Cover Page
Cover Page | 9 Months Ended |
Sep. 30, 2023 shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Sep. 30, 2023 |
Document Transition Report | false |
Entity File Number | 333-21011 |
Entity Registrant Name | FIRSTENERGY CORP. |
Entity Tax Identification Number | 34-1843785 |
Entity Incorporation, State or Country Code | OH |
Entity Address, Address Line One | 76 South Main Street |
Entity Address, City or Town | Akron |
Entity Address, State or Province | OH |
Entity Address, Postal Zip Code | 44308 |
City Area Code | (800) |
Local Phone Number | 736-3402 |
Title of 12(b) Security | Common Stock, $0.10 par value |
Trading Symbol | FE |
Security Exchange Name | NYSE |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock Shares Outstanding | 573,814,823 |
Entity Central Index Key | 0001031296 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2023 |
Document Fiscal Period Focus | Q3 |
Amendment Flag | false |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
REVENUES: | |||||
Total revenues | [1] | $ 3,487,000 | $ 3,475,000 | $ 9,724,000 | $ 9,282,000 |
OPERATING EXPENSES: | |||||
Fuel | 166,000 | 209,000 | 439,000 | 539,000 | |
Purchased power | 1,155,000 | 1,109,000 | 3,173,000 | 2,786,000 | |
Other operating expenses | 967,000 | 1,111,000 | 2,698,000 | 2,827,000 | |
Provision for depreciation | 366,000 | 332,000 | 1,088,000 | 1,020,000 | |
Deferral of regulatory assets, net | (140,000) | (86,000) | (253,000) | (252,000) | |
General taxes | 307,000 | 295,000 | 881,000 | 851,000 | |
Total operating expenses | 2,821,000 | 2,970,000 | 8,026,000 | 7,771,000 | |
OPERATING INCOME | 666,000 | 505,000 | 1,698,000 | 1,511,000 | |
OTHER INCOME (EXPENSE): | |||||
Debt redemption costs (Note 6) | 0 | 1,000 | (36,000) | (155,000) | |
Equity method investment earnings (Note 1) | 43,000 | 57,000 | 134,000 | 134,000 | |
Miscellaneous income, net | 24,000 | 111,000 | 102,000 | 300,000 | |
Pension and OPEB mark-to-market adjustment (Note 4) | 0 | 0 | 59,000 | 0 | |
Interest expense | (289,000) | (248,000) | (828,000) | (788,000) | |
Capitalized financing costs | 26,000 | 23,000 | 69,000 | 59,000 | |
Total other expense | (196,000) | (56,000) | (500,000) | (450,000) | |
INCOME BEFORE INCOME TAXES | 449,000 | 1,198,000 | 1,061,000 | ||
INCOME TAXES | 29,000 | 105,000 | 193,000 | 237,000 | |
INCOME FROM CONTINUING OPERATIONS | 441,000 | 344,000 | 1,005,000 | 824,000 | |
Discontinued operations (Note 1) | [2] | (21,000) | 0 | (21,000) | 0 |
NET INCOME | 420,000 | 344,000 | 984,000 | 824,000 | |
Income attributable to noncontrolling interest (continuing operations) | 20,000 | 10,000 | 57,000 | 15,000 | |
EARNINGS ATTRIBUTABLE TO FIRSTENERGY CORP. | 400,000 | 334,000 | 927,000 | 809,000 | |
AMOUNTS ATTRIBUTABLE TO FIRSTENERGY CORP.: | |||||
Earnings from continuing operations | 421,000 | 334,000 | 948,000 | 809,000 | |
Earnings from discontinued operations | [2] | (21,000) | 0 | (21,000) | 0 |
EARNINGS ATTRIBUTABLE TO FIRSTENERGY CORP. | $ 400,000 | $ 334,000 | $ 927,000 | $ 809,000 | |
EARNINGS PER SHARE ATTRIBUTABLE TO FIRSTENERGY CORP. (Note 3): | |||||
Basic - continuing operations (in dollars per share) | $ 0.74 | $ 0.58 | $ 1.66 | $ 1.42 | |
Basic - discontinued operations (in dollars per share) | (0.04) | 0 | (0.04) | 0 | |
Basic (in dollars per share) | 0.70 | 0.58 | 1.62 | 1.42 | |
Diluted - continuing operations (in dollars per share) | 0.73 | 0.58 | 1.65 | 1.41 | |
Diluted - discontinued operations (in dollars per share) | (0.04) | 0 | (0.04) | 0 | |
Diluted (in dollars per share) | $ 0.69 | $ 0.58 | $ 1.61 | $ 1.41 | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | |||||
Basic (in shares) | 573 | 571 | 573 | 571 | |
Diluted (in shares) | 574 | 572 | 574 | 572 | |
Distribution services and retail generation | |||||
REVENUES: | |||||
Total revenues | $ 2,869,000 | $ 2,767,000 | $ 7,924,000 | $ 7,334,000 | |
Transmission | |||||
REVENUES: | |||||
Total revenues | 508,000 | 502,000 | 1,486,000 | 1,393,000 | |
Other | |||||
REVENUES: | |||||
Total revenues | $ 110,000 | $ 206,000 | $ 314,000 | $ 555,000 | |
[1]Includes excise and gross receipts tax collections of $114 million and $111 million during the three months ended September 30, 2023 and 2022, respectively, and $315 million and $305 million during the nine months ended September 30, 2023 and 2022, respectively.[2]Consists of income taxes of $21 million during the three and nine months ended September 30, 2023. |
Consolidated Statements of In_2
Consolidated Statements of Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Excise taxes collected | $ 114 | $ 111 | $ 315 | $ 305 |
Income tax benefit | $ 21 | $ 21 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
NET INCOME | $ 420 | $ 344 | $ 984 | $ 824 |
OTHER COMPREHENSIVE INCOME (LOSS): | ||||
Pension and OPEB prior service costs | (2) | (2) | (5) | (6) |
Amortized losses on derivative hedges | 0 | 0 | 2 | 8 |
Other comprehensive income (loss) | (2) | (2) | (3) | 2 |
Income tax benefits on other comprehensive income (loss) | (1) | (1) | (1) | 0 |
Other comprehensive income (loss), net of tax | (1) | (1) | (2) | 2 |
COMPREHENSIVE INCOME | 419 | 343 | 982 | 826 |
Comprehensive income attributable to noncontrolling interest | 20 | 10 | 57 | 15 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO FIRSTENERGY CORP. | $ 399 | $ 333 | $ 925 | $ 811 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 118 | $ 160 |
Restricted cash | 26 | 46 |
Receivables- | ||
Customers | 1,387 | 1,455 |
Less — Allowance for uncollectible customer receivables | 85 | 137 |
Receivable | 1,302 | 1,318 |
Other, net of allowance for uncollectible accounts of $15 in 2023 and $11 in 2022 | 271 | 253 |
Materials and supplies, at average cost | 481 | 421 |
Prepaid taxes and other | 322 | 217 |
Total current assets | 2,520 | 2,415 |
PROPERTY, PLANT AND EQUIPMENT: | ||
In service | 49,301 | 47,850 |
Less — Accumulated provision for depreciation | 13,854 | 13,258 |
Property, plant and equipment in service net of accumulated provision for depreciation | 35,447 | 34,592 |
Construction work in progress | 2,231 | 1,693 |
Total property, plant and equipment | 37,678 | 36,285 |
INVESTMENTS AND OTHER NONCURRENT ASSETS: | ||
Goodwill | 5,618 | 5,618 |
Investments (Note 6) | 626 | 622 |
Regulatory assets | 353 | 33 |
Other | 676 | 1,135 |
Total investments and other noncurrent assets | 7,273 | 7,408 |
TOTAL ASSETS | 47,471 | 46,108 |
CURRENT LIABILITIES: | ||
Currently payable long-term debt | 1,302 | 351 |
Short-term borrowings | 270 | 100 |
Accounts payable | 1,262 | 1,503 |
Accrued interest | 303 | 254 |
Accrued taxes | 657 | 668 |
Accrued compensation and benefits | 252 | 272 |
Customer deposits | 225 | 223 |
Dividends payable | 235 | 223 |
Other | 290 | 364 |
Total current liabilities | 4,796 | 3,958 |
NONCURRENT LIABILITIES: | ||
Long-term debt and other long-term obligations | 22,882 | 21,203 |
Accumulated deferred income taxes | 4,449 | 4,202 |
Retirement benefits | 1,512 | 2,335 |
Regulatory liabilities | 1,316 | 1,847 |
Other | 1,571 | 1,920 |
Total noncurrent liabilities | 31,730 | 31,507 |
TOTAL LIABILITIES | 36,526 | 35,465 |
Common stockholders’ equity- | ||
Common stock, $0.10 par value, authorized 700,000,000 shares - 573,814,823 and 572,130,932 shares outstanding as of September 30, 2023 and December 31, 2022, respectively. | 57 | 57 |
Other paid-in capital | 10,705 | 11,322 |
Accumulated other comprehensive loss | (16) | (14) |
Accumulated deficit | (272) | (1,199) |
Total common stockholders’ equity | 10,474 | 10,166 |
Noncontrolling interest | 471 | 477 |
TOTAL EQUITY | 10,945 | 10,643 |
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 8) | ||
TOTAL LIABILITIES AND EQUITY | 47,471 | 46,108 |
Customer | ||
Receivables- | ||
Customers | 1,387 | 1,455 |
Less — Allowance for uncollectible customer receivables | 85 | 137 |
Receivable | $ 1,302 | $ 1,318 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Receivables- | ||
Allowance for uncollectible accounts | $ 85 | $ 137 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, authorized (in shares) | 700,000,000 | 700,000,000 |
Common stock, outstanding (in shares) | 573,814,823 | 572,130,932 |
Other | ||
Receivables- | ||
Allowance for uncollectible accounts | $ 15 | $ 11 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Millions | Total | Total Common Stockholders’ Equity | Common Stock | OPIC | AOCI | Accumulated Deficit | NCI |
Beginning balance, (in shares) at Dec. 31, 2021 | 570,000,000 | ||||||
Beginning balance at Dec. 31, 2021 | $ 8,675 | $ 8,675 | $ 57 | $ 10,238 | $ (15) | $ (1,605) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 288 | 288 | 288 | ||||
Other comprehensive income (loss), net of tax | (1) | (1) | (1) | ||||
Stock Investment Plan and share-based benefit plans (in shares) | 1,000,000 | ||||||
Stock Investment Plan and share-based benefit plans | 20 | 20 | 20 | ||||
Cash dividends declared on common stock | (223) | (223) | (223) | ||||
Other | (4) | (4) | (4) | ||||
Ending balance (in shares) at Mar. 31, 2022 | 571,000,000 | ||||||
Ending balance at Mar. 31, 2022 | 8,755 | 8,755 | $ 57 | 10,031 | (16) | (1,317) | 0 |
Beginning balance, (in shares) at Dec. 31, 2021 | 570,000,000 | ||||||
Beginning balance at Dec. 31, 2021 | 8,675 | 8,675 | $ 57 | 10,238 | (15) | (1,605) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 824 | ||||||
Other comprehensive income (loss), net of tax | 2 | ||||||
Ending balance (in shares) at Sep. 30, 2022 | 572,000,000 | ||||||
Ending balance at Sep. 30, 2022 | 11,238 | 10,774 | $ 57 | 11,526 | (13) | (796) | 464 |
Beginning balance, (in shares) at Mar. 31, 2022 | 571,000,000 | ||||||
Beginning balance at Mar. 31, 2022 | 8,755 | 8,755 | $ 57 | 10,031 | (16) | (1,317) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 192 | 187 | 187 | 5 | |||
Other comprehensive income (loss), net of tax | 4 | 4 | 4 | ||||
Stock Investment Plan and share-based benefit plans | 25 | 25 | |||||
FET minority interest sale, net of transaction costs | 2,338 | 1,887 | 1,887 | 451 | |||
Ending balance (in shares) at Jun. 30, 2022 | 571,000,000 | ||||||
Ending balance at Jun. 30, 2022 | 11,314 | 10,858 | $ 57 | 11,943 | (12) | (1,130) | 456 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 344 | 334 | 334 | 10 | |||
Other comprehensive income (loss), net of tax | (1) | (1) | (1) | ||||
Stock Investment Plan and share-based benefit plans (in shares) | 1,000,000 | ||||||
Stock Investment Plan and share-based benefit plans | 33 | 33 | 33 | ||||
Cash dividends declared on common stock | (446) | (446) | (446) | ||||
Distributions to FET minority interest | (15) | (15) | |||||
Capital contribution from FET minority interest | 9 | 9 | |||||
Consolidated tax benefit allocation | 0 | (4) | (4) | 4 | |||
Ending balance (in shares) at Sep. 30, 2022 | 572,000,000 | ||||||
Ending balance at Sep. 30, 2022 | $ 11,238 | 10,774 | $ 57 | 11,526 | (13) | (796) | 464 |
Beginning balance, (in shares) at Dec. 31, 2022 | 572,130,932 | 572,000,000 | |||||
Beginning balance at Dec. 31, 2022 | $ 10,643 | 10,166 | $ 57 | 11,322 | (14) | (1,199) | 477 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 310 | 292 | 292 | 18 | |||
Other comprehensive income (loss), net of tax | (1) | (1) | (1) | ||||
Stock Investment Plan and share-based benefit plans (in shares) | 1,000,000 | ||||||
Stock Investment Plan and share-based benefit plans | 19 | 19 | 19 | ||||
Cash dividends declared on common stock | (223) | (223) | (223) | ||||
Distributions to FET minority interest | (17) | (17) | |||||
Ending balance (in shares) at Mar. 31, 2023 | 573,000,000 | ||||||
Ending balance at Mar. 31, 2023 | $ 10,731 | 10,253 | $ 57 | 11,118 | (15) | (907) | 478 |
Beginning balance, (in shares) at Dec. 31, 2022 | 572,130,932 | 572,000,000 | |||||
Beginning balance at Dec. 31, 2022 | $ 10,643 | 10,166 | $ 57 | 11,322 | (14) | (1,199) | 477 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 984 | ||||||
Other comprehensive income (loss), net of tax | $ (2) | ||||||
Ending balance (in shares) at Sep. 30, 2023 | 573,814,823 | 574,000,000 | |||||
Ending balance at Sep. 30, 2023 | $ 10,945 | 10,474 | $ 57 | 10,705 | (16) | (272) | 471 |
Beginning balance, (in shares) at Mar. 31, 2023 | 573,000,000 | ||||||
Beginning balance at Mar. 31, 2023 | 10,731 | 10,253 | $ 57 | 11,118 | (15) | (907) | 478 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 254 | 235 | 235 | 19 | |||
Stock Investment Plan and share-based benefit plans | 22 | 22 | 22 | ||||
Distributions to FET minority interest | (36) | (36) | |||||
Ending balance (in shares) at Jun. 30, 2023 | 573,000,000 | ||||||
Ending balance at Jun. 30, 2023 | 10,971 | 10,510 | $ 57 | 11,140 | (15) | (672) | 461 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 420 | 400 | 400 | 20 | |||
Other comprehensive income (loss), net of tax | (1) | (1) | (1) | ||||
Stock Investment Plan and share-based benefit plans (in shares) | 1,000,000 | ||||||
Stock Investment Plan and share-based benefit plans | 24 | 24 | 24 | ||||
Cash dividends declared on common stock | (459) | (459) | (459) | ||||
Distributions to FET minority interest | $ (10) | (10) | |||||
Ending balance (in shares) at Sep. 30, 2023 | 573,814,823 | 574,000,000 | |||||
Ending balance at Sep. 30, 2023 | $ 10,945 | $ 10,474 | $ 57 | $ 10,705 | $ (16) | $ (272) | $ 471 |
Consolidated Statements of Eq_2
Consolidated Statements of Equity (Parenthetical) - $ / shares | 1 Months Ended | 3 Months Ended | ||||
Sep. 30, 2023 | Jul. 31, 2023 | Sep. 30, 2022 | Jul. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||||||
Dividends declared (in dollars per share) | $ 0.41 | $ 0.39 | $ 0.39 | $ 0.39 | $ 0.39 | $ 0.39 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 984 | $ 824 |
Adjustments to reconcile net income to net cash from operating activities- | ||
Depreciation, amortization and impairments | 893 | 1,043 |
Deferred income taxes and investment tax credits, net | 157 | 221 |
Retirement benefits, net of payments | (74) | (283) |
Pension trust contribution | (750) | 0 |
Pension and OPEB mark-to-market adjustment | (59) | 0 |
Transmission revenue collections, net | (93) | 89 |
Gain on sale of Yards Creek | 21 | 0 |
Changes in current assets and liabilities- | ||
Receivables | (2) | (167) |
Materials and supplies | (60) | (101) |
Prepaid taxes and other current assets | (66) | (46) |
Accounts payable | (241) | 182 |
Accrued taxes | (147) | (135) |
Accrued interest | 49 | (27) |
Accrued compensation and benefits | (46) | (82) |
Other current liabilities | 55 | 3 |
Collateral, net | (216) | 240 |
Other | 24 | 76 |
Net cash provided from operating activities | 429 | 1,837 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital investments | (2,266) | (1,852) |
Sales of investment securities held in trusts | 28 | 31 |
Purchases of investment securities held in trusts | (37) | (40) |
Asset removal costs | (190) | (151) |
Other | (8) | 9 |
Net cash used for investing activities | (2,473) | (2,003) |
New financing- | ||
Long-term debt | 3,150 | 300 |
Short-term borrowings, net | 170 | 0 |
Redemptions and repayments- | ||
Long-term debt | (537) | (2,903) |
Proceeds from FET minority interest sale, net of transaction costs | 0 | 2,348 |
Distributions to FET minority interest | (63) | (15) |
Capital contributions from FET minority interest | 0 | 9 |
Common stock dividend payments | (670) | (667) |
Other | (68) | (140) |
Net cash provided from (used for) financing activities | 1,982 | (1,068) |
Net change in cash, cash equivalents, and restricted cash | (62) | (1,234) |
Cash, cash equivalents, and restricted cash at beginning of period | 206 | 1,511 |
Cash, cash equivalents, and restricted cash at end of period | 144 | 277 |
Significant non-cash transactions: | ||
Accrued capital investments | $ 212 | $ 133 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | ORGANIZATION AND BASIS OF PRESENTATION Unless otherwise indicated, defined terms and abbreviations used herein have the meanings set forth in the accompanying Glossary of Terms. FE was incorporated under Ohio law in 1996. FE’s principal business is the holding, directly or indirectly, of all of the outstanding equity of its principal subsidiaries: OE, CEI, TE, Penn (a wholly owned subsidiary of OE), JCP&L, ME, PN, FESC, MP, AGC (a wholly owned subsidiary of MP), PE and WP. Additionally, FET is a majority-owned subsidiary of FE, and is the parent company of ATSI, MAIT, PATH and TrAIL. In addition, FE holds all of the outstanding equity of other direct subsidiaries including FEV, which currently 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. On November 6, 2021, FirstEnergy, along with FET, entered into the FET P&SA I, with Brookfield and the Brookfield Guarantors, pursuant to which FET agreed to issue and sell to Brookfield at the closing, and Brookfield agreed to purchase from FET, certain newly issued membership interests of FET, such that Brookfield would own 19.9% of the issued and outstanding membership interests of FET, for a purchase price of $2.375 billion. The transaction closed on May 31, 2022. The difference between the cash consideration received, net of transaction costs of approximately $37 million, and the carrying value of the NCI of $451 million was recorded as an increase to OPIC. FirstEnergy presents the third-party investors’ ownership portion of FirstEnergy's net income, net assets and comprehensive income as NCI. NCI is included as a component of equity on the Consolidated Balance Sheets. FE and its subsidiaries are principally involved in the transmission, distribution and generation of electricity. FirstEnergy’s ten utility operating companies comprise one of the nation’s largest investor-owned electric systems, based on serving over six million customers in the Midwest and Mid-Atlantic regions. FirstEnergy’s transmission operations include approximately 24,000 miles of lines and two regional transmission operation centers. AGC and MP control 3,580 MWs of total capacity. These interim financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and disclosures normally included in financial statements and notes prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These interim financial statements should be read in conjunction with the financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2022. FE and its subsidiaries follow GAAP and comply with the related regulations, orders, policies and practices prescribed by the SEC, FERC, and, as applicable, the PUCO, the PPUC, the MDPSC, the NYPSC, the WVPSC, the VSCC and the NJBPU. The accompanying interim financial statements are unaudited, but reflect all adjustments, consisting of normal recurring adjustments, that, in the opinion of management, are necessary for a fair statement of the financial statements. The preparation of financial statements in conformity with GAAP requires management to make periodic estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results could differ from these estimates. The reported results of operations are not necessarily indicative of results of operations for any future period. FE and its subsidiaries have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. FE and its subsidiaries consolidate all majority-owned subsidiaries over which they exercise control and, when applicable, entities for which they have a controlling financial interest. Intercompany transactions and balances are eliminated in consolidation as appropriate and permitted pursuant to GAAP. FE and its subsidiaries consolidate a variable interest entity when it is determined that it is the primary beneficiary. Investments in affiliates over which FE and its subsidiaries have the ability to exercise significant influence, but do not have a controlling financial interest, follow the equity method of accounting. Under the equity method, the interest in the entity is reported as an investment in the Consolidated Balance Sheets and the percentage of FE’s ownership share of the entity’s earnings is reported in the Consolidated Statements of Income and Comprehensive Income. Certain prior year amounts have been reclassified to conform to the current year presentation, including presenting long-term debt and other long-term obligations within “Noncurrent Liabilities” on the Consolidated Balance Sheets as compared to “Total Capitalization”. Economic Conditions Economic conditions following the global pandemic have increased supply chain lead times across numerous material categories, with some as much as tripling from pre-pandemic lead times. Some key suppliers have struggled with labor shortages and raw material availability, which along with inflationary pressure that appears to be moderating, have increased costs and decreased the availability of certain materials, equipment and contractors. FirstEnergy has taken steps to mitigate these risks and does not currently expect service disruptions or any material impact on its capital spending plan. However, the situation remains fluid and a prolonged continuation or further increase in supply chain disruptions could have an adverse effect on FirstEnergy’s results of operations, cash flow and financial condition. Additionally, interest rates have increased significantly, Sale of Equity Interest in FirstEnergy Transmission, LLC On February 2, 2023, FE, along with FET, entered into the FET P&SA II with Brookfield and the Brookfield Guarantors, pursuant to which FE agreed to sell to Brookfield at the closing, and Brookfield agreed to purchase from FE, an incremental 30% equity interest in FET for a purchase price of $3.5 billion. The majority of the purchase price is expected to be paid in cash upon closing, and the remainder will be payable by the issuance of a promissory note, which is expected to be repaid by the end of 2024. As a result of the consummation of the transaction, Brookfield’s interest in FET will increase from 19.9% to 49.9%, while FE will retain the remaining 50.1% ownership interests of FET. The transaction is subject to customary closing conditions, including approval from the FERC, which was received on August 14, 2023, and certain state utility commissions, and completion of review by the CFIUS. In addition, pursuant to the FET P&SA II, FirstEnergy made the necessary filings with the applicable regulatory authorities for the PA Consolidation. The FET Minority Equity Interest Sale is expected to close in early 2024. Upon closing, FET will continue to be consolidated in FirstEnergy’s GAAP financial statements. Pursuant to the terms of the FET P&SA II, in connection with the closing, Brookfield, FET and FE will enter into the A&R FET LLC Agreement, which will amend and restate in its entirety the current limited liability company agreement of FET. The A&R FET LLC Agreement, among other things, provides for the governance, exit, capital and distribution, and other arrangements for FET from and following the closing. Under the A&R FET LLC Agreement, at the closing, the FET Board will consist of five directors, two appointed by Brookfield and three appointed by FE. Each of Brookfield’s and FE’s respective appointment rights are subject to such party maintaining certain minimum ownership percentages. The A&R FET LLC Agreement contains certain investor protections, including, among other things, requiring Brookfield's approval for FET and its subsidiaries to take certain major actions. Under the terms of the A&R FET LLC Agreement, for so long as Brookfield holds at least a 30.0% interest in FET, Brookfield’s consent is required for FET or any of its subsidiaries to, among other things, undertake certain acquisitions or dispositions in excess of certain dollar thresholds, establish or amend the annual budget, incur cost overruns on certain capital expenditures projects during any fiscal year in excess of a certain percentage overage of the budgeted amounts or incur cost overruns on the aggregate capital expenditure budget of FET’s subsidiaries during any fiscal year in excess of a certain percentage overage of the aggregated budgeted amount, make material decisions relating to litigation where either the potential liability exposure is in excess of a certain threshold dollar amount or such proceeding would reasonably be expected to have an adverse effect on Brookfield or FET, make certain material regulatory filings, incur or refinance indebtedness by FET or its subsidiaries, which, in the case of its subsidiaries, would reasonably be expected to cause such subsidiary to deviate from its targeted capital structure, enter into joint ventures, appoint or replace any member of its transmission leadership team, amend the accounting policies of FET or its subsidiaries (but only if FE is no longer the majority owner of FET), take any action that would reasonably be expected to cause a default or breach of any material contract of FET or any of its subsidiaries, create certain material liens (excluding certain permitted liens), or cause any reorganization of FET or any of its subsidiaries. The A&R FET LLC Agreement also includes provisions relating to the resolution of disputes and to address deadlocks between FET members and provides a mechanism to preserve FE’s economic interest in the MAIT Class B distributions. Consolidation of Pennsylvania Companies FirstEnergy is proceeding with the consolidation of the Pennsylvania Companies into FE PA, a new, single operating entity. The PA Consolidation will require, among other steps: (a) the transfer of certain Pennsylvania-based transmission assets owned by WP to KATCo, (b) the contribution of Class B equity interests of MAIT currently held by PN and ME to FE (and ultimately transferred to FET as part of the FET Minority Equity Interest Sale), (c) the formation of FE PA and (d) the merger of each of the Pennsylvania Companies with and into FE PA, with FE PA surviving such mergers as the successor-in-interest to all assets and liabilities of the Pennsylvania Companies. Following completion of the PA Consolidation, FE PA will be FE’s only regulated utility in Pennsylvania encompassing the operations previously conducted individually by the Pennsylvania Companies. Consummation of the PA