000
|
|
|
—
|
|
||
FMBs
|
|
250
|
|
|
—
|
|
||
|
|
$
|
3,500
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Redemptions / Repayments
|
|
|
|
|
|
|
||
PCRBs
|
|
(158
|
)
|
|
—
|
|
||
Unsecured notes
|
|
(380
|
)
|
|
(356
|
)
|
||
FMBs
|
|
(150
|
)
|
|
—
|
|
||
Senior secured notes
|
|
(47
|
)
|
|
(225
|
)
|
||
|
|
$
|
(735
|
)
|
|
$
|
(581
|
)
|
|
|
|
|
|
||||
Short-term borrowings (repayments), net
|
|
$
|
(2,450
|
)
|
|
$
|
1,225
|
|
|
|
|
|
|
||||
Common stock dividend payments
|
|
$
|
(319
|
)
|
|
$
|
(305
|
)
|
|
|
For the Six Months Ended June 30
|
|
|
||||||||
Cash Used for Investing Activities
|
|
2017
|
|
2016
|
|
Increase (Decrease)
|
||||||
|
|
(In millions)
|
||||||||||
Property Additions:
|
|
|
|
|
|
|
||||||
Regulated Distribution
|
|
$
|
568
|
|
|
$
|
528
|
|
|
$
|
40
|
|
Regulated Transmission
|
|
469
|
|
|
556
|
|
|
(87
|
)
|
|||
Competitive Energy Services
|
|
188
|
|
|
382
|
|
|
(194
|
)
|
|||
Corporate / Other
|
|
29
|
|
|
26
|
|
|
3
|
|
|||
Nuclear fuel
|
|
134
|
|
|
188
|
|
|
(54
|
)
|
|||
Investments
|
|
48
|
|
|
49
|
|
|
(1
|
)
|
|||
Asset removal costs
|
|
79
|
|
|
63
|
|
|
16
|
|
|||
Other
|
|
(4
|
)
|
|
(25
|
)
|
|
21
|
|
|||
|
|
$
|
1,511
|
|
|
$
|
1,767
|
|
|
$
|
(256
|
)
|
•
|
a decrease of $194 million at CES, resulting from lower capital investments associated with outages, MATS compliance, and the Mansfield dewatering facility,
|
•
|
a decrease of $87 million at Regulated Transmission due to timing of capital investments associated with its
Energizing the Future
investment program
;
partially offset by,
|
•
|
an increase of $40 million at Regulated Distribution due to an increase in storm restoration work and smart meter investments in Pennsylvania.
|
Guarantees and Other Assurances
|
|
Maximum Exposure
|
||
|
|
(In millions)
|
||
FE's Guarantees on Behalf of its Subsidiaries
|
|
|
|
|
Energy and Energy-Related Contracts
(1)
|
|
$
|
5
|
|
Deferred compensation arrangements
(2)
|
|
568
|
|
|
Fuel Related
(3)
|
|
72
|
|
|
Other
(4)
|
|
4
|
|
|
|
|
649
|
|
|
Subsidiaries’ Guarantees
|
|
|
||
Energy and Energy-Related Contracts
(5)
|
|
265
|
|
|
FES’ guarantee of FG’s sale and leaseback obligations
|
|
1,600
|
|
|
|
|
1,865
|
|
|
|
|
|
||
FE's Guarantees on Behalf of Business Ventures
|
|
|
||
Global Holding facility
|
|
300
|
|
|
|
|
|
||
Other Assurances
|
|
|
||
Surety Bonds - Wholly Owned Subsidiaries
(6)
|
|
195
|
|
|
Surety Bonds
|
|
203
|
|
|
Sale leaseback indemnity
|
|
58
|
|
|
LOCs
(7)
|
|
10
|
|
|
|
|
466
|
|
|
Total Guarantees and Other Assurances
|
|
$
|
3,280
|
|
(1)
|
Issued for open-ended terms, with a 10-day termination right by FirstEnergy.
|
(2)
|
CES-related portion is $143 million, including $56 million and $87 million at FES and FENOC, respectively.
|
(3)
|
FE is the guarantor of the remaining payments due to CSX/BNSF in connection with the definitive settlement on a transportation agreement.
