1000 - CONSOLIDATED STATEMENTS
1000 - CONSOLIDATED STATEMENTS OF INCOME (USD $) | |||||||||||||||||||
In Millions, except Share data, unless otherwise specified | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 | |||||||||||||||
REVENUES: | |||||||||||||||||||
Electric utilities | $2,791 | $2,865 | $5,811 | $5,778 | |||||||||||||||
Unregulated businesses | 480 | 380 | 794 | 744 | |||||||||||||||
Total revenues | 3,271 | [4] | 3,245 | [1] | 6,605 | [2] | 6,522 | [3] | |||||||||||
EXPENSES: | |||||||||||||||||||
Fuel | 276 | 316 | 588 | 644 | |||||||||||||||
Purchased power | 1,024 | 1,070 | 2,167 | 2,070 | |||||||||||||||
Other operating expenses | 612 | 781 | 1,439 | 1,580 | |||||||||||||||
Provision for depreciation | 185 | 168 | 362 | 332 | |||||||||||||||
Amortization of regulatory assets | 233 | 246 | 642 | 504 | |||||||||||||||
Deferral of regulatory assets | (45) | (98) | (136) | (203) | |||||||||||||||
General taxes | 184 | 180 | 395 | 395 | |||||||||||||||
Total expenses | 2,469 | 2,663 | 5,457 | 5,322 | |||||||||||||||
OPERATING INCOME | 802 | 582 | 1,148 | 1,200 | |||||||||||||||
Investment income | 27 | 16 | 16 | 33 | |||||||||||||||
Interest expense | (206) | (188) | (400) | (367) | |||||||||||||||
Capitalized interest | 33 | 13 | 61 | 21 | |||||||||||||||
Total other expense | (146) | (159) | (323) | (313) | |||||||||||||||
INCOME BEFORE INCOME TAXES | 656 | 423 | 825 | 887 | |||||||||||||||
INCOME TAXES | 248 | 160 | 302 | 347 | |||||||||||||||
NET INCOME | 408 | 263 | 523 | 540 | |||||||||||||||
Less: Noncontrolling interest income (loss) | (6) | (10) | 1 | ||||||||||||||||
EARNINGS AVAILABLE TO FIRSTENERGY CORP. | $414 | $263 | $533 | $539 | |||||||||||||||
BASIC EARNINGS PER SHARE OF COMMON STOCK | 1.36 | 0.86 | 1.75 | 1.77 | |||||||||||||||
WEIGHTED AVERAGE NUMBER OF BASIC SHARES OUTSTANDING | 304,000,000 | 304,000,000 | 304,000,000 | 304,000,000 | |||||||||||||||
DILUTED EARNINGS PER SHARE OF COMMON STOCK | 1.36 | 0.85 | 1.75 | 1.75 | |||||||||||||||
WEIGHTED AVERAGE NUMBER OF DILUTED SHARES OUTSTANDING | 305,000,000 | 307,000,000 | 306,000,000 | 307,000,000 | |||||||||||||||
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK | 0.55 | 0.55 | |||||||||||||||||
[1]Includes $100 million of excise tax collections. | |||||||||||||||||||
[2]Includes $204 million of excise tax collections. | |||||||||||||||||||
[3]Includes $214 million of excise tax collections. | |||||||||||||||||||
[4]Includes $95 million of excise tax collections. |
2000 - CONSOLIDATED STATEMENTS
2000 - CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | ||||
In Millions | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
NET INCOME | $408 | $263 | $523 | $540 |
OTHER COMPREHENSIVE INCOME (LOSS): | ||||
Pension and other postretirement benefits | 469 | (20) | 504 | (40) |
Unrealized gain (loss) on derivative hedges | 23 | 8 | 38 | (5) |
Change in unrealized gain on available-for-sale securities | 37 | (23) | 32 | (81) |
Other comprehensive income (loss) | 529 | (35) | 574 | (126) |
Income tax expense (benefit) related to other comprehensive income | 227 | (14) | 242 | (47) |
Other comprehensive income (loss), net of tax | 302 | (21) | 332 | (79) |
COMPREHENSIVE INCOME | 710 | 242 | 855 | 461 |
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | (6) | (10) | 1 | |
COMPREHENSIVE INCOME AVAILABLE TO FIRSTENERGY CORP. | $716 | $242 | $865 | $460 |
3000 - CONSOLIDATED BALANCE SHE
3000 - CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | Jun. 30, 2009
| Dec. 31, 2008
|
CURRENT ASSETS: | ||
Cash and cash equivalents | $900 | $545 |
Receivables- | ||
Customers | 1,313 | 1,304 |
Other | 127 | 167 |
Materials and supplies, at average cost | 644 | 605 |
Prepaid taxes | 457 | 283 |
Other | 209 | 149 |
Total current assets | 3,650 | 3,053 |
PROPERTY, PLANT AND EQUIPMENT: | ||
In service | 27,315 | 26,482 |
Less - Accumulated provision for depreciation | 11,113 | 10,821 |
Total in service, net of accumulated depreciation | 16,202 | 15,661 |
Construction work in progress | 2,307 | 2,062 |
Total property, plant and equipment | 18,509 | 17,723 |
INVESTMENTS: | ||
Nuclear plant decommissioning trusts | 1,733 | 1,708 |
Investments in lease obligation bonds | 553 | 598 |
Other | 696 | 711 |
Total investments | 2,982 | 3,017 |
DEFERRED CHARGES AND OTHER ASSETS: | ||
Goodwill | 5,575 | 5,575 |
Regulatory assets | 2,819 | 3,140 |
Power purchase contract asset | 214 | 434 |
Other | 557 | 579 |
Total deferred charges and other assets | 9,165 | 9,728 |
Total assets | 34,306 | 33,521 |
CURRENT LIABILITIES: | ||
Currently payable long-term debt | 1,984 | 2,476 |
Short-term borrowings | 2,397 | 2,397 |
Accounts payable | 806 | 794 |
Accrued taxes | 259 | 333 |
Other | 782 | 1,098 |
Total current liabilities | 6,228 | 7,098 |
Common stockholders' equity- | ||
Common stock | 31 | 31 |
Other paid-in capital | 5,465 | 5,473 |
Accumulated other comprehensive loss | (1,048) | (1,380) |
Retained earnings | 4,525 | 4,159 |
Total common stockholders' equity | 8,973 | 8,283 |
