Exhibit 99.2
Consolidated Report to the Financial Community
Fourth Quarter 2010
(Released February 16, 2011)
HIGHLIGHTS | After-Tax EPS Variance Analysis | 4th.Qtr. | ||
4Q 2009 Basic EPS – GAAP Basis | $0.78 | |||
Special Items – 2009 | (0.01) | |||
● | Normalized non-GAAP* earnings, excluding special items, were $0.71 per | 4Q 2009 Normalized Earnings – Non-GAAP Basis* | $0.77 | |
share for the fourth quarter of 2010, compared with $0.77 per share for the | Distribution Deliveries | 0.03 | ||
fourth quarter of 2009. GAAP earnings for the fourth quarter of 2010 were | Commodity Margin | 0.24 | ||
$0.61 per share, compared with $0.78 per share for the fourth quarter of | O&M Expenses | (0.18) | ||
2009. | Depreciation | 0.01 | ||
General Taxes | (0.05) | |||
● | Normalized non-GAAP earnings for 2010, excluding special items, were | Investment Income - NDT | 0.04 | |
$3.62 per share, within our earnings guidance of $3.60 to $3.70 per share. | Capitalized Interest | 0.02 | ||
Normalized non-GAAP earnings for 2009, excluding special items, were | Income Tax Adjustment - 2009 | (0.18) | ||
$3.77 per share. GAAP earnings for 2010 were $2.58 per share, compared | Other | 0.01 | ||
$3.31 per share in 2009. | 4Q 2010 Normalized Earnings – Non-GAAP Basis* | $0.71 | ||
Special Items - 2010 | (0.10) | |||
4Q 2010 Basic EPS – GAAP Basis | $0.61 | |||
4Q 2010 Results vs. 4Q 2009 | ||||
● | Higher distribution delivery revenues increased earnings by $0.03 per share. Electric distribution deliveries increased 524,000 MWH, or 2%, due to the improving | |||
economy and colder weather. Heating-degree-days were 8% higher than the same period last year and 5% above normal. Residential deliveries increased 115,000 | ||||
MWH, or 1%, while commercial deliveries increased by 178,000 MWH, or 2%. Industrial deliveries increased 234,000 MWH, or 3%, due mostly to increased usage in | ||||
the steel industry. |
● | Commodity margin increased earnings by $0.24 per share, as a result of the factors described below. |
FirstEnergy Solutions Corp.’s (FES) generation sales increased 3.4 million MWH, or 23%, and increased earnings by $0.49 per share. FES continues to successfully execute its retail strategy by gaining customers in Ohio through direct and governmental aggregation sales channels. FES retail sales also grew significantly in all other markets it serves, with expansion into multiple new territories, including central and southern Ohio, Michigan and Pennsylvania, and continued growth in existing territories.
FES Generation Sales - 4Q10 vs. 4Q09 | |||||||||||
(thousand MWH) | POLR | Direct | Aggregation | Total | |||||||
MISO | (1,722) | 2,117 | 2,137 | 2,532 | |||||||
PJM | 918 | 918 | |||||||||
Total Increase/ (Decrease) | (1,722) | 3,035 | 2,137 | 3,450 | |||||||
FES wholesale electricity sales increased 1.2 million MWH, or 58%, increasing earnings by $0.07 per share.
FES - Wholesale Sales - 4Q10 vs. 4Q09 | |||||||||
(thousand MWH) | MISO | PJM | Total | ||||||
Wholesale Sales Increase | 347 | 865 | 1,212 | ||||||
Generation output for the quarter increased 3.6 million MWH, or 23%. Approximately 2.2 million MWH of the 2.8 million increase in fossil generation output was from the baseload units, while nuclear generation output increased 834,000 MWH.
Generation Output - 4Q10 vs. 4Q09 | |||||||||
(thousand MWH) | Fossil | Nuclear | Total | ||||||
Generation Output Increase | 2,760 | 834 | 3,594 | ||||||
Higher fuel expenses reduced earnings by $0.18 per share. Fossil fuel expenses increased $0.16 per share due to increased coal consumption, higher coal transportation costs and fuel surcharges. Nuclear fuel expenses increased $0.02 per share due to higher volume and unit prices.
Increased purchased power costs reduced earnings by $0.12 per share. The increase in energy purchases was primarily attributable to increased spot market purchases in PJM. The increase in PJM energy purchases resulted from higher POLR and retail load requirements.
FES - Purchased Power - 4Q10 vs. 4Q09 | |||||||||
(thousand MWH) | MISO | PJM | Total | ||||||
Purchased Power Increase / (Decrease) | (79) | 925 | 846 | ||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 2 |
Commodity Margin EPS Summary
Revenues - 4Q10 vs. 4Q09 | ||||||||||||
FES Generation Sales | Wholesale | |||||||||||
EPS | POLR | Direct | Aggregation | Sales | Total Rev | |||||||
Rate | $0.05 | ($0.06) | $0.04 | ($0.02) | $0.01 | |||||||
Volume | ($0.18) | $0.37 | $0.25 | $0.09 | $0.53 | |||||||
Total | ($0.13) | $0.31 | $0.29 | $0.07 | $0.54 | |||||||
Expenses - 4Q10 vs. 4Q09 | ||||||||
Purchased | ||||||||
EPS | Fuel | Power | Total Exp | |||||
Rate | ($0.02) | ($0.04) | ($0.06) | |||||
Volume | ($0.16) | ($0.08) | ($0.24) | |||||
Total | ($0.18) | ($0.12) | ($0.30) | |||||
● | Higher O&M expenses reduced earnings by $0.18 per share. |
- | Higher generation O&M expenses reduced earnings by $0.09 per share – the result of undertaking work activities in the fourth quarter of 2010 that were originally planned for future periods. |
- | Higher operating expenses from the Energy Delivery segment decreased earnings by $0.06 per share. |
- | Higher employee-related costs reduced earnings by $0.03 per share due principally to the impact of more favorable results on incentive compensation programs. |
● | Lower depreciation expense increased earnings by $0.01 per share, primarily due to reduced depreciation expense associated with the impairment of the Lake Plants in August of 2010. |
● | Higher general taxes decreased earnings by $0.05 per share, primarily due to higher Ohio KWH taxes and Pennsylvania gross receipts taxes, as well as higher property taxes. |
● | Higher investment income from the nuclear decommissioning trusts increased earnings by $0.04 per share. |
● | Net financing costs increased earnings by $0.02 per share due to higher capitalized interest related to construction programs. Interest expense decreased slightly, as the impact of interest rate swap agreements implemented in the second quarter of 2010 more than offset higher interest costs. |
● | An $0.18 per share reduction in earnings resulted from last year’s reversal of after-tax interest associated with several tax positions that were settled in the fourth quarter of 2009. |
Consolidated Report to the Financial Community - 4th Quarter 2010 | 3 |
● | The following special items were recognized during the fourth quarter of 2010. |
Special Items | EPS | ||||
Merger Transaction Costs | ($0.07) | ||||
Non-Core Asset Sales | $0.16 | ||||
Generating Plant Charges | ($0.17) | ||||
Trust Securities Impairment | ($0.02) | ||||
Total | ($0.10) | ||||
* The 2010 GAAP to non-GAAP reconciliation statements can be found on page 16 of this report and all GAAP to non-GAAP reconciliation statements are available on the Investor Information section of FirstEnergy Corp.'s website at www.firstenergycorp.com/ir.
For additional information, please contact: |
Ronald E. Seeholzer | Irene M. Prezelj | Rey Y. Jimenez |
Vice President, Investor Relations | Director, Investor Relations | Manager, Investor Relations |
(330) 384-5415 | (330) 384-3859 | (330) 761-4239 |
Consolidated Report to the Financial Community - 4th Quarter 2010 | 4 |
FirstEnergy Corp.