|
(4)
|
Includes guarantees of
$1 million
for railcar leases and $
3 million
for various leases.
|
(5)
|
Includes energy and energy-related contracts associated with FES.
|
(6)
|
FE is a guarantor for $169 million of FG surety bonds for the benefit of the PA DEP with respect to LBR and a guarantor for a $12 million FES surety bond for the benefit of the Ohio Environmental Protection Agency relating to the W.H. Sammis generating station
under the surety support provisions of FE's credit facility to FES as discussed above. As of
June 30, 2017
, an additional $19 million of surety credit support remains available to FES from FE under this facility.
|
(7)
|
Includes
$10 million
issued for various terms pursuant to LOC capacity available under FirstEnergy’s revolving credit facilities.
|
Potential Collateral Obligations
|
|
FES
|
|
AE Supply
|
|
Regulated
|
|
FE Corp
|
|
Total
|
||||||||||
|
|
|
(in millions)
|
|||||||||||||||||
Contractual Obligations for Additional Collateral
|
|
|
|
|
|
|
|
|
|
|
||||||||||
At Current Credit Rating
|
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
Upon Further Downgrade
|
|
—
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
|||||
Surety Bonds (Collateralized Amount)
(1)
|
|
65
|
|
|
25
|
|
|
92
|
|
|
187
|
|
|
369
|
|
|||||
Total Exposure from Contractual Obligations
|
|
$
|
71
|
|
|
$
|
27
|
|
|
$
|
135
|
|
|
$
|
187
|
|
|
$
|
420
|
|
Source of Information-
Fair Value by Contract Year
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||||||
Other external sources
(1)
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
(34
|
)
|
|
$
|
(11
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(65
|
)
|
Prices based on models
|
|
(1
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Total
(2)
|
|
$
|
(1
|
)
|
|
$
|
(18
|
)
|
|
$
|
(34
|
)
|
|
$
|
(11
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(64
|
)
|
(1)
|
Primarily represents contracts based on broker and ICE quotes.
|
(2)
|
Includes
$(98) million
in non-hedge derivative contracts that are primarily related to NUG contracts at certain of the Utilities. NUG contracts are subject to regulatory accounting and do not impact earnings.
|
•
|
legislative or regulatory solutions for generation assets that recognize their environmental or energy security benefits;
|
•
|
restructuring FES debt with its creditors;
|
•
|
seeking protection under U.S. bankruptcy laws for FES and likely FENOC; and/or
|
•
|
additional asset sales and/or plant deactivations.
|
•
|
The outcome of the recently announced directive by the Secretary of Energy to complete a study that explores critical issues central to protecting the long-term reliability of the electric grid, including the impact of federal policy interventions and the changing nature of electricity fuel mix, compensation of on-site fuel supply and other factors that strengthen grid resilience, and the impact of regulatory burdens, mandates and tax and subsidy policies on the premature retirement of baseload power plants;
|
•
|
The resolution of legislation before the Ohio General Assembly that would create a zero-emission nuclear (ZEN) credit that would compensate nuclear power plants for their environmental attributes and the potential for similar legislative action in Pennsylvania; and/or
|
•
|
The inability to finalize and consummate a settlement agreement with BNSF and NS regarding a previously disclosed long-term coal transportation contract dispute as discussed in "Outlook - Environmental Matters" above, whereby FG could be subject to materially higher damages.