Noncontrolling interest | 28 | 32 |
Total equity | 9,001 | 8,315 |
Long-term debt and other long-term obligations | 10,399 | 9,100 |
Total capitalization | 19,400 | 17,415 |
NONCURRENT LIABILITIES: | ||
Accumulated deferred income taxes | 2,447 | 2,163 |
Asset retirement obligations | 1,379 | 1,335 |
Deferred gain on sale and leaseback transaction | 1,010 | 1,027 |
Power purchase contract liability | 750 | 766 |
Retirement benefits | 1,473 | 1,884 |
Lease market valuation liability | 285 | 308 |
Other | 1,334 | 1,525 |
Total noncurrent liabilities | 8,678 | 9,008 |
Total liabilities and capitalization | $34,306 | $33,521 |
3050 - Paranthetical Data to th
3050 - Paranthetical Data to the Consolidated Balance Sheets (USD $) | ||
In Millions, except Share data | Jun. 30, 2009
| Dec. 31, 2008
|
Receivables- | ||
Accumulated provision for uncollectible accounts - customers | $26 | $28 |
Accumulated provision for uncollectible accounts - other | $9 | $9 |
Common stockholders' equity- | ||
Common stock - par value | 0.1 | 0.1 |
Common stock - shares authorized | 375,000,000 | 375,000,000 |
Common stock - shares outstanding | 304,835,407 | 304,835,407 |
4000 - CONSOLIDATED STATEMENTS
4000 - CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
NET INCOME | $523 | $540 |
Adjustments to reconcile net income to net cash from operating activities- | ||
Provision for depreciation | 362 | 332 |
Amortization of regulatory assets | 642 | 504 |
Deferral of regulatory assets | (136) | (203) |
Nuclear fuel and lease amortization | 52 | 51 |
Deferred purchased power and other costs | (135) | (95) |
Deferred income taxes and investment tax credits, net | 69 | 129 |
Investment impairment | 39 | 38 |
Deferred rents and lease market valuation liability | (59) | (101) |
Stock-based compensation | (2) | (72) |
Accrued compensation and retirement benefits | (93) | (140) |
Gain on asset sales | (12) | (41) |
Electric service prepayment programs | (10) | (39) |
Cash collateral, net | 48 | 67 |
Decrease (increase) in operating assets- | ||
Receivables | 32 | (136) |
Materials and supplies | 6 | (31) |
Prepaid taxes | (204) | (393) |
Increase (decrease) in operating liabilities- | ||
Accounts payable | (11) | 152 |
Accrued taxes | (101) | (190) |
Other | 92 | (53) |
Net cash provided from operating activities | 1,102 | 319 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Long-term debt | 1,679 | 549 |
Short-term borrowings, net | 1,705 | |
Long-term debt | (881) | (719) |
Net controlled disbursement activity | (15) | 8 |
Common stock dividend payments | (335) | (335) |
Other | (22) | 19 |
Net cash provided from financing activities | 426 | 1,227 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Property additions | (1,143) | (1,617) |
Proceeds from asset sales | 19 | 56 |
Sales of investment securities held in trusts | 1,001 | 726 |
Purchases of investment securities held in trusts | (1,041) | (775) |
Cash investments | 40 | 65 |
Other | (49) | (60) |
Net cash used for investing activities | (1,173) | (1,605) |
Net change in cash and cash equivalents | 355 | (59) |
Cash and cash equivalents at beginning of period | 545 | 129 |
Cash and cash equivalents at end of period | $900 | $70 |
6000 - ORGANIZATION AND BASIS O
6000 - ORGANIZATION AND BASIS OF PRESENTATION | |
6 Months Ended
Jun. 30, 2009 | |
Organization and Basis of Presentation [Abstract] | |
1. ORGANIZATION AND BASIS OF PRESENTATION | 1. ORGANIZATION AND BASIS OF PRESENTATION FirstEnergy is a diversified energy company that holds, directly or indirectly, all of the outstanding common stock of its principal subsidiaries: OE, CEI, TE, Penn (a wholly owned subsidiary of OE), ATSI, JCP&L, Met-Ed, Penelec, FENOC, FES and its subsidiaries FGCO and NGC, and FESC. FirstEnergy and its subsidiaries follow GAAP and comply with the regulations, orders, policies and practices prescribed by the SEC, the FERC and, as applicable, the PUCO, the PPUC and the NJBPU. 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 indicative of results of operations for any future period. In preparing the financial statements, FirstEnergy and its subsidiaries have evaluated events and transactions for potential recognition or disclosure through August 3, 2009, the date the financial statements were issued. These statements should be read in conjunction with the financial statements and notes included in the combined Annual Report on Form 10-K for the year ended December 31, 2008 for FirstEnergy, FES and the Utilities. The consolidated unaudited financial statements of FirstEnergy, FES and each of the Utilities reflect all normal recurring adjustments that, in the opinion of management, are necessary to fairly present results of operations for the interim periods. Certain prior year amounts have been reclassified to conform to the current year presentation. Unless otherwise indicated, defined terms used herein have the meanings set forth in the accompanying Glossary of Terms. FirstEnergy 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. FirstEnergy consolidates a