Consolidated Statements of Income
(In millions, except for per share amounts)
Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||||
(1 | ) | Electric utilities | $ | 2,200 | $ | 2,389 | $ | (189 | ) | $ | 9,952 | $ | 11,144 | $ | (1,192 | ) | |||||||||
(2 | ) | Unregulated businesses | 1,592 | 1,078 | 514 | 5,878 | 4,774 | 1,104 | |||||||||||||||||
(3 | ) | Intersegment revenues | (575 | ) | (507 | ) | (68 | ) | (2,491 | ) | (2,945 | ) | 454 | ||||||||||||
(4 | ) | Total Revenues | 3,217 | 2,960 | 257 | 13,339 | 12,973 | 366 | |||||||||||||||||
Expenses | |||||||||||||||||||||||||
(5 | ) | Fuel | 348 | 263 | 85 | 1,432 | 1,153 | 279 | |||||||||||||||||
(6 | ) | Purchased power | 1,050 | 1,250 | (200 | ) | 4,624 | 4,730 | (106 | ) | |||||||||||||||
(7 | ) | Other operating expenses | 738 | 594 | 144 | 2,850 | 2,697 | 153 | |||||||||||||||||
(8 | ) | Provision for depreciation | 181 | 186 | (5 | ) | 746 | 736 | 10 | ||||||||||||||||
(9 | ) | Amortization of regulatory assets | 173 | 252 | (79 | ) | 722 | 1,155 | (433 | ) | |||||||||||||||
(10 | ) | Deferral of new regulatory assets | - | - | - | - | (136 | ) | 136 | ||||||||||||||||
(11 | ) | General taxes | 189 | 166 | 23 | 776 | 753 | 23 | |||||||||||||||||
(12 | ) | Impairment of long-lived assets | 90 | 6 | 84 | 384 | 6 | 378 | |||||||||||||||||
(13 | ) | Total Expenses | 2,769 | 2,717 | 52 | 11,534 | 11,094 | 440 | |||||||||||||||||
(14 | ) | Operating Income | 448 | 243 | 205 | 1,805 | 1,879 | (74 | ) | ||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||||
(15 | ) | Investment income (loss) | 24 | (3 | ) | 27 | 117 | 204 | (87 | ) | |||||||||||||||
(16 | ) | Interest expense | (217 | ) | (223 | ) | 6 | (845 | ) | (978 | ) | 133 | |||||||||||||
(17 | ) | Capitalized interest | 43 | 34 | 9 | 165 | 130 | 35 | |||||||||||||||||
(18 | ) | Total Other Expense | (150 | ) | (192 | ) | 42 | (563 | ) | (644 | ) | 81 | |||||||||||||
(19 | ) | Income Before Income Taxes | 298 | 51 | 247 | 1,242 | 1,235 | 7 | |||||||||||||||||
(20 | ) | Income taxes (benefits) | 118 | (185 | ) | 303 | 482 | 245 | 237 | ||||||||||||||||
(21 | ) | Net Income | 180 | 236 | (56 | ) | 760 | 990 | (230 | ) | |||||||||||||||
(22 | ) | Loss attributable to noncontrolling interest | (5 | ) | (2 | ) | (3 | ) | (24 | ) | (16 | ) | (8 | ) | |||||||||||
(23 | ) | Earnings Available to FirstEnergy Corp. | $ | 185 | $ | 238 | $ | (53 | ) | $ | 784 | $ | 1,006 | $ | (222 | ) | |||||||||
(24 | ) | Earnings Per Share of Common Stock | |||||||||||||||||||||||
(25 | ) | Basic | $ | 0.61 | $ | 0.78 | $ | (0.17 | ) | $ | 2.58 | $ | 3.31 | $ | (0.73 | ) | |||||||||
(26 | ) | Diluted | $ | 0.61 | $ | 0.78 | $ | (0.17 | ) | $ | 2.57 | $ | 3.29 | $ | (0.72 | ) | |||||||||
(27 | ) | Weighted Average Number of | |||||||||||||||||||||||
Common Shares Outstanding | |||||||||||||||||||||||||
(28 | ) | Basic | 304 | 304 | - | 304 | 304 | - | |||||||||||||||||
(29 | ) | Diluted | 306 | 306 | - | 305 | 306 | (1 | ) | ||||||||||||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 5 |
FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Three Months Ended December 31, 2010 | |||||||||||||||||
Energy | Competitive | Other & | |||||||||||||||
Delivery | Energy | Reconciling | |||||||||||||||
Services (a) | Services (b) | Adjustments (c) | Consolidated | ||||||||||||||
Revenues | |||||||||||||||||
(1 | ) | Electric sales | $ | 2,021 | $ | 950 | $ | - | $ | 2,971 | |||||||
(2 | ) | Other | 119 | 141 | (21 | ) | 239 | ||||||||||
(3 | ) | Internal revenues* | 60 | 489 | (542 | ) | 7 | ||||||||||
(4 | ) | Total Revenues | 2,200 | 1,580 | (563 | ) | 3,217 | ||||||||||
Expenses | |||||||||||||||||
(5 | ) | Fuel | - | 351 | (3 | ) | 348 | ||||||||||
(6 | ) | Purchased power | 1,107 | 485 | (542 | ) | 1,050 | ||||||||||
(7 | ) | Other operating expenses | 338 | 405 | (5 | ) | 738 | ||||||||||
(8 | ) | Provision for depreciation | 112 | 60 | 9 | 181 | |||||||||||
(9 | ) | Amortization of regulatory assets | 173 | - | - | 173 | |||||||||||
(10 | ) | General taxes | 172 | 27 | (10 | ) | 189 | ||||||||||
(11 | ) | Impairment of long-lived assets | - | 90 | - | 90 | |||||||||||
(12 | ) | Total Expenses | 1,902 | 1,418 | (551 | ) | 2,769 | ||||||||||
(13 | ) | Operating Income (Loss) | 298 | 162 | (12 | ) | 448 | ||||||||||
Other Income (Expense) | |||||||||||||||||
(14 | ) | Investment income (loss) | 27 | 9 | (12 | ) | 24 | ||||||||||
(15 | ) | Interest expense | (123 | ) | (60 | ) | (34 | ) | (217 | ) | |||||||
(16 | ) | Capitalized interest | 1 | 25 | 17 | 43 | |||||||||||
(17 | ) | Total Other Expense | (95 | ) | (26 | ) | (29 | ) | (150 | ) | |||||||
(18 | ) | Income (Loss) Before Income Taxes | 203 | 136 | (41 | ) | 298 | ||||||||||
(19 | ) | Income taxes (benefits) | 77 | 52 | (11 | ) | 118 | ||||||||||
(20 | ) | Net Income (Loss) | 126 | 84 | (30 | ) | 180 | ||||||||||
(21 | ) | Loss attributable to noncontrolling interest | - | - | (5 | ) | (5 | ) | |||||||||
(22 | ) | Earnings Available to FirstEnergy Corp. | $ | 126 | $ | 84 | $ | (25 | ) | $ | 185 | ||||||
* | Under the accounting standard for the effects of certain types of regulation, internal revenues are not fully offset for sale of | ||||||||||||||||
Renewable Energy Credits by FES to the Ohio Companies that are retained in inventory. | |||||||||||||||||
(a) | Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort | ||||||||||||||||
generation service for FirstEnergy's electric utility subsidiaries. | |||||||||||||||||
(b) | Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to | ||||||||||||||||
affiliated electric utilities. | |||||||||||||||||
(c) | Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses | ||||||||||||||||
and elimination of intersegment transactions. | |||||||||||||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 6 |
FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Three Months Ended December 31, 2009 | |||||||||||||||||
Energy | Competitive | Other & | |||||||||||||||
Delivery | Energy | Reconciling | |||||||||||||||
Services (a) | Services (b) | Adjustments (c) | Consolidated | ||||||||||||||
Revenues | |||||||||||||||||
(1 | ) | Electric sales | $ | 2,263 | $ | 518 | $ | - | $ | 2,781 | |||||||
(2 | ) | Other | 126 | 47 | (11 | ) | 162 | ||||||||||
(3 | ) | Internal revenues* | - | 494 | (477 | ) | 17 | ||||||||||
(4 | ) | Total Revenues | 2,389 | 1,059 | (488 | ) | 2,960 | ||||||||||
Expenses | |||||||||||||||||
(5 | ) | Fuel | - | 263 | - | 263 | |||||||||||
(6 | ) | Purchased power | 1,282 | 445 | (477 | ) | 1,250 | ||||||||||
(7 | ) | Other operating expenses | 235 | 356 | 3 | 594 | |||||||||||
(8 | ) | Provision for depreciation | 114 | 69 | 3 | 186 | |||||||||||