Consolidation is contingent upon numerous conditions, including the approval of NYPSC and PPUC, which filings were submitted on March 6, 2023. Subject to receipt of the remaining regulatory approvals, FirstEnergy expects that the PA Consolidation will close by early 2024. Capitalized Financing Costs For the three months ended September 30, 2023 and 2022, capitalized financing costs on FirstEnergy’s Consolidated Statements of Income include $12 million and $15 million, respectively, of allowance for equity funds used during construction and $14 million and $8 million, respectively, of capitalized interest. For the nine months ended September 30, 2023 and 2022, capitalized financing costs on FirstEnergy’s Consolidated Statements of Income include $31 million and $39 million, respectively, of allowance for equity funds used during construction and $38 million and $20 million, respectively, of capitalized interest. Discontinued Operations On February 27, 2020, the FES Debtors emerged from bankruptcy and were deconsolidated from FirstEnergy’s consolidated federal income tax group. The bankruptcy, emergence and deconsolidation resulted in FirstEnergy recognizing certain income tax benefits and charges, which were classified as discontinued operations. During the third quarter of 2023, FirstEnergy recognized a $21 million tax-effected charge to income tax expense as a result of identifying an out of period adjustment related to the allocation of certain deferred income tax liabilities associated with the FES Debtors and their tax return deconsolidation in 2020. This adjustment at Corporate/Other for segment reporting was immaterial to the 2023 and prior period financial statements, and is reflected within “Discontinued Operations” on the Consolidated Statements of Income and Comprehensive Income and “Loss on disposal, net of tax” on the Consolidated Statements of Cash Flow. Equity Method Investments Investments over which FE and its subsidiaries have the ability to exercise significant influence, but do not have a controlling financial interest, follow the equity method of accounting. Under the equity method, the interest in the entity is reported as an Investment on the Consolidated Balance Sheets. The percentage of FE's ownership share of the entity’s earnings is reported in the Consolidated Statements of Income and Comprehensive Income and reflected in “Other Income (Expense)”. Equity method investments included within "Investments" on the Consolidated Balance Sheets were approximately $93 million and $90 million as of September 30, 2023 and December 31, 2022, respectively. Global Holding - FEV currently 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 primarily focused on 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. For the three months ended September 30, 2023 and 2022, pre-tax income related to FEV’s ownership in Global Holding was $43 million and $57 million, respectively, and $132 million and $133 million for the nine months ended September 30, 2023 and 2022, respectively. FEV’s pre-tax equity earnings and investment in Global Holding are included in Corporate/Other for segment reporting. As of September 30, 2023, and December 31, 2022, the carrying value of the equity method investment was $54 million and $57 million, respectively. During the nine months ended September 30, 2023 and 2022, FEV received cash dividends from Global Holding of $135 million and $120 million, which were classified with “Cash from Operating Activities” on the Consolidated Statements of Cash Flow. PATH WV - PATH, a proposed transmission line from West Virginia through Virginia into Maryland which PJM cancelled in 2012, is a series limited liability company that is comprised of multiple series, each of which has separate rights, powers and duties regarding specified property and the series profits and losses associated with such property. A subsidiary of FE owns 100% of the Allegheny Series (PATH-Allegheny) and 50% of the West Virginia Series (PATH-WV), which is a joint venture with a subsidiary of AEP. FirstEnergy is not the primary beneficiary of PATH-WV, as it does not have control over the significant activities affecting the economics of PATH-WV. FirstEnergy's ownership interest in PATH-WV is subject to the equity method of accounting. As of September 30, 2023 and December 31, 2022, the carrying value of the equity method investment was $18 million. Goodwill FirstEnergy evaluates goodwill for impairment annually on July 31 and more frequently if indicators of impairment arise. For 2023, FirstEnergy performed a qualitative assessment of the Regulated Distribution and Regulated Transmission reporting units' goodwill, assessing economic, industry and market considerations in addition to the reporting units' overall financial performance. Key factors used in the assessment included: growth rates, interest rates, expected capital expenditures, utility sector market performance, regulatory and legal developments, and other market considerations. It was determined that the fair values of these reporting units were, more likely than not, greater than their carrying values and a quantitative analysis was not necessary. Reference Rate Reform In March of 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (issued March 2020 and subsequently updated). This ASU, which introduces Topic ASC 848 to the FASB codification, provides temporary optional expedients and exceptions, that if elected, will ease the financial reporting burdens related to the market transition from LIBOR and other interbank offered rates to alternative reference rates. On April 27, 2023, FE, FET, the Utilities and the Transmission Companies entered into amendments to the 2021 Credit Facilities to, among other things: (i) permit the sale from FE to Brookfield of an incremental 30% equity interest in FET for a purchase price of $3.5 billion, (ii) permit the consolidation of the Pennsylvania Companies into a new, single operating entity, FE PA, which will be FE’s only regulated utility in Pennsylvania encompassing the operations previously conducted individually by the Pennsylvania Companies, and (iii) transition the benchmark interest rate for borrowings under the 2021 Credit Facilities from LIBOR to SOFR. During the second quarter of 2023, FirstEnergy utilized the optional expedient within ASC 848 to account for the amendments to the credit facilities as a continuation of the existing contract without additional analysis. New Accounting Pronouncements Recently Issued Pronouncements - FirstEnergy is currently assessing the impact of new authoritative accounting guidance issued by the FASB that has not yet been adopted and the impact it will have on its financial statements and disclosures, as well as the potential to early adopt where applicable. The current expectation is that such new standards will not significantly impact FirstEnergy's financial reporting. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE The following represents a disaggregation of revenue from contracts with customers for the three and nine months ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Regulated Distribution Retail generation and distribution services Residential $ 1,894 $ 1,756 $ 5,010 $ 4,608 Commercial 698 686 1,970 1,858 Industrial 296 348 1,002 943 Other 26 23 78 61 Wholesale 65 159 173 408 Other revenue from contracts with customers 30 27 86 82 Total revenues from contracts with customers 3,009 2,999 8,319 7,960 Other revenue unrelated to contracts with customers 25 24 83 78 Total Regulated Distribution $ 3,034 $ 3,023 $ 8,402 $ 8,038 Regulated Transmission ATSI $ 244 $ 252 $ 712 $ 686 TrAIL 72 78 203 205 MAIT 101 97 289 253 JCP&L 52 45 152 151 MP, PE and WP 39 $ 30 130 98 Total revenues from contracts with customers 508 502 1,486 1,393 Other revenue unrelated to contracts with customers 1 1 4 4 Total Regulated Transmission $ 509 $ 503 $ 1,490 $ 1,397 Corporate/Other and Reconciling Adjustments (1) Wholesale $ 1 $ 7 $ 6 $ 21 Retail generation and distribution services (1) (45) (46) (136) (136) Other revenue unrelated to contracts with customers (1) (12) (12) (38) (38) Total Corporate/Other and Reconciling $ (56) $ (51) $ (168) $ (153) FirstEnergy Total Revenues $ 3,487 $ 3,475 $ 9,724 $ 9,282 (1) Includes eliminations and reconciling adjustments of inter-segment revenues. Other revenue unrelated to contracts with customers includes revenue from late payment charges of $10 million for both the three months ended September 30, 2023 and 2022. Other revenue unrelated to contracts with customers also includes revenue from derivatives of $4 million and $2 million for the three months ended September 30, 2023 and 2022, respectively. Other revenue unrelated to contracts with customers includes revenue from late payment charges of $31 million and $29 million for the nine months ended September 30, 2023 and 2022, respectively. Other revenue unrelated to contracts with customers also includes revenue from derivatives of $16 million and $13 million for the nine months ended September 30, 2023 and 2022, respectively. Customer Receivables Receivables from contracts with customers include distribution services and retail generation sales to residential, commercial and industrial customers of the Utilities. Billed and unbilled customer receivables as of September 30, 2023 and December 31, 2022, are included below: Customer Receivables September 30, 2023 December 31, 2022 (In millions) Billed $ 848 $ 674 Unbilled 539 781 1,387 1,455 Less: Uncollectible Reserve 85 137 Total Customer Receivables $ 1,302 $ 1,318 The allowance for uncollectible customer receivables is based on historical loss information comprised of a rolling 36-month average net write-off percentage of revenues, in conjunction with a qualitative assessment of elements that impact the collectability of receivables to determine if allowances for uncollectible customer receivables should be further adjusted in accordance with the accounting guidance for credit losses. FirstEnergy reviews its allowance for uncollectible customer receivables utilizing a quantitative and qualitative assessment. Management contemplates available current information such as changes in economic factors, regulatory matters, industry trends, customer credit factors, amount of receivable balances that are past-due, payment options and programs available to customers, and the methods that the Utilities are able to utilize to ensure payment. This analysis includes consideration of the outbreak of the pandemic and the impact on customer receivable balances outstanding and write-offs since the pandemic began and subsequent economic slowdown. FirstEnergy’s uncollectible risk on PJM receivables, resulting from transmission and wholesale sales, is minimal due to the nature of PJM’s settlement process and as a result there is no current allowance for doubtful accounts. During 2023, various regulatory actions, including extended installment plans, continue to impact the level of past due balances in certain states, resulting in the allowances for uncollectible customer receivables to remain elevated above 2019 pre-pandemic levels. However, normal collection activity has resumed and arrears levels continue to decline towards pre-pandemic levels. As a result, FirstEnergy recognized a $52 million decrease to its allowance during the first nine months of 2023, of which $27 million was applied to existing deferred regulatory assets. Activity in the allowance for uncollectible accounts on customer receivables for the nine months ended September 30, 2023 and for the year ended December 31, 2022 are as follows: (In millions) Balance, January 1, 2022 $ 159 Provision for expected credit losses (1) 59 Charged to other accounts (2) 62 Write-offs (143) Balance, December 31, 2022 $ 137 Provision for expected credit losses (1) 3 Charged to other accounts (2) 25 Write-offs (80) Balance, September 30, 2023 $ 85 (1) Approximately $(7) million and $11 million of which was deferred for future recovery (refund) in the nine months ended September 30, 2023 and the year ended December 31, 2022, respectively. (2) Represents recoveries and reinstatements of accounts written off for uncollectible accounts. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE EPS is calculated by dividing earnings attributable to FE by the weighted average number of common shares outstanding. Basic EPS is computed using the weighted average number of common shares outstanding during the relevant period as the denominator. The denominator for diluted EPS of common stock reflects the weighted average of common shares outstanding plus the potential additional common shares that could result if dilutive securities and other agreements to issue common stock were exercised. Diluted EPS reflects the dilutive effect of potential common shares from share-based awards and convertible securities. The dilutive effect of outstanding share-based awards was computed using the treasury stock method, which assumes any proceeds that could be obtained upon the exercise of the award would be used to purchase common stock at the average market price for the period. The dilutive effect of the 2026 Convertible Notes, as further discussed in Note 6, “Fair Value Measurements” under Long-term debt and other long-term obligations, is computed using the if-converted method. The following table reconciles basic and diluted EPS attributable to FE: For the Three Months Ended September 30, For the Nine Months Ended September 30, Reconciliation of Basic and Diluted EPS 2023 2022 2023 2022 (In millions, except per share amounts) Earnings attributable to FE - continuing operations $ 421 $ 334 $ 948 $ 809 Earnings attributable to FE - discontinued operations, net of tax (21) — (21) — Earnings attributable to FE $ 400 $ 334 $ 927 $ 809 Share count information: Weighted average number of basic shares outstanding 573 571 573 571 Assumed exercise of dilutive stock options and awards 1 1 1 1 Weighted average number of diluted shares outstanding 574 572 574 572 EPS attributable to FE: Basic - continuing operations $ 0.74 $ 0.58 $ 1.66 $ 1.42 Basic - discontinued operations (0.04) — (0.04) — Basic EPS $ 0.70 $ 0.58 $ 1.62 $ 1.42 Diluted - continuing operations $ 0.73 $ 0.58 $ 1.65 $ 1.41 Diluted - discontinued operations (0.04) — (0.04) — Diluted EPS $ 0.69 $ 0.58 $ 1.61 $ 1.41 For the three and nine months ended September 30, 2023 and 2022, no shares from stock options and awards were excluded from the calculation of diluted shares outstanding, as their inclusion would have been antidilutive. The dilutive effect of the 2026 Convertible Notes is limited to the conversion obligation in excess of the aggregate principal amount of the 2026 Convertible Notes being converted. For the three and nine months ended September 30, 2023, there was no dilutive effect resulting from the 2026 Convertible Notes as the average market price of FE shares of common stock was below the initial conversion price of $46.81 per share. See Note 6, “Fair Value Measurements” for additional details on the 2026 Convertible Notes that were issued during the second quarter of 2023. |
PENSION AND OTHER POST-EMPLOYME
PENSION AND OTHER POST-EMPLOYMENT BENEFITS | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
PENSION AND OTHER POST-EMPLOYMENT BENEFITS | PENSION AND OTHER POST-EMPLOYMENT BENEFITS The components of FirstEnergy’s net periodic benefit costs (credits) for pension and OPEB were as follows: Components of Net Periodic Benefit Costs (Credits) Pension OPEB For the Three Months Ended September 30, 2023 2022 2023 2022 (In millions) Service costs $ 35 $ 46 $ 1 $ 1 Interest costs 106 68 5 3 Expected return on plan assets (151) (164) (7) (10) Amortization of prior service costs (credits) (1) 1 1 (3) (3) Special termination benefits (2) 13 — 5 — Net periodic benefit costs (credits) $ 4 $ (49) $ 1 $ (9) Net periodic benefit costs (credits), net of amounts capitalized $ (15) $ (77) $ 1 $ (9) (1) The income tax benefits associated with pension and OPEB prior service costs amortized out of AOCI were $1 million for the three months ended September 30, 2022, and immaterial for the three months ended September 30, 2023. (2) Related to benefits provided in connection with the PEER. Components of Net Periodic Benefit Costs (Credits) Pension OPEB For the Nine Months Ended September 30, 2023 2022 2023 2022 (In millions) Service costs $ 104 $ 138 $ 2 $ 3 Interest costs 322 204 16 8 Expected return on plan assets (421) (492) (23) (30) Amortization of prior service costs (credits) (1) 2 2 (7) (8) Special termination benefits (2) 18 — 7 — Pension and OPEB mark-to-market adjustment (59) — — — Net periodic benefit credits $ (34) $ (148) $ (5) $ (27) Net periodic benefit credits, net of amounts capitalized $ (88) $ (218) $ (6) $ (28) (1) The income tax benefits associated with the pension and OPEB prior service costs amortized out of AOCI were $1 million and $2 million for the nine months ended September 30, 2023 and 2022, respectively. (2) Related to benefits provided in connection with the PEER. On May 9, 2023, FirstEnergy announced a voluntary retirement program for eligible non-bargaining employees, known as the PEER. More than 65% of eligible employees, totaling approximately 450 employees, accepted the PEER, which included lump sum compensation equivalent to severance benefits, healthcare continuation costs and a temporary pension enhancement with most participating employees expected to depart by the end of 2023. The temporary pension enhancement and healthcare continuation costs are classified as special termination costs within net periodic benefit costs (credits). In addition to the PEER, FirstEnergy notified and involuntarily separated approximately 90 employees on May 9, 2023. Management expects the cost savings resulting from these initiatives to support FirstEnergy’s growth plans. FirstEnergy’s pension and OPEB funding policy is based on actuarial computations using the projected unit credit method. On May 12, 2023, FirstEnergy made a $750 million voluntary cash contribution to the qualified pension plan. As a result of this contribution, FirstEnergy does not currently expect to have a required contribution to the pension plan through 2027 based on the 7.7% actual return through April 30, 2023, and various assumptions, including an expected rate of return on assets of 5.3% (8.0% on an annualized basis) for May 1, 2023 through December 31, 2023. However, FirstEnergy may elect to contribute to the pension plan voluntarily. FirstEnergy recognizes a pension and OPEB mark-to-market adjustment for the change in fair value of plan assets and net actuarial gains and losses annually in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for remeasurement. The size of the voluntary contribution made on May 12, 2023, in relation to total pension assets triggered a remeasurement of the pension plan, and as a result, FirstEnergy recognized a non-cash, pre-tax pension mark-to-market adjustment gain of approximately $59 million in the second quarter of 2023. FirstEnergy elected the practical expedient to remeasure pension plan assets and obligations as of April 30, 2023, which is the month-end closest to the date of the voluntary contribution. The pension mark-to-market adjustment primarily reflects higher than expected return on assets, partially offset by a 29 basis points decrease in the discount rate used to measure benefit obligations. The discount rate used to measure pension obligations was 4.94% as of April 30, 2023 and 5.23% as of December 31, 2022. The discount rate used to measure OPEB obligations was 5.16% as of December 31, 2022. Based on the following assumptions, FirstEnergy expects its 2023 pre-tax net periodic costs, including amounts capitalized and the $59 million pension mark-to-market adjustment gain in the second quarter of 2023, to be a credit of approximately $47 million. Assumptions for 2023 net periodic credits Pension OPEB Effective rate for interest costs on benefit obligations (1) 5.10%/4.80% 5.06 % Effective rate for service costs (1) 5.34%/5.11% 5.41 % Effective rate for interest on service costs (1) 5.22%/4.94% 5.33 % Annualized expected rate of return on plan assets 8.00% 7.00 % (1) Pension rates effective for January 1, 2023 through April 30, 2023 and May 1, 2023 through December 31, 2023, respectively. Service costs, net of capitalization, are reported within Other operating expenses on FirstEnergy’s Consolidated Statements of Income. Non-service costs, other than the pension and OPEB mark-to-market adjustment, which is separately shown, are reported within “Miscellaneous income, net”, within “Other Income (Expense)” on FirstEnergy’s Consolidated Statements of Income. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES FirstEnergy’s interim effective tax rates reflect the estimated annual effective tax rates for 2023 and 2022. These tax rates are affected by estimated annual permanent items, such as AFUDC equity and other flow-through items, as well as certain discrete items. The following tables reconcile the effective tax rate to the federal income tax statutory rate for the three and nine months ended September 30, 2023 and 2022: For the Three Months For the Nine Months Ended September 30, Ended September 30, 2023 2022 2023 2022 (In millions) Income before income taxes (continuing operations) $ 470 $ 449 $ 1,198 $ 1,061 Federal income tax expense at statutory rate (21%) $ 99 $ 94 $ 252 $ 223 Increases (reductions) in tax expense resulting from: State income taxes, net of federal tax benefit 25 25 49 68 AFUDC equity and other flow-through (15) (8) (25) (23) Excess deferred tax amortization due to the Tax Act 2 (15) (30) (46) Federal tax credits claimed (2) (3) (2) (3) Valuation allowances (122) (8) (113) 26 Remeasurement of state deferred taxes due to law changes — 4 — (22) Uncertain tax positions 50 2 50 2 Other, net (8) 14 12 12 Total income taxes (continuing operations) $ 29 $ 105 $ 193 $ 237 Effective income tax rate (continuing operations) 6.0 % 23.4 % 16.1 % 22.3 % During the three months ended September 30, 2023, FirstEnergy recognized a tax benefit of approximately $65 million, net of a reserve for uncertain tax positions, from the reduction of state income taxes and partial release of a valuation allowance for the expected utilization of state net operating losses based on an assessment of regulated business operations and a change in the composition of a state tax return filing group. During the three months ended September 30, 2023, FirstEnergy increased the reserve for uncertain tax positions by approximately $64 million, before federal tax, due to the assessment of regulated business operations discussed above, and a settlement of a separate state income tax dispute with a taxing authority, the combined effect of which increased FirstEnergy’s effective tax rate by approximately $50 million. On March 29, 2023, the West Virginia Governor signed into law House Bill 3286, which allows corporate taxpayers a reduction to pre-apportionment federal taxable income with the amount necessary to offset the increase in the net deferred tax liability (or decrease in the net deferred tax asset) caused by West Virginia’s apportionment law change enacted in 2021. Beginning with the 2033 tax year, qualifying taxpayers can subtract one-tenth of the amount each year for ten years. Taxpayers intending to claim this subtraction will have to file a statement with the West Virginia tax commissioner by July 1, 2024, specifying the total amount of subtraction to be claimed. Accordingly, FirstEnergy recorded a state deferred tax asset of approximately $9 million in the first quarter of 2023, which was fully reserved. In conjunction with the assessment of regulated business operations discussed above, FirstEnergy removed the $9 million reserve and reduced the state deferred tax asset to approximately $4 million, and recorded a corresponding $4 million regulatory liability associated with the amount expected to be refunded to customers in future rates. On August 16, 2022, President Biden signed into law the IRA of 2022, which, among other things, imposes a new 15% corporate AMT based on AFSI applicable to corporations with a three-year average AFSI over $1 billion. The AMT is effective for the 2023 tax year and, if applicable, corporations must pay the greater of the regular corporate income tax or the AMT. Although NOL carryforwards created through the regular corporate income tax system cannot be used to reduce the AMT, financial statement net operating losses can be used to reduce AFSI and the amount of AMT owed. The IRA of 2022 as enacted requires the U.S. Treasury to provide regulations and other guidance necessary to administer the AMT, including further defining allowable adjustments to determine AFSI, which directly impacts the amount of AMT to be paid. Based on interim guidance issued by the U.S. Treasury in late December 2022, FirstEnergy continues to believe that it is more likely than not it will be subject to the AMT beginning in 2023. Accordingly, FirstEnergy made a first quarter estimated payment of AMT of approximately $49 million in April 2023. In June 2023, the U.S. Treasury issued additional guidance that eliminated the requirement of corporations to include AMT in quarterly estimated tax payments, pending further guidance on the application and administration of AMT. In September 2023, the U.S. Treasury issued additional guidance clarifying certain aspects of ASFI, which FirstEnergy is currently assessing but does not believe will have a material impact on its position. Therefore, as a result of guidance issued to date, current forecast of AMT obligation, and the amount of AMT already paid in April 2023, FirstEnergy does not expect to make any additional AMT |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS RECURRING FAIR VALUE MEASUREMENTS Authoritative accounting guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy gives the highest priority to Level 1 measurements and the lowest priority to Level 3 measurements. The three levels of the fair value hierarchy and a