VIE (see Note 6) when it is determined to be the VIE's primary beneficiary. Investments in non-consolidated affiliates over which FirstEnergy and its subsidiaries have the ability to exercise significant influence, but not control (20-50% owned companies, joint ventures and partnerships) 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 share of the entity's earnings is reported in the Consolidated Statements of Income. The consolidated financial statements as of June 30, 2009 and for the three-month and six-month periods ended June 30, 2009 and 2008, have been reviewed by PricewaterhouseCoopers LLP, an independent registered public accounting firm. Their report (dated August 3, 2009) is included herein. The report of PricewaterhouseCoopers LLP states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be |
6010 - EARNINGS PER SHARE
6010 - EARNINGS PER SHARE | |
6 Months Ended
Jun. 30, 2009 | |
Earnings Per Share [Abstract] | |
2. EARNINGS PER SHARE | 2. EARNINGS PER SHARE Basic earnings per share of common stock are computed using the weighted average of actual common shares outstanding during the respective period as the denominator. The denominator for diluted earnings per share 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. The following table reconciles basic and diluted earnings per share of common stock: Three Months Six Months Reconciliation of Basic and Diluted Earnings per ShareEnded June 30Ended June 30of Common Stock 2009 2008 2009 2008 (In millions, except per share amounts) Earnings available to FirstEnergy Corp. $414$263 $533$539 Average shares of common stock outstanding - Basic 304304 304304Assumed exercise of dilutive stock options and awards 13 23Average shares of common stock outstanding - Diluted 305307 306307 Basic earnings per share of common stock $1.36$0.86 $1.75$1.77Diluted earnings per share of common stock$1.36$0.85$1.75$1.75 Earnings in the second quarter of 2009 include a gain of $254 million ($0.52 per share) from the sale of FirstEnergy's nine percent interest in the stock and output of OVEC. |
6020 - FAIR VALUE MEASURES
6020 - FAIR VALUE MEASURES | |
6 Months Ended
Jun. 30, 2009 | |
Fair Value Measurements [Abstract] | |
3. FAIR VALUE OF FINANCIAL INSTRUMENTS | 3. FAIR VALUE OF FINANCIAL INSTRUMENTS (A)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 on the Consolidated Balance Sheets at cost, which approximates their fair market value, in the caption "short-term borrowings." The following table provides the approximate fair value and related carrying amounts of long-term debt and other long-term obligations as of June 30, 2009 and December 31, 2008: June 30, 2009December 31, 2008 CarryingFairCarryingFairValueValueValueValue(In millions)FirstEnergy$12,389$12,535$11,585$11,146FES2,5562,5592,5522,528OE1,1691,2331,2321,223CEI1,7231,8061,7411,618TE600621300244JCP&L1,8561,8731,5691,520Met-Ed842858542519Penelec679676779721 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 FES and the Utilities. (B)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 held-to-maturity securities and available-for-sale securities. FES and the Utilities periodically evaluate their investments for other-than-temporary impairment. They first consider their intent and ability to hold an equity investment until recovery and then consider, among other factors, the duration and the extent to which the security's fair value has been less than cost and the near-term financial prospects of the security issuer when evaluating an investment for impairment. For debt securities, in accordance with FSP FAS 115-2 and FAS 124-2, FES and the Utilities consider their intent to hold the security, the likelihood that they will be required to sell the security before recovery of its cost basis, and the likelihood of recovery of the security's entire amortized cost basis. Available-For-Sale Securities FES and the Utilities hold debt and equity securities within their nuclear decommissioning trusts, nuclear fuel disposal trusts and NUG trusts. These trust investments are classified as available-for-sale with the fair value representing quoted market prices. FES and the Utilities have no securities held for trading purposes. The following table summarizes the amortized cost basis, unrealized gains and losses and fair values of investments in available-for-sale securities as of June 30, 2009 and December 31, 2008: June 30, 2009(1)December 31, 2008(2) CostUnrealizedUnrealizedFairCostUnrealizedUnrealizedFairBasisGainsLossesValueBasisGainsLossesValueDebt securities(In millions)FirstEnergy(3)$1,181$44$-$1,225$1,078$56$-$1,134FES47625-50140128-429OE933-96869-95TE703-73668-74JCP&L2497-2562499-258Met-Ed1163-1191114-115Penelec1783-1811643-167Eq |
6030 - DERIVATIVE INSTRUMENTS
6030 - DERIVATIVE INSTRUMENTS | |
6 Months Ended
Jun. 30, 2009 | |
Derivative Instruments [Abstract] | |