(9 | ) | Amortization of regulatory assets | 252 | - | - | 252 | |||||||||||
(10 | ) | General taxes | 155 | 24 | (13 | ) | 166 | ||||||||||
(11 | ) | Impairment of long-lived assets | - | 6 | - | 6 | |||||||||||
(12 | ) | Total Expenses | 2,038 | 1,163 | (484 | ) | 2,717 | ||||||||||
(13 | ) | Operating Income (Loss) | 351 | (104 | ) | (4 | ) | 243 | |||||||||
Other Income (Expense) | |||||||||||||||||
(14 | ) | Investment income (loss) | 28 | (15 | ) | (16 | ) | (3 | ) | ||||||||
(15 | ) | Interest expense | (129 | ) | (60 | ) | (34 | ) | (223 | ) | |||||||
(16 | ) | Capitalized interest | - | 18 | 16 | 34 | |||||||||||
(17 | ) | Total Other Expense | (101 | ) | (57 | ) | (34 | ) | (192 | ) | |||||||
(18 | ) | Income (Loss) Before Income Taxes | 250 | (161 | ) | (38 | ) | 51 | |||||||||
(19 | ) | Income taxes (benefits) | 100 | (64 | ) | (221 | ) | (185 | ) | ||||||||
(20 | ) | Net Income (Loss) | 150 | (97 | ) | 183 | 236 | ||||||||||
(21 | ) | Loss attributable to noncontrolling interest | - | - | (2 | ) | (2 | ) | |||||||||
(22 | ) | Earnings Available to FirstEnergy Corp. | $ | 150 | $ | (97 | ) | $ | 185 | $ | 238 | ||||||
* | Under the accounting standard for the effects of certain types of regulation, internal revenues are not fully offset for sale of | ||||||||||||||||
Renewable Energy Credits by FES to the Ohio Companies that are retained in inventory. | |||||||||||||||||
(a) | Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort | ||||||||||||||||
generation service for FirstEnergy's electric utility subsidiaries. | |||||||||||||||||
(b) | Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to | ||||||||||||||||
affiliated electric utilities. | |||||||||||||||||
(c) | Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses | ||||||||||||||||
and elimination of intersegment transactions. | |||||||||||||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 7 |
FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Three Months Ended Dec. 31, 2010 vs. Three Months Ended Dec. 31, 2009 | |||||||||||||||||
Energy | Competitive | Other & | |||||||||||||||
Delivery | Energy | Reconciling | |||||||||||||||
Services (a) | Services (b) | Adjustments (c) | Consolidated | ||||||||||||||
Revenues | |||||||||||||||||
(1 | ) | Electric sales | $ | (242 | ) | $ | 432 | $ | - | $ | 190 | ||||||
(2 | ) | Other | (7 | ) | 94 | (10 | ) | 77 | |||||||||
(3 | ) | Internal revenues* | 60 | (5 | ) | (65 | ) | (10 | ) | ||||||||
(4 | ) | Total Revenues | (189 | ) | 521 | (75 | ) | 257 | |||||||||
Expenses | |||||||||||||||||
(5 | ) | Fuel | - | 88 | (3 | ) | 85 | ||||||||||
(6 | ) | Purchased power | (175 | ) | 40 | (65 | ) | (200 | ) | ||||||||
(7 | ) | Other operating expenses | 103 | 49 | (8 | ) | 144 | ||||||||||
(8 | ) | Provision for depreciation | (2 | ) | (9 | ) | 6 | (5 | ) | ||||||||
(9 | ) | Amortization of regulatory assets | (79 | ) | - | - | (79 | ) | |||||||||
(10 | ) | General taxes | 17 | 3 | 3 | 23 | |||||||||||
(11 | ) | Impairment of long-lived assets | - | 84 | - | 84 | |||||||||||
(12 | ) | Total Expenses | (136 | ) | 255 | (67 | ) | 52 | |||||||||
(13 | ) | Operating Income (Loss) | (53 | ) | 266 | (8 | ) | 205 | |||||||||
Other Income (Expense) | |||||||||||||||||
(14 | ) | Investment income (loss) | (1 | ) | 24 | 4 | 27 | ||||||||||
(15 | ) | Interest expense | 6 | - | - | 6 | |||||||||||
(16 | ) | Capitalized interest | 1 | 7 | 1 | 9 | |||||||||||
(17 | ) | Total Other Income | 6 | 31 | 5 | 42 | |||||||||||
(18 | ) | Income (Loss) Before Income Taxes | (47 | ) | 297 | (3 | ) | 247 | |||||||||
(19 | ) | Income taxes (benefits) | (23 | ) | 116 | 210 | 303 | ||||||||||
(20 | ) | Net Income (Loss) | (24 | ) | 181 | (213 | ) | (56 | ) | ||||||||
(21 | ) | Loss attributable to noncontrolling interest | - | - | (3 | ) | (3 | ) | |||||||||
(22 | ) | Earnings Available to FirstEnergy Corp. | $ | (24 | ) | $ | 181 | $ | (210 | ) | $ | (53 | ) | ||||
* | Under the accounting standard for the effects of certain types of regulation, internal revenues are not fully offset for sale of | ||||||||||||||||
Renewable Energy Credits by FES to the Ohio Companies that are retained in inventory. | |||||||||||||||||
(a) | Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort | ||||||||||||||||
generation service for FirstEnergy's electric utility subsidiaries. | |||||||||||||||||
(b) | Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to | ||||||||||||||||
affiliated electric utilities. | |||||||||||||||||
(c) | Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses | ||||||||||||||||
and elimination of intersegment transactions. | |||||||||||||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 8 |
FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Twelve Months Ended December 31, 2010 | |||||||||||||||||
Energy | Competitive | Other & | |||||||||||||||
Delivery | Energy | Reconciling | |||||||||||||||
Services (a) | Services (b) | Adjustments (c) | Consolidated | ||||||||||||||
Revenues | |||||||||||||||||
(1 | ) | Electric sales | $ | 9,271 | $ | 3,252 | $ | - | $ | 12,523 | |||||||
(2 | ) | Other | 542 | 292 | (92 | ) | 742 | ||||||||||
(3 | ) | Internal revenues* | 139 | 2,301 | (2,366 | ) | 74 | ||||||||||
(4 | ) | Total Revenues | 9,952 | 5,845 | (2,458 | ) | 13,339 | ||||||||||
Expenses | |||||||||||||||||
(5 | ) | Fuel | - | 1,440 | (8 | ) | 1,432 | ||||||||||
(6 | ) | Purchased power | 5,266 | 1,724 | (2,366 | ) | 4,624 | ||||||||||
(7 | ) | Other operating expenses | 1,492 | 1,436 | (78 | ) | 2,850 | ||||||||||
(8 | ) | Provision for depreciation | 451 | 254 | 41 | 746 | |||||||||||
(9 | ) | Amortization of regulatory assets | 722 | - | - | 722 | |||||||||||
(10 | ) | General taxes | 653 | 113 | 10 | 776 | |||||||||||
(11 | ) | Impairment of long-lived assets | - | 384 | - | 384 | |||||||||||
(12 | ) | Total Expenses | 8,584 | 5,351 | (2,401 | ) | 11,534 | ||||||||||
(13 | ) | Operating Income (Loss) | 1,368 | 494 | (57 | ) | 1,805 | ||||||||||
Other Income (Expense) | |||||||||||||||||
(14 | ) | Investment income (loss) | 102 | 51 | (36 | ) | 117 | ||||||||||
(15 | ) | Interest expense | (496 | ) | (221 | ) | (128 | ) | (845 | ) | |||||||
(16 | ) | Capitalized interest | 5 | 92 | 68 | 165 | |||||||||||
(17 | ) | Total Other Expense | (389 | ) | (78 | ) | (96 | ) | (563 | ) | |||||||
(18 | ) | Income (Loss) Before Income Taxes | 979 | 416 | (153 | ) | 1,242 | ||||||||||
(19 | ) | Income taxes (benefits) | 372 | 158 | (48 | ) | 482 | ||||||||||
(20 | ) | Net Income (Loss) | 607 | 258 | (105 | ) | 760 | ||||||||||
(21 | ) | Loss attributable to noncontrolling interest | - | - | (24 | ) | (24 | ) | |||||||||
(22 | ) | Earnings Available to FirstEnergy Corp. | $ | 607 | $ | 258 | $ | (81 | ) | $ | 784 | ||||||