|
|
|
For the Six Months Ended June 30
|
|
|
||||||||
Revenues by Type of Service
|
|
2017
|
|
2016
|
|
Decrease
|
||||||
|
|
(In millions)
|
||||||||||
Contract Sales:
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
387
|
|
|
$
|
402
|
|
|
$
|
(15
|
)
|
Governmental Aggregation
|
|
193
|
|
|
431
|
|
|
(238
|
)
|
|||
Mass Market
|
|
65
|
|
|
85
|
|
|
(20
|
)
|
|||
POLR
|
|
268
|
|
|
282
|
|
|
(14
|
)
|
|||
Structured Sales
|
|
149
|
|
|
265
|
|
|
(116
|
)
|
|||
Total Contract Sales
|
|
1,062
|
|
|
1,465
|
|
|
(403
|
)
|
|||
Wholesale
|
|
509
|
|
|
712
|
|
|
(203
|
)
|
|||
Transmission
|
|
23
|
|
|
37
|
|
|
(14
|
)
|
|||
Other
|
|
61
|
|
|
87
|
|
|
(26
|
)
|
|||
Total Revenues
|
|
$
|
1,655
|
|
|
$
|
2,301
|
|
|
$
|
(646
|
)
|
|
|
For the Six Months Ended June 30
|
|
Increase
|
|||||
MWH Sales by Channel
|
|
2017
|
|
2016
|
|
(Decrease)
|
|||
|
|
(In thousands)
|
|
|
|||||
Contract Sales:
|
|
|
|
|
|
|
|||
Direct
|
|
7,859
|
|
|
7,478
|
|
|
5.1
|
%
|
Governmental Aggregation
|
|
3,754
|
|
|
6,560
|
|
|
(42.8
|
)%
|
Mass Market
|
|
947
|
|
|
1,239
|
|
|
(23.6
|
)%
|
POLR
|
|
4,813
|
|
|
4,632
|
|
|
3.9
|
%
|
Structured Sales
|
|
3,740
|
|
|
6,534
|
|
|
(42.8
|
)%
|
Total Contract Sales
|
|
21,113
|
|
|
26,443
|
|
|
(20.2
|
)%
|
Wholesale
|
|
7,897
|
|
|
3,959
|
|
|
99.5
|
%
|
Total MWH Sales
|
|
29,010
|
|
|
30,402
|
|
|
(4.6
|
)%
|
|
|
Source of Change in Revenues
|
||||||||||||||||||
|
|
Increase (Decrease)
|
||||||||||||||||||
MWH Sales Channel:
|
|
Sales Volumes
|
|
Prices
|
|
Gain on Settled Contracts
|
|
Capacity Revenue
|
|
Total
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Direct
|
|
$
|
21
|
|
|
$
|
(36
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
Governmental Aggregation
|
|
(185
|
)
|
|
(53
|
)
|
|
—
|
|
|
—
|
|
|
(238
|
)
|
|||||
Mass Market
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|||||
POLR
|
|
11
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|||||
Structured Sales
|
|
(113
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(116
|
)
|
|||||
Wholesale
|
|
98
|
|
|
25
|
|
|
(90
|
)
|
|
(236
|
)
|
|
(203
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Source of Change
|
||||||||||||||||||
|
|
Increase (Decrease)
|
||||||||||||||||||
Operating Expenses
|
|
Volumes
|
|
Unit Costs
|
|
Loss on Settled Contracts
|
|
Capacity Expense
|
|
Total
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Fossil Fuel
|
|
$
|
(36
|
)
|
|
$
|
(2
|
)
|
|
$
|
(58
|
)
|
|
$
|
—
|
|
|
$
|
(96
|
)
|
Nuclear Fuel
|
|
(1
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Affiliated Purchased Power
|
|
101
|
|
|
(5
|
)
|
|
(143
|
)
|
|
—
|
|
|
(47
|
)
|
|||||
Non-affiliated Purchased Power
|
|
(44
|
)
|
|
22
|
|
|
(72
|
)
|
|
(233
|
)
|
|
(327
|
)
|
•
|
A $164 million charge associated with estimated losses on long-term coal transportation contract disputes recognized in the first quarter of 2017 as discussed in "Outlook - Environmental Matters" above.
|
•
|
Fossil operating and maintenance expenses decreased $34 million, primarily due to lower outage costs.
|
•
|
Nuclear operating and maintenance expenses increased $24 million, primarily as a result of higher refueling outage costs. There were two refueling outages during the first six months of 2017, as compared to one refueling outage during the same period of 2016.
|
•
|
Transmission expenses decreased $22
million, primarily due to lower load requirements.
|
•
|
Other operating expenses increased $64 million, primarily due to higher non-cash mark-to-market losses on commodity contract positions.