4. DERIVATIVE INSTRUMENTS | 4. DERIVATIVE INSTRUMENTS FirstEnergy is exposed to financial risks resulting from fluctuating interest rates and commodity prices, including prices for electricity, natural gas, coal and energy transmission. To manage the volatility relating to these exposures, FirstEnergy uses a variety of derivative instruments, including forward contracts, options, futures contracts and swaps. The derivatives are used for risk management purposes. In addition to derivatives, FirstEnergy also enters into master netting agreements with certain third parties. FirstEnergy's Risk Policy Committee, comprised of members of senior management, provides general management oversight for risk management activities throughout FirstEnergy. They are responsible for promoting the effective design and implementation of sound risk management programs. They also oversee compliance with corporate risk management policies and established risk management practices. FirstEnergy accounts for derivative instruments on its Consolidated Balance Sheets at their fair value unless they meet the normal purchase and normal sales criteria. Derivatives that meet those criteria are accounted for at cost. The changes in the fair value of derivative instruments that do not meet the normal purchase and normal sales criteria are recorded as other expense, as AOCL, or as part of the value of the hedged item as described below. Interest Rate Derivatives Under the revolving credit facility, FirstEnergy incurs variable interest charges based on LIBOR. In 2008, FirstEnergy entered into swaps with a notional value of $300 million to hedge against changes in associated interest rates. Hedges with a notional value of $100 million expire in November 2009 and $100 million expire in November 2010. The swaps are accounted for as cash flow hedges under SFAS 133. As of June 30, 2009, the fair value of outstanding swaps was $(3) million. FirstEnergy uses forward starting swap agreements to hedge a portion of the consolidated interest rate risk associated with issuances of fixed-rate, long-term debt securities of its subsidiaries. These derivatives are treated as cash flow hedges, protecting against the risk of changes in future interest payments resulting from changes in benchmark U.S. Treasury rates between the date of hedge inception and the date of the debt issuance. During the first six months of 2009, FirstEnergy terminated forward swaps with a notional value of $100 million when a subsidiary issued long term debt. The gain associated with the termination was $1.3 million, of which $0.3 million was ineffective and recognized as an adjustment to interest expense. The remaining effective portion will be amortized to interest expense over the life of the hedged debt. As of June 30, 2009 and December 31, 2008, the fair value of outstanding interest rate derivatives was $(3) million. Interest rate derivatives are included in "Other Noncurrent Liabilities" on FirstEnergy's consolidated balance sheets. The effect of interest rate derivatives on the consolidated statements of income and comprehensive income during the three months and six months ended June 30, 2009 and 2008 were: Three MonthsSix Months Ended Ju |
6040 - PENSION AND OTHER POSTRE
6040 - PENSION AND OTHER POSTRETIREMENT BENEFITS | |
6 Months Ended
Jun. 30, 2009 | |
Pension and Other Postretirement Benefits [Abstract] | |
5. PENSION AND OTHER POSTRETIREMENT BENEFITS | 5. PENSION AND OTHER POSTRETIREMENT BENEFITS FirstEnergy provides noncontributory qualified defined benefit pension plans that cover substantially all of its employees and non-qualified pension plans that cover certain employees. The plans provide defined benefits based on years of service and compensation levels. FirstEnergy's funding policy is based on actuarial computations using the projected unit credit method. FirstEnergy uses a December 31 measurement date for its pension and other postretirement benefit plans. The fair value of the plan assets represents the actual market value as of December 31. FirstEnergy also provides a minimum amount of noncontributory life insurance to retired employees in addition to optional contributory insurance. Health care benefits, which include certain employee contributions, deductibles and co-payments, are available upon retirement to employees hired prior to January 1, 2005, their dependents and, under certain circumstances, their survivors. FirstEnergy recognizes the expected cost of providing pension benefits and other postretirement benefits from the time employees are hired until they become eligible to receive those benefits. In addition, FirstEnergy has obligations to former or inactive employees after employment, but before retirement, for disability-related benefits. On June 2, 2009, FirstEnergy amended its health care benefits plan (Plan) for all employees and retirees eligible to participate in the Plan. The Plan amendment, which reduces future health care coverage subsidies paid by FirstEnergy on behalf of participants, triggered a remeasurement of FirstEnergy's other postretirement benefit plans as of May 31, 2009. As a result of the remeasurement, the Plan's discount rate was revised to 7.5% while the