* | Under the accounting standard for the effects of certain types of regulation, internal revenues are not fully offset for sale of | ||||||||||||||||
Renewable Energy Credits by FES to the Ohio Companies that are retained in inventory. | |||||||||||||||||
(a) | Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort | ||||||||||||||||
generation service for FirstEnergy's electric utility subsidiaries. | |||||||||||||||||
(b) | Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to | ||||||||||||||||
affiliated electric utilities. | |||||||||||||||||
(c) | Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses | ||||||||||||||||
and elimination of intersegment transactions. | |||||||||||||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 9 |
FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Twelve Months Ended December 31, 2009 | |||||||||||||||||
Energy | Competitive | Other & | |||||||||||||||
Delivery | Energy | Reconciling | |||||||||||||||
Services (a) | Services (b) | Adjustments (c) | Consolidated | ||||||||||||||
Revenues | |||||||||||||||||
(1 | ) | Electric sales | $ | 10,585 | $ | 1,447 | $ | - | $ | 12,032 | |||||||
(2 | ) | Other | 559 | 447 | (82 | ) | 924 | ||||||||||
(3 | ) | Internal revenues* | - | 2,843 | (2,826 | ) | 17 | ||||||||||
(4 | ) | Total Revenues | 11,144 | 4,737 | (2,908 | ) | 12,973 | ||||||||||
Expenses | |||||||||||||||||
(5 | ) | Fuel | - | 1,153 | - | 1,153 | |||||||||||
(6 | ) | Purchased power | 6,560 | 996 | (2,826 | ) | 4,730 | ||||||||||
(7 | ) | Other operating expenses | 1,424 | 1,357 | (84 | ) | 2,697 | ||||||||||
(8 | ) | Provision for depreciation | 445 | 270 | 21 | 736 | |||||||||||
(9 | ) | Amortization of regulatory assets | 1,155 | - | - | 1,155 | |||||||||||
(10 | ) | Deferral of new regulatory assets | (136 | ) | - | - | (136 | ) | |||||||||
(11 | ) | General taxes | 641 | 108 | 4 | 753 | |||||||||||
(12 | ) | Impairment of long-lived assets | - | 6 | - | 6 | |||||||||||
(13 | ) | Total Expenses | 10,089 | 3,890 | (2,885 | ) | 11,094 | ||||||||||
(14 | ) | Operating Income (Loss) | 1,055 | 847 | (23 | ) | 1,879 | ||||||||||
Other Income (Expense) | |||||||||||||||||
(15 | ) | Investment income | 139 | 121 | (56 | ) | 204 | ||||||||||
(16 | ) | Interest expense | (472 | ) | (166 | ) | (340 | ) | (978 | ) | |||||||
(17 | ) | Capitalized interest | 3 | 60 | 67 | 130 | |||||||||||
(18 | ) | Total Other Income (Expense) | (330 | ) | 15 | (329 | ) | (644 | ) | ||||||||
(19 | ) | Income (Loss) Before Income Taxes | 725 | 862 | (352 | ) | 1,235 | ||||||||||
(20 | ) | Income taxes (benefits) | 290 | 345 | (390 | ) | 245 | ||||||||||
(21 | ) | Net Income | 435 | 517 | 38 | 990 | |||||||||||
(22 | ) | Loss attributable to noncontrolling interest | - | - | (16 | ) | (16 | ) | |||||||||
(23 | ) | Earnings Available to FirstEnergy Corp. | $ | 435 | $ | 517 | $ | 54 | $ | 1,006 | |||||||
* | Under the accounting standard for the effects of certain types of regulation, internal revenues are not fully offset for sale of | ||||||||||||||||
Renewable Energy Credits by FES to the Ohio Companies that are retained in inventory. | |||||||||||||||||
(a) | Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort | ||||||||||||||||
generation service for FirstEnergy's electric utility subsidiaries. | |||||||||||||||||
(b) | Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to | ||||||||||||||||
affiliated electric utilities. | |||||||||||||||||
(c) | Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses | ||||||||||||||||
and elimination of intersegment transactions. | |||||||||||||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 10 |
FirstEnergy Corp.
Consolidated Income Segments
(In millions)
Twelve Months Ended Dec. 31, 2010 vs. Twelve Months Ended Dec. 31, 2009 | |||||||||||||||||
Energy | Competitive | Other & | |||||||||||||||
Delivery | Energy | Reconciling | |||||||||||||||
Services (a) | Services (b) | Adjustments (c) | Consolidated | ||||||||||||||
Revenues | |||||||||||||||||
(1 | ) | Electric sales | $ | (1,314 | ) | $ | 1,805 | $ | - | $ | 491 | ||||||
(2 | ) | Other | (17 | ) | (155 | ) | (10 | ) | (182 | ) | |||||||
(3 | ) | Internal revenues* | 139 | (542 | ) | 460 | 57 | ||||||||||
(4 | ) | Total Revenues | (1,192 | ) | 1,108 | 450 | 366 | ||||||||||
Expenses | |||||||||||||||||
(5 | ) | Fuel | - | 287 | (8 | ) | 279 | ||||||||||
(6 | ) | Purchased power | (1,294 | ) | 728 | 460 | (106 | ) | |||||||||
(7 | ) | Other operating expenses | 68 | 79 | 6 | 153 | |||||||||||
(8 | ) | Provision for depreciation | 6 | (16 | ) | 20 | 10 | ||||||||||
(9 | ) | Amortization of regulatory assets | (433 | ) | - | - | (433 | ) | |||||||||
(10 | ) | Deferral of new regulatory assets | 136 | - | - | 136 | |||||||||||
(11 | ) | General taxes | 12 | 5 | 6 | 23 | |||||||||||
(12 | ) | Impairment of long-lived assets | - | 378 | - | 378 | |||||||||||
(13 | ) | Total Expenses | (1,505 | ) | 1,461 | 484 | 440 | ||||||||||
(14 | ) | Operating Income (Loss) | 313 | (353 | ) | (34 | ) | (74 | ) | ||||||||
Other Income (Expense) | |||||||||||||||||
(15 | ) | Investment income (loss) | (37 | ) | (70 | ) | 20 | (87 | ) | ||||||||
(16 | ) | Interest expense | (24 | ) | (55 | ) | 212 | 133 | |||||||||
(17 | ) | Capitalized interest | 2 | 32 | 1 | 35 | |||||||||||
(18 | ) | Total Other Income (Expense) | (59 | ) | (93 | ) | 233 | 81 | |||||||||
(19 | ) | Income (Loss) Before Income Taxes | 254 | (446 | ) | 199 | 7 | ||||||||||
(20 | ) | Income taxes (benefits) | 82 | (187 | ) | 342 | 237 | ||||||||||
(21 | ) | Net Income (Loss) | 172 | (259 | ) | (143 | ) | (230 | ) | ||||||||
(22 | ) | Loss attributable to noncontrolling interest | - | - | (8 | ) | (8 | ) | |||||||||
(23 | ) | Earnings Available to FirstEnergy Corp. | $ | 172 | $ | (259 | ) | $ | (135 | ) | $ | (222 | ) | ||||
* | Under the accounting standard for the effects of certain types of regulation, internal revenues are not fully offset for sale of | ||||||||||||||||
Renewable Energy Credits by FES to the Ohio Companies that are retained in inventory. | |||||||||||||||||
(a) | Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort | ||||||||||||||||
generation service for FirstEnergy's electric utility subsidiaries. | |||||||||||||||||
(b) | Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to | ||||||||||||||||
affiliated electric utilities. | |||||||||||||||||
(c) | Consists primarily of interest expense related to holding company debt, corporate support services revenues and expenses | ||||||||||||||||
and elimination of intersegment transactions. | |||||||||||||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 11 |
FirstEnergy Corp.