|
|
|
For the Six Months Ended June 30
|
||||||
Securities Issued or Redeemed / Repaid
|
|
2017
|
|
2016
|
||||
|
|
(In millions)
|
||||||
Redemptions / Repayments
|
|
|
|
|
|
|
||
PCRBs
|
|
$
|
(158
|
)
|
|
$
|
(245
|
)
|
Senior secured notes
|
|
(5
|
)
|
|
—
|
|
||
|
|
$
|
(163
|
)
|
|
$
|
(245
|
)
|
|
|
|
|
|
||||
Short-term borrowings, net
|
|
$
|
174
|
|
|
$
|
210
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30
|
||||||
Cash Used for Investing Activities
|
|
2017
|
|
2016
|
||||
|
|
(In millions)
|
||||||
Property Additions
|
|
$
|
169
|
|
|
$
|
335
|
|
Nuclear fuel
|
|
134
|
|
|
188
|
|
||
Loans to affiliated companies, net
|
|
(29
|
)
|
|
(11
|
)
|
||
Investments
|
|
29
|
|
|
15
|
|
||
Other
|
|
(1
|
)
|
|
(8
|
)
|
||
|
|
$
|
302
|
|
|
$
|
519
|
|
Source of Information-
Fair Value by Contract Year
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||||||
Other external sources
(1)
|
|
$
|
19
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33
|
|
Prices based on models
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||||
Total
|
|
$
|
17
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31
|
|
(1)
|
Primarily represents contracts based on broker and ICE quotes.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
•
|
the risk that we may not be able to, or may no longer desire to, complete our planned disposition of our generating assets;
|
•
|
the risk that FirstEnergy could be required or otherwise elect to satisfy significant financial obligations of FES or its subsidiaries, which could adversely affect our financial condition and cash flows;
|
•
|
the risk that creditors of FES may attempt to assert claims, including those that arise out of litigation or other commercial disputes, against FirstEnergy that may require significant effort and money to defend and could adversely affect our business, financial condition, results of operations and cash flows; and
|
•
|
the risk that certain triggering events could constitute events of default under certain of our obligations.
|
Period
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs
(2)
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||||
|
|
|
|
|
|
|
|
|
|||||
April 1-30, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
May 1-31, 2017
|
|
1,883
|
|
|
$
|
29.72
|
|
|
—
|
|
|
—
|
|
June 1-30, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Second Quarter
|
|
1,883
|
|
|
$
|
29.72
|
|
|
—
|
|
|
—
|
|
(1)
|
Share amounts reflect shares that were surrendered to FirstEnergy by a participant under our 2007 Incentive Plan to satisfy tax withholding obligations relating to the vesting of a restricted stock award and the subsequent dividend reinvestments on such equity award. The total number of shares repurchased represents the net shares surrendered to FirstEnergy to satisfy tax withholding. All such repurchased shares are now held as treasury shares.
|
(2)
|
FirstEnergy does not currently have any publicly announced plan or program for share purchases.
|
Exhibit Number
|
|
||
FirstEnergy
|
|
|
|
(A)
|
3.1
|
|
Amended Articles of Incorporation of FirstEnergy Corp., as amended July 25, 2017
|
|
4.1
|
|
Officer’s Certificate relating to FirstEnergy Corp.’s 2.85% Notes, Series A, due 2022, 3.90% Notes, Series B, due 2027 and 4.85% Notes, Series C, due 2047 (incorporated by reference to FirstEnergy Corp.’s Form 8-K filed June 21, 2017, Exhibit 4.1, File No. 333-21011)
|
|
4.2
|
|
Form of 2.85% Note, Series A, due 2022 (incorporated by reference to FirstEnergy Corp.’s Form 8-K filed June 21, 2017, Exhibit 4.1, File No. 333-21011)
|
|
4.3
|
|
Form of 3.90% Note, Series B, due 2027 (incorporated by reference to FirstEnergy Corp.’s Form 8-K filed June 21, 2017, Exhibit 4.1, File No. 333-21011)
|
|
4.4
|
|
Form of 4.85% Note, Series C, due 2047 (incorporated by reference to FirstEnergy Corp.’s Form 8-K filed June 21, 2017, Exhibit 4.1, File No. 333-21011)
|
(A)
|
10.1
|
|
Guarantee, dated as of February 21, 2017, by FirstEnergy Corp. in favor of participants under the FirstEnergy Corp. Cash Balance Pension Restoration Plan
|
(A)
|
12
|
|
Fixed charge ratio
|
(A)
|
31.1
|
|
Certification of chief executive officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
31.2
|
|
Certification of chief financial officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
32
|
|
Certification of chief executive officer and chief financial officer, pursuant to 18 U.S.C. Section 1350
|
|
101
|
|
The following materials from the Quarterly Report on Form 10-Q of FirstEnergy Corp. for the period ended June 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income (Loss) and Consolidated Statements of Comprehensive Income (Loss), (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) related notes to these financial statements and (v) document and entity information.