expected long-term rate of return on assets remained at 9%. The remeasurement and Plan amendment increased FirstEnergy's accumulated other comprehensive income by $449 million in the second quarter of 2009 and will reduce FirstEnergy's net postretirement benefit cost (including amounts capitalized) for the remainder of 2009 by $48 million, including a $7 million reduction that is applicable to the second quarter of 2009. FirstEnergy's net pension and OPEB expenses (benefits) for the three months ended June 30, 2009 and 2008 were $38 million and $(15) million, respectively. For the six months ended June 30, 2009 and 2008, FirstEnergy's net pension and OPEB expenses (benefits) were $80 million and $(29) million, respectively. The components of FirstEnergy's net pension and other postretirement benefit costs (including amounts capitalized) for the three months and six months ended June 30, 2009 and 2008, consisted of the following: Three MonthsSix Months Ended June 30 Ended June 30 Pension Benefits 2009 2008 2009 2008 (In millions) Service cost $22$22$43$43Interest cost 80 75 159 150Expected return on plan assets (81)(116) (162) (231)Amortization of prior service cost 3 3 7 6Recognized net actuarial loss 42 2 85 4Net periodic cost (credit) $66$(14)$132$(28) Three MonthsSix Months Ended June 30 Ended June 30 Other Postretirement Benefits 2009 2008 2009 2008 (In millions) Service cost $4$5$8$9Int |
6050 - VARIABLE INTEREST ENTITI
6050 - VARIABLE INTEREST ENTITIES | |
6 Months Ended
Jun. 30, 2009 | |
Schedule of Variable Interest Entities [Abstract] | |
6. VARIABLE INTEREST ENTITIES | 6. VARIABLE INTEREST ENTITIES FirstEnergy and its subsidiaries consolidate VIEs when they are determined to be the VIE's primary beneficiary as defined by FIN 46R. Effective January 1, 2009, FirstEnergy adopted SFAS 160. As a result, FirstEnergy and its subsidiaries reflect the portion of VIEs not owned by them in the caption noncontrolling interest within the consolidated financial statements. The change in noncontrolling interest within the consolidated balance sheets is the result of earnings and losses of the noncontrolling interests and distribution to owners. Mining Operations On July 16, 2008, FEV entered into a joint venture with the Boich Companies, a Columbus, Ohio-based coal company, to acquire a majority stake in the Signal Peak mining and coal transportation operations near Roundup, Montana. FEV made a $125 million equity investment in the joint venture, which acquired 80% of the mining operations (Signal Peak Energy, LLC) and 100% of the transportation operations, with FEV owning a 45% economic interest and an affiliate of the Boich Companies owning a 55% economic interest in the joint venture. Both parties have a 50% voting interest in the joint venture. In March 2009, FEV agreed to pay a total of $8.5 million to affiliates of the Boich Companies to purchase an additional 5% economic interest in the Signal Peak mining and coal transportation operations. Voting interests remained unchanged after the sale was completed in July 2009. Effective January 16, 2010, the joint venture will have 18 months to exercise an option to acquire the remaining 20% stake in the mining operations. In accordance with FIN 46R, FEV consolidates the mining and transportation operations of this joint venture in its financial statements. Trusts FirstEnergy's consolidated financial statements include PNBV and Shippingport, VIEs created in 1996 and 1997, respectively, to refinance debt originally issued in connection with sale and leaseback transactions. PNBV and Shippingport financial data are included in the consolidated financial statements of OE and CEI, respectively. PNBV was established to purchase a portion of the lease obligation bonds issued in connection with OE's 1987 sale and leaseback of its interests in the Perry Plant and Beaver Valley Unit 2. OE used debt and available funds to purchase the notes issued by PNBV for the purchase of lease obligation bonds. Ownership of PNBV includes a 3% equity interest by an unaffiliated third party and a 3% equity interest held by OES Ventures, a wholly owned subsidiary of OE. Shippingport was established to purchase all of the lease obligation bonds issued in connection with CEI's and TE's Bruce Mansfield Plant sale and leaseback transaction in 1987. CEI and TE used debt and available funds to purchase the notes issued by Shippingport. Loss Contingencies FES and the Ohio Companies are exposed to losses under their applicable sale-leaseback agreements upon the occurrence of certain contingent events that each company considers unlikely to occur. The maximum exposure under these provisions represents the net amount of casualty value payments due upon the occurrence of specified casualty events that render th |
6060 - INCOME TAXES
6060 - INCOME TAXES | |
6 Months Ended
Jun. 30, 2009 | |
Income Tax [Abstract] | |