Financial Statements
(In millions)
Condensed Consolidated Balance Sheets | ||||||||
As of | As of | |||||||
Assets | Dec. 31, 2010 | Dec. 31, 2009 | ||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 1,019 | $ | 874 | ||||
Receivables | 1,568 | 1,397 | ||||||
Other | 1,111 | 1,049 | ||||||
Total Current Assets | 3,698 | 3,320 | ||||||
Property, Plant and Equipment | 19,788 | 19,164 | ||||||
Investments | 3,002 | 3,023 | ||||||
Deferred Charges and Other Assets | 8,317 | 8,797 | ||||||
Total Assets | $ | 34,805 | $ | 34,304 | ||||
Liabilities and Capitalization | ||||||||
Current Liabilities: | ||||||||
Currently payable long-term debt | $ | 1,486 | $ | 1,834 | ||||
Short-term borrowings | 700 | 1,081 | ||||||
Accounts payable | 872 | 829 | ||||||
Other | 1,640 | 1,444 | ||||||
Total Current Liabilities | 4,698 | 5,188 | ||||||
Capitalization: | ||||||||
Total equity | 8,513 | 8,557 | ||||||
Long-term debt and other long-term obligations | 12,579 | 12,008 | ||||||
Total Capitalization | 21,092 | 20,565 | ||||||
Noncurrent Liabilities | 9,015 | 8,551 | ||||||
Total Liabilities and Capitalization | $ | 34,805 | $ | 34,304 | ||||
General Information | ||||||||||||||||
Three Months Ended Dec. 31 | Twelve Months Ended Dec. 31 | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Debt redemptions | $ | (593 | ) | $ | (397 | ) | $ | (1,015 | ) | $ | (2,610 | ) | ||||
New long-term debt issues | $ | 848 | $ | 481 | $ | 1,099 | $ | 4,632 | ||||||||
Short-term borrowings decrease | $ | (207 | ) | $ | (482 | ) | $ | (378 | ) | $ | (1,246 | ) | ||||
Property additions | $ | (496 | ) | $ | (628 | ) | $ | (1,963 | ) | $ | (2,203 | ) | ||||
Adjusted Capitalization | ||||||||||||||||||
As of December 31 | ||||||||||||||||||
2010 | % Total | 2009 | % Total | |||||||||||||||
Total equity* | $ | 8,513 | 36 | % | $ | 8,557 | 36 | % | ||||||||||
Long-term debt and other long-term obligations | 12,579 | 55 | % | 12,008 | 50 | % | ||||||||||||
Currently payable long-term debt | 1,486 | 6 | % | 1,834 | 8 | % | ||||||||||||
Short-term borrowings | 700 | 3 | % | 1,081 | 5 | % | ||||||||||||
Adjustments: | ||||||||||||||||||
Sale-leaseback net debt equivalents | 1,357 | 6 | % | 1,391 | 6 | % | ||||||||||||
JCP&L securitization debt and cash | (1,295 | ) | -6 | % | (1,189 | ) | -5 | % | ||||||||||
Total | $ | 23,340 | 100 | % | $ | 23,682 | 100 | % | ||||||||||
*Includes $(1,539) million and $(1,415) million, respectively, of Accumulated Other Comprehensive Loss | ||||||||||||||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 12 |
FirstEnergy Corp.
Financial Statements
(In millions)
Condensed Consolidated Statements of Cash Flows | |||||||||||||||||
Three Months Ended Dec. 31 | Twelve Months Ended Dec. 31 | ||||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||||
Cash flows from operating activities | |||||||||||||||||
Net income | $ | 180 | $ | 236 | $ | 760 | $ | 990 | |||||||||
Adjustments to reconcile net income to net cash from operating activities: | |||||||||||||||||
Depreciation, amortization, and deferral of regulatory assets | 354 | 438 | 1,468 | 1,755 | |||||||||||||
Deferred purchased power and other costs | (62 | ) | (103 | ) | (254 | ) | (338 | ) | |||||||||
Deferred income taxes and investment tax credits | 211 | (37 | ) | 470 | 384 | ||||||||||||
Deferred rents and lease market valuation liability | (33 | ) | (32 | ) | (54 | ) | (52 | ) | |||||||||
Cash collateral received (paid), net | 28 | 115 | (26 | ) | 30 | ||||||||||||
Commodity derivative transactions, net | (41 | ) | 203 | (81 | ) | 229 | |||||||||||
Interest rate swap transactions | - | - | 129 | - | |||||||||||||
Impairment of long-lived assets | 90 | 6 | 384 | 6 | |||||||||||||
Pension trust contribution | - | - | - | (500 | ) | ||||||||||||
Loss on debt redemptions | 5 | 4 | 5 | 146 | |||||||||||||
Gain on investment securities held in trusts, net | (16 | ) | (4 | ) | (55 | ) | (176 | ) | |||||||||
Change in working capital and other | 287 | 175 | 330 | (9 | ) | ||||||||||||
Cash flows provided from operating activities | 1,003 | 1,001 | 3,076 | 2,465 | |||||||||||||
Cash flows provided from (used for) financing activities | (113 | ) | (568 | ) | (983 | ) | 49 | ||||||||||
Cash flows used for investing activities | (503 | ) | (397 | ) | (1,948 | ) | (2,185 | ) | |||||||||
Net change in cash and cash equivalents | $ | 387 | $ | 36 | $ | 145 | $ | 329 | |||||||||
Deferrals and Amortization | Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||||
Ohio Rate Certainty Plan Amortization (Deferrals) | |||||||||||||||||||||||||
Ohio Transition costs | $ | - | $ | - | $ | - | $ | - | $ | 70 | $ | (70 | ) | ||||||||||||
Shopping incentives & interest | 26 | 37 | (11 | ) | 154 | 265 | (111 | ) | |||||||||||||||||
RCP distribution reliability costs and interest | - | - | - | - | (14 | ) | 14 | ||||||||||||||||||
RCP fuel & interest | (5 | ) | (5 | ) | - | (20 | ) | (24 | ) | 4 | |||||||||||||||
Ohio ESP Amortization (Deferrals) | |||||||||||||||||||||||||
Uncollectible customer accounts | $ | - | $ | 7 | $ | (7 | ) | $ | (6 | ) | $ | 5 | $ | (11 | ) | ||||||||||
Economic development costs & interest | (10 | ) | 1 | (11 | ) | - | 26 | (26 | ) | ||||||||||||||||
Generation cost rider true-up & interest | 18 | (3 | ) | 21 | 19 | (15 | ) | 34 | |||||||||||||||||
CEI fuel & interest | - | - | - | - | (141 | ) | 141 | ||||||||||||||||||
Distribution reliability costs (RDD/NDD) | 47 | 39 | 8 | 131 | 51 | 80 | |||||||||||||||||||
Ohio Transmission Amortization (Deferrals) | |||||||||||||||||||||||||
MISO transmission costs | $ | 3 | $ | 9 | $ | (6 | ) | $ | (34 | ) | $ | 105 | $ | (139 | ) | ||||||||||
Ohio Other Amortization (Deferrals) | |||||||||||||||||||||||||
Generation Related Costs | $ | (26 | ) | $ | (9 | ) | $ | (17 | ) | $ | (59 | ) | $ | (2 | ) | $ | (57 | ) | |||||||
Distribution Related Costs | 7 | 5 | 2 | 25 | 30 | (5 | ) | ||||||||||||||||||
All Other | 6 | 5 | 1 | 53 | 10 | 43 | |||||||||||||||||||
Pennsylvania Amortization (Deferrals) | |||||||||||||||||||||||||
PJM transmission costs | $ | 6 | $ | 49 | $ | (43 | ) | $ | 2 | $ | 141 | $ | (139 | ) | |||||||||||
NUG costs | 10 | 20 | (10 | ) | 48 | 84 | (36 | ) | |||||||||||||||||
All Other | 21 | 16 | 5 | 88 | 83 | 5 | |||||||||||||||||||
New Jersey Amortization (Deferrals) | |||||||||||||||||||||||||
NUG costs | $ | 58 | $ | 57 | $ | 1 | $ | 265 | $ | 255 | $ | 10 | |||||||||||||
All Other | 12 | 24 | (12 | ) | 56 | 90 | (34 | ) | |||||||||||||||||
Total Amortization, net | $ | 173 | $ | 252 | $ | (79 | ) | $ | 722 | $ | 1,019 | $ | (297 | ) | |||||||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 13 |
FirstEnergy Corp.