|
FES
|
|
|
|
(A)
|
10.1
|
|
Settlement Agreement, dated May 1, 2017, by and among FirstEnergy Corp. and FirstEnergy Generation, LLC and BNSF Railway Company and CSX Transportation, Inc.
|
(A)
|
31.1
|
|
Certification of principal executive officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
31.2
|
|
Certification of principal financial officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
32
|
|
Certification of principal executive officer and principal financial officer, pursuant to 18 U.S.C. Section 1350
|
|
101
|
|
The following materials from the Quarterly Report on Form 10-Q of FirstEnergy Solutions Corp. for the period ended June 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss), (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) related notes to these financial statements and (v) document and entity information.
|
|
FIRSTENERGY CORP.
|
|
Registrant
|
|
|
|
/s/ K. Jon Taylor
|
|
K. Jon Taylor
|
|
Vice President, Controller
and Chief Accounting Officer
|
|
|
|
FIRSTENERGY SOLUTIONS CORP.
|
|
Registrant
|
|
|
|
/s/ Jason J. Lisowski
|
|
Jason J. Lisowski
|
|
Controller and Treasurer
|
|
(Principal Financial Officer)
|
Exhibit Number
|
|
||
|
|
|
|
FirstEnergy
|
|
|
|
(A)
|
3.1
|
|
Amended Articles of Incorporation of FirstEnergy Corp., as amended July 25, 2017
|
|
4.1
|
|
Officer’s Certificate relating to FirstEnergy Corp.’s 2.85% Notes, Series A, due 2022, 3.90% Notes, Series B, due 2027 and 4.85% Notes, Series C, due 2047 (incorporated by reference to FirstEnergy Corp.’s Form 8-K filed June 21, 2017, Exhibit 4.1, File No. 333-21011)
|
|
4.2
|
|
Form of 2.85% Note, Series A, due 2022 (incorporated by reference to FirstEnergy Corp.’s Form 8-K filed June 21, 2017, Exhibit 4.1, File No. 333-21011)
|
|
4.3
|
|
Form of 3.90% Note, Series B, due 2027 (incorporated by reference to FirstEnergy Corp.’s Form 8-K filed June 21, 2017, Exhibit 4.1, File No. 333-21011)
|
|
4.4
|
|
Form of 4.85% Note, Series C, due 2047 (incorporated by reference to FirstEnergy Corp.’s Form 8-K filed June 21, 2017, Exhibit 4.1, File No. 333-21011)
|
(A)
|
10.1
|
|
Guarantee, dated as of February 21, 2017, by FirstEnergy Corp. in favor of participants under the FirstEnergy Corp. Cash Balance Pension Restoration Plan
|
(A)
|
12
|
|
Fixed charge ratio
|
(A)
|
31.1
|
|
Certification of chief executive officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
31.2
|
|
Certification of chief financial officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
32
|
|
Certification of chief executive officer and chief financial officer, pursuant to 18 U.S.C. Section 1350
|
|
101
|
|
The following materials from the Quarterly Report on Form 10-Q of FirstEnergy Corp. for the period ended June 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income (Loss) and Consolidated Statements of Comprehensive Income (Loss), (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) related notes to these financial statements and (v) document and entity information.
|
|
|
|
|
FES
|
|
|
|
(A)
|
10.1
|
|
Settlement Agreement, dated May 1, 2017, by and among FirstEnergy Corp. and FirstEnergy Generation, LLC and BNSF Railway Company and CSX Transportation, Inc.
|
(A)
|
31.1
|
|
Certification of principal executive officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
31.2
|
|
Certification of principal financial officer, as adopted pursuant to Rule 13a-14(a)
|
(A)
|
32
|
|
Certification of principal executive officer and principal financial officer, pursuant to 18 U.S.C. Section 1350
|
|
101
|
|
The following materials from the Quarterly Report on Form 10-Q of FirstEnergy Solutions Corp. for the period ended June 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss), (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) related notes to these financial statements and (v) document and entity information.