description of the valuation techniques are as follows: 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. Models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Level 3 - Valuation inputs are unobservable and significant to the fair value measurement. FirstEnergy produces a long-term power and capacity price forecast annually with periodic updates as market conditions change. When underlying prices are not observable, prices from the long-term price forecast are used to measure fair value. FTRs are financial instruments that entitle the holder to a stream of revenues (or charges) based on the hourly day-ahead congestion price differences across transmission paths. FTRs are acquired by FirstEnergy in the annual, monthly and long-term PJM auctions and are initially recorded using the auction clearing price less cost. After initial recognition, FTRs’ carrying values are periodically adjusted to fair value using a mark-to-model methodology, which approximates market. The primary inputs into the model, which are generally less observable than objective sources, are the most recent PJM auction clearing prices and the FTRs’ remaining hours. The model calculates the fair value by multiplying the most recent auction clearing price by the remaining FTR hours less the prorated FTR cost. Significant increases or decreases in inputs in isolation may have resulted in a higher or lower fair value measurement. FirstEnergy primarily applies the market approach for recurring fair value measurements using the best information available. Accordingly, FirstEnergy maximizes the use of observable inputs and minimizes the use of unobservable inputs. There were no changes in valuation methodologies used as of September 30, 2023, from those used as of December 31, 2022. The determination of the fair value measures takes into consideration various factors, including but not limited to, nonperformance risk, counterparty credit risk and the impact of credit enhancements (such as cash deposits, LOCs and priority interests). The impact of these forms of risk was not significant to the fair value measurements. The following table sets forth the recurring assets and liabilities that are accounted for at fair value by level within the fair value hierarchy: September 30, 2023 December 31, 2022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets (In millions) Derivative assets FTRs (1) $ — $ — $ 10 $ 10 $ — $ — $ 11 $ 11 Equity securities 2 — — 2 2 — — 2 U.S. state and municipal debt securities — 259 — 259 — 266 — 266 Cash, cash equivalents and restricted cash (2) 144 — — 144 206 — — 206 Other (3) — 41 — 41 — 40 — 40 Total assets $ 146 $ 300 $ 10 $ 456 $ 208 $ 306 $ 11 $ 525 Liabilities Derivative liabilities FTRs (1) $ — $ — $ (3) $ (3) $ — $ — $ (2) $ (2) Total liabilities $ — $ — $ (3) $ (3) $ — $ — $ (2) $ (2) Net assets $ 146 $ 300 $ 7 $ 453 $ 208 $ 306 $ 9 $ 523 (1) Contracts are subject to regulatory accounting treatment and changes in market values do not impact earnings. (2) Restricted cash of $26 million and $46 million as of September 30, 2023 and December 31, 2022, respectively, primarily relates to cash collected from MP, PE and the Ohio Companies’ customers that is specifically used to service debt of their respective securitization or funding companies. (3) Primarily consists of short-term investments. INVESTMENTS All temporary cash investments purchased with an initial maturity of three months or less are reported as cash equivalents on the Consolidated Balance Sheets at cost, which approximates their fair market value. Investments other than cash and cash equivalents include equity securities, AFS debt securities and other investments. FirstEnergy has no debt securities held for trading purposes. Generally, unrealized gains and losses on equity securities are recognized in income whereas unrealized gains and losses on AFS debt securities are recognized in AOCI. However, the spent nuclear fuel disposal trusts of JCP&L are subject to regulatory accounting with all gains and losses on equity and AFS debt securities offset against regulatory assets. Spent Nuclear Fuel Disposal Trusts JCP&L holds debt securities within the spent nuclear fuel disposal trust, which are classified as AFS securities, recognized at fair market value. The trust is intended for funding spent nuclear fuel disposal fees to the United States Department of Energy associated with the previously owned Oyster Creek and TMI-1 nuclear power plants. The following table summarizes the amortized cost basis, unrealized gains, unrealized losses and fair values of investments held in spent nuclear fuel disposal trusts as of September 30, 2023, and December 31, 2022: September 30, 2023 (1) December 31, 2022 (2) Cost Basis Unrealized Gains Unrealized Losses Fair Value Cost Basis Unrealized Gains Unrealized Losses Fair Value (In millions) Debt securities $ 296 $ — $ (37) $ 259 $ 294 $ — $ (28) $ 266 (1) Excludes short-term cash investments of $9 million as of September 30, 2023. (2) Excludes short-term cash investments of $5 million as of December 31, 2022. Proceeds from the sale of investments in AFS debt securities, realized gains and losses on those sales and interest and dividend income for the three and nine months ended September 30, 2023 and 2022, were as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 (In millions) Sale proceeds $ 10 $ 15 $ 28 $ 31 Realized gains — — — 1 Realized losses — (2) (2) (4) Interest and dividend income 3 3 9 9 Other Investments Other investments include employee benefit trusts, which are primarily invested in corporate-owned life insurance policies, and equity method investments. Earnings and losses associated with corporate-owned life insurance policies are reflected in “Miscellaneous income, net” on FirstEnergy’s Consolidated Statements of Income. The total carrying value of other investments were $358 million and $351 million as of September 30, 2023, and December 31, 2022, respectively, and are excluded from the amounts reported above. See Note 1, "Organization and Basis of Presentation," for additional information on FirstEnergy's equity method investments. Pre-tax income (expense) related to corporate-owned life insurance policies were $(4) million and $(6) million, for the three months ended September 30, 2023 and 2022, respectively, and $6 million and $(28) million for the nine months ended September 30, 2023 and 2022, respectively. Corporate-owned life insurance policies are valued using the cash surrender value and any changes in value during the period are recognized as income or expense. LONG-TERM DEBT AND OTHER LONG-TERM OBLIGATIONS All borrowings with initial maturities of less than one year are defined as short-term financial instruments under GAAP and are reported as Short-term borrowings on the Consolidated Balance Sheets at cost. Since these borrowings are short-term in nature, FirstEnergy believes that their costs approximate their fair market value. The following table provides the approximate fair value and related carrying amounts of long-term debt, which excludes finance lease obligations and net unamortized debt issuance costs, unamortized fair value adjustments, premiums and discounts as of September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 (In millions) Carrying value $ 24,254 $ 21,641 Fair value $ 21,800 $ 19,784 The fair values of long-term debt and other long-term obligations reflect the present value of the cash outflows relating to those securities based on the current call price, the yield to maturity or the yield to call, as deemed appropriate at the end of each respective period. The yields assumed were based on securities with similar characteristics offered by corporations with credit ratings similar to those of FirstEnergy. FirstEnergy classified short-term borrowings, long-term debt and other long-term obligations as Level 2 in the fair value hierarchy as of September 30, 2023, and December 31, 2022. FirstEnergy had the following redemptions and issuances during the nine months ended September 30, 2023: Company Type Redemption / Issuance Date Interest Rate Maturity Amount (In millions) Description Redemptions (1) ME Unsecured Notes March, 2023 3.50% 2023 $300 ME redeemed unsecured notes that became due. FE Unsecured Notes May, 2023 7.375% 2031 $194 FE repurchased approximately $194 million of the principal amount of its 2031 Notes through the open market for $228 million including a premium of approximately $34 million ($27 million after-tax). In addition, FE recognized approximately $2 million ($1 million after-tax) of deferred cash flow hedge losses associated with the FE debt redemptions. Issuances WP FMBs January, 2023 5.29% 2033 $50 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. MAIT Unsecured Notes February, 2023 5.39% 2033 $175 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. ME Unsecured Notes March, 2023 5.20% 2028 $425 Proceeds were used to repay short-term borrowings, including borrowings incurred to repay, at maturity, the $300 million aggregate principal amount of ME's 3.50% unsecured notes due March 15, 2023, to finance capital expenditures and for other general corporate purposes. PN Unsecured Notes March, 2023 5.15% 2026 $300 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. ATSI Unsecured Notes May, 2023 5.13% 2033 $150 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. FE Unsecured Convertible Notes May, 2023 4.00% 2026 $1,500 Proceeds were used to repay short-term borrowings, to repurchase a portion of its 2031 Notes, to fund the qualified pension plan and for other general corporate purposes. PE FMBs September, 2023 5.64% 2028 $100 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. PE FMBs September, 2023 5.73% 2030 $50 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. MP FMBs September, 2023 5.85% 2034 $400 Proceeds are for repaying short-term and long-term debt, including MP’s $400 million 4.1% FMBs due April 15, 2024, to finance capital expenditures and for other general corporate purposes. (1) Excludes principal payments on securitized bonds. Convertible Notes As discussed above, on May 4, 2023, FE issued $1.5 billion aggregate principal amount of 2026 Convertible Notes, with a fixed interest rate of 4.00% per year, payable semiannually in arrears on May 1 and November 1 of each year, beginning on November 1, 2023. The 2026 Convertible Notes are unsecured and unsubordinated obligations of FE, and will mature on May 1, 2026, unless required to be converted or repurchased in accordance with their terms. However, FE may not elect to redeem the 2026 Convertible Notes prior to the maturity date. The 2026 Convertible Notes are included within “Long-term debt and other long-term obligations” on the FirstEnergy Consolidated Balance Sheets. Proceeds from the issuance were approximately $1.48 billion, net of issuance costs. Prior to the close of business on the business day immediately preceding February 1, 2026, the 2026 Convertible Notes will be convertible at the option of the holders only under the following conditions: • During any calendar quarter, if the last reported sale price of FE’s common stock for at least 20 trading days during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • During the five consecutive business day period immediately after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the 2026 Convertible Notes for each trading day of such 10 trading day period was less than 98% of the product of the last reported sale price of FE’s common stock and the conversion rate on each such trading day; or • Upon the occurrence of certain corporate events specified in the indenture governing the 2026 Convertible Notes. On and after February 1, 2026, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2026 Convertible Notes may convert all or any portion of their 2026 Convertible Notes at their option at any time at the conversion rate then in effect, irrespective of these conditions. FE will settle conversions of the 2026 Convertible Notes, if any, by paying cash up to the aggregate principal amount of the 2026 Convertible Notes being converted and by paying cash or delivering shares of FE’s common stock (or a combination of each), at its election, of its conversion obligation in excess of the aggregate principal amount of the 2026 Convertible Notes being converted. The conversion rate for the 2026 Convertible Notes will initially be 21.3620 shares of FE’s common stock per $1,000 principal amount of the 2026 Convertible Notes (equivalent to an initial conversion price of approximately $46.81 per share of FE’s common stock). The initial conversion price of the 2026 Convertible Notes represents a premium of approximately 20% over the last reported sale price of FE’s common stock on the New York Stock Exchange on May 1, 2023. The conversion rate and the corresponding conversion price will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. FE may not elect to redeem the 2026 Convertible Notes prior to the maturity date. If FE undergoes a fundamental change (as defined in the relevant indenture), subject to certain conditions, holders of the 2026 Convertible Notes may require FE to repurchase for cash all or any portion of their 2026 Convertible Notes at a repurchase price equal to 100% of the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date (as defined in the relevant indenture). In addition, if certain fundamental changes occur, FE may be required, in certain circumstances, to increase the conversion rate for any 2026 Convertible Notes converted in connection with such fundamental changes by a specified number of shares of its common stock. |
REGULATORY MATTERS
REGULATORY MATTERS | 9 Months Ended |
Sep. 30, 2023 | |
Regulated Operations [Abstract] | |
REGULATORY MATTERS | REGULATORY MATTERS STATE REGULATION Each of the Utilities' retail rates, conditions of service, issuance of securities and other matters are subject to regulation in the states in which it operates - in Maryland by the MDPSC, in New Jersey by the NJBPU, in Ohio by the PUCO, in Pennsylvania by the PPUC, in West Virginia by the WVPSC and in New York by the NYPSC. The transmission operations of PE in Virginia, ATSI in Ohio, and the Transmission Companies in Pennsylvania are subject to certain regulations of the VSCC, PUCO and PPUC, respectively. In addition, under Ohio law, municipalities may regulate rates of a public utility, subject to appeal to the PUCO if not acceptable to the utility. Further, if any of the FirstEnergy affiliates were to engage in the construction of significant new transmission facilities, depending on the state, they may be required to obtain state and/or local regulatory authorization to site, construct and operate the new transmission facility. MARYLAND PE operates under MDPSC approved base rates that were effective as of March 23, 2019. PE also provides SOS pursuant to a combination of settlement agreements, MDPSC orders and regulations, and statutory provisions. SOS supply is competitively procured in the form of rolling contracts of varying lengths through periodic auctions that are overseen by the MDPSC and a third-party monitor. Although settlements with respect to SOS supply for PE customers have expired, service continues in the same manner until changed by order of the MDPSC. PE recovers its costs plus a return for providing SOS. On March 22, 2023, PE filed a base rate case with the MDPSC, utilizing a test year based on twelve months of actual 2022 data. The base rate case requests an annual increase in base distribution rates of $50.4 million, plus a request to establish a regulatory asset (or liability) to recover (or refund) in a subsequent base rate case the net differences between the amount of pension and OPEB expense requested in the proceeding (based on average expense from 2018 to 2022) and the actual annual amount each year using the delayed recognition method. The rate case additionally requests approval to continue an EDIS to fund three service reliability and resiliency programs, two new proposed programs to assist low-income customers and cost recovery of certain expenses associated with PE’s pilot electric vehicle charger program and its COVID-19 pandemic response. On October 18, 2023, the MDPSC approved an annual increase in base distribution rates of $28 million, effective October 19, 2023. The order denied PE’s request to establish a pension/OPEB regulatory asset (or liability), allowed recovery of most COVID-19 deferred costs; and rejected the continuation of PE’s EDIS, as PE's reliability has improved such that the surcharge recovery mechanism is no longer merited at this time. The MDPSC also ordered an independent audit of certain allocations from FESC to PE and denied recovery of approximately $12 million in rate base associated with certain corporate support costs recorded to capital accounts resulting from the FERC Audit. The EmPOWER Maryland program requires each electric utility to file a plan to reduce electric consumption and demand 0.2% per year, up to the ultimate goal of 2% annual savings, for the duration of the 2021-2023 EmPOWER Maryland program cycles to the extent the MDPSC determines that cost-effective programs and services are available. PE's approved 2021-2023 EmPOWER Maryland plan continues and expands upon prior years' programs for a projected total investment of approximately $148 million over the three-year period. PE recovers program investments with a return through an annually reconciled surcharge, with most costs subject to recovery over a five-year period with a return on the unamortized balance. On October 28, 2022, PE submitted its plan, as ordered by the MDPSC, to recover all unamortized balances by the scheduled expiration of the EmPOWER program on December 31, 2029. At the further direction of the MDPSC, PE filed a revised plan on January 11, 2023. Maryland law only allows for the utility to recover lost distribution revenue attributable to energy efficiency or demand reduction programs through a base rate case proceeding. On August 1, 2023, PE filed its proposed plan for the 2024-2026 cycle as required by the MDPSC. Consistent with the December 29, 2022, order by the MDPSC phasing out the ability of Maryland utilities to earn a return on EmPOWER investments, PE will be required to expense 33% of its EmPOWER program costs in 2024, 67% in 2025 and 100% in 2026. Notwithstanding the order to phase out PE’s ability to earn a return on its EmPOWER investments, all previously unamortized costs will continue to earn a return and be collected by the end of 2029, consistent with the plan PE submitted on January 11, 2023. Additionally at the direction of the MDPSC, PE together with other Maryland utilities are required to address GHG reductions in addition to energy efficiency. In compliance with the MDPSC directive, PE submitted three scenarios with projected costs over a three-year cycle of $310 million, $354 million, and $510 million, respectively. Hearings on the proposed plans for all Maryland utilities are scheduled to begin on November 6, 2023. On April 17, 2023, PE submitted a proposal to the MDPSC seeking approval to end its PPA with the Warrior Run generating station. The PPA for Warrior Run was a requirement of the Public Utility Regulatory Policies Act of 1978. PE’s Maryland customers currently pay a surcharge on their electric bill in connection with the Warrior Run PPA, which fluctuates from year to year based on the difference between what PE pays for the output of the plant and what PE is able to recover by reselling that output into PJM. PE negotiated a termination of the PPA, which the MDPSC approved on June 21, 2023, and became effective June 28, 2023, requiring it to pay Warrior Run a fixed amount of $51 million annually through 2029, for a total of $357 million. During the second quarter of 2023, a liability was established for the $357 million termination fee, of which $55 million was included in “Other current liabilities” and $302 million in “Other non-current liabilities”, and as the cost of the termination fee will be recovered through the current surcharge, an offsetting regulatory asset was established on FirstEnergy’s Consolidated Balance Sheets, and results in no impact to FirstEnergy’s or PE’s current or future earnings and is expected to result in savings for PE’s Maryland customers. On July 26, 2023, the MDPSC approved the change in surcharge, effective August 1, 2023, after previously approving the termination of the agreement. NEW JERSEY JCP&L operates under NJBPU approved rates that took effect as of January 1, 2021, and were effective for customers as of November 1, 2021. JCP&L provides BGS for retail customers who do not choose a third-party EGS and for customers of third- party EGSs that fail to provide the contracted service. All New Jersey EDCs participate in this competitive BGS procurement process and recover BGS costs directly from customers as a charge separate from base rates. On March 16, 2023, JCP&L filed a base rate case with the NJBPU, utilizing a test year based on six months of actual data for the second half of calendar year 2022, and six months of forecasted data for the first half of calendar year 2023. The rate case requests an annual net increase in base distribution revenues of approximately $185 million, plus a request to establish a regulatory asset (or liability) to recover (or refund) in a subsequent base rate case the net differences between the amount of pension and OPEB expense requested in the proceeding (based on 2023 expense) and the actual annual amount each year using the delayed recognition method. On August 7, 2023, JCP&L updated its base rate case to provide actual test-year data for the first quarter of calendar year 2023 and update its proposed annual net increase in base rate distribution revenues to approximately $192 million. In addition to the above, JCP&L’s request includes, among other things, approval of two new proposed programs to assist low-income customers, cost recovery of certain investments and expenses associated with its electric vehicle and AMI programs, an update of its depreciation rates, modifications to its storm cost recovery, and tariff modifications to update standard construction costs. A procedural schedule was adopted with evidentiary hearings to be held the week of January 8, 2024. On October 17, 2023, JCP&L requested a suspension of the procedural schedule to enter into formal settlement discussions, which all parties agreed and the administrative law judge granted the same day. JCP&L has instituted energy efficiency and peak demand reduction programs in accordance with the New Jersey Clean Energy Act as approved by the NJBPU in April 2021. The NJBPU approved plans include recovery of lost revenues resulting from the programs and a three-year plan including total program costs of $203 million, of which $160 million of investment is recovered over a ten-year amortization period with a return as well as operations and maintenance expenses and financing costs of $43 million recovered on an annual basis. On March 6, 2023, the NJBPU issued final rules modifying its regulations to reflect its CTA policy in base rate cases to: (i) calculate savings using a five-year look back from the beginning of the test year; (ii) allocate 100% of CTA savings to customers; and (iii) exclude transmission assets of EDCs in the savings calculation. The final rules of practice were applied by JCP&L in its most recent base rate case filing described above. On October 28, 2020, the NJBPU approved a stipulated settlement between JCP&L and various parties, resolving JCP&L’s request for distribution base rate increase. The settlement provided for a $94 million annual base distribution revenues increase for JCP&L based on an ROE of 9.6%, which became effective for customers on November 1, 2021. The settlement additionally provided that JCP&L would be subject to a management audit, which began in May 2021. On April 12, 2023, the NJBPU accepted the final management audit report for filing purposes and ordered that interested stakeholders file comments on the report by May 22, 2023, which deadline was extended until July 31, 2023. JCP&L filed its comments on July 31, 2023. The parties have filed responses. On July 2, 2020, the NJBPU issued an order allowing New Jersey utilities to track and create a regulatory asset for future recovery of all prudently incurred incremental costs arising from the COVID-19 pandemic beginning March 9, 2020 and continuing until the New Jersey Governor issues an order stating that the COVID-19 pandemic is no longer in effect. New Jersey utilities can request recovery of such regulatory asset in a stand-alone COVID-19 regulatory asset filing or future base rate case. On October 28, 2020, the NJBPU issued an order expanding the scope of the proceeding to examine all pandemic issues, including recovery of the COVID-19 regulatory assets, by way of a generic proceeding. No moratorium on residential disconnections remains in effect for investor-owned electric utilities such as JCP&L. Legislation was enacted on March 25, 2022, prohibiting utilities from disconnecting electric service to customers that have applied for utility bill assistance before June 15, 2022 until such time as the state agency administering the assistance program makes a decision on the application and further requiring that all utilities offer a deferred payment arrangement meeting certain minimum criteria after the state agency’s decision on the application has been made. On July 17, 2023, JCP&L submitted a stand-alone filing to recover approximately $31 million, through October 1, 2023, in incremental costs and interest incurred during the COVID-19 pandemic. On September 17, 2021, in connection with Mid-Atlantic Offshore Development, LLC, a transmission company jointly owned by Shell New Energies US and EDF Renewables North America, JCP&L submitted a proposal to the NJBPU and PJM to build transmission infrastructure connecting offshore wind-generated electricity to the New Jersey power grid. On October 26, 2022, the JCP&L proposal was accepted, in part, in an order issued by NJBPU. The proposal, as accepted, included approximately $723 million in investments for JCP&L to both build new and upgrade existing transmission infrastructure. JCP&L’s proposal projects an investment ROE of 10.2% and includes the option for JCP&L to acquire up to a 20% equity stake in Mid-Atlantic Offshore Development, LLC. The resulting rates associated with the project are expected to be shared among the ratepayers of all New Jersey electric utilities. On April 17, 2023, JCP&L applied for the FERC “abandonment” transmission rates incentive, which would provide for recovery of 100% of the cancelled prudent project costs that are incurred after the incentive is approved, and 50% of the costs incurred prior to that date, in the event that some or all of the project is cancelled for reasons beyond JCP&L’s control. FERC staff subsequently requested additional information on JCP&L’s application, which JCP&L provided. On August 21, 2023, FERC approved JCP&L’s application, effective August 22, 2023. Construction is expected to begin in 2025. Consistent with the commitments made in its proposal to the NJBPU, JCP&L intends to pursue an opportunity to finance a portion of the project using low-interest rate loans available under the United States Department of Energy’s Energy Infrastructure Reinvestment Program of the IRA of 2022. JCP&L anticipates submitting the first part of its two-part application in the fourth quarter of 2023, with the second part due in January 2024. OHIO The Ohio Companies operate under PUCO-approved base distribution rates that became effective in 2009. The Ohio Companies currently operate under ESP IV, effective June 1, 2016 and continuing through May 31, 2024, that continues the supply of power to non-shopping customers at a market-based price set through an auction process. ESP IV also continues the Rider DCR, which supports continued investment related to the distribution system for the benefit of customers, with increased revenue caps of $20 million per year from June 1, 2019 through May 31, 2022; and $15 million per year from June 1, 2022 through May 31, 2024. In addition, ESP IV includes: (1) continuation of a base distribution rate freeze through May 31, 2024; (2) a goal across FirstEnergy to reduce CO 2 emissions by 90% below 2005 levels by 2045; and (3) contributions, totaling $51 million to: (a) fund energy conservation programs, economic development and job retention in the Ohio Companies’ service territories; (b) establish a fuel-fund in each of the Ohio Companies’ service territories to assist low-income customers; and (c) establish a Customer Advisory Council to ensure preservation and growth of the competitive market in Ohio. On April 5, 2023, the Ohio Companies filed an application with the PUCO for approval of ESP V, for an eight-year term beginning June 1, 2024, and continuing through May 31, 2032. ESP V proposes to continue providing power to non-shopping customers at market-based prices set through an auction process, with process enhancements designed to reduce costs to customers. ESP V also proposes to continue riders supporting investment in the Ohio Companies’ distribution system, including Rider DCR with annual revenue cap increases of $15 to $21 million per year, based on reliability performance, and Rider AMI for recovery of approved grid modernization investments. ESP V proposes new riders to support continued maintenance of the distribution system, including vegetation management and storm restoration operating expense. In addition, ESP V proposes four-year energy efficiency and peak demand reduction programs for residential and commercial customers, with cost recovery spread over eight years. ESP V further includes a commitment to spend $52 million in total over the eight-year term, without recovery from customers, on initiatives to assist low-income customers, education and incentives to help ensure customers have good experiences with electric vehicles. Hearings are scheduled to commence on November 7, 2023. On May 16, 2022, the Ohio Companies filed their application for determination of the existence of SEET under ESP IV for calendar year 2021, which demonstrated that each of the individual Ohio Companies did not have significantly excessive earnings. On July 15, 2022, the Ohio Companies filed an application with the PUCO for approval of phase two of their distribution grid modernization plan that would, among other things, provide for the installation of an additional 700 thousand smart meters, distribution automation equipment on approximately 240 distribution circuits, voltage regulating equipment on approximately 220 distribution circuits, and other investments and pilot programs in related technologies designed to provide enhanced customer benefits. The Ohio Companies propose that phase two will be implemented over a four-year budget period with estimated capital investments of approximately $626 million and operations and maintenance expenses of approximately $144 million over the deployment period. Under the proposal, costs of phase two of the grid modernization plan would be recovered through the Ohio Companies’ AMI rider, pursuant to the terms and conditions approved in ESP IV. Hearings are scheduled to commence on December 11, 2023. On September 8, 2020, the OCC filed motions in the Ohio Companies’ corporate separation audit and DMR audit dockets, requesting the PUCO to open an investigation and management audit, hire an independent auditor, and require FirstEnergy to show it did not improperly use money collected from consumers or violate any utility regulatory laws, rules or orders in its activities regarding HB 6. On December 30, 2020, in response to the OCC's motion, the PUCO reopened the DMR audit docket, and directed PUCO staff to solicit a third-party auditor and conduct a full review of the DMR to ensure funds collected from customers through the DMR were only used for the purposes established in ESP IV. On June 2, 2021, the PUCO selected an auditor and the auditor filed the final audit report on January 14, 2022, which made certain findings and recommendations. The report found that spending of DMR revenues was not required to be tracked, and that DMR revenues, like all rider revenues, are placed into the regulated money pool as a matter of routine, where the funds lose their identity. Therefore, the report could not suggest that DMR funds were used definitively for direct or indirect support for grid modernization. The report also concluded that there was no documented evidence that ties revenues from the DMR to lobbying for the passage of HB 6, but also could not rule out with certainty uses of DMR funds to support the passage of HB 6. The report further recommended that the regulated companies' money pool be audited more frequently and the Ohio Companies adopt formal dividend policies. Final comments and responses were filed by parties during the second quarter of 2022. On September 15, 2020, the PUCO opened a new proceeding to review the political and charitable spending by the Ohio Companies in support of HB 6 and the subsequent referendum effort, and directing the Ohio Companies to show cause, demonstrating that the costs of any political or charitable spending in support of HB 6, or the subsequent referendum effort, were not included, directly or indirectly, in any rates or charges paid by customers. The Ohio Companies initially filed a response stating that the costs of any political or charitable spending in support of HB 6, or the subsequent referendum effort, were not included, directly or indirectly, in any rates or charges paid by customers, but on August 6, 2021, filed a supplemental response explaining that, in light of the facts set forth in the DPA and the findings of the Rider DCR audit report further discussed below, political or charitable spending in support of HB 6, or the subsequent referendum effort, affected pole attachment rates paid by approximately $15 thousand. On October 26, 2021, the OCC filed a motion requesting the PUCO to order an independent external audit to investigate FE’s political and charitable spending related to HB 6, and to appoint an independent review panel to retain and oversee the auditor. In November and December 2021, parties filed comments and reply comments regarding the Ohio Companies’ original and supplemental responses to the PUCO’s September 15, 2020, show cause directive. On May 4, 2022, the PUCO selected a third-party auditor to determine whether the show cause demonstration submitted by the Ohio Companies is sufficient to ensure that the cost of any political or charitable spending in support of HB 6 or the subsequent referendum effort was not included, directly or indirectly, in any rates or charges paid by ratepayers. In connection with an ongoing audit of the Ohio Companies’ policies and procedures relating to the code of conduct rules between affiliates, on November 4, 2020, the PUCO initiated an additional corporate separation audit as a result of the FirstEnergy leadership transition announcement made on October 29, 2020, as further discussed below. The additional audit is to ensure compliance by the Ohio Companies and their affiliates with corporate separation laws and the Ohio Companies’ corporate separation plan. The additional audit is for the period from November 2016 through October 2020. The final audit report was filed on September 13, 2021. The audit report makes no findings of major non-compliance with Ohio corporate separation requirements, minor non-compliance with eight requirements, and findings of compliance with 23 requirements. Parties filed comments and reply comments on the audit report. In connection with an ongoing annual audit of the Ohio Companies’ Rider DCR for 2020, and as a result of disclosures in FirstEnergy’s Form 10-K for the year ended December 31, 2020 (filed on February 18, 2021), the PUCO expanded the scope of the audit on March 10, 2021, to include a review of certain transactions that were either improperly classified, misallocated, or lacked supporting documentation, and to determine whether funds collected from customers were used to pay the vendors, and if so, whether or not the funds associated with those payments should be returned to customers through Rider DCR or through an alternative proceeding. On August 3, 2021, the auditor filed its final report on this phase of the audit, and the parties submitted comments and reply comments on this audit report in October 2021. Additionally, on September 29, 2021, the PUCO expanded the scope of the audit in this proceeding to determine if the costs of the naming rights for FirstEnergy Stadium have been recovered from the Ohio Companies’ customers. On November 19, 2021, the auditor filed its final report, in which the auditor concluded that the FirstEnergy Stadium naming rights expenses were not recovered from Ohio customers. On December 15, 2021, the PUCO further expanded the scope of the audit to include an investigation into an apparent nondisclosure of a side agreement in the Ohio Companies’ ESP IV settlement proceedings, but stayed its expansion of the audit until otherwise ordered by the PUCO. On August 16, 2022, the U.S. Attorney for the Southern District of Ohio requested that the PUCO stay the above pending HB 6- related matters for a period of six months, which request was granted by the PUCO on August 24, 2022. On February 22, 2023, the U.S. Attorney for the Southern District of Ohio again requested that the PUCO stay the above pending HB-6 related matters for a period of six months, which request was granted by the PUCO on March 8, 2023. On August 10, 2023, the U.S. Attorney for the Southern District of Ohio requested that the PUCO stay the above pending HB 6-related matters for a period of six additional months, which was approved by the PUCO on August 23, 2023. On September 22, 2023, OCC filed an application for rehearing challenging the PUCO’s August 23, 2023, order, which the PUCO denied on October 18, 2023. The four cases remain stayed in their entirety, including discovery and motions, and all related procedural schedules are vacated. In the fourth quarter of 2020, motions were filed with the PUCO requesting that the PUCO amend the Ohio Companies’ riders for collecting the OVEC-related charges required by HB 6 to provide for refunds in the event such provisions of HB 6 are repealed. Neither the Ohio Companies nor FE benefit from the OVEC-related charges the Ohio Companies collect. Instead, the Ohio Companies are further required by HB 6 to remit all the OVEC-related charges they collect to non-FE Ohio electric distribution utilities. The Ohio Companies contested the motions, which are pending before the PUCO. On May 15, 2023, the Ohio Companies filed their application for determination of the existence of SEET under ESP IV for calendar year 2022, which demonstrated that each of the individual Ohio Companies did not have significantly excessive earnings. See Note 8, “Commitments, Guarantees and Contingencies” below for additional details on the government investigations and subsequent litigation surrounding the investigation of HB 6. PENNSYLVANIA The Pennsylvania Companies operate under rates approved by the PPUC, effective as of January 27, 2017. On November 18, 2021, the PPUC issued orders to each of the Pennsylvania Companies directing they operate under DSPs for the June 1, 2019 through May 31, 2023 delivery period, which DSPs provide for the competitive procurement of generation supply for customers who do not receive service from an alternative EGS. Under the 2019-2023 DSPs, supply will be provided by wholesale suppliers through a mix of 3, 12 and 24-month energy contracts, as well as two RFPs for 2-year SREC contracts for ME, PN and Penn. On December 14, 2021, the Pennsylvania Companies filed proposed DSPs for provision of generation for the June 1, 2023 through May 31, 2027 delivery period, to be sourced through competitive procurements for customers who do not receive service from an alternative EGS. An evidentiary hearing was held on April 13, 2022, and on April 20, 2022, the parties filed a partial settlement with the PPUC resolving certain of the issues in the proceeding and setting aside the remainder of the issues to be resolved through briefing. The PPUC approved the partial settlement, without modification, on August 4, 2022. Under the 2023-2027 DSPs, supply will be provided through a mix of 12 and 24-month energy contracts, as well as long-term solar PPAs. Pursuant to Pennsylvania Act 129 of 2008 and PPUC orders, the Pennsylvania Companies implemented energy efficiency and peak demand reduction programs with demand reduction targets, relative to 2007 to 2008 peak demands, at 2.9% MW for ME, 3.3% MW for PN, 2.0% MW for Penn, and 2.5% MW for WP; and energy consumption reduction targets, as a percentage of the Pennsylvania Companies’ historic 2009 to 2010 reference load at 3.1% MWH for ME, 3.0% MWH for PN, 2.7% MWH for Penn, and 2.4% MWH for WP. Pennsylvania EDCs are permitted to seek PPUC approval of an LTIIP for infrastructure improvements and costs related to highway relocation projects, after which a DSIC may be approved to recover LTIIP costs. On January 16, 2020, the PPUC approved the Pennsylvania Companies’ LTIIPs for the five-year period beginning January 1, 2020 and ending December 31, 2024 for a total capital investment of approximately $572 million for certain infrastructure improvement initiatives. On June 25, 2021, the Pennsylvania Office of Consumer Advocate filed a complaint against Penn’s quarterly DSIC rate, disputing the recoverability of the Companies’ automated distribution management system investment under the DSIC mechanism. On January 26, 2022, the parties filed a joint petition for settlement that resolves all issues in this matter, which was approved by the PPUC without modification on April 14, 2022. Following the Pennsylvania Companies’ 2016 base rate proceedings, the PPUC ruled in a separate proceeding related to the DSIC mechanisms that the Pennsylvania Companies were not required to reflect federal and state income tax deductions related to DSIC-eligible property in DSIC rates. The decision was appealed to the Pennsylvania Supreme Court and in July 2021 the court upheld the Pennsylvania Commonwealth Court’s reversal of the PPUC’s decision and remanded the matter back to the PPUC for determination as to how DSIC calculations shall account for accumulated deferred income taxes and state taxes. The PPUC issued the order as directed. On March 6, 2023, FirstEnergy filed applications with the PPUC, NYPSC and FERC seeking approval to consolidate the Pennsylvania Companies into a new, single operating entity. The PA Consolidation includes, among other steps: (a) the transfer of certain Pennsylvania-based transmission assets owned by WP to KATCo, (b) the contribution of Class B equity interests of MAIT currently held by PN and ME to FE (and ultimately transferred to FET as part of the FET Minority Equity Interest Sale), (c) the formation of FE PA and (d) the merger of each of the Pennsylvania Companies with and into FE PA, with FE PA surviving such mergers as the successor-in-interest to all assets and liabilities of the Pennsylvania Companies. Following completion of the PA Consolidation, FE PA will be FE’s only regulated utility in Pennsylvania encompassing the retail utility operations previously conducted individually by the Pennsylvania Companies. Consummation of the PA Consolidation is contingent upon numerous conditions, including the approval of NYPSC and PPUC. On August 14, 2023, FERC issued an order approving the proposed PA Consolidation. On August 30, 2023, the parties filed a settlement agreement recommending that the PPUC approve PA Consolidation subject to the terms of the settlement, which include among other things, $650 thousand over five years in bill assistance for income-eligible customers and the Pennsylvania Companies’ commitment to (i) not seek full distribution rate unification until the earlier of 10 years or in the fourth base rate case filed after January 1, 2025 and (ii) track and share with customers certain operational and administrative efficiency costs associated with the PA Consolidation. On October 19, 2023, the ALJs issued a decision recommending that the PPUC approve, without modification, the August 30, 2023 settlement agreement. The settlement agreement is pending PPUC approval. Subject to receipt of all regulatory approvals, FirstEnergy expects that the PA Consolidation will close by early 2024. On May 5, 2023, FirstEnergy and Brookfield submitted applications to FERC and to the PPUC to facilitate the FET Minority Equity Interest Sale. On May 12, 2023, the parties also filed an application with the VSCC, which was approved on June 20, 2023. On August 14, 2023, FERC issued an order approving the FET Minority Equity Interest Sale. On August 7, 2023, the PPUC’s presiding officers held a prehearing conference, which, among other things, set evidentiary hearings for early November 2023. The parties also must obtain successful review of the transaction by the CFIUS. WEST VIRGINIA MP and PE provide electric service to all customers through traditional cost-based, regulated utility ratemaking and operate under WVPSC-approved rates that became effective in February 2015. MP and PE recover net power supply costs, including fuel costs, purchased power costs and related expenses, net of related market sales revenue through the ENEC. MP’s and PE’s ENEC rate is updated annually. On August 25, 2022, MP and PE filed with the WVPSC their annual ENEC case requesting an increase in ENEC rates of $183.8 million beginning January 1, 2023, which represents a 12.2% increase to the rates then in effect. The increase was driven by an underrecovery during the review period (July 1, 2021, to June 30, 2022) of approximately $145 million due to higher coal, reagent, and emission allowance expenses. This filing additionally addresses, among other things, the WVPSC’s May 2022 request for a prudence review of current rates. At a hearing on December 8, 2022, the parties in the case presented a unanimous settlement to increase rates by approximatel |
COMMITMENTS, GUARANTEES AND CON
COMMITMENTS, GUARANTEES AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, GUARANTEES AND CONTINGENCIES | COMMITMENTS, GUARANTEES AND CONTINGENCIES GUARANTEES AND OTHER ASSURANCES FirstEnergy has various financial and performance guarantees and indemnifications, which are issued in the normal course of business. These contracts include performance guarantees, stand-by LOCs, debt guarantees, surety bonds and indemnifications. FirstEnergy enters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party. As of September 30, 2023, outstanding guarantees and other assurances aggregated $818 million, consisting of parental guarantees on behalf of its consolidated subsidiaries ($521 million) and other assurances ($297 million). COLLATERAL AND CONTINGENT-RELATED FEATURES In the normal course of business, FE and its subsidiaries may enter into physical or financially settled contracts for the sale and purchase of electric capacity, energy, fuel and emission allowances. Certain agreements contain provisions that require FE or its subsidiaries to post collateral. This collateral may be posted in the form of cash or credit support with thresholds contingent upon FE’s or its subsidiaries’ credit rating from each of the major credit rating agencies. The collateral and credit support requirements vary by contract and by counterparty. As of September 30, 2023, $89 million of net cash collateral has been posted by FE or its subsidiaries and is included in “Prepaid taxes and other current assets” on FirstEnergy’s Consolidated Balance Sheets. FE or its subsidiaries are holding $29 million of net cash collateral as of September 30, 2023, from certain generation suppliers, and such amount is included in “Other current liabilities” on FirstEnergy’s Consolidated Balance Sheets. These credit-risk-related contingent features stipulate that if the subsidiary were to be downgraded or lose its investment grade credit rating (based on its senior unsecured debt rating), it would be required to provide additional collateral. The following table discloses the potential additional credit rating contingent contractual collateral obligations as of September 30, 2023: Potential Collateral Obligations Utilities and Transmission Companies FE Total (In millions) Contractual Obligations for Additional Collateral Upon Further Downgrade $ 63 $ — $ 63 Surety Bonds (Collateralized Amount) (1) 80 79 159 Total Exposure from Contractual Obligations $ 143 $ 79 $ 222 (1) Surety Bonds are not tied to a credit rating. Surety Bonds’ impact assumes maximum contractual obligations, which is ordinarily 100% of the face amount of the surety bond except with respect to $39 million of surety bond obligations for which the collateral obligation is capped at 60% of the face amount, and typical obligations require 30 days to cure. During the second quarter of 2023, FE was released from its $169 million surety bond to the Pennsylvania Department of Environmental Protection related to the Little Blue Run Disposal Impoundment. ENVIRONMENTAL MATTERS Various federal, state and local authorities regulate FirstEnergy with regard to air and water quality, hazardous and solid waste disposal, and other environmental matters. While FirstEnergy’s environmental policies and procedures are designed to achieve compliance with applicable environmental laws and regulations, such laws and regulations are subject to periodic review and potential revision by the implementing agencies. FirstEnergy cannot predict the timing or ultimate outcome of any of these reviews or how any future actions taken as a result thereof may materially impact its business, results of operations, cash flows and financial condition. Clean Air Act FirstEnergy complies with SO 2 and NOx emission reduction requirements under the CAA and SIP by burning lower-sulfur fuel, utilizing combustion controls and post-combustion controls and/or using emission allowances. CSAPR requires reductions of NOx and SO 2 emissions in two phases (2015 and 2017), ultimately capping SO 2 emissions in affected states to 2.4 million tons annually and NOx emissions to 1.2 million tons annually. CSAPR allows trading of NOx and SO 2 emission allowances between power plants located in the same state and interstate trading of NOx and SO 2 emission allowances with some restrictions. On July 28, 2015, the D.C. Circuit ordered the EPA to reconsider the CSAPR caps on NOx and SO 2 emissions from power plants in 13 states, including West Virginia. This followed the 2014 U.S. Supreme Court ruling generally upholding the EPA’s regulatory approach under CSAPR but questioning whether the EPA required upwind states to reduce emissions by more than their contribution to air pollution in downwind states. The EPA issued a CSAPR Update on September 7, 2016, reducing summertime NOx emissions from power plants in 22 states in the eastern U.S., including West Virginia, beginning in 2017. Various states and other stakeholders appealed the CSAPR Update to the D.C. Circuit in November and December 2016. On September 13, 2019, the D.C. Circuit remanded the CSAPR Update to the EPA citing that the rule did not eliminate upwind states’ significant contributions to downwind states’ air quality attainment requirements within applicable attainment deadlines. Also in March 2018, the State of New York filed a CAA Section 126 petition with the EPA alleging that NOx emissions from nine states (including West Virginia) significantly contribute to New York’s inability to attain the ozone National Ambient Air Quality Standards. The petition sought suitable emission rate limits for large stationary sources that are allegedly affecting New York’s air quality within the three years allowed by CAA Section 126. On September 20, 2019, the EPA denied New York’s CAA Section 126 petition. On October 29, 2019, the State of New York appealed the denial of its petition to the D.C. Circuit. On July 14, 2020, the D.C. Circuit reversed and remanded the New York petition to the EPA for further consideration. On March 15, 2021, the EPA issued a revised CSAPR Update that addressed, among other things, the remands of the prior CSAPR Update and the New York Section 126 petition. In December 2021, MP purchased NOx emissions allowances to comply with 2021 ozone season requirements. On April 6, 2022, the EPA published proposed rules seeking to impose further significant reductions in EGU NOx emissions in 25 upwind states, including West Virginia, with the stated purpose of allowing downwind states to attain or maintain compliance with the 2015 ozone National Ambient Air Quality Standards. On February 13, 2023, the EPA disapproved 21 SIPs, which was a prerequisite for the EPA to issue a final Good Neighbor Plan or FIP. On June 5, 2023, the EPA issued the final Good Neighbor Plan with an effective date 60 days thereafter. Certain states, including West Virginia, have appealed the disapprovals of their respective SIPs, and some of those states have obtained stays of those disapprovals precluding the Good Neighbor Plan from taking effect in those states. On August 10, 2023, West Virginia was granted an interim stay of the disapproval of its SIP pending a hearing scheduled for October 27, 2023, meaning the Good Neighbor Plan will not take effect in West Virginia until October 27, 2023, at the earliest. In addition, certain states including West Virginia, and certain trade organizations, including the Midwest Ozone Group of which FE is a member, have separately appealed and filed motions to stay the Good Neighbor Plan itself, with more appeals expected. On September 25, 2023, the DC Circuit denied the motions to stay the Good Neighbor Plan. On October 13, 2023, the aggrieved parties filed an Emergency Application for an Immediate Stay of the Good Neighbor Plan with the U.S. Supreme Court. Unless the West Virginia SIP disapproval is stayed after oral argument on October 27, 2023, or the FIP is successfully stayed, the Good Neighbor Plan will be effective in West Virginia in late October 2023, which could cause MP to accelerate certain of its planned capital expenditures to comply with the new rule. Climate Change In September 2016, the U.S. joined in adopting the agreement reached on December 12, 2015, at the United Nations Framework Convention on Climate Change meetings in Paris to reduce GHGs. The Paris Agreement’s non-binding obligations to limit global warming to below two degrees Celsius became effective on November 4, 2016. On June 1, 2017, the Trump Administration announced that the U.S. would cease all participation in the Paris Agreement. On January 20, 2021, President Biden signed an executive order re-adopting the agreement on behalf of the U.S. There are several initiatives to reduce GHG emissions at the state, federal and international level. Certain northeastern states are participating in the Regional Greenhouse Gas Initiative and western states led by California, have implemented programs, primarily cap and trade mechanisms, to control emissions of certain GHGs. Additional policies reducing GHG emissions, such as demand reduction programs, renewable portfolio standards and renewable subsidies have been implemented across the nation. FirstEnergy has pledged to achieve carbon neutrality by 2050 and set an interim goal for a 30% reduction in GHGs within FirstEnergy’s direct operational control (Scope 1) by 2030, based on 2019 levels. Future resource plans to achieve carbon reductions, including potential changes in operations or any determination of retirement dates of the regulated coal-fired generating facilities, will be subject to the West Virginia legislation effective March 7, 2023, which requires prior approval from the West Virginia Public Energy Authority to decommission MP’s generating facilities. FirstEnergy will work collaboratively with regulators in West Virginia to achieve its climate goals. Determination of the useful life of the regulated coal-fired generation could result in changes in depreciation, and/or continued collection of net plant in rates after retirement, securitization, sale, impairment, or regulatory disallowances. If MP is unable to recover these costs, it could have a material adverse effect on FirstEnergy’s and/or MP’s financial condition, results of operations, and cash flow. Furthermore, FirstEnergy cannot currently estimate the financial impact of climate change policies, although potential legislative or regulatory programs restricting CO 2 emissions, or litigation alleging damages from GHG emissions, could require material capital and other expenditures or result in changes to its operations. In December 2009, the EPA released its final “Endangerment and Cause or Contribute Findings for GHGs under the Clean Air Act,” concluding that concentrations of several key GHGs constitute an “endangerment” and may be regulated as “air pollutants” under the CAA and mandated measurement and reporting of GHG emissions from certain sources, including electric generating plants. Subsequently, the EPA released its final CPP regulations in August 2015 to reduce CO 2 emissions from existing fossil fuel-fired EGUs and finalized separate regulations imposing CO 2 emission limits for new, modified, and reconstructed fossil fuel-fired EGUs. Numerous states and private parties filed appeals and motions to stay the CPP with the D.C. Circuit in October 2015. On February 9, 2016, the U.S. Supreme Court stayed the rule during the pendency of the challenges to the D.C. Circuit and U.S. Supreme Court. On March 28, 2017, an executive order, entitled “Promoting Energy Independence and Economic Growth,” instructed the EPA to review the CPP and related rules addressing GHG emissions and suspend, revise or rescind the rules if appropriate. On June 19, 2019, the EPA repealed the CPP and replaced it with the ACE rule that established guidelines for states to develop standards of performance to address GHG emissions from existing coal-fired generation. On January 19, 2021, the D.C. Circuit vacated and remanded the ACE rule declaring that the EPA was “arbitrary and capricious” in its rule making and, as such, the ACE rule is no longer in effect and all actions thus far taken by states to implement the federally mandated rule are now null and void. Vacating the ACE rule had the unintended effect of reinstating the CPP because the repeal of the CPP was a provision within the ACE rule. The D.C. Circuit decision was appealed by several states and interested parties, including West Virginia, arguing that the EPA did not have the authorization under Section 111(d) of the CAA to require “generation shifting” as a way to limit GHGs. On June 30, 2022, the U.S. Supreme Court in West Virginia v. Environmental Protection Agency held that the method the EPA used to regulate GHGs (generation shifting) under Section 111(d) of the CAA (the CPP) was not authorized by Congress and remanded the rule to the EPA for further reconsideration. In response, on May 23, 2023, the EPA published a proposed rule pursuant to CAA Section 111 (b) and (d) in line with the decision in West Virginia v. Environmental Protection Agency intended to reduce power sector GHG emissions (primarily CO 2 emissions) from fossil fuel based EGUs. The rule proposes stringent emissions limitations based on fuel type and unit retirement date. Comments on the proposed rule were submitted to the EPA on August 8, 2023. Depending on how final rules are ultimately implemented and the outcome of any appeals, compliance with these standards could require additional capital expenditures or changes in operation at the Ft. Martin and Harrison power stations. Clean Water Act Various water quality regulations, the majority of which are the result of the federal Clean Water Act and its amendments, apply to FirstEnergy’s facilities. In addition, the states in which FirstEnergy operates have water quality standards applicable to FirstEnergy’s operations. On September 30, 2015, the EPA finalized new, more stringent effluent limits for the Steam Electric Power Generating category (40 CFR Part 423) for arsenic, mercury, selenium and nitrogen for wastewater from wet scrubber systems and zero discharge of pollutants in ash transport water. The treatment obligations were to phase-in as permits are renewed on a five-year cycle from 2018 to 2023. However, on April 13, 2017, the EPA granted a Petition for Reconsideration and on September 18, 2017, the EPA postponed certain compliance deadlines for two years. On August 31, 2020, the EPA issued a final rule revising the effluent limits for discharges from wet scrubber systems, retaining the zero-discharge standard for ash transport water, (with some limited discharge allowances), and extending the deadline for compliance to December 31, 2025 for both. In addition, the EPA allows for less stringent limits for sub-categories of generating units based on capacity utilization, flow volume from the scrubber system, and unit retirement date. On March 29, 2023, the EPA published proposed revised ELGs applicable to coal-fired power plants that include more stringent effluent limitations for wet scrubber systems and ash transport water, and new limits on landfill leachate. Public hearings on the proposed rules were held in April 2023 and comments were accepted through May 30, 2023. In the interim, the rule issued on August 31, 2020, remains in effect. Depending on the outcome of appeals and how final revised rules are ultimately implemented, compliance with these standards could require additional capital expenditures or changes in operation at the Ft. Martin and Harrison power stations from what was approved by the WVPSC in September 2022 to comply with the 2020 ELG rule. Regulation of Waste Disposal Federal and state hazardous waste regulations have been promulgated as a result of the Resource Conservation and Recovery Act, as amended, and the Toxic Substances Control Act. Certain CCRs, such as coal ash, were exempted from hazardous waste disposal requirements pending the EPA’s evaluation of the need for future regulation. In April 2015, the EPA finalized regulations for the disposal of CCRs (non-hazardous), establishing national standards for landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring and protection procedures and other operational and reporting procedures to assure the safe disposal of CCRs from electric generating plants. On September 13, 2017, the EPA announced that it would reconsider certain provisions of the final regulations. On July 29, 2020, the EPA published a final rule again revising the date that certain CCR impoundments must cease accepting waste and initiate closure to April 11, 2021. The final rule allowed for an extension of the closure deadline based on meeting identified site-specific criteria. On November 30, 2020, AE Supply submitted a closure deadline extension request to the EPA seeking to extend the cease accepting waste date for the McElroy's Run CCR impoundment facility until 2024, which request is pending technical review by the EPA. AE Supply continues to operate McElroy’s Run as a disposal facility for Pleasants Power Station. FE or its subsidiaries have been named as potentially responsible parties at waste disposal sites, which may require cleanup under the CERCLA. Allegations of disposal of hazardous substances at historical sites and the liability involved are often unsubstantiated and subject to dispute; however, federal law provides that all potentially responsible parties for a particular site may be liable on a joint and several basis. Environmental liabilities that are considered probable have been recognized on the Consolidated Balance Sheets as of September 30, 2023, based on estimates of the total costs of cleanup, FirstEnergy’s proportionate responsibility for such costs and the financial ability of other unaffiliated entities to pay. Total liabilities of approximately $96 million have been accrued through September 30, 2023, of which, approximately $62 million are for environmental remediation of former MGP and gas holder facilities in New Jersey, which are being recovered by JCP&L through a non-bypassable societal benefits charge. FE or its subsidiaries could be found potentially responsible for additional amounts or additional sites, but the loss or range of losses cannot be determined or reasonably estimated at this time. OTHER LEGAL PROCEEDINGS United States v. Larry Householder, et al. On July 21, 2020, a complaint and supporting affidavit containing federal criminal allegations were unsealed against the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. In March 2023, a jury found Mr. Householder and his co-defendant, Matthew Borges, guilty and in June 2023, the two were sentenced to prison for 20 and 5 years, respectively. Messrs. Householder and Borges have appealed their sentences. Also, on July 21, 2020, and in connection with the DOJ’s investigation, FirstEnergy received subpoenas for records from the U.S. Attorney’s Office for the Southern District Ohio. FirstEnergy was not aware of the criminal allegations, affidavit or subpoenas before July 21, 2020. On July 21, 2021, FE entered into a three-year DPA with the U.S. Attorney’s Office that, subject to court proceedings, resolves this matter. Under the DPA, FE has agreed to the filing of a criminal information charging FE with one count of conspiracy to commit honest services wire fraud. The DPA requires that FirstEnergy, among other obligations: (i) continue to cooperate with the U.S. Attorney’s Office in all matters relating to the conduct described in the DPA and other conduct under investigation by the U.S. government; (ii) pay a criminal monetary penalty totaling $230 million within sixty days, which shall consist of (x) $115 million paid by FE to the United States Treasury and (y) $115 million paid by FE to the ODSA to fund certain assistance programs, as determined by the ODSA, for the benefit of low-income Ohio electric utility customers; (iii) publish a list of all payments made in 2021 to either 501(c)(4) entities or to entities known by FirstEnergy to be operating for the benefit of a public official, either directly or indirectly, and update the same on a quarterly basis during the term of the DPA; (iv) issue a public statement, as dictated in the DPA, regarding FE’s use of 501(c)(4) entities; and (v) continue to implement and review its compliance and ethics program, internal controls, policies and procedures designed, implemented and enforced to prevent and detect violations of the U.S. laws throughout its operations, and to take certain related remedial measures. The $230 million payment will neither be recovered in rates or charged to FirstEnergy customers nor will FirstEnergy seek any tax deduction related to such payment. The entire amount of the monetary penalty was recognized as expense in the second quarter of 2021 and paid in the third quarter of 2021. Under the terms of the DPA, the criminal information will be dismissed after FirstEnergy fully complies with its obligations under the DPA. Legal Proceedings Relating to United States v. Larry Householder, et al. On August 10, 2020, the SEC, through its Division of Enforcement, issued an order directing an investigation of possible securities laws violations by FE, and on September 1, 2020, issued subpoenas to FE and certain FE officers. On April 28, 2021, July 11, 2022, and May 25, 2023, the SEC issued additional subpoenas to FE, with which FE has complied. While no contingency has been reflected in its consolidated financial statements, FE believes that it is probable that it will incur a loss in connection with the resolution of the SEC investigation. Given the ongoing nature and complexity of the review, inquiries and investigations, FE cannot yet reasonably estimate a loss or range of loss that may arise from the resolution of the SEC investigation. On June 29, 2023, the OOCIC served FE a subpoena, seeking information relating to the conduct described in the DPA. FirstEnergy was not aware of the OOCIC’s investigation prior to receiving the subpoena and understands that the OOCIC’s investigation is also focused on the conduct described in the DPA. FirstEnergy is cooperating with the OOCIC in its investigation. No contingency has been reflected in FirstEnergy’s consolidated financial statements, as a loss is neither probable, nor is a loss or range of loss reasonably estimable. In addition to the subpoenas referenced above under “—United States v. Larry Householder, et. al.” and the SEC investigation, certain FE stockholders and FirstEnergy customers filed several lawsuits against FirstEnergy and certain current and former directors, officers and other employees, and the complaints in each of these suits is related to allegations in the complaint and supporting affidavit relating to HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. The plaintiffs in each of the below cases seek, among other things, to recover an unspecified amount of damages (unless otherwise noted). Unless otherwise indicated, no contingency has been reflected in FirstEnergy’s consolidated financial statements with respect to these lawsuits as a loss is neither probable, nor is a loss or range of a loss reasonably estimable. • In re FirstEnergy Corp. Securities Litigation (S.D. Ohio); on July 28, 2020 and August 21, 2020, purported stockholders of FE filed putative class action lawsuits alleging violations of the federal securities laws. Those actions have been consolidated and a lead plaintiff, the Los Angeles County Employees Retirement Association, has been appointed by the court. A consolidated complaint was filed on February 26, 2021. The consolidated complaint alleges, on behalf of a proposed class of persons who purchased FE securities between February 21, 2017 and July 21, 2020, that FE and certain current or former FE officers violated Sections 10(b) and 20(a) of the Exchange Act by issuing misrepresentations or omissions concerning FE’s business and results of operations. The consolidated complaint also alleges that FE, certain current or former FE officers and directors, and a group of underwriters violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 as a result of alleged misrepresentations or omissions in connection with offerings of senior notes by FE in February and June 2020. On March 30, 2023, the court granted plaintiffs’ motion for class certification. On April 14, 2023, FE filed a petition in the U.S. Court of Appeals for the Sixth Circuit seeking to appeal that order. Discovery is ongoing. FE believes that it is probable that it will incur a loss in connection with the resolution of this lawsuit. Given the ongoing nature and complexity of such litigation, FE cannot yet reasonably estimate a loss or range of loss. • MFS Series Trust I, et al. v. FirstEnergy Corp., et al. and Brighthouse Funds II – MFS Value Portfolio, et al. v. FirstEnergy Corp., et al. (S.D. Ohio) on December 17, 2021 and February 21, 2022, purported stockholders of FE filed complaints against FE, certain current and former officers, and certain current and former officers of EH. The complaints allege that the defendants violated Sections 10(b) and 20(a) of the Exchange Act by issuing alleged misrepresentations or omissions regarding FE’s business and its results of operations, and seek the same relief as the In re FirstEnergy Corp. Securities Litigation described above. FE believes that it is probable that it will incur losses in connection with the resolution of these lawsuits. Given the ongoing nature and complexity of such litigation, FE cannot yet reasonably estimate a loss or range of loss. • State of Ohio ex rel. Dave Yost, Ohio Attorney General v. FirstEnergy Corp., et al. and City of Cincinnati and City of Columbus v. FirstEnergy Corp. (Common Pleas Court, Franklin County, OH, all actions have been consolidated); on September 23, 2020 and October 27, 2020, the OAG and the cities of Cincinnati and Columbus, respectively, filed complaints against several parties including FE, each alleging civil violations of the Ohio Corrupt Activity Act and related claims in connection with the passage of HB 6. On January 13, 2021, the OAG filed a motion for a temporary restraining order and preliminary injunction against FirstEnergy seeking to enjoin FirstEnergy from collecting the Ohio Companies' decoupling rider. On January 31, 2021, FE reached a partial settlement with the OAG and the cities of Cincinnati and Columbus with respect to the temporary restraining order and preliminary injunction request and related issues. In connection with the partial settlement, the Ohio Companies filed an application on February 1, 2021, with the PUCO to set their respective decoupling riders (Conservation Support Rider) to zero. On February 2, 2021, the PUCO approved the application of the Ohio Companies setting the rider to zero, and no additional customer bills will include new decoupling rider charges after February 8, 2021. On August 13, 2021, new defendants were added to the complaint, including two former officers of FirstEnergy. On December 2, 2021, the cities and FE entered a stipulated dismissal with prejudice of the cities’ suit. After a stay, pending final resolution of the United States v. Larry Householder, et al. criminal proceeding described above, the litigation has resumed pursuant to an order, dated March 15, 2023. Discovery is ongoing. On July 31, 2023, FE and other defendants filed motions to dismiss in part the OAG’s section amended complaint, which the OAG opposed. On February 9, 2022, FE, acting through the SLC, agreed to a settlement term sheet to resolve the following shareholder derivative lawsuits relating to HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder that were filed in the S.D. Ohio, the N.D. Ohio, and the Ohio Court of Common Pleas, Summit County: • Gendrich v. Anderson, et al. and Sloan v. Anderson, et al. (Common Pleas Court, Summit County, Ohio, all actions have been consolidated); on July 26, 2020 and July 31, 2020, respectively, purported stockholders of FE filed shareholder derivative action lawsuits against certain current and former FE directors and officers, alleging, among other things, breaches of fiduciary duty. • Miller v. Anderson, et al. (N.D. Ohio); Bloom, et al. v. Anderson, et al.; Employees Retirement System of the City of St. Louis v. Jones, et al.; Electrical Workers Pension Fund, Local 103, I.B.E.W. v. Anderson et al.; Massachusetts Laborers Pension Fund v. Anderson et al.; The City of Philadelphia Board of Pensions and Retirement v. Anderson et al.; Atherton v. Dowling et al.; Behar v. Anderson, et al. (S.D. Ohio, all actions have been consolidated); beginning on August 7, 2020, purported stockholders of FE filed shareholder derivative actions alleging the FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act. On March 11, 2022, the parties executed a stipulation and agreement of settlement, and filed a motion the same day requesting preliminary settlement approval in the S.D. Ohio, which the S.D. Ohio granted on May 9, 2022. Subsequently, following a hearing on August 4, 2022, the S.D. Ohio granted final approval of the settlement on August 23, 2022. The settlement includes a series of corporate governance enhancements and a payment to FE of $180 million, to be paid by insurance after the judgment has become final, less approximately $36 million in court-ordered attorney’s fees awarded to plaintiffs. On September 20, 2022, a purported FE stockholder filed a motion for reconsideration of the S.D. Ohio’s final settlement approval. The parties filed oppositions to that motion on October 11, 2022, and the S.D. Ohio denied that motion on May 22, 2023. On June 15, 2023, the purported FE stockholder filed an appeal in the U.S. Court of Appeals for the Sixth Circuit. If the S.D. Ohio’s final settlement approval is affirmed by the U.S. Court of Appeals for the Sixth Circuit, the settlement agreement is expected to resolve fully these shareholder derivative lawsuits. On June 2, 2022, the N.D. Ohio entered an order to show cause why the court should not appoint new plaintiffs’ counsel, and thereafter, on June 10, 2022, the parties filed a joint motion to dismiss the matter without prejudice, which the N.D. Ohio denied on July 5, 2022. On August 15, 2022, the N.D. Ohio issued an order stating its intention to appoint one group of applicants as new plaintiffs’ counsel, and on August 22, 2022, the N.D. Ohio ordered that any objections to the appointment be submitted by August 26, 2022. The parties filed their objections by that deadline, and on September 2, 2022, the applicants responded to those objections. In the meantime, on August 25, 2022, a purported FE stockholder represented by the applicants filed a motion to intervene, attaching a proposed complaint-in-intervention purporting to assert claims that the FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act as well as a claim against a third party for professional negligence and malpractice. The parties filed oppositions to that motion to intervene on September 8, 2022, and the proposed intervenor's reply in support of his motion to intervene was filed on September 22, 2022. On August 24, 2022, the parties filed a joint motion to dismiss the action pending in the N.D. Ohio based upon and in light of the approval of the settlement by the S.D. Ohio. On August 30, 2022, the parties filed a joint motion to dismiss the state court action, which the court granted on September 2, 2022. On September 29, 2023, the N.D. Ohio issued a stay of the case pending the appeal in the U.S. Court of Appeals for the Sixth Circuit. In letters dated January 26, and February 22, 2021, staff of FERC's Division of Investigations notified FirstEnergy that the Division was conducting an investigation of FirstEnergy’s lobbying and governmental affairs activities concerning HB 6, and staff directed FirstEnergy to preserve and maintain all documents and information related to the same as such have been developed as part of an ongoing non-public audit being conducted by FERC's Division of Audits and Accounting. On December 30, 2022, FERC approved a Stipulation and Consent Agreement that resolves the investigation. The agreement inc |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION FE and its subsidiaries are principally involved in the transmission, distribution and generation of electricity through its reportable segments, Regulated Distribution and Regulated Transmission. FirstEnergy evaluates segment performance based on earnings attributable to FE from continuing operations. The Regulated Distribution segment distributes electricity through FirstEnergy’s ten utility operating companies, serving approximately six million customers within 65,000 square miles of Ohio, Pennsylvania, West Virginia, Maryland, New Jersey and New York, and purchases power for its provider of last resort, SOS, standard service offer and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland. This segment also controls 3,580 MWs of regulated electric generation capacity located primarily in West Virginia and Virginia. The segment’s results reflect the costs of securing and delivering electric generation from transmission facilities to customers, including the deferral and amortization of certain related costs. The Regulated Transmission segment provides transmission infrastructure owned and operated by the Transmission Companies and certain of FirstEnergy’s utilities (JCP&L, MP, PE and WP) to transmit electricity from generation sources to distribution facilities. The segment’s revenues are primarily derived from forward-looking formula rates. Under forward-looking formula rates, the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual rate base and costs. The segment’s results also reflect the net transmission expenses related to the delivery of electricity on FirstEnergy’s transmission facilities. On November 6, 2021, FirstEnergy, along with FET, entered into the FET P&SA I, with Brookfield and the Brookfield Guarantors pursuant to which FET agreed to issue and sell to Brookfield at the closing, and Brookfield agreed to purchase from FET, certain newly issued membership interests of FET, such that Brookfield would own 19.9% of the issued and outstanding membership interests of FET, for a purchase price of $2.375 billion. The transaction closed on May 31, 2022. KATCo, which was a subsidiary of FET, became a wholly owned subsidiary of FE prior to the closing of the FET P&SA I and remains in the Regulated Transmission segment. On February 2, 2023, FE, along with FET, entered into the FET P&SA II with Brookfield and the Brookfield Guarantors, pursuant to which FE agreed to sell to Brookfield at the closing, and Brookfield agreed to purchase from FE, an incremental 30% equity interest in FET for a purchase price of $3.5 billion. The majority of the purchase price is expected to be paid in cash upon closing, and the remainder will be payable by the issuance of a promissory note, which is expected to be repaid by the end of 2024. As a result of the consummation of the transaction, Brookfield’s interest in FET will increase from 19.9% to 49.9%, while FE will retain the remaining 50.1% ownership interests of FET. The transaction is subject to customary closing conditions, including approval from the PPUC, and completion of review by the CFIUS. In addition, pursuant to the FET P&SA II, FirstEnergy made the necessary filings with the applicable regulatory authorities for the PA Consolidation. The FET Minority Equity Interest Sale is expected to close by early 2024. Upon closing, FET will continue to be consolidated in FirstEnergy’s GAAP financial statements. Corporate/Other reflects corporate support and other costs not charged or attributable to the Utilities or Transmission Companies, including FE’s retained pension and OPEB assets and liabilities of former subsidiaries, interest expense on FE’s holding company debt and other investments or businesses that do not constitute an operating segment, including FEV’s investment of 33-1/3% equity ownership in Global Holding. Reconciling adjustments for the elimination of inter-segment transactions are shown separately in the following table of Segment Financial Information. As of September 30, 2023, 67 MWs of electric generating capacity, representing AE Supply’s OVEC capacity entitlement, was also included in Corporate/Other for segment reporting. As of September 30, 2023, Corporate/Other had approximately $6.8 billion of FE holding company debt. Financial information for FirstEnergy’s business segments and reconciliations to consolidated amounts is presented below: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 External revenues Regulated Distribution $ 2,978 $ 2,965 $ 8,231 $ 7,867 Regulated Transmission 508 503 1,487 1,394 Corporate/Other 1 7 6 21 Reconciling Adjustments — — — — Total external revenues $ 3,487 $ 3,475 $ 9,724 $ 9,282 Internal revenues Regulated Distribution $ 56 $ 58 $ 171 $ 171 Regulated Transmission 1 — 3 3 Corporate/Other — — — — Reconciling Adjustments (57) (58) (174) (174) Total internal revenues $ — $ — $ — $ — Total revenues $ 3,487 $ 3,475 $ 9,724 $ 9,282 Depreciation Regulated Distribution $ 256 $ 242 $ 762 $ 719 Regulated Transmission 93 72 272 245 Corporate/Other — 3 3 6 Reconciling Adjustments 17 15 51 50 Total depreciation $ 366 $ 332 $ 1,088 $ 1,020 Deferral of regulatory assets, net Regulated Distribution $ (136) $ (85) $ (249) $ (250) Regulated Transmission (4) (1) (4) (2) Corporate/Other — — — — Reconciling Adjustments — — — — Total deferral of regulatory assets, net $ (140) $ (86) $ (253) $ (252) Equity method investment earnings Regulated Distribution $ — $ — $ — $ — Regulated Transmission — — — — Corporate/Other 43 57 134 134 Reconciling Adjustments — — — — Total equity method investment earnings $ 43 $ 57 $ 134 $ 134 Interest expense Regulated Distribution $ 159 $ 132 $ 456 $ 389 Regulated Transmission 65 41 185 155 Corporate/Other 87 99 244 276 Reconciling Adjustments (22) (24) (57) (32) Total interest expense $ 289 $ 248 $ 828 $ 788 Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Income taxes (benefits) Regulated Distribution $ 70 $ 92 $ 170 $ 213 Regulated Transmission 45 5 131 85 Corporate/Other (86) 8 (108) (61) Reconciling Adjustments — — — — Total income taxes (benefits) $ 29 $ 105 $ 193 $ 237 Earnings (losses) attributable to FE from continuing operations Regulated Distribution $ 275 $ 361 $ 688 $ 828 Regulated Transmission 123 27 371 275 Corporate/Other 23 (54) (111) (294) Reconciling Adjustments — — — — Total earnings attributable to FE from continuing operations $ 421 $ 334 $ 948 $ 809 Cash Flows From Investing Activities: Capital investments Regulated Distribution $ 409 $ 415 $ 1,136 $ 1,127 Regulated Transmission 424 236 1,097 700 Corporate/Other 15 15 33 25 Reconciling Adjustments — — — — Total capital investments $ 848 $ 666 $ 2,266 $ 1,852 (In millions) As of September 30, 2023 As of December 31, 2022 Assets Regulated Distribution $ 32,434 $ 31,749 Regulated Transmission 14,454 13,835 Corporate/Other 583 524 Reconciling Adjustments — — Total assets $ 47,471 $ 46,108 Goodwill Regulated Distribution $ 5,004 $ 5,004 Regulated Transmission 614 614 Corporate/Other — — Reconciling Adjustments — — Total goodwill $ 5,618 $ 5,618 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 400,000 | $ 334,000 | $ 927,000 | $ 809,000 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | These interim financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and disclosures normally included in financial statements and notes prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These interim financial statements should be read in conjunction with the financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2022. FE and its subsidiaries follow GAAP and comply with the related regulations, orders, policies and practices prescribed by the SEC, FERC, and, as applicable, the PUCO, the PPUC, the MDPSC, the NYPSC, the WVPSC, the VSCC and the NJBPU. The accompanying interim financial statements are unaudited, but reflect all adjustments, consisting of normal recurring adjustments, that, in the opinion of management, are necessary for a fair statement of the financial statements. The preparation of financial statements in conformity with GAAP requires management to make periodic estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results could differ from these estimates. The reported results of operations are not necessarily indicative of results of operations for any future period. FE and its subsidiaries have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. |
Consolidation | FE and its subsidiaries consolidate all majority-owned subsidiaries over which they exercise control and, when applicable, entities for which they have a controlling financial interest. Intercompany transactions and balances are eliminated in consolidation as appropriate and permitted pursuant to GAAP. FE and its subsidiaries consolidate a variable interest entity when it is determined that it is the primary beneficiary. Investments in affiliates over which FE and its subsidiaries have the ability to exercise significant influence, but do not have a controlling financial interest, follow the equity method of accounting. Under the equity method, the interest in the entity is reported as an investment in the Consolidated Balance Sheets and the percentage of FE’s ownership share of the entity’s earnings is reported in the Consolidated Statements of Income and Comprehensive Income. |
Discontinued Operations | Discontinued Operations On February 27, 2020, the FES Debtors emerged from bankruptcy and were deconsolidated from FirstEnergy’s consolidated federal income tax group. The bankruptcy, emergence and deconsolidation resulted in FirstEnergy recognizing certain income tax benefits and charges, which were classified as discontinued operations. During the third quarter of 2023, FirstEnergy recognized a $21 million tax-effected charge to income tax expense as a result of identifying an out of period adjustment related |
Equity Method Investments | Equity Method Investments Investments over which FE and its subsidiaries have the ability to exercise significant influence, but do not have a controlling financial interest, follow the equity method of accounting. Under the equity method, the interest in the entity is reported as an Investment on the Consolidated Balance Sheets. The percentage of FE's ownership share of the entity’s earnings is reported in the Consolidated Statements of Income and Comprehensive Income and reflected in “Other Income (Expense)”. |
Goodwill | Goodwill FirstEnergy evaluates goodwill for impairment annually on July 31 and more frequently if indicators of impairment arise. For 2023, FirstEnergy performed a qualitative assessment of the Regulated Distribution and Regulated Transmission reporting units' goodwill, assessing economic, industry and market considerations in addition to the reporting units' overall financial performance. Key factors used in the assessment included: growth rates, interest rates, expected capital expenditures, utility sector market performance, regulatory and legal developments, and other market considerations. It was determined that the fair values of these reporting units were, more likely than not, greater than their carrying values and a quantitative analysis was not necessary. |
New Accounting Pronouncements | New Accounting Pronouncements Recently Issued Pronouncements - FirstEnergy is currently assessing the impact of new authoritative accounting guidance issued by the FASB that has not yet been adopted and the impact it will have on its financial statements and disclosures, as well as the potential to early adopt where applicable. The current expectation is that such new standards will not significantly impact FirstEnergy's financial reporting. |
Customer Receivables | Customer Receivables Receivables from contracts with customers include distribution services and retail generation sales to residential, commercial and industrial customers of the Utilities. The allowance for uncollectible customer receivables is based on historical loss information comprised of a rolling 36-month average net write-off percentage of revenues, in conjunction with a qualitative assessment of elements that impact the collectability of receivables to determine if allowances for uncollectible customer receivables should be further adjusted in accordance with the accounting guidance for credit losses. FirstEnergy reviews its allowance for uncollectible customer receivables utilizing a quantitative and qualitative assessment. Management contemplates available current information such as changes in economic factors, regulatory matters, industry trends, customer credit factors, amount of receivable balances that are past-due, payment options and programs available to customers, and the methods that the Utilities are able to utilize to ensure payment. This analysis includes consideration of the outbreak of the pandemic and the impact on customer receivable balances outstanding and write-offs since the pandemic began and subsequent economic slowdown. FirstEnergy’s uncollectible risk on PJM receivables, resulting from transmission and wholesale sales, is minimal due to the nature of PJM’s settlement process and as a result there is no current allowance for doubtful accounts. During 2023, various regulatory actions, including extended installment plans, continue to impact the level of past due balances in certain states, resulting in the allowances for uncollectible customer receivables to remain elevated above 2019 pre-pandemic levels. However, normal collection activity has resumed and arrears levels continue to decline towards pre-pandemic levels. As a result, FirstEnergy recognized a $52 million decrease to its allowance during the first nine months of 2023, of which $27 million was applied to existing deferred regulatory assets. |
Earnings Per Share | Basic EPS is computed using the weighted average number of common shares outstanding during the relevant period as the denominator. The denominator for diluted EPS of common stock reflects the weighted average of common shares outstanding plus the potential additional common shares that could result if dilutive securities and other agreements to issue common stock were exercised. Diluted EPS reflects the dilutive effect of potential common shares from share-based awards and convertible securities. The dilutive effect of outstanding share-based awards was computed using the treasury stock method, which assumes any proceeds that could be obtained upon the exercise of the award would be used to purchase common stock at the average market price for the period. The dilutive effect of the 2026 Convertible Notes, as further discussed in Note 6, “Fair Value Measurements” under Long-term debt and other long-term obligations, is computed using the if-converted method. |
Investments | INVESTMENTS All temporary cash investments purchased with an initial maturity of three months or less are reported as cash equivalents on the Consolidated Balance Sheets at cost, which approximates their fair market value. Investments other than cash and cash equivalents include equity securities, AFS debt securities and other investments. FirstEnergy has no debt securities held for trading purposes. |
Long-Term Debt and Other Long-Term Obligations | LONG-TERM DEBT AND OTHER LONG-TERM OBLIGATIONSAll borrowings with initial maturities of less than one year are defined as short-term financial instruments under GAAP and are reported as Short-term borrowings on the Consolidated Balance Sheets at cost. Since these borrowings are short-term in nature, FirstEnergy believes that their costs approximate their fair market value. |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following represents a disaggregation of revenue from contracts with customers for the three and nine months ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Regulated Distribution Retail generation and distribution services Residential $ 1,894 $ 1,756 $ 5,010 $ 4,608 Commercial 698 686 1,970 1,858 Industrial 296 348 1,002 943 Other 26 23 78 61 Wholesale 65 159 173 408 Other revenue from contracts with customers 30 27 86 82 Total revenues from contracts with customers 3,009 2,999 8,319 7,960 Other revenue unrelated to contracts with customers 25 24 83 78 Total Regulated Distribution $ 3,034 $ 3,023 $ 8,402 $ 8,038 Regulated Transmission ATSI $ 244 $ 252 $ 712 $ 686 TrAIL 72 78 203 205 MAIT 101 97 289 253 JCP&L 52 45 152 151 MP, PE and WP 39 $ 30 130 98 Total revenues from contracts with customers 508 502 1,486 1,393 Other revenue unrelated to contracts with customers 1 1 4 4 Total Regulated Transmission $ 509 $ 503 $ 1,490 $ 1,397 Corporate/Other and Reconciling Adjustments (1) Wholesale $ 1 $ 7 $ 6 $ 21 Retail generation and distribution services (1) (45) (46) (136) (136) Other revenue unrelated to contracts with customers (1) (12) (12) (38) (38) Total Corporate/Other and Reconciling $ (56) $ (51) $ (168) $ (153) FirstEnergy Total Revenues $ 3,487 $ 3,475 $ 9,724 $ 9,282 (1) Includes eliminations and reconciling adjustments of inter-segment revenues. |
Schedule of Receivables from Customers | Billed and unbilled customer receivables as of September 30, 2023 and December 31, 2022, are included below: Customer Receivables September 30, 2023 December 31, 2022 (In millions) Billed $ 848 $ 674 Unbilled 539 781 1,387 1,455 Less: Uncollectible Reserve 85 137 Total Customer Receivables $ 1,302 $ 1,318 |
Schedule of Activity in the Allowance for Uncollectible Accounts on Customer Receivables | Activity in the allowance for uncollectible accounts on customer receivables for the nine months ended September 30, 2023 and for the year ended December 31, 2022 are as follows: (In millions) Balance, January 1, 2022 $ 159 Provision for expected credit losses (1) 59 Charged to other accounts (2) 62 Write-offs (143) Balance, December 31, 2022 $ 137 Provision for expected credit losses (1) 3 Charged to other accounts (2) 25 Write-offs (80) Balance, September 30, 2023 $ 85 (1) Approximately $(7) million and $11 million of which was deferred for future recovery (refund) in the nine months ended September 30, 2023 and the year ended December 31, 2022, respectively. (2) Represents recoveries and reinstatements of accounts written off for uncollectible accounts. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciles Basic and Diluted Eps Attributable to FE | The following table reconciles basic and diluted EPS attributable to FE: For the Three Months Ended September 30, For the Nine Months Ended September 30, Reconciliation of Basic and Diluted EPS 2023 2022 2023 2022 (In millions, except per share amounts) Earnings attributable to FE - continuing operations $ 421 $ 334 $ 948 $ 809 Earnings attributable to FE - discontinued operations, net of tax (21) — (21) — Earnings attributable to FE $ 400 $ 334 $ 927 $ 809 Share count information: Weighted average number of basic shares outstanding 573 571 573 571 Assumed exercise of dilutive stock options and awards 1 1 1 1 Weighted average number of diluted shares outstanding 574 572 574 572 EPS attributable to FE: Basic - continuing operations $ 0.74 $ 0.58 $ 1.66 $ 1.42 Basic - discontinued operations (0.04) — (0.04) — Basic EPS $ 0.70 $ 0.58 $ 1.62 $ 1.42 Diluted - continuing operations $ 0.73 $ 0.58 $ 1.65 $ 1.41 Diluted - discontinued operations (0.04) — (0.04) — Diluted EPS $ 0.69 $ 0.58 $ 1.61 $ 1.41 |
PENSION AND OTHER POST-EMPLOY_2
PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Schedule of Components of Net Periodic Benefit Costs | The components of FirstEnergy’s net periodic benefit costs (credits) for pension and OPEB were as follows: Components of Net Periodic Benefit Costs (Credits) Pension OPEB For the Three Months Ended September 30, 2023 2022 2023 2022 (In millions) Service costs $ 35 $ 46 $ 1 $ 1 Interest costs 106 68 5 3 Expected return on plan assets (151) (164) (7) (10) Amortization of prior service costs (credits) (1) 1 1 (3) (3) Special termination benefits (2) 13 — 5 — Net periodic benefit costs (credits) $ 4 $ (49) $ 1 $ (9) Net periodic benefit costs (credits), net of amounts capitalized $ (15) $ (77) $ 1 $ (9) (1) The income tax benefits associated with pension and OPEB prior service costs amortized out of AOCI were $1 million for the three months ended September 30, 2022, and immaterial for the three months ended September 30, 2023. (2) Related to benefits provided in connection with the PEER. Components of Net Periodic Benefit Costs (Credits) Pension OPEB For the Nine Months Ended September 30, 2023 2022 2023 2022 (In millions) Service costs $ 104 $ 138 $ 2 $ 3 Interest costs 322 204 16 8 Expected return on plan assets (421) (492) (23) (30) Amortization of prior service costs (credits) (1) 2 2 (7) (8) Special termination benefits (2) 18 — 7 — Pension and OPEB mark-to-market adjustment (59) — — — Net periodic benefit credits $ (34) $ (148) $ (5) $ (27) Net periodic benefit credits, net of amounts capitalized $ (88) $ (218) $ (6) $ (28) (1) The income tax benefits associated with the pension and OPEB prior service costs amortized out of AOCI were $1 million and $2 million for the nine months ended September 30, 2023 and 2022, respectively. |
Schedule of Assumptions Used to Determine Net Periodic Benefit Cost | Assumptions for 2023 net periodic credits Pension OPEB Effective rate for interest costs on benefit obligations (1) 5.10%/4.80% 5.06 % Effective rate for service costs (1) 5.34%/5.11% 5.41 % Effective rate for interest on service costs (1) 5.22%/4.94% 5.33 % Annualized expected rate of return on plan assets 8.00% 7.00 % |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The following tables reconcile the effective tax rate to the federal income tax statutory rate for the three and nine months ended September 30, 2023 and 2022: For the Three Months For the Nine Months Ended September 30, Ended September 30, 2023 2022 2023 2022 (In millions) Income before income taxes (continuing operations) $ 470 $ 449 $ 1,198 $ 1,061 Federal income tax expense at statutory rate (21%) $ 99 $ 94 $ 252 $ 223 Increases (reductions) in tax expense resulting from: State income taxes, net of federal tax benefit 25 25 49 68 AFUDC equity and other flow-through (15) (8) (25) (23) Excess deferred tax amortization due to the Tax Act 2 (15) (30) (46) Federal tax credits claimed (2) (3) (2) (3) Valuation allowances (122) (8) (113) 26 Remeasurement of state deferred taxes due to law changes — 4 — (22) Uncertain tax positions 50 2 50 2 Other, net (8) 14 12 12 Total income taxes (continuing operations) $ 29 $ 105 $ 193 $ 237 Effective income tax rate (continuing operations) 6.0 % 23.4 % 16.1 % 22.3 % |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured on Recurring Basis | The following table sets forth the recurring assets and liabilities that are accounted for at fair value by level within the fair value hierarchy: September 30, 2023 December 31, 2022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets (In millions) Derivative assets FTRs (1) $ — $ — $ 10 $ 10 $ — $ — $ 11 $ 11 Equity securities 2 — — 2 2 — — 2 U.S. state and municipal debt securities — 259 — 259 — 266 — 266 Cash, cash equivalents and restricted cash (2) 144 — — 144 206 — — 206 Other (3) — 41 — 41 — 40 — 40 Total assets $ 146 $ 300 $ 10 $ 456 $ 208 $ 306 $ 11 $ 525 Liabilities Derivative liabilities FTRs (1) $ — $ — $ (3) $ (3) $ — $ — $ (2) $ (2) Total liabilities $ — $ — $ (3) $ (3) $ — $ — $ (2) $ (2) Net assets $ 146 $ 300 $ 7 $ 453 $ 208 $ 306 $ 9 $ 523 (1) Contracts are subject to regulatory accounting treatment and changes in market values do not impact earnings. (2) Restricted cash of $26 million and $46 million as of September 30, 2023 and December 31, 2022, respectively, primarily relates to cash collected from MP, PE and the Ohio Companies’ customers that is specifically used to service debt of their respective securitization or funding companies. (3) Primarily consists of short-term investments. |
Schedule of Amortized Cost Basis, Unrealized Gains and Losses and Fair Values of Investments in Available-for-sale Securities | The following table summarizes the amortized cost basis, unrealized gains, unrealized losses and fair values of investments held in spent nuclear fuel disposal trusts as of September 30, 2023, and December 31, 2022: September 30, 2023 (1) December 31, 2022 (2) Cost Basis Unrealized Gains Unrealized Losses Fair Value Cost Basis Unrealized Gains Unrealized Losses Fair Value (In millions) Debt securities $ 296 $ — $ (37) $ 259 $ 294 $ — $ (28) $ 266 (1) Excludes short-term cash investments of $9 million as of September 30, 2023. (2) Excludes short-term cash investments of $5 million as of December 31, 2022. |
Schedule of Proceeds from the Sale of Investments in Available-for-sale Debt Securities | Proceeds from the sale of investments in AFS debt securities, realized gains and losses on those sales and interest and dividend income for the three and nine months ended September 30, 2023 and 2022, were as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 (In millions) Sale proceeds $ 10 $ 15 $ 28 $ 31 Realized gains — — — 1 Realized losses — (2) (2) (4) Interest and dividend income 3 3 9 9 |
Schedule of Fair Value and Related Carrying Amounts of Long-term Debt | The following table provides the approximate fair value and related carrying amounts of long-term debt, which excludes finance lease obligations and net unamortized debt issuance costs, unamortized fair value adjustments, premiums and discounts as of September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 (In millions) Carrying value $ 24,254 $ 21,641 Fair value $ 21,800 $ 19,784 |
Schedule of Long-term Debt Redemption and Issuance | FirstEnergy had the following redemptions and issuances during the nine months ended September 30, 2023: Company Type Redemption / Issuance Date Interest Rate Maturity Amount (In millions) Description Redemptions (1) ME Unsecured Notes March, 2023 3.50% 2023 $300 ME redeemed unsecured notes that became due. FE Unsecured Notes May, 2023 7.375% 2031 $194 FE repurchased approximately $194 million of the principal amount of its 2031 Notes through the open market for $228 million including a premium of approximately $34 million ($27 million after-tax). In addition, FE recognized approximately $2 million ($1 million after-tax) of deferred cash flow hedge losses associated with the FE debt redemptions. Issuances WP FMBs January, 2023 5.29% 2033 $50 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. MAIT Unsecured Notes February, 2023 5.39% 2033 $175 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. ME Unsecured Notes March, 2023 5.20% 2028 $425 Proceeds were used to repay short-term borrowings, including borrowings incurred to repay, at maturity, the $300 million aggregate principal amount of ME's 3.50% unsecured notes due March 15, 2023, to finance capital expenditures and for other general corporate purposes. PN Unsecured Notes March, 2023 5.15% 2026 $300 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. ATSI Unsecured Notes May, 2023 5.13% 2033 $150 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. FE Unsecured Convertible Notes May, 2023 4.00% 2026 $1,500 Proceeds were used to repay short-term borrowings, to repurchase a portion of its 2031 Notes, to fund the qualified pension plan and for other general corporate purposes. PE FMBs September, 2023 5.64% 2028 $100 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. PE FMBs September, 2023 5.73% 2030 $50 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes. MP FMBs September, 2023 5.85% 2034 $400 Proceeds are for repaying short-term and long-term debt, including MP’s $400 million 4.1% FMBs due April 15, 2024, to finance capital expenditures and for other general corporate purposes. (1) Excludes principal payments on securitized bonds. |
COMMITMENTS, GUARANTEES AND C_2
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Potential Collateral Obligations | These credit-risk-related contingent features stipulate that if the subsidiary were to be downgraded or lose its investment grade credit rating (based on its senior unsecured debt rating), it would be required to provide additional collateral. The following table discloses the potential additional credit rating contingent contractual collateral obligations as of September 30, 2023: Potential Collateral Obligations Utilities and Transmission Companies FE Total (In millions) Contractual Obligations for Additional Collateral Upon Further Downgrade $ 63 $ — $ 63 Surety Bonds (Collateralized Amount) (1) 80 79 159 Total Exposure from Contractual Obligations $ 143 $ 79 $ 222 (1) |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Financial Information | Financial information for FirstEnergy’s business segments and reconciliations to consolidated amounts is presented below: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 External revenues Regulated Distribution $ 2,978 $ 2,965 $ 8,231 $ 7,867 Regulated Transmission 508 503 1,487 1,394 Corporate/Other 1 7 6 21 Reconciling Adjustments — — — — Total external revenues $ 3,487 $ 3,475 $ 9,724 $ 9,282 Internal revenues Regulated Distribution $ 56 $ 58 $ 171 $ 171 Regulated Transmission 1 — 3 3 Corporate/Other — — — — Reconciling Adjustments (57) (58) (174) (174) Total internal revenues $ — $ — $ — $ — Total revenues $ 3,487 $ 3,475 $ 9,724 $ 9,282 Depreciation Regulated Distribution $ 256 $ 242 $ 762 $ 719 Regulated Transmission 93 72 272 245 Corporate/Other — 3 3 6 Reconciling Adjustments 17 15 51 50 Total depreciation $ 366 $ 332 $ 1,088 $ 1,020 Deferral of regulatory assets, net Regulated Distribution $ (136) $ (85) $ (249) $ (250) Regulated Transmission (4) (1) (4) (2) Corporate/Other — — — — Reconciling Adjustments — — — — Total deferral of regulatory assets, net $ (140) $ (86) $ (253) $ (252) Equity method investment earnings Regulated Distribution $ — $ — $ — $ — Regulated Transmission — — — — Corporate/Other 43 57 134 134 Reconciling Adjustments — — — — Total equity method investment earnings $ 43 $ 57 $ 134 $ 134 Interest expense Regulated Distribution $ 159 $ 132 $ 456 $ 389 Regulated Transmission 65 41 185 155 Corporate/Other 87 99 244 276 Reconciling Adjustments (22) (24) (57) (32) Total interest expense $ 289 $ 248 $ 828 $ 788 Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Income taxes (benefits) Regulated Distribution $ 70 $ 92 $ 170 $ 213 Regulated Transmission 45 5 131 85 Corporate/Other (86) 8 (108) (61) Reconciling Adjustments — — — — Total income taxes (benefits) $ 29 $ 105 $ 193 $ 237 Earnings (losses) attributable to FE from continuing operations Regulated Distribution $ 275 $ 361 $ 688 $ 828 Regulated Transmission 123 27 371 275 Corporate/Other 23 (54) (111) (294) Reconciling Adjustments — — — — Total earnings attributable to FE from continuing operations $ 421 $ 334 $ 948 $ 809 Cash Flows From Investing Activities: Capital investments Regulated Distribution $ 409 $ 415 $ 1,136 $ 1,127 Regulated Transmission 424 236 1,097 700 Corporate/Other 15 15 33 25 Reconciling Adjustments — — — — Total capital investments $ 848 $ 666 $ 2,266 $ 1,852 (In millions) As of September 30, 2023 As of December 31, 2022 Assets Regulated Distribution $ 32,434 $ 31,749 Regulated Transmission 14,454 13,835 Corporate/Other 583 524 Reconciling Adjustments — — Total assets $ 47,471 $ 46,108 Goodwill Regulated Distribution $ 5,004 $ 5,004 Regulated Transmission 614 614 Corporate/Other — — Reconciling Adjustments — — Total goodwill $ 5,618 $ 5,618 |
ORGANIZATION AND BASIS OF PRE_3
ORGANIZATION AND BASIS OF PRESENTATION (Details) mi in Thousands, customer in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
May 31, 2022 USD ($) | Sep. 30, 2023 USD ($) company transmissionCenter MW | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) company customer transmissionCenter mi MW | Sep. 30, 2022 USD ($) | Apr. 27, 2023 USD ($) | Feb. 02, 2023 USD ($) director | Dec. 31, 2022 USD ($) | |
Property, Plant and Equipment [Line Items] | ||||||||
Length of transmission lines | mi | 24 | |||||||
Number of regional transmission centers | transmissionCenter | 2 | 2 | ||||||
Capitalized cost of equity | $ 12 | $ 15 | $ 31 | $ 39 | ||||
Capitalized interest | 14 | 8 | 38 | 20 | ||||
Equity method investment earnings (Note 1) | 43 | 57 | 134 | 134 | ||||
Revision of Prior Period, Adjustment | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Deferred tax assets, valuation allowance | $ 21 | $ 21 | ||||||
Regulated Distribution | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Number Of existing utility operating companies | company | 10 | 10 | ||||||
Number of customers | customer | 6 | |||||||
Plant capacity (in MW's) | MW | 3,580 | 3,580 | ||||||
North American Transmission Company II LLC | FET | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Sale of ownership interest by parent | 30% | 30% | ||||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 49.90% | |||||||
FET | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Net of transaction costs | $ 37 | |||||||
Carrying value of the noncontrolling interest | $ 451 | |||||||
Number of directors | director | 5 | |||||||
FET | FE | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Number of directors | director | 3 | |||||||
FET | North American Transmission Company II LLC | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Sale of ownership interest by parent | 19.90% | |||||||
Sale price of ownership interest by parent | $ 2,375 | |||||||
Disposal group, including discontinued operation, consideration | $ 3,500 | $ 3,500 | ||||||
Number of directors | director | 2 | |||||||
Minimum ownership interest | 30% | |||||||
Global Holding | Variable Interest Entity, Not Primary Beneficiary | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Equity method investments | $ 54 | $ 54 | $ 57 | |||||
Global Holding | FEV | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Investment ownership percentage | 33.30% | 33.30% | ||||||
Global Holding | FEV | Variable Interest Entity, Not Primary Beneficiary | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Proceeds from dividends received | $ 135 | 120 | ||||||
Global Holding | FEV | Corporate and Other | Other Nonoperating Income (Expense) | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Equity method investment earnings (Note 1) | $ 43 | $ 57 | 132 | $ 133 | ||||
Other Sundry Investments | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Equity method investments | 93 | 93 | 90 | |||||
Path Wv | Variable Interest Entity, Not Primary Beneficiary | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Equity method investments | $ 18 | $ 18 | $ 18 | |||||
Variable interest entities percentage of high voltage transmission line project owned By variable interest entity one in joint venture party one | 100% | 100% | ||||||
Variable interest entities percentage of high voltage transmission line project owned by variable interest entity one in joint venture party two | 50% | 50% |
REVENUE - Schedule of Disaggreg
REVENUE - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | [1] | $ 3,487 | $ 3,475 | $ 9,724 | $ 9,282 |
Operating Segments | Regulated Distribution | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 3,009 | 2,999 | 8,319 | 7,960 | |
Total revenues | 3,034 | 3,023 | 8,402 | 8,038 | |
Operating Segments | Regulated Distribution | Wholesale | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 65 | 159 | 173 | 408 | |
Operating Segments | Regulated Distribution | Other revenue from contracts with customers | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 30 | 27 | 86 | 82 | |
Operating Segments | Regulated Distribution | Other revenue unrelated to contracts with customers | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 25 | 24 | 83 | 78 | |
Operating Segments | Regulated Transmission | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 508 | 502 | 1,486 | 1,393 | |
Total revenues | 509 | 503 | 1,490 | 1,397 | |
Operating Segments | Regulated Transmission | Other revenue unrelated to contracts with customers | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 1 | 1 | 4 | 4 | |
Operating Segments | Residential | Regulated Distribution | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 1,894 | 1,756 | 5,010 | 4,608 | |
Operating Segments | Commercial | Regulated Distribution | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 698 | 686 | 1,970 | 1,858 | |
Operating Segments | Industrial | Regulated Distribution | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 296 | 348 | 1,002 | 943 | |
Operating Segments | Other | Regulated Distribution | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 26 | 23 | 78 | 61 | |
Operating Segments | ATSI | Regulated Transmission | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 244 | 252 | 712 | 686 | |
Operating Segments | TrAIL | Regulated Transmission | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 72 | 78 | 203 | 205 | |
Operating Segments | MAIT | Regulated Transmission | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 101 | 97 | 289 | 253 | |
Operating Segments | JCP&L | Regulated Transmission | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 52 | 45 | 152 | 151 | |
Operating Segments | MP, PE and WP | Regulated Transmission | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 39 | 30 | 130 | 98 | |
Corporate/Other and Reconciling Adjustments | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | (56) | (51) | (168) | (153) | |
Corporate/Other and Reconciling Adjustments | Wholesale | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | 1 | 7 | 6 | 21 | |
Corporate/Other and Reconciling Adjustments | Other revenue unrelated to contracts with customers | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | (12) | (12) | (38) | (38) | |
Corporate/Other and Reconciling Adjustments | Retail Generation and Distribution Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues from contracts with customers | $ (45) | $ (46) | $ (136) | $ (136) | |
[1]Includes excise and gross receipts tax collections of $114 million and $111 million during the three months ended September 30, 2023 and 2022, respectively, and $315 million and $305 million during the nine months ended September 30, 2023 and 2022, respectively. |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | [1] | $ 3,487 | $ 3,475 | $ 9,724 | $ 9,282 |
Incremental decrease to uncollectible expense due to Covid-19 | 52 | ||||
Deferred Regulatory Assets | |||||
Disaggregation of Revenue [Line Items] | |||||
Incremental decrease to uncollectible expense due to Covid-19 | 27 | ||||
Other Non-Customer Revenue | Derivative revenue | |||||
Disaggregation of Revenue [Line Items] | |||||
Late payment charges | 10 | 10 | 31 | 29 | |
Total revenues | $ 4 | $ 2 | $ 16 | $ 13 | |
[1]Includes excise and gross receipts tax collections of $114 million and $111 million during the three months ended September 30, 2023 and 2022, respectively, and $315 million and $305 million during the nine months ended September 30, 2023 and 2022, respectively. |
REVENUE - Receivables from Cust
REVENUE - Receivables from Customers (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Customers | $ 1,387 | $ 1,455 |
Less: Uncollectible Reserve | 85 | 137 |
Receivable | 1,302 | 1,318 |
Billed Revenues | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Customers | 848 | 674 |
Unbilled Revenues | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Customers | $ 539 | $ 781 |
REVENUE - Activity in Uncollect
REVENUE - Activity in Uncollectable Accounts (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 137 | $ 159 |
Provision for expected credit losses | 3 | 59 |
Charged to other accounts | 25 | 62 |
Write-offs | (80) | (143) |
Ending balance | 85 | 137 |
Deferred (refunded to customer) for recovery | $ (7) | $ 11 |
EARNINGS PER SHARE - Reconciles
EARNINGS PER SHARE - Reconciles Basic and Diluted Eps Attributable to FE (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Earnings Per Share [Abstract] | |||||
Earnings attributable to FE - continuing operations | $ 421,000 | $ 334,000 | $ 948,000 | $ 809,000 | |
Earnings attributable to FE - discontinued operations, net of tax | [1] | (21,000) | 0 | (21,000) | 0 |
EARNINGS ATTRIBUTABLE TO FIRSTENERGY CORP. | $ 400,000 | $ 334,000 | $ 927,000 | $ 809,000 | |
Share count information: | |||||
Weighted average number of basic shares outstanding (in shares) | 573 | 571 | 573 | 571 | |
Assumed exercise of dilutive stock options and awards (in shares) | 1 | 1 | 1 | 1 | |
Weighted average number of diluted shares outstanding (in shares) | 574 | 572 | 574 | 572 | |
EPS attributable to FE: | |||||
Basic - continuing operations (in dollars per share) | $ 0.74 | $ 0.58 | $ 1.66 | $ 1.42 | |
Basic - discontinued operations (in dollars per share) | (0.04) | 0 | (0.04) | 0 | |
Basic EPS (in dollars per share) | 0.70 | 0.58 | 1.62 | 1.42 | |
Diluted - continuing operations (in dollars per share) | 0.73 | 0.58 | 1.65 | 1.41 | |
Diluted - discontinued operations (in dollars per share) | (0.04) | 0 | (0.04) | 0 | |
Diluted EPS (in dollars per share) | $ 0.69 | $ 0.58 | $ 1.61 | $ 1.41 | |
[1]Consists of income taxes of $21 million during the three and nine months ended September 30, 2023. |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - $ / shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
4.00%, 1,300 Million Notes Maturity 2026 | Promissory Notes | FE | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Debt instrument, conversion price (in dollars per share) | $ 46.81 | $ 46.81 | ||
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of EPS (in shares) | 0 | 0 | 0 | 0 |
PENSION AND OTHER POST-EMPLOY_3
PENSION AND OTHER POST-EMPLOYMENT BENEFITS - Schedule of Components of Net Periodic Benefit Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Pension and OPEB prior service costs amortized out of AOCI | $ 0 | $ 1 | $ 1 | $ 2 |
Pension | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service costs | 35 | 46 | 104 | 138 |
Interest costs | 106 | 68 | 322 | 204 |
Expected return on plan assets | (151) | (164) | (421) | (492) |
Amortization of prior service costs (credits) | 1 | 1 | 2 | 2 |
Special termination benefits | 13 | 0 | 18 | 0 |
Pension and OPEB mark-to-market adjustment | (59) | 0 | ||
Net periodic benefit costs (credits) | 4 | (49) | (34) | (148) |
Net periodic benefit costs (credits), net of amounts capitalized | (15) | (77) | (88) | (218) |
OPEB | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service costs | 1 | 1 | 2 | 3 |
Interest costs | 5 | 3 | 16 | 8 |
Expected return on plan assets | (7) | (10) | (23) | (30) |
Amortization of prior service costs (credits) | (3) | (3) | (7) | (8) |
Special termination benefits | 5 | 0 | 7 | 0 |
Pension and OPEB mark-to-market adjustment | 0 | 0 | ||
Net periodic benefit costs (credits) | 1 | (9) | (5) | (27) |
Net periodic benefit costs (credits), net of amounts capitalized | $ 1 | $ (9) | $ (6) | $ (28) |
PENSION AND OTHER POST-EMPLOY_4
PENSION AND OTHER POST-EMPLOYMENT BENEFITS - Narrative (Details) $ in Millions | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||||
May 12, 2023 USD ($) | Apr. 30, 2023 | Dec. 31, 2022 | Jun. 30, 2023 USD ($) | Dec. 31, 2023 | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | May 09, 2023 employee | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||||
Percent of eligible employees that accepted the voluntary retirement program | 0.65 | |||||||
Number of employees | employee | 450 | |||||||
Number of separated employees | employee | 90 | |||||||
Defined benefit plan, assumptions used calculating benefit obligation, increase (decrease) in discount rate | 0.29% | |||||||
Pension | ||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||||
Voluntary cash contribution | $ 750 | |||||||
Voluntary contribution, percentage | 7.70% | |||||||
Estimated return | 800% | |||||||
Discount rate | 4.94% | 5.23% | ||||||
Pension and OPEB mark-to-market adjustment | $ (59) | $ 0 | ||||||
Pension | Forecast | ||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||||
Estimated return | 5.30% | |||||||
Discount rate | 8% | |||||||
OPEB | ||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||||
Estimated return | 7% | |||||||
Discount rate | 5.16% | |||||||
Pension and OPEB mark-to-market adjustment | $ 0 | $ 0 | ||||||
Pension Mark-to-market Adjustment | ||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||||
Net periodic benefit cost, pre-tax | $ 47 |
PENSION AND OTHER POST-EMPLOY_5
PENSION AND OTHER POST-EMPLOYMENT BENEFITS - Assumptions Used to Determine Net Periodic Benefit Cost (Details) | 9 Months Ended | ||
Apr. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2023 | |
Pension | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted-average discount rate | 4.94% | 5.23% | |
Annualized expected rate of return on plan assets | 800% | ||
Pension | Effective rate for interest costs on benefit obligations | Minimum | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted-average discount rate | 5.10% | ||
Pension | Effective rate for interest costs on benefit obligations | Maximum | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted-average discount rate | 4.80% | ||
Pension | Effective rate for service costs | Minimum | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted-average discount rate | 5.34% | ||
Pension | Effective rate for service costs | Maximum | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted-average discount rate | 5.11% | ||
Pension | Effective rate for interest on service costs | Minimum | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted-average discount rate | 5.22% | ||
Pension | Effective rate for interest on service costs | Maximum | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted-average discount rate | 4.94% | ||
OPEB | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted-average discount rate | 5.16% | ||
Annualized expected rate of return on plan assets | 7% | ||
OPEB | Effective rate for interest costs on benefit obligations | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted-average discount rate | 5.06% | ||
OPEB | Effective rate for service costs | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted-average discount rate | 5.41% | ||
OPEB | Effective rate for interest on service costs | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted-average discount rate | 5.33% |
INCOME TAXES - Schedule of Effe
INCOME TAXES - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income before income taxes (continuing operations) | $ 470 | $ 449 | $ 1,198 | $ 1,061 |
Federal income tax expense at statutory rate (21%) | 99 | 94 | 252 | 223 |
Increases (reductions) in tax expense resulting from: | ||||
State income taxes, net of federal tax benefit | 25 | 25 | 49 | 68 |
AFUDC equity and other flow-through | (15) | (8) | (25) | (23) |
Excess deferred tax amortization due to the Tax Act | 2 | (15) | (30) | (46) |
Federal tax credits claimed | (2) | (3) | (2) | (3) |
Valuation allowances | (122) | (8) | (113) | 26 |
Remeasurement of state deferred taxes due to law changes | 0 | 4 | 0 | (22) |
Uncertain tax positions | 50 | 2 | 50 | 2 |
Other, net | (8) | 14 | 12 | 12 |
Total income taxes (continuing operations) | $ 29 | $ 105 | $ 193 | $ 237 |
Effective income tax rate (continuing operations) | 6% | 23.40% | 16.10% | 22.30% |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Apr. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2024 | Mar. 31, 2023 | May 31, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||
Deferred tax assets valuation allowance, amount | $ 65 | ||||||||
Unrecognized tax benefits, increase resulting from settlements with taxing authorities | 64 | ||||||||
Uncertain tax positions | 50 | $ 2 | $ 50 | $ 2 | |||||
Deferred tax assets | 4 | 4 | $ 9 | ||||||
Deferred tax assets, expected to be refunded to customers | 4 | 4 | |||||||
Operating loss carryforwards, not subject to expiration, net of tax | $ 1,000 | $ 1,000 | |||||||
Estimated AMT paid | $ 49 | ||||||||
Disposition of business, amount | $ 752 | ||||||||
North American Transmission Company II LLC | FET | |||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||
Sale of ownership interest by parent | 19.90% | ||||||||
North American Transmission Company II LLC | Forecast | FET | |||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||
Sale of ownership interest by parent | 30% | ||||||||
Equity interest rate of combined sale | 30% |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Liabilities | ||
Restricted cash | $ 26 | $ 46 |
Recurring | ||
Assets | ||
Total assets | 456 | 525 |
Liabilities | ||
Total liabilities | (3) | (2) |
Net assets | 453 | 523 |
Recurring | FTRs | Derivative Liabilities | ||
Liabilities | ||
Total liabilities | (3) | (2) |
Recurring | FTRs | Derivative Assets | ||
Assets | ||
Total assets | 10 | 11 |
Recurring | Equity securities | ||
Assets | ||
Total assets | 2 | 2 |
Recurring | U.S. state debt securities | ||
Assets | ||
Total assets | 259 | 266 |
Recurring | Cash, cash equivalents and restricted cash | ||
Assets | ||
Total assets | 144 | 206 |
Recurring | Other | ||
Assets | ||
Total assets | 41 | 40 |
Recurring | Level 1 | ||
Assets | ||
Total assets | 146 | 208 |
Liabilities | ||
Total liabilities | 0 | 0 |
Net assets | 146 | 208 |
Recurring | Level 1 | FTRs | Derivative Liabilities | ||
Liabilities | ||
Total liabilities | 0 | 0 |
Recurring | Level 1 | FTRs | Derivative Assets | ||
Assets | ||
Total assets | 0 | 0 |
Recurring | Level 1 | Equity securities | ||
Assets | ||
Total assets | 2 | 2 |
Recurring | Level 1 | U.S. state debt securities | ||
Assets | ||
Total assets | 0 | 0 |
Recurring | Level 1 | Cash, cash equivalents and restricted cash | ||
Assets | ||
Total assets | 144 | 206 |
Recurring | Level 1 | Other | ||
Assets | ||
Total assets | 0 | 0 |
Recurring | Level 2 | ||
Assets | ||
Total assets | 300 | 306 |
Liabilities | ||
Total liabilities | 0 | 0 |
Net assets | 300 | 306 |
Recurring | Level 2 | FTRs | Derivative Liabilities | ||
Liabilities | ||
Total liabilities | 0 | 0 |
Recurring | Level 2 | FTRs | Derivative Assets | ||
Assets | ||
Total assets | 0 | 0 |
Recurring | Level 2 | Equity securities | ||
Assets | ||
Total assets | 0 | 0 |
Recurring | Level 2 | U.S. state debt securities | ||
Assets | ||
Total assets | 259 | 266 |
Recurring | Level 2 | Cash, cash equivalents and restricted cash | ||
Assets | ||
Total assets | 0 | 0 |
Recurring | Level 2 | Other | ||
Assets | ||
Total assets | 41 | 40 |
Recurring | Level 3 | ||
Assets | ||
Total assets | 10 | 11 |
Liabilities | ||
Total liabilities | (3) | (2) |
Net assets | 7 | 9 |
Recurring | Level 3 | FTRs | Derivative Liabilities | ||
Liabilities | ||
Total liabilities | (3) | (2) |
Recurring | Level 3 | FTRs | Derivative Assets | ||
Assets | ||
Total assets | 10 | 11 |
Recurring | Level 3 | Equity securities | ||
Assets | ||
Total assets | 0 | 0 |
Recurring | Level 3 | U.S. state debt securities | ||
Assets | ||
Total assets | 0 | 0 |
Recurring | Level 3 | Cash, cash equivalents and restricted cash | ||
Assets | ||
Total assets | 0 | 0 |
Recurring | Level 3 | Other | ||
Assets | ||
Total assets | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Amort
FAIR VALUE MEASUREMENTS - Amortized Cost Basis, Unrealized Gains and Losses and Fair Values of Investments in Available-for-sale Securities (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Securities, Available-for-sale [Line Items] | ||
Short-term cash investments | $ 9 | $ 5 |
Debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost Basis | 296 | 294 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (37) | (28) |
Fair Value | $ 259 | $ 266 |
FAIR VALUE MEASUREMENTS - Proce
FAIR VALUE MEASUREMENTS - Proceeds from the Sale of Investments in Available-for-sale Debt Securities (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Proceeds from the sale of investments in available-for-sale securities, realized gains and losses on those sales, and interest and dividend income | ||||
Sale proceeds | $ 10 | $ 15 | $ 28 | $ 31 |
Realized gains | 0 | 0 | 0 | 1 |
Realized losses | 0 | (2) | (2) | (4) |
Interest and dividend income | $ 3 | $ 3 | $ 9 | $ 9 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||||||
May 04, 2023 USD ($) tradingDay | May 01, 2023 | Sep. 30, 2023 USD ($) $ / shares | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) $ / shares | Sep. 30, 2022 USD ($) | May 31, 2023 USD ($) | Apr. 30, 2023 | Dec. 31, 2022 USD ($) | |
Fair Value of Financial Instruments [Line Items] | |||||||||
Investments not required to be disclosed | $ | $ 358 | $ 358 | $ 351 | ||||||
Debt instrument, conversion rate | 0.021362 | ||||||||
2026 Convertible Notes | Unsecured Debt | |||||||||
Fair Value of Financial Instruments [Line Items] | |||||||||
Issuance interest rate | 4% | ||||||||
FE | 4.00%, 1,300 Million Notes Maturity 2026 | Promissory Notes | |||||||||
Fair Value of Financial Instruments [Line Items] | |||||||||
Face amount of debt | $ | $ 1,500 | $ 1,500 | |||||||
Issuance interest rate | 4% | ||||||||
Debt instrument, convertible, threshold trading days | 20 | ||||||||
Debt instrument, convertible, threshold consecutive trading days | 30 | ||||||||
Debt instrument, convertible, threshold percentage of stock price trigger | 130% | ||||||||
Debt instrument, convertible, business days | 5 | ||||||||
Threshold trading days measurement period | 10 | ||||||||
Debt instrument, measurement period percentage | 98% | ||||||||
Debt instrument, conversion price (in dollars per share) | $ / shares | $ 46.81 | $ 46.81 | |||||||
Debt instrument convertible premium | 0.20 | ||||||||
Repurchase price, percentage | 100 | ||||||||
Corporate-Owned Life Insurance | |||||||||
Fair Value of Financial Instruments [Line Items] | |||||||||
Gain (loss) on investments | $ | $ (4) | $ (6) | $ 6 | $ (28) |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value and Related Carrying Amounts of Long-term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Carrying Value | ||
Fair value and related carrying amounts of long-term debt and other long-term obligations | ||
Long-term debt and other long-term obligations | $ 24,254 | $ 21,641 |
Fair Value | ||
Fair value and related carrying amounts of long-term debt and other long-term obligations | ||
Long-term debt and other long-term obligations | $ 21,800 | $ 19,784 |
FAIR VALUE MEASUREMENTS - Long-
FAIR VALUE MEASUREMENTS - Long-term Debt Redemption and Issuance (Details) - USD ($) $ in Millions | 1 Months Ended | |||||
May 04, 2023 | May 31, 2023 | Sep. 30, 2023 | Mar. 31, 2023 | Feb. 28, 2023 | Jan. 31, 2023 | |
Debt Instrument [Line Items] | ||||||
Losses on deferred cash flows | $ 2 | |||||
Losses on deferred cash flows, net | 1 | |||||
4.00%, 1,300 Million Notes Maturity 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Proceeds from issuance of debt | $ 1,480 | |||||
Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Early repayment of debt | 194 | |||||
Make-whole premium | 34 | |||||
Make-whole premium, net | 27 | |||||
Senior Notes | 7.375% Secured Senior Notes Maturing 2031 | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt and other long-term obligations | $ 228 | |||||
ME | Promissory Notes | 3.50% Series B Senior Notes Due 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 3.50% | |||||
Face amount of debt | $ 300 | |||||
ME | Promissory Notes | 3.50% Series B Senior Notes Due 2023 | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 3.50% | |||||
Face amount of debt | $ 300 | |||||
ME | Promissory Notes | 5.20%, 425 Million Notes Maturing 2028 | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 5.20% | |||||
Face amount of debt | $ 425 | |||||
FE | Promissory Notes | 7.375% Secured Senior Notes Maturing 2031 | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 7.375% | |||||
Face amount of debt | $ 194 | |||||
FE | Promissory Notes | 4.00%, 1,300 Million Notes Maturity 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 4% | |||||
Face amount of debt | $ 1,500 | $ 1,500 | ||||
WP | First Mortgage Bond | 5.29%, 50 Million Notes Maturing 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 5.29% | |||||
Face amount of debt | $ 50 | |||||
MAIT | Promissory Notes | 5.39%, 175 Million Notes Maturing 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 5.39% | |||||
Face amount of debt | $ 175 | |||||
PN | Promissory Notes | 5.15%, 300 Million Notes Maturing 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 5.15% | |||||
Face amount of debt | $ 300 | |||||
ATSI | Promissory Notes | 5.13%, 150 Million Notes Maturity 2033 | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 5.13% | |||||
Face amount of debt | $ 150 | |||||
PE | First Mortgage Bond | 5.64%, $100 Million Notes Maturity 2028 | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 5.64% | |||||
Face amount of debt | $ 100 | |||||
PE | First Mortgage Bond | 5.37%, $50 Million Notes Maturity 2030 | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 5.73% | |||||
Face amount of debt | $ 50 | |||||
MP | Promissory Notes | 4.1% Notes, 400 Million Notes Maturing 2023 | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 4.10% | |||||
Face amount of debt | $ 400 | |||||
MP | First Mortgage Bond | 5.85%, $400 Million Notes Maturity 2034 | ||||||
Debt Instrument [Line Items] | ||||||
Issuance interest rate | 5.85% | |||||
Face amount of debt | $ 400 |
REGULATORY MATTERS - Maryland a
REGULATORY MATTERS - Maryland and New Jersey (Details) | 1 Months Ended | ||||||||||
Oct. 18, 2023 USD ($) | Aug. 07, 2023 USD ($) | Aug. 01, 2023 USD ($) | Jul. 17, 2023 USD ($) | Apr. 17, 2023 USD ($) | Mar. 22, 2023 USD ($) program | Mar. 16, 2023 USD ($) program | Oct. 26, 2022 USD ($) | Nov. 01, 2021 | Oct. 28, 2020 USD ($) | Apr. 30, 2021 USD ($) | |
Maryland | Subsequent Event | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Increase base distribution rate | $ 28,000,000 | ||||||||||
PE | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Amount of requested rate increase | $ 50,400,000 | ||||||||||
PE | Subsequent Event | FERC | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Support costs | $ 12,000,000 | ||||||||||
PE | Maryland | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Amount of requested rate increase | $ 148,000,000 | ||||||||||
Number of service reliability and resiliency programs | program | 3 | ||||||||||
Number of programs | program | 2 | ||||||||||
Incremental energy savings goal per year (percent) | 0.20% | ||||||||||
Incremental energy savings goal thereafter (percent) | 2% | ||||||||||
Recovery period for expenditures for cost recovery program | 3 years | ||||||||||
PE | Maryland | Power Purchase Agreements | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Annual termination fee | $ 51,000,000 | ||||||||||
Amount of termination fee | 357,000,000 | ||||||||||
Expected savings of ending the program | 80,000,000 | ||||||||||
PE | Maryland | Power Purchase Agreements | Other Current Liabilities | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Amount of termination fee | 55,000,000 | ||||||||||
PE | Maryland | Power Purchase Agreements | Other Noncurrent Liabilities | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Amount of termination fee | $ 302,000,000 | ||||||||||
PE | Maryland | 2021-2023 EmPOWER Program Cycle | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Amortization period | 5 years | ||||||||||
PE | Maryland | 2024-2026 EmPOWER Program Cycle | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Recovery period for expenditures for cost recovery program | 3 years | ||||||||||
Public utilities, requested cost percentage, year one | 0.33 | ||||||||||
Public utilities, requested cost percentage, year two | 0.67 | ||||||||||
Public utilities, requested cost percentage, year three | 1 | ||||||||||
Public utilities, requested year one | $ 310,000,000 | ||||||||||
Public utilities, requested year two | 354,000,000 | ||||||||||
Public utilities, requested year three | $ 510,000,000 | ||||||||||
JCP&L | NEW JERSEY | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Approved amount of annual increase | $ 723,000,000 | ||||||||||
Approved ROE | 10.20% | ||||||||||
Public utility, offshore development, percent | 20% | ||||||||||
Recovery of transmission incentive rates, percentage | 100% | ||||||||||
Recovery of transmission incentive rates prior to approval date | 50% | ||||||||||
JCP&L | NEW JERSEY | NJBPU | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Amount of requested rate increase | $ 31,000,000 | ||||||||||
Requested increase to ROE | 9.60% | ||||||||||
Amount of revenue increase | $ 94,000,000 | ||||||||||
JCP&L | NEW JERSEY | NJBPU | Energy Efficiency and Peak Demand Reduction Stipulation Settlement | Regulated Distribution | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Amount of requested rate increase | $ 203,000,000 | ||||||||||
Increase base distribution rate | $ 192,000,000 | $ 185,000,000 | |||||||||
Number of proposed programs | program | 2 | ||||||||||
Approved period of rate plan | 3 years | ||||||||||
Approved investment recovery | $ 160,000,000 | ||||||||||
Approved amount of operation and maintenance recovery | $ 43,000,000 | ||||||||||
JCP&L | NEW JERSEY | NJBPU | Energy Efficiency and Peak Demand Reduction | Regulated Distribution | |||||||||||
Regulatory Matters [Line Items] | |||||||||||
Amortization period | 10 years |
REGULATORY MATTERS - Ohio (Deta
REGULATORY MATTERS - Ohio (Details) - PUCO meter in Thousands, $ in Thousands | Apr. 05, 2023 USD ($) | Jul. 15, 2022 USD ($) circuit meter | Jun. 01, 2016 USD ($) | Sep. 13, 2021 requirement | Aug. 06, 2021 USD ($) |
The Ohio Companies | |||||
Regulatory Matters [Line Items] | |||||
Commitment to spend | $ 52,000 | ||||
Minimum | The Ohio Companies | |||||
Regulatory Matters [Line Items] | |||||
Approved period of rate plan | 8 years | ||||
Amount of revenue increase | $ 15,000 | ||||
Maximum | The Ohio Companies | |||||
Regulatory Matters [Line Items] | |||||
Amount of revenue increase | $ 21,000 | ||||
OHIO | |||||
Regulatory Matters [Line Items] | |||||
Proposed goal to reduce CO2 pollution (percent) | 90% | ||||
OHIO | Energy Conservation, Economic Development and Job Retention | |||||
Regulatory Matters [Line Items] | |||||
Contribution amount | $ 51,000 | ||||
OHIO | Delivery Capital Recovery Rider | |||||
Regulatory Matters [Line Items] | |||||
Annual revenue cap for rider for years three through six | 20,000 | ||||
Annual revenue cap for rider for years six through eight | $ 15,000 | ||||
OHIO | Phase Two of Grid Modernization Plan | The Ohio Companies | |||||
Regulatory Matters [Line Items] | |||||
Numbers of additional meters to be installed | meter | 700 | ||||
Number of circuits additional automation equipment to be installed on | circuit | 240 | ||||
Number of circuits additional voltage regulating equipment to be installed on | circuit | 220 | ||||
Period of grid modernization plan | 4 years | ||||
Requested amount of capital investments | $ 626,000 | ||||
Requested amount of operations and maintenance expenses | $ 144,000 | ||||
OHIO | Rider DCR Audit Report | The Ohio Companies | |||||
Regulatory Matters [Line Items] | |||||
Refund to customer of pole attachment sates | $ 15 | ||||
Number of requirements with minor non-compliance | requirement | 8 | ||||
Number of requirements | requirement | 23 |
REGULATORY MATTERS - Pennsylvan
REGULATORY MATTERS - Pennsylvania and West Virginia (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||||||
Aug. 31, 2023 USD ($) | Aug. 30, 2023 USD ($) | Aug. 22, 2023 USD ($) | May 31, 2023 USD ($) | Jan. 13, 2023 USD ($) | Aug. 25, 2022 USD ($) MW | May 01, 2022 USD ($) | Mar. 17, 2022 | Nov. 22, 2021 site MW | Jan. 16, 2020 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 proposal | Dec. 31, 2022 USD ($) | |
FERC | Regulated Transmission | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Pre-tax impairment of regulatory asset | $ 25,000 | ||||||||||||
Transmission Related Vegetation Management Programs | FERC | FE | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Customer refund | $ 45,000 | ||||||||||||
Customer refund, net | 34,000 | ||||||||||||
Capital assets | 195,000 | ||||||||||||
Operating expense | 90,000 | ||||||||||||
Operating expense, net | 67,000 | ||||||||||||
Reduction in operating expense | $ 160,000 | ||||||||||||
Pennsylvania | PPUC | Pennsylvania Companies | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Recovery period | 5 years | ||||||||||||
Public utilities, settlement amount | $ 650 | ||||||||||||
Pennsylvania | DSP June 2019- May 2023 | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Number of RFP's | proposal | 2 | ||||||||||||
RFP term | 2 years | ||||||||||||
Pennsylvania | EE&C Phase IV | PPUC | ME | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Demand reduction targets | 2.90% | ||||||||||||
Energy consumption reduction targets | 3.10% | ||||||||||||
Pennsylvania | EE&C Phase IV | PPUC | PN | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Demand reduction targets | 3.30% | ||||||||||||
Energy consumption reduction targets | 3% | ||||||||||||
Pennsylvania | EE&C Phase IV | PPUC | Penn | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Demand reduction targets | 2% | ||||||||||||
Energy consumption reduction targets | 2.70% | ||||||||||||
Pennsylvania | EE&C Phase IV | PPUC | WP | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Demand reduction targets | 2.50% | ||||||||||||
Energy consumption reduction targets | 2.40% | ||||||||||||
Pennsylvania | New LTIIPs | PPUC | Pennsylvania Companies | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Recovery period | 5 years | ||||||||||||
Amount of requested rate increase | $ 572,000 | ||||||||||||
West Virginia | WVPSC | MP and PE | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Amount of requested rate increase | $ 17,000 | $ 207,000 | |||||||||||
Requested amount of annual depreciation expense | $ 76,000 | $ 76,000 | |||||||||||
Increase in annual amount of depreciation expense | $ 33,000 | ||||||||||||
Recovery period for expenditures for cost recovery program | 2 years | ||||||||||||
West Virginia | WVPSC | MP and PE | Solar Generation Project | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Plant capacity (in MW's) | MW | 50 | ||||||||||||
Percent of subscriptions required prior to commencement of construction | 85% | ||||||||||||
Number of proposed solar sites | site | 3 | ||||||||||||
Number of solar sites | site | 5 | ||||||||||||
Expected cost of the program | $ 110,000 | ||||||||||||
Number of approved solar sites | site | 3 | ||||||||||||
West Virginia | ENEC | WVPSC | MP and PE | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Amount of requested rate increase | $ 167,500 | $ 183,800 | |||||||||||
Under recovered amount, percent | 9.90% | 12.20% | |||||||||||
Supplemental requested decrease | $ 267,000 | $ 145,000 | |||||||||||
Approved amount of annual increase | $ 92,000 | ||||||||||||
Approved ROE | 4% | 4% | |||||||||||
Public utilities, requested under recovery, not recovered, amount | $ 75,600 | ||||||||||||
Plant capacity (in MW's) | MW | 1,200 | ||||||||||||
Public utilities, deferred requested rate Increase amount | $ 92,000 | ||||||||||||
Three month period | Pennsylvania | DSP June 2019- May 2023 | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Term of energy contract | 3 months | ||||||||||||
Twelve month period | Pennsylvania | DSP June 2019- May 2023 | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Term of energy contract | 12 months | ||||||||||||
Twenty-four month period | Pennsylvania | DSP June 2019- May 2023 | |||||||||||||
Regulatory Matters [Line Items] | |||||||||||||
Term of energy contract | 24 months |
COMMITMENTS, GUARANTEES AND C_3
COMMITMENTS, GUARANTEES AND CONTINGENCIES - Narrative (Details) $ in Thousands | Feb. 09, 2022 USD ($) | Jul. 21, 2021 USD ($) | Oct. 29, 2020 USD ($) review | Sep. 30, 2023 USD ($) | Mar. 11, 2022 director |
Guarantor Obligations [Line Items] | |||||
Outstanding guarantees and other assurances aggregated | $ 818,000 | ||||
Company posted collateral related to net liability positions | 89,000 | ||||
Collateral received | $ 29,000 | ||||
Goal to reduce in GHG emissions | 30% | ||||
Litigation settlement, number of voluntary compliance reports | review | 2 | ||||
Litigation settlement, amount awarded to other party, civil penalty | $ 3,860 | ||||
United States v. Householder, et al. | |||||
Guarantor Obligations [Line Items] | |||||
Number of board members not seeking re-election | director | 6 | ||||
Number of board members on special committee | director | 3 | ||||
Shareholder Derivative Lawsuit | |||||
Guarantor Obligations [Line Items] | |||||
Amount awarded to other party | $ 36,000 | ||||
Amount awarded from other party | $ 180,000 | ||||
Regulation of Waste Disposal | |||||
Guarantor Obligations [Line Items] | |||||
Accrual for environmental loss contingencies | $ 96,000 | ||||
Environmental liabilities former gas facilities | 62,000 | ||||
U.S. Attorney's Office | United States v. Householder, et al. | |||||
Guarantor Obligations [Line Items] | |||||
Term of DPA | 3 years | ||||
Loss in period | $ 230,000 | ||||
Term of payments | 60 days | ||||
United States Treasury | United States v. Householder, et al. | |||||
Guarantor Obligations [Line Items] | |||||
Amount awarded to other party | $ 115,000 | ||||
Ohio Development Service | United States v. Householder, et al. | |||||
Guarantor Obligations [Line Items] | |||||
Amount awarded to other party | $ 115,000 | ||||
FE | |||||
Guarantor Obligations [Line Items] | |||||
Outstanding guarantees and other assurances aggregated | 521,000 | ||||
Other Assurances | |||||
Guarantor Obligations [Line Items] | |||||
Outstanding guarantees and other assurances aggregated | $ 297,000 |
COMMITMENTS, GUARANTEES AND C_4
COMMITMENTS, GUARANTEES AND CONTINGENCIES - Potential Collateral Obligations (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | $ 222 |
Percent of face amount of debt | 100% |
Curing period | 30 days |
Upon Further Downgrade | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | $ 63 |
Surety Bond (Collateralized Amount) | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | $ 159 |
Percent of face amount of debt | 60% |
Capped portion of surety bond obligations | $ 39 |
Surety Bond (Collateralized Amount) | Pennsylvania Department of Environmental Protection | |
Guarantor Obligations [Line Items] | |
Capped portion of surety bond obligations | 169 |
FE | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 79 |
FE | Upon Further Downgrade | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 0 |
FE | Surety Bond (Collateralized Amount) | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 79 |
Utilities and Transmission Companies | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 143 |
Utilities and Transmission Companies | Upon Further Downgrade | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 63 |
Utilities and Transmission Companies | Surety Bond (Collateralized Amount) | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | $ 80 |
SEGMENT INFORMATION - Narrative
SEGMENT INFORMATION - Narrative (Details) mi² in Thousands, customer in Millions, $ in Millions | 9 Months Ended | |||
May 31, 2022 USD ($) | Sep. 30, 2023 USD ($) mi² company customer MW | Apr. 27, 2023 USD ($) | Feb. 02, 2023 USD ($) | |
North American Transmission Company II LLC | FET | ||||
Segment Reporting Information [Line Items] | ||||
Sale of ownership interest by parent | 30% | 30% | ||
Noncontrolling interest, ownership percentage by noncontrolling owners | 49.90% | |||
FEV | Global Holding | ||||
Segment Reporting Information [Line Items] | ||||
Investment ownership percentage | 33.30% | |||
FET | North American Transmission Company II LLC | ||||
Segment Reporting Information [Line Items] | ||||
Sale of ownership interest by parent | 19.90% | |||
Sale price of ownership interest by parent | $ 2,375 | |||
Disposal group, including discontinued operation, consideration | $ 3,500 | $ 3,500 | ||
FE | FET | ||||
Segment Reporting Information [Line Items] | ||||
Equity method investment, ownership percentage | 50.10% | |||
Regulated Distribution | ||||
Segment Reporting Information [Line Items] | ||||
Number of existing utility operating companies | company | 10 | |||
Number of customers served by utility operating companies | customer | 6 | |||
Number of square miles in service area | mi² | 65 | |||
Megawatts of net demonstrated capacity of competitive segment | MW | 3,580 | |||
Other/Corporate | OVEC | ||||
Segment Reporting Information [Line Items] | ||||
Megawatts of net demonstrated capacity of competitive segment | MW | 67 | |||
Other/Corporate | FE | ||||
Segment Reporting Information [Line Items] | ||||
Long-term debt and other long-term obligations | $ 6,800 |
SEGMENT INFORMATION - Segment F
SEGMENT INFORMATION - Segment Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | ||
Segment Financial Information | ||||||
Total revenues | [1] | $ 3,487,000 | $ 3,475,000 | $ 9,724,000 | $ 9,282,000 | |
Depreciation | 366,000 | 332,000 | 1,088,000 | 1,020,000 | ||
Deferral of regulatory assets, net | (140,000) | (86,000) | (253,000) | (252,000) | ||
Equity method investment earnings | 43,000 | 57,000 | 134,000 | 134,000 | ||
Interest expense | 289,000 | 248,000 | 828,000 | 788,000 | ||
Income taxes (benefits) | 29,000 | 105,000 | 193,000 | 237,000 | ||
Earnings (losses) attributable to FE from continuing operations | 421,000 | 334,000 | 948,000 | 809,000 | ||
Capital investments | 848,000 | 666,000 | 2,266,000 | 1,852,000 | ||
Assets | 47,471,000 | 47,471,000 | $ 46,108,000 | |||
Goodwill | 5,618,000 | 5,618,000 | 5,618,000 | |||
External Customers | ||||||
Segment Financial Information | ||||||
Total revenues | 3,487,000 | 3,475,000 | 9,724,000 | 9,282,000 | ||
Internal Customers | ||||||
Segment Financial Information | ||||||
Total revenues | 0 | 0 | 0 | 0 | ||
Operating Segments | Regulated Distribution | ||||||
Segment Financial Information | ||||||
Total revenues | 3,034,000 | 3,023,000 | 8,402,000 | 8,038,000 | ||
Depreciation | 256,000 | 242,000 | 762,000 | 719,000 | ||
Deferral of regulatory assets, net | (136,000) | (85,000) | (249,000) | (250,000) | ||
Equity method investment earnings | 0 | 0 | 0 | 0 | ||
Interest expense | 159,000 | 132,000 | 456,000 | 389,000 | ||
Income taxes (benefits) | 70,000 | 92,000 | 170,000 | 213,000 | ||
Earnings (losses) attributable to FE from continuing operations | 275,000 | 361,000 | 688,000 | 828,000 | ||
Capital investments | 409,000 | 415,000 | 1,136,000 | 1,127,000 | ||
Assets | 32,434,000 | 32,434,000 | 31,749,000 | |||
Goodwill | 5,004,000 | 5,004,000 | 5,004,000 | |||
Operating Segments | Regulated Distribution | External Customers | ||||||
Segment Financial Information | ||||||
Total revenues | 2,978,000 | 2,965,000 | 8,231,000 | 7,867,000 | ||
Operating Segments | Regulated Distribution | Internal Customers | ||||||
Segment Financial Information | ||||||
Total revenues | 56,000 | 58,000 | 171,000 | 171,000 | ||
Operating Segments | Regulated Transmission | ||||||
Segment Financial Information | ||||||
Total revenues | 509,000 | 503,000 | 1,490,000 | 1,397,000 | ||
Depreciation | 93,000 | 72,000 | 272,000 | 245,000 | ||
Deferral of regulatory assets, net | (4,000) | (1,000) | (4,000) | (2,000) | ||
Equity method investment earnings | 0 | 0 | 0 | 0 | ||
Interest expense | 65,000 | 41,000 | 185,000 | 155,000 | ||
Income taxes (benefits) | 45,000 | 5,000 | 131,000 | 85,000 | ||
Earnings (losses) attributable to FE from continuing operations | 123,000 | 27,000 | 371,000 | 275,000 | ||
Capital investments | 424,000 | 236,000 | 1,097,000 | 700,000 | ||
Assets | 14,454,000 | 14,454,000 | 13,835,000 | |||
Goodwill | 614,000 | 614,000 | 614,000 | |||
Operating Segments | Regulated Transmission | External Customers | ||||||
Segment Financial Information | ||||||
Total revenues | 508,000 | 503,000 | 1,487,000 | 1,394,000 | ||
Operating Segments | Regulated Transmission | Internal Customers | ||||||
Segment Financial Information | ||||||
Total revenues | 1,000 | 0 | 3,000 | 3,000 | ||
Corporate/Other | ||||||
Segment Financial Information | ||||||
Total revenues | (56,000) | (51,000) | (168,000) | (153,000) | ||
Depreciation | 0 | 3,000 | 3,000 | 6,000 | ||
Deferral of regulatory assets, net | 0 | 0 | 0 | 0 | ||
Equity method investment earnings | 43,000 | 57,000 | 134,000 | 134,000 | ||
Interest expense | 87,000 | 99,000 | 244,000 | 276,000 | ||
Income taxes (benefits) | (86,000) | 8,000 | (108,000) | (61,000) | ||
Earnings (losses) attributable to FE from continuing operations | 23,000 | (54,000) | (111,000) | (294,000) | ||
Capital investments | 15,000 | 15,000 | 33,000 | 25,000 | ||
Assets | 583,000 | 583,000 | 524,000 | |||
Goodwill | 0 | 0 | 0 | |||
Corporate/Other | External Customers | ||||||
Segment Financial Information | ||||||
Total revenues | 1,000 | 7,000 | 6,000 | 21,000 | ||
Corporate/Other | Internal Customers | ||||||
Segment Financial Information | ||||||
Total revenues | 0 | 0 | 0 | 0 | ||
Reconciling Adjustments | ||||||
Segment Financial Information | ||||||
Depreciation | 17,000 | 15,000 | 51,000 | 50,000 | ||
Deferral of regulatory assets, net | 0 | 0 | 0 | 0 | ||
Equity method investment earnings | 0 | 0 | 0 | 0 | ||
Interest expense | (22,000) | (24,000) | (57,000) | (32,000) | ||
Income taxes (benefits) | 0 | 0 | 0 | 0 | ||
Earnings (losses) attributable to FE from continuing operations | 0 | 0 | 0 | 0 | ||
Capital investments | 0 | 0 | 0 | 0 | ||
Assets | 0 | 0 | 0 | |||
Goodwill | 0 | 0 | $ 0 | |||
Reconciling Adjustments | External Customers | ||||||
Segment Financial Information | ||||||
Total revenues | 0 | 0 | 0 | 0 | ||
Reconciling Adjustments | Internal Customers | ||||||
Segment Financial Information | ||||||
Total revenues | $ (57,000) | $ (58,000) | $ (174,000) | $ (174,000) | ||
[1]Includes excise and gross receipts tax collections of $114 million and $111 million during the three months ended September 30, 2023 and 2022, respectively, and $315 million and $305 million during the nine months ended September 30, 2023 and 2022, respectively. |