Statistical Summary
Electric Sales Statistics (kWh in millions) | ||||||||||||||||
Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||||||
Electric Distribution Deliveries | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||
Ohio | - Residential | 4,287 | 4,208 | 1.9% | 17,808 | 16,807 | 6.0% | |||||||||
- Commercial | 3,516 | 3,347 | 5.0% | 14,443 | 14,042 | 2.9% | ||||||||||
- Industrial | 5,060 | 4,892 | 3.4% | 20,707 | 18,742 | 10.5% | ||||||||||
- Other | 87 | 90 | -3.3% | 348 | 351 | -0.9% | ||||||||||
Total Ohio | 12,950 | 12,537 | 3.3% | 53,306 | 49,942 | 6.7% | ||||||||||
Pennsylvania | - Residential | 2,925 | 2,917 | 0.3% | 11,971 | 11,553 | 3.6% | |||||||||
- Commercial | 2,665 | 2,688 | -0.9% | 11,285 | 10,954 | 3.0% | ||||||||||
- Industrial | 2,315 | 2,232 | 3.7% | 9,221 | 8,712 | 5.8% | ||||||||||
- Other | 20 | 20 | 0.0% | 82 | 81 | 1.2% | ||||||||||
Total Pennsylvania | 7,925 | 7,857 | 0.9% | 32,559 | 31,300 | 4.0% | ||||||||||
New Jersey | - Residential | 2,118 | 2,090 | 1.3% | 9,993 | 9,214 | 8.5% | |||||||||
- Commercial | 2,295 | 2,263 | 1.4% | 9,563 | 9,323 | 2.6% | ||||||||||
- Industrial | 576 | 593 | -2.9% | 2,487 | 2,447 | 1.6% | ||||||||||
- Other | 22 | 22 | 0.0% | 89 | 87 | 2.3% | ||||||||||
Total New Jersey | 5,011 | 4,968 | 0.9% | 22,132 | 21,071 | 5.0% | ||||||||||
Total Residential | 9,330 | 9,215 | 1.2% | 39,772 | 37,574 | 5.8% | ||||||||||
Total Commercial | 8,476 | 8,298 | 2.1% | 35,291 | 34,319 | 2.8% | ||||||||||
Total Industrial | 7,951 | 7,717 | 3.0% | 32,415 | 29,901 | 8.4% | ||||||||||
Total Other | 129 | 132 | -2.3% | 519 | 519 | 0.0% | ||||||||||
Total Distribution Deliveries | 25,886 | 25,362 | 2.1% | 107,997 | 102,313 | 5.6% | ||||||||||
Generation Sales - Franchise (kWh in millions) | ||||||||||||||||
Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||
Ohio | ||||||||||||||||
FES | - POLR | 2,959 | 4,681 | -36.8% | 14,583 | 30,204 | -51.7% | |||||||||
- Direct | 4,112 | 2,967 | 38.6% | 15,597 | 4,474 | 248.6% | ||||||||||
- Aggregation | 3,475 | 1,395 | 149.1% | 12,574 | 1,830 | 587.1% | ||||||||||
Subtotal | 10,546 | 9,043 | 16.6% | 42,754 | 36,508 | 17.1% | ||||||||||
3rd Party | - POLR | 1,173 | 1,776 | -34.0% | 5,811 | 11,050 | -47.4% | |||||||||
- Shopping | 1,231 | 1,718 | -28.3% | 4,741 | 2,384 | 98.9% | ||||||||||
Subtotal | 2,404 | 3,494 | -31.2% | 10,552 | 13,434 | -21.5% | ||||||||||
Total - OH | 12,950 | 12,537 | 3.3% | 53,306 | 49,942 | 6.7% | ||||||||||
Pennsylvania | ||||||||||||||||
FES | - POLR | 3,692 | 3,871 | -4.6% | 16,147 | 15,829 | 2.0% | |||||||||
- Direct | 561 | 440 | 27.5% | 2,010 | 1,645 | 22.2% | ||||||||||
Subtotal | 4,253 | 4,311 | -1.3% | 18,157 | 17,474 | 3.9% | ||||||||||
3rd Party | - POLR | 3,172 | 3,271 | -3.0% | 13,028 | 12,806 | 1.7% | |||||||||
- Shopping | 500 | 275 | 81.8% | 1,374 | 1,020 | 34.7% | ||||||||||
Subtotal | 3,672 | 3,546 | 3.6% | 14,402 | 13,826 | 4.2% | ||||||||||
Total - PA | 7,925 | 7,857 | 0.9% | 32,559 | 31,300 | 4.0% | ||||||||||
New Jersey | ||||||||||||||||
FES | - Direct | 142 | 72 | 97.2% | 476 | 206 | 131.1% | |||||||||
Subtotal | 142 | 72 | 97.2% | 476 | 206 | 131.1% | ||||||||||
3rd Party | - POLR | 2,967 | 3,323 | -10.7% | 14,393 | 15,348 | -6.2% | |||||||||
- Shopping | 1,902 | 1,573 | 20.9% | 7,263 | 5,517 | 31.6% | ||||||||||
Subtotal | 4,869 | 4,896 | -0.6% | 21,656 | 20,865 | 3.8% | ||||||||||
Total - NJ | 5,011 | 4,968 | 0.9% | 22,132 | 21,071 | 5.0% | ||||||||||
Summary | ||||||||||||||||
FES - POLR | 6,651 | 8,552 | -22.2% | 30,730 | 46,033 | -33.2% | ||||||||||
FES - Direct | 4,815 | 3,479 | 38.4% | 18,083 | 6,325 | 185.9% | ||||||||||
FES - Aggregation | 3,475 | 1,395 | 149.1% | 12,574 | 1,830 | 587.1% | ||||||||||
Subtotal | 14,941 | 13,426 | 11.3% | 61,387 | 54,188 | 13.3% | ||||||||||
3rd Party Suppliers - POLR | 7,312 | 8,370 | -12.6% | 33,232 | 39,204 | -15.2% | ||||||||||
3rd Party Suppliers - Shopping | 3,633 | 3,566 | 1.9% | 13,378 | 8,921 | 50.0% | ||||||||||
Subtotal | 10,945 | 11,936 | -8.3% | 46,610 | 48,125 | -3.1% | ||||||||||
Total Franchise | 25,886 | 25,362 | 2.1% | 107,997 | 102,313 | 5.6% | ||||||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 14 |
FirstEnergy Corp.
Statistical Summary
Summary of Sales, Power Purchases and Generation Output (kWh in millions) | |||||||||||||||||
Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||||||||
FES Sales | 2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||
POLR | |||||||||||||||||
- OH | 2,959 | 4,681 | (1,722) | 14,583 | 30,204 | (15,621) | |||||||||||
- PA | 6,939 | 4,204 | 2,735 | 29,604 | 16,557 | 13,047 | |||||||||||
- PA (ME/PN 3rd Party Contract) | (2,735) | - | (2,735) | (11,044) | - | (11,044) | |||||||||||
Total POLR | 7,163 | 8,885 | (1,722) | 33,143 | 46,761 | (13,618) | |||||||||||
Direct | |||||||||||||||||
- OH | 5,102 | 3,258 | 1,844 | 18,651 | 4,799 | 13,852 | |||||||||||
- PA | 1,373 | 926 | 447 | 4,638 | 3,583 | 1,055 | |||||||||||
- NJ | 359 | 213 | 146 | 1,374 | 574 | 800 | |||||||||||
- MI | 392 | 8 | 384 | 1,518 | 19 | 1,499 | |||||||||||
- IL | 551 | 345 | 206 | 2,153 | 882 | 1,271 | |||||||||||
- MD | 73 | 65 | 8 | 281 | 187 | 94 | |||||||||||
Total Direct | 7,850 | 4,815 | 3,035 | 28,615 | 10,044 | 18,571 | |||||||||||
Aggregation | |||||||||||||||||
- OH | 3,532 | 1,395 | 2,137 | 12,682 | 1,830 | 10,852 | |||||||||||
Total Aggregation | 3,532 | 1,395 | 2,137 | 12,682 | 1,830 | 10,852 | |||||||||||
Total FES Sales | 18,545 | 15,095 | 3,450 | 74,440 | 58,635 | 15,805 | |||||||||||
Wholesale Sales | |||||||||||||||||
MISO | 2,366 | 2,019 | 347 | 6,315 | 10,622 | (4,307) | |||||||||||
PJM | 943 | 78 | 865 | 2,394 | 1,227 | 1,167 | |||||||||||
Total Wholesale Sales | 3,309 | 2,097 | 1,212 | 8,709 | 11,849 | (3,140) | |||||||||||
Purchased Power | |||||||||||||||||
MISO | 25 | 104 | (79) | 1,167 | 1,511 | (344) | |||||||||||
PJM | 3,576 | 2,651 | 925 | 11,364 | 7,433 | 3,931 | |||||||||||
Total Purchased Power | 3,601 | 2,755 | 846 | 12,531 | 8,944 | 3,587 | |||||||||||
Generation Output | |||||||||||||||||
Fossil | 11,304 | 8,544 | 2,760 | 44,308 | 36,700 | 7,608 | |||||||||||
Nuclear | 7,995 | 7,161 | 834 | 30,872 | 29,216 | 1,656 | |||||||||||
Total Generation Output | 19,299 | 15,705 | 3,594 | 75,180 | 65,916 | 9,264 | |||||||||||
Operating Statistics | Three Months Ended Dec. 31 | Twelve Months Ended Dec. 31 | |||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||||
Capacity Factors: | |||||||||||||||||
Nuclear | 91% | 81% | 88% | 84% | |||||||||||||
Fossil - Baseload | 88% | 65% | 76% | 72% | |||||||||||||
Fossil - Load Following | 37% | 30% | 52% | 31% | |||||||||||||
Generation Output: | |||||||||||||||||
Nuclear | 42% | 46% | 42% | 45% | |||||||||||||
Fossil - Baseload | 45% | 41% | 40% | 43% | |||||||||||||
Fossil - Load Following | 13% | 13% | 18% | 12% | |||||||||||||
Three Months Ended Dec. 31 | Twelve Months Ended Dec. 31 | ||||||||||||||||
2010 | 2009 | Normal | 2010 | 2009 | Normal | ||||||||||||
Composite Heating-Degree-Days | 2,052 | 1,903 | 1,958 | 5,292 | 5,533 | 5,572 | |||||||||||
Composite Cooling-Degree-Days | 7 | 2 | 12 | 1,249 | 736 | 897 | |||||||||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 15 |
FirstEnergy Corp.
Special Items, EPS Reconciliations and Liquidity
(In millions, except for per share amounts)
Special Items | |||||||||||||||||||
Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Pre-tax Items - Income Increase (Decrease) | |||||||||||||||||||
Regulatory charges (a) | $ | - | $ | - | $ | (52 | ) | $ | (263 | ) | |||||||||
Trust securities impairment (b) | (11 | ) | (23 | ) | (32 | ) | (45 | ) | |||||||||||
Organizational restructuring/strike costs (c) | - | 1 | - | (67 | ) | ||||||||||||||
Generating plant charges (d) | (84 | ) | - | (376 | ) | - | |||||||||||||
Non-core asset sales/impairments (d) | 80 | 1 | 71 | 255 | |||||||||||||||
Merger transaction costs (c) | (29 | ) | - | (65 | ) | - | |||||||||||||
Litigation settlement (c) | - | - | 7 | - | |||||||||||||||
Derivative mark-to-market adjustment (e) | - | (205 | ) | (30 | ) | (205 | ) | ||||||||||||
Debt redemption premium/hedge write-off (f) | - | (4 | ) | - | (146 | ) | |||||||||||||
Total-Pretax Items | $ | (44 | ) | $ | (230 | ) | $ | (477 | ) | $ | (471 | ) | |||||||
Income tax charge/Income tax resolution | $ | - | $ | 148 | $ | (13 | ) | $ | 161 | ||||||||||
EPS Effect | $ | (0.10 | ) | $ | 0.01 | $ | (1.04 | ) | $ | (0.46 | ) | ||||||||
(a) | For YTD 2010, $35 million included in "Amortization of regulatory assets"; $17 million included in "Other operating expenses". For YTD 2009, $216 million included in "Amortization of regulatory assets"; $37 million included in "Other operating expenses"; $10 million included in "Purchased Power" | (d) | For YTD 2010, $384 million included in "Impairment of long-lived assets"; $7 million included in "Depreciation"; ($86) million included in "Revenues - Unregulated businesses. For YTD 2009, included in "Revenues - Unregulated businesses" | ||||||||||||||||
(b) | Included in "Investment income" | (e) | For YTD 2010 $43 million included in "Purchased power"; $(13) million included in "Revenues - Unregulated businesses". | ||||||||||||||||
(c) | For YTD 2010 included in "Other operating expenses". For YTD 2009, | ||||||||||||||||||
$65 million included in "Other operating expenses"; $2 million included | (f) | Included in "Interest expense" | |||||||||||||||||
in "General taxes". | |||||||||||||||||||
2010 Earnings Per Share (EPS) | ||||||||||||||||
(Reconciliation of GAAP to Non-GAAP) | ||||||||||||||||
Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Basic EPS (GAAP basis) | $ | 0.61 | $ | 0.78 | $ | 2.58 | $ | 3.31 | ||||||||
Excluding Special Items: | ||||||||||||||||
Regulatory charges | - | - | 0.11 | 0.55 | ||||||||||||
Trust securities impairment | 0.02 | 0.05 | 0.07 | 0.09 | ||||||||||||
Organizational restructuring/strike costs | - | - | - | 0.14 | ||||||||||||
Debt redemption premiums | - | 0.01 | - | 0.31 | ||||||||||||
Income tax resolution | - | (0.49 | ) | - | (0.53 | ) | ||||||||||
Income tax charge - retiree drug change | - | - | 0.04 | - | ||||||||||||
Merger transaction costs | 0.07 | - | 0.15 | - | ||||||||||||
Litigation settlement | - | - | (0.01 | ) | - | |||||||||||
Non-core asset sales/impairments | (0.16 | ) | - | (0.15 | ) | (0.52 | ) | |||||||||
Generating plant charges | 0.17 | - | 0.77 | - | ||||||||||||
Derivative mark-to-market adjustment | - | 0.42 | 0.06 | 0.42 | ||||||||||||
Basic EPS (Non-GAAP basis) | $ | 0.71 | $ | 0.77 | $ | 3.62 | $ | 3.77 | ||||||||
Liquidity position as of January 31, 2011 | |||||||
Company | Type | Maturity | Amount (M) | Available (M) | |||
FirstEnergy(1) | Revolving | Aug. 2012 | $2,750 | $2,245 | |||
FirstEnergy Solutions | Term Loan | Mar. 2011 | 100 | - | |||
OH & PA Utilities | Receivables Financing | Various(2) | 395 | 237 | |||
(1) FirstEnergy Corp. and subsidiary borrowers | Subtotal: | $3,245 | $2,482 | ||||
(2) OH - $250M matures March 30, 2011; PA $145M matures June 17, 2011 | Cash: | - | 668 | ||||
Total: | $3,245 | $3,150 | |||||
Consolidated Report to the Financial Community - 4th Quarter 2010 | 16 |
Recent Developments
Merger Matters
Pennsylvania State Filing
On October 25, 2010, FirstEnergy (FE) and Allegheny Energy (AYE) filed a comprehensive settlement with the Pennsylvania Public Utility Commission (PPUC) that addresses issues raised by 18 of the parties to the merger. On December 20, 2010 the Administrative Law Judges issued their initial decision on the merger. FE provided a five-year commitment to maintain at least 800 jobs in Greensburg and Westmoreland County for the first year after the merger close, 675 jobs for the following 12 months, 650 jobs for the next year and 600 jobs for each of the next two years, subject to certain conditions; nearly $11 million in distribution rate credits for West Penn Power customers; a distribution rate freeze for FE's current Pennsylvania utility customers and support for renewable and sustainable energy and customer choice. A PPUC decision is pen ding.
Federal Energy Regulatory Commission (FERC)
On December 16, 2010, the companies received approval from the FERC.
West Virginia State Filing
On December 16, 2010, the West Virginia Public Service Commission approved the merger. FE committed to a regional headquarters for Allegheny Power’s West Virginia utility operations; $7.5 million rate reduction over two years for Allegheny Power’s West Virginia customers; and commitment to maintain call center operations in Fairmont for at least five years.
Department of Justice (DOJ)
On January 7, 2011, the DOJ completed its merger review process and closed its investigation.
Maryland State Filing
On January 18, 2011, the Maryland Public Service Commission (PSC) approved the merger. FE committed to locate a regional headquarters in Potomac Edison’s Maryland service territory; a one-time $6.5 million credit to be provided to Potomac Edison’s residential electric distribution customers; a reduction of $750,000 in costs to customers for EmPower Maryland Programs and a $600,000 contribution of corporate funds for the Electric Universal Service Program.
Financial Matters
Dividend
On December 21, 2010, the FE Board of Directors declared an unchanged quarterly dividend of 55 cents per share of outstanding common stock for the first quarter of 2011 and on February 15, 2011, the FE Board of Directors declared an unchanged quarterly dividend of 55 cents per share of outstanding common stock for the second quarter of 2011. The dividend declarations provide contingent dividend payment scenarios to reflect possible timing of the completion of the pending merger with AYE.
Financing Activities
On December 3, 2010, FirstEnergy Solutions Corp. (FES) and Pennsylvania Electric Company (Penelec) completed the refinancing and remarketing of five series of Pollution Control Revenue Bonds totaling $178 million. These series were converted from variable rates to fixed interest rates ranging from 2.25% to 3.75% per-annum and are subject to mandatory purchase between April 1, 2011 and December 1, 2014.