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
---|
DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|---|---|---|
(2) As of December 31, 2024, Messrs. Tierney, Smith, and Thomas are not vested in their pension benefits. In recognition of Mr. Park’s extensive legal and energy sector expertise and in order to incentivize Mr. Park to join the Company as well as encourage retention, Mr. Park will be provided an additional credit of $275,000 into the Cash Balance Restoration Plan after five years of continuous employment. | |||
(2) As of December 31, 2024, Messrs. Tierney, Smith, and Thomas are not vested in their pension benefits. In recognition of Mr. Park’s extensive legal and energy sector expertise and in order to incentivize Mr. Park to join the Company as well as encourage retention, Mr. Park will be provided an additional credit of $275,000 into the Cash Balance Restoration Plan after five years of continuous employment. | |||
Chairman of the board of CenTrio Energy since July 2024. Former chief executive officer and vice chairman of Orbital Infrastructure Group, Inc. (from 2019-2023), a provider of specialty contracting services to the electric power, telecommunications, and renewable industries. Former president, chief executive officer and director of Quanta Services, Inc., a provider of specialty contracting services to the electric power and oil and gas industries (from 2011 to 2016). He served as a director of Hennessy Capital Acquisition Corp IV (from 2019 to 2020), NRC Group Holdings (from 2017 to 2019) and Spark Power Group Inc. (from 2018 to 2019). | |||
(1) Ms. Walker no longer served as SVP, Chief Human Resources Officer and Corporate Services, effective as of July 31, 2024. | |||
Mr. Tierney earned his bachelor’s degree from Boston College and an MBA from the University of Chicago. He also served as a United States Peace Corps volunteer in the Republic of the Philippines. With a career spanning 29 years in the electric utility industry, Mr. Tierney has developed extensive leadership, operational and commercial experience. Moreover, his strong financial acumen – across capital allocation, accounting, investor relations, planning and strategy, and risk management – and demonstrated ability to advance business strategies and drive value creation make him a valuable member of the FirstEnergy Board. Mr. Tierney’s extensive experience qualifies him to lead your Board in the Company’s efforts to build trust with our external stakeholders, support our senior leadership team’s efforts to carry out its strategy, and strengthen your Company’s governance, responsible business practices and stewardship. |
Name and Principal Position |
Year |
Salary
($) |
Bonus
($) |
Stock
Awards ($) |
Non-Equity
Incentive Plan Compensation ($) |
Change in
Pension Value and Nonqualified Deferred Compensation Earnings ($) |
All Other
Compensation ($) |
Total
($) |
SEC Total
Without Change In Pension Value and Nonqualified Deferred Compensation Earnings ($) |