7. INCOME TAXES | 7. INCOME TAXES FirstEnergy accounts for uncertainty in income taxes recognized in its financial statements in accordance with FIN 48. This interpretation prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions taken or expected to be taken on a company's tax return. Upon completion of the federal tax examination for the 2007 tax year in the first quarter of 2009, FirstEnergy recognized $13 million in tax benefits, which favorably affected FirstEnergy's effective tax rate. During the second quarter of 2009 and the first six months of 2008, there were no material changes to FirstEnergy's unrecognized tax benefits. As of June 30, 2009, FirstEnergy expects that it is reasonably possible that $195 million of unrecognized benefits may be resolved within the next twelve months, of which approximately $148 million, if recognized, would affect FirstEnergy's effective tax rate. The potential decrease in the amount of unrecognized tax benefits is primarily associated with issues related to the capitalization of certain costs, gains and losses recognized on the disposition of assets and various other tax items. FIN 48 also requires companies to recognize interest expense or income related to uncertain tax positions. That amount is computed by applying the applicable statutory interest rate to the difference between the tax position recognized in accordance with FIN 48 and the amount previously taken or expected to be taken on the tax return. FirstEnergy includes net interest and penalties in the provision for income taxes. The net amount of accumulated interest accrued as of June 30, 2009 was $64 million, as compared to $59 million as of December 31, 2008. During the first six months of 2009 and 2008, there were no material changes to the amount of interest accrued. In 2008, FirstEnergy, on behalf of FGCO and NGC, filed a change in accounting method related to the costs to repair and maintain electric generation stations. During the second quarter of 2009, the IRS approved the change in accounting method and FGCO and NGC are in the process of computing the amount of costs that will qualify as a deduction. If the IRS completes its review process by the extended filing date of September 15, 2009, an amount for the repair deduction will be included in FirstEnergy's 2008 consolidated tax return. This change in accounting method could have a significant impact on taxable income for 2008 and could reduce the amount of taxes to be accrued in the third quarter of 2009, with no corresponding impact to the effective tax rate for the quarter. FirstEnergy has tax returns that are under review at the audit or appeals level by the IRS and state tax authorities. All state jurisdictions are open from 2001-2008. The IRS began reviewing returns for the years 2001-2003 in July 2004 and several items are under appeal. The federal audits for the years 2004-2006 were completed in 2008 and several items are under appeal. The IRS began auditing the year 2007 in February 2007 under its Compliance Assurance Process program and was completed in the first quarter of 2009 with two items under appeal. The IRS |
6070 - COMMITMENTS, GUARANTEES
6070 - COMMITMENTS, GUARANTEES AND CONTINGENCIES | |
6 Months Ended
Jun. 30, 2009 | |
Commitments, Guarantees and Contingencies [Abstract] | |
8. COMMITMENTS, GUARANTEES AND CONTINGENCIES | 8. COMMITMENTS, GUARANTEES AND CONTINGENCIES (A) GUARANTEES AND OTHER ASSURANCES As part of normal business activities, FirstEnergy enters into various agreements on behalf of its subsidiaries to provide financial or performance assurances to third parties. These agreements include contract guarantees, surety bonds and LOCs. As of June 30, 2009, outstanding guarantees and other assurances aggregated approximately $4.6 billion, consisting primarily of parental guarantees - $1.3 billion, subsidiaries' guarantees - $2.6 billion, surety bonds - $0.1 billion and LOCs - $0.5 billion. FirstEnergy guarantees energy and energy-related payments of its subsidiaries involved in energy commodity activities principally to facilitate or hedge normal physical transactions involving electricity, gas, emission allowances and coal. FirstEnergy also provides guarantees to various providers of credit support for the financing or refinancing by subsidiaries of costs related to the acquisition of property, plant and equipment. These agreements obligate FirstEnergy to fulfill the obligations of those subsidiaries directly involved in energy and energy-related transactions or financing where the law might otherwise limit the counterparties' claims. If demands of a counterparty were to exceed the ability of a subsidiary to satisfy existing obligations, FirstEnergy's guarantee enables the counterparty's legal claim to be satisfied by other FirstEnergy assets. The likelihood is remote that such parental guarantees of $0.4 billion (included in the $1.3 billion discussed above) as of June 30, 2009 would increase amounts otherwise payable by FirstEnergy to meet its obligations incurred in connection with financings and ongoing energy and energy-related activities. While these types of guarantees are normally parental