Consolidated Report to the Financial Community - 4th Quarter 2010 | 17 |
Regulatory Matters
Ohio Generation Auction
On January 25, 2011, Ohio Edison Company, The Cleveland Electric Illuminating Company and The Toledo Edison Company (Ohio Utilities) conducted the second in a series of auctions to procure generation for customers who choose not to shop with an alternative supplier for delivery beginning June 1, 2011 through May 31, 2014. The auction consisted of one, two and three-year products. Fifty tranches in total were acquired through this auction. Seventeen tranches of the one-year product were acquired at a clearing price of $56.13 per MWh; seventeen tranches of the two-year product were acquired at a clearing price of $54.92 per MWh; and sixteen tranches of the three-year product were acquired at a clearing price of $57.47 per MWh. There were 10 registered bidders that participated in the auction, with 7 bidders winning tranches in the auction. FES participated and was the winning bidder for three tranches of the one-year product and three tranches of the three-year product. On January 27, 2010, the Public Utilities Commission of Ohio (PUCO) accepted the results of the auction. The next auction is scheduled for October 2011.
Significantly Excessive Earnings Test (SEET)
On November 22, 2010, the PUCO unanimously approved a stipulation between the parties resolving all issues related to the Ohio Utilities’ SEET application filed on September 1, 2010. The stipulation recommended that the PUCO determine that there were no significantly excessive earnings in 2009.
Met-Ed, Penelec and Penn Power Generation Procurement
On January 18-20, 2011, the Pennsylvania utilities conducted auctions to procure a portion of the default service requirements for Metropolitan Edison (Met-Ed), Penelec and Pennsylvania Power (Penn Power) customers who choose not to shop with an alternative supplier. The January 2011 auction was the third of four auctions for Met-Ed and Penelec and the first of two auctions for Penn Power to procure commercial default service requirements for the 12-month period of June 1, 2011 to May 31, 2012 and residential requirements for the 24-month period of June 1, 2011 to May 31, 2013. For Met-Ed, Penelec and Penn Power commercial customers the tranche-weighted average price ($/MWh) was $69.97, $59.32 and $57.88, respectively, and for residential customers the tranche-weighted average price was $70.69, $59.74 and $55.39, respe ctively. This was also the first of two auctions held to procure residential service requirements for the 12-month period of June 1, 2011 to May 31, 2012. For Met-Ed, Penelec and Penn Power residential customers the tranche-weighted average price ($/MWh) was $67.43, $58.01 and $60.29, respectively. In addition, the January 2011 auction procured supply for Met-Ed and Penelec industrial customers opting in to Hourly Price Default Service. For Met-Ed and Penelec, the average 12-month price ($/MWh) was $9.90 and $9.91, respectively.
FERC Rate Filing
On February 1, 2011, American Transmission Systems, Inc. (ATSI) and PJM Interconnection, LLC (PJM) jointly filed with FERC to establish transmission rates and make PJM tariff and operating agreement changes. The rates would be effective June 1, 2011, concurrent with ATSI’s integration into PJM.
Operational Matters
Burger Biomass
On November 17, 2010, FE announced plans to cancel the repowering of R.E. Burger units 4 and 5 (312 MW) to generate electricity principally with biomass. The units were permanently shut down on December 31, 2010, due to current market conditions. The avoided capital cost to retrofit Burger was estimated to be $200 million.
Beaver Valley Refueling
On November 4, 2010, Beaver Valley Nuclear Power Station Unit 1 (911 MW) returned to service after completing its scheduled refueling and maintenance outage which began on October 2, 2010. Several projects were completed to ensure continued safe and reliable operations, including replacement of one of three reactor coolant pump motors and maintenance work and inspections on various plant components. Sixty of the 157 fuel assemblies were exchanged during the outage.
Consolidated Report to the Financial Community - 4th Quarter 2010 | 18 |
Ohio Valley Electric Corporation (OVEC)
On December 28, 2010, FE announced the sale of FirstEnergy Generation Corp.’s 6.65% participation interest in the output of OVEC (approximately 150 MW) to Peninsula Generation Cooperative, a subsidiary of Wolverine Power Supply Cooperative, Inc. FE’s remaining interest in OVEC is 4.85%.
Ohio Wind Power Project
On February 8, 2011, FES announced its agreement to purchase 100 MW of output from Blue Creek Wind Farm (304 MW), which is being built in western Ohio by Iberdrola Renewables. Under terms of the agreement FES will purchase 100 MW of the total output of the project for 20 years beginning in October of 2012.
Fremont Energy Center
On February 9, 2011, FE entered into a non-binding Memorandum of Understanding (MOU) for the sale of its Fremont Energy Center (707 MW) to American Municipal Power, Inc. The MOU provides, among other things, for the parties to engage in exclusive negotiations toward AMP executing a definitive agreement by March 11, 2011, to purchase the facility on or about July 1, 2011. Fremont is currently under construction and scheduled to be completed in 2011. The plant includes two natural gas turbines and a steam turbine capable of producing 544 MW of load-following capacity and 163 MW of peaking capacity.
Consolidated Report to the Financial Community - 4th Quarter 2010 | 19 |
Forward-Looking Statements: This Consolidated Report to the Financial Community includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms "anticipate," "potential," "expect," "believe," "estimate" and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Ac tual results may differ materially due to the speed and nature of increased competition in the electric utility industry, the impact of the regulatory process on the pending matters in Ohio, Pennsylvania and New Jersey, business and regulatory impacts from American Transmission Systems, Incorporated's realignment into PJM Interconnection, L.L.C., economic or weather conditions affecting future sales and margins, changes in markets for energy services, changing energy and commodity market prices and availability, financial derivative reforms that could increase our liquidity needs and collateral costs, replacement power costs being higher than anticipated or inadequately hedged, the continued ability of FirstEnergy's regulated utilities to collect transition and other costs, operating and maintenance costs being higher than anticipated, other legislative and regulatory changes, revised environmental requirements, including possible greenhouse gas emission and coal combustion regulations, the potential impacts of any laws, rules or regulations that ultimately replace the Clean Air Interstate Rules, the uncertainty of the timing and amounts of the capital expenditures needed to, among other things, resolve any NSR litigation or other potential similar regulatory initiatives or rulemakings (including that such amounts could be higher than anticipated or that certain generating units may need to be shut down), adverse regulatory or legal decisions and outcomes (including, but not limited to, the revocation of necessary licenses or operating permits and oversight) by the Nuclear Regulatory Commission, Metropolitan Edison Company's and Pennsylvania Electric Company's transmission service charge appeal at the Commonwealth Court of Pennsylvania, any impact resulting from the receipt by Signal Peak of the Department of Labor’s notice of potential pattern violations at Bull Mountain Mine No. 1, the continuing availability of generating units and their ability to operate at or near full capacity, the ability to compl y with applicable state and federal reliability standards, the ability to accomplish or realize anticipated benefits from strategic goals (including employee workforce initiatives), the ability to improve electric commodity margins and the impact of, among other factors, the increase cost of coal and coal transportation on such margins and the ability to experience growth in the distribution business, the changing market conditions that could affect the value of assets held in FirstEnergy's nuclear decommissioning trusts, pension trusts and other trust funds, and cause it to make additional contributions sooner, or in an amount that is larger than currently anticipated, the ability to access the public securities and other capital and credit markets in accordance with FirstEnergy's financing plan and the cost of such capital, changes in general economic conditions affecting the company, the state of the capital and credit markets affecting the company, interest rates and any actions taken by credit rating ag encies that could negatively affect FirstEnergy's access to financing or its costs or increase its requirements to post additional collateral to support outstanding commodity positions, letters of credit and other financial guarantees, the continuing uncertainty in the national and regional economy and its impact on the company's major industrial and commercial customers, issues concerning the soundness of financial institutions and counterparties with which FirstEnergy does business, the expected timing and likelihood of completion of the proposed merger with Allegheny Energy, Inc., including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the proposed merger that could reduce anticipated benefits or cause the parties to abandon the merger, the diversion of management's time and attention from our ongoing business during this time period, the ability to maintain relationships with customers, employees or suppliers as well as the ability to successfully i ntegrate the businesses and realize cost savings and any other synergies and the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect and the risks and other factors discussed from time to time in its Securities and Exchange Commission filings, and other similar factors. The foregoing review of factors should not be construed as exhaustive. Dividends declared from time to time on FirstEnergy’s common stock during any annual period may in aggregate vary from the indicated amount due to circumstances considered by FirstEnergy’s Board of Directors at the time of actual declarations. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly discl aims any current intention to update any forward-looking statements contained herein as a result of new information, future events, or otherwise.
Consolidated Report to the Financial Community - 4th Quarter 2010 | 20 |