|||||||||||||||||||||||||||
Brian X. Tierney President & CEO |
2024 | $ | 1,511,539 | $ | — | $ | 10,197,274 | $ | — | $ | 186,854 | $ | 37,867 | $ | 11,933,534 | $ | 11,746,680 | |||||||||||||||||||
|
2023 |
|
$ |
876,923 |
|
$ |
1,500,000 |
|
$ |
22,267,685 |
|
$ |
1,573,767 |
|
$ |
49,154 |
|
$ |
185,087 |
|
$ |
26,452,616 |
|
$ |
26,403,462 |
|
||||||||||
K. Jon Taylor SVP, CFO & Strategy |
|
2024 |
|
$ |
881,731 |
|
$ |
— |
|
$ |
2,830,502 |
|
$ |
— |
|
$ |
434,674 |
|
$ |
114,252 |
|
$ |
4,261,159 |
|
$ |
3,826,485 |
|
|||||||||
|
2023 |
|
$ |
870,962 |
|
$ |
— |
|
$ |
4,665,181 |
|
$ |
939,479 |
|
$ |
541,704 |
|
$ |
32,955 |
|
$ |
7,050,282 |
|
$ |
6,508,578 |
|
||||||||||
|
2022 |
|
$ |
790,223 |
|
$ |
— |
|
$ |
1,974,021 |
|
$ |
661,438 |
|
$ |
9,412 |
|
$ |
32,131 |
|
$ |
3,467,225 |
|
$ |
3,457,813 |
|
||||||||||
A. Wade Smith President, FE Utilities |
|
2024 |
|
$ |
765,875 |
|
$ |
— |
|
$ |
1,891,170 |
|
$ |
— |
|
$ |
53,200 |
|
$ |
169,569 |
|
$ |
2,879,814 |
|
$ |
2,826,614 |
|
|||||||||
|
2023 |
|
$ |
29,231 |
|
$ |
1,500,000 |
|
$ |
5,632,346 |
|
$ |
— |
|
$ |
— |
|
$ |
228 |
|
$ |
7,161,805 |
|
$ |
7,161,805 |
|
||||||||||
Hyun Park SVP & Chief Legal Officer |
|
2024 |
|
$ |
735,616 |
|
$ |
— |
|
$ |
1,634,879 |
|
$ |
— |
|
$ |
108,238 |
|
$ |
14,775 |
|
$ |
2,493,508 |
|
$ |
2,385,270 |
|
|||||||||
|
2023 |
|
$ |
725,154 |
|
$ |
— |
|
$ |
1,539,342 |
|
$ |
653,162 |
|
$ |
89,494 |
|
$ |
18,484 |
|
$ |
3,025,635 |
|
$ |
2,936,141 |
|
||||||||||
|
2022 |
|
$ |
691,978 |
|
$ |
— |
|
$ |
1,584,261 |
|
$ |
473,156 |
|
$ |
98,743 |
|
$ |
134,077 |
|
$ |
2,982,215 |
|
$ |
2,883,472 |
|
||||||||||
Toby L. Thomas Chief Operating Officer |
|
2024 |
|
$ |
604,615 |
|
$ |
— |
|
$ |
1,284,022 |
|
$ |
— |
|
$ |
36,301 |
|
$ |
165,918 |
|
$ |
2,090,856 |
|
$ |
2,054,555 |
|
|||||||||
2023 | $ | 50,769 | $ | 250,000 | $ | 1,957,547 | $ | — | $ | 1,662 | $ | 21,193 | $ | 2,281,172 | $ | 2,279,510 | ||||||||||||||||||||
Christine L. Walker Former SVP, Chief Human Resources Officer & Corporate Services |
|
2024 |
|
$ |
297,437 |
|
$ |
— |
|
$ |
765,670 |
|
$ |
— |
|
$ |
149,215 |
|
$ |
1,719,111 |
|
$ |
2,931,433 |
|
$ |
2,782,218 |
|
|||||||||
|
2023 |
|
$ |
490,962 |
|
$ |
— |
|
$ |
695,884 |
|
$ |
383,845 |
|
$ |
885,250 |
|
$ |
32,288 |
|
$ |
2,488,229 |
|
$ |
1,602,979 |
|
||||||||||
|
2022 |
|
$ |
465,324 |
|
$ |
— |
|
$ |
638,241 |
|
$ |
275,332 |
|
$ |
7,827 |
|
$ |
22,828 |
|
$ |
1,409,552 |
|
$ |
1,401,725 |
|
No Customers Found
Suppliers
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
---|---|---|---|
TIERNEY BRIAN X | - | 198,280 | 447 |
TIERNEY BRIAN X | - | 134,753 | 0 |
SOMERHALDER JOHN W II | - | 100,637 | 677 |
K. Jon Taylor | - | 99,919 | 5,468 |
Smith Allan Wade | - | 93,557 | 0 |
Smith Allan Wade | - | 83,554 | 255 |
Belcher Samuel | - | 68,924 | 2,593 |
Walker Christine | - | 36,959 | 54 |
Lisowski Jason | - | 12,183 | 910 |
Thomas Toby L. | - | 11,827 | 201 |
Thomas Toby L. | - | 8,138 | 0 |
Croom Jana T | - | 2,673 | 0 |