commitments for the future payment of subsidiary obligations, subsequent to the occurrence of a credit rating downgrade or "material adverse event," the immediate posting of cash collateral, provision of an LOC or accelerated payments may be required of the subsidiary. As of June 30, 2009, FirstEnergy's maximum exposure under these collateral provisions was $601 million, consisting of $41 million due to "material adverse event" contractual clauses and $560 million due to a below investment grade credit rating. Additionally, stress case conditions of a credit rating downgrade or "material adverse event" and hypothetical adverse price movements in the underlying commodity markets would increase this amount to $700 million, consisting of $49 million due to "material adverse event" contractual clauses and $651 million due to a below investment grade credit rating. Most of FirstEnergy's surety bonds are backed by various indemnities common within the insurance industry. Surety bonds and related guarantees of $108 million provide additional assurance to outside parties that contractual and statutory obligations will be met in a number of areas including construction contracts, environmental commitments and various retail transactions. In addition to guarantees and surety bonds, FES' contracts, including power contracts with affiliates awarded through competitive bid |
6080 - REGULATORY MATTERS
6080 - REGULATORY MATTERS | |
6 Months Ended
Jun. 30, 2009 | |
Public Utilities [Abstract] | |
9. REGULATORY MATTERS | 9. REGULATORY MATTERS (A) RELIABILITY INITIATIVES In 2005, Congress amended the Federal Power Act to provide for federally-enforceable mandatory reliability standards. The mandatory reliability standards apply to the bulk power system and impose certain operating, record-keeping and reporting requirements on the Utilities and ATSI. The NERC is charged with establishing and enforcing these reliability standards, although it has delegated day-to-day implementation and enforcement of its responsibilities to eight regional entities, including ReliabilityFirst Corporation. All of FirstEnergy's facilities are located within the ReliabilityFirst region. FirstEnergy actively participates in the NERC and ReliabilityFirst stakeholder processes, and otherwise monitors and manages its companies in response to the ongoing development, implementation and enforcement of the reliability standards. FirstEnergy believes that it is in compliance with all currently-effective and enforceable reliability standards. Nevertheless, it is clear that the NERC, ReliabilityFirst and the FERC will continue to refine existing reliability standards as well as to develop and adopt new reliability standards. The financial impact of complying with new or amended standards cannot be determined at this time. However, the 2005 amendments to the Federal Power Act provide that all prudent costs incurred to comply with the new reliability standards be recovered in rates. Still, any future inability on FirstEnergy's part to comply with the reliability standards for its bulk power system could result in the imposition of financial penalties and thus have a material adverse effect on its financial condition, results of operations and cash flows. In April 2007, ReliabilityFirst performed a routine compliance audit of FirstEnergy's bulk-power system within the MISO region and found it to be in full compliance with all audited reliability standards. Similarly, in October 2008, ReliabilityFirst performed a routine compliance audit of FirstEnergy's bulk-power system within the PJM region and found it to be in full compliance with all audited reliability standards. On December 9, 2008, a transformer at JCP&L's Oceanview substation failed, resulting in an outage on certain bulk electric system (transmission voltage) lines out of the Oceanview and Atlantic substations, with customers in the affected area losing power. Power was restored to most customers within a few hours and to all customers within eleven hours. On December 16, 2008, JCP&L provided preliminary information about the event to certain regulatory agencies, including the NERC. On March 31, 2009, the NERC initiated a Compliance Violation Investigation in order to determine JCP&L's contribution to the electrical event and to review any potential violation of NERC Reliability Standards associated with the event. The initial phase of the investigation requires JCP&L to respond to the NERC's request for factual data about the outage. JCP&L submitted its written response on May 1, 2009. The NERC conducted on site interviews with personnel involved in responding to the event on June 16-17, 2009. On July 7, 2009, the NERC issued addition |
6090 - NEW ACCOUNTING STANDARDS
6090 - NEW ACCOUNTING STANDARDS AND INTERPRETATIONS | |
6 Months Ended
Jun. 30, 2009 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
10. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS | 10. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS FSP FAS 132 (R)-1 - "Employers' Disclosures about Postretirement Benefit Plan Assets" In December 2008, the FASB issued Staff Position FAS 132(R)-1, which provides guidance on an employer's disclosures about assets of a defined benefit pension or other postretirement plan. Requirements of this FSP include disclosures about investment policies and strategies, categories of plan assets, fair value measurements of plan assets, and significant categories of risk. This FSP is effective for fiscal years ending after December 15, 2009. FirstEnergy will expand its disclosures related to postretirement benefit plan assets as a result of this FSP. SFAS 166 - "Accounting for Transfers of Financial Assets - an amendment of FASB Statement No. 140" In June 2009, the FASB issued SFAS 166, which amends the derecognition guidance in SFAS 140 and eliminates the concept of a qualifying special-purpose entity (QSPE). It removes the exception from applying FIN 46R to QSPEs and requires an evaluation of all existing QSPEs to determine whether they must be consolidated in accordance with SFAS 167. This Statement is effective for financial asset transfers that occur in fiscal years beginning after November 15, 2009. FirstEnergy does not expect this Standard to have a material effect upon its financial statements. SFAS 167 - "Amendments to FASB Interpretation No. 46(R)" In June 2009, the FASB issued SFAS 167, which amends the consolidation guidance applied to VIEs. This Statement replaces the quantitative approach previously required to determine which entity has a controlling financial interest in a VIE with a qualitative approach. Under the new approach, the primary beneficiary of a VIE is the entity that has both (a) the power to direct the activities of the VIE that most significantly impact the entity's economic performance, and (b) the obligation to absorb losses of the entity, or the right to receive benefits from the entity, that could be significant to the VIE. SFAS 167 also requires ongoing reassessments of whether an entity is the primary beneficiary of a VIE and enhanced disclosures about an entity's involvement in VIEs. This Statement is effective for fiscal years beginning after November 15, 2009. FirstEnergy is currently evaluating the impact of adopting this Standard on its financial statements. SFAS 168 - "The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No. 162" In June 2009, the FASB issued SFAS 168, which recognizes the FASB Accounting Standards CodificationTM (Codification) as the source of authoritative GAAP. It also recognizes that rules and interpretative releases of the SEC under federal securities laws are sources of authoritative GAAP for SEC registrants. The Codification supersedes all non-SEC accounting and reporting standards. This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. This Statement will change how FirstEnergy references GAAP in its financial statement disclosures. |
6100 - SEGMENT INFORMATION
6100 - SEGMENT INFORMATION | |
6 Months Ended
Jun. 30, 2009 | |
Segment Information [Abstract] | |
11. SEGMENT INFORMATION | 11. SEGMENT INFORMATION FirstEnergy has three reportable operating segments: energy delivery services, competitive energy services and Ohio transitional generation services. The assets and revenues for all other business operations are below the quantifiable threshold for operating segments for separate disclosure as "reportable operating segments." FES and the Utilities do not have separate reportable operating segments. The energy delivery services segment designs, constructs, operates and maintains FirstEnergy's regulated transmission and distribution systems and is responsible for the regulated generation commodity operations of FirstEnergy's Pennsylvania and New Jersey electric utility subsidiaries. Its revenues are primarily derived from the delivery of electricity, cost recovery of regulatory assets, and default service electric generation sales to non-shopping customers in its Pennsylvania and New Jersey franchise areas. Its results reflect the commodity costs of securing electric generation from FES under Met-Ed's and Penelec's partial requirements purchased power agreements and from non-affiliated power suppliers as well as the net PJM transmission expenses related to the delivery of that generation load. The competitive energy services segment supplies electric power to its electric utility affiliates, provides competitive electricity sales primarily in Ohio, Pennsylvania, Maryland and Michigan, owns or leases and operates FirstEnergy's generating facilities and purchases electricity to meet its sales obligations. The segment's net income is primarily derived from affiliated and non-affiliated electric generation sales revenues less the related costs of electricity generation, including purchased power and net transmission (including congestion) and ancillary costs charged by PJM and MISO to deliver electricity to the segment's customers. The segment's internal revenues represent sales to its affiliates in Ohio and Pennsylvania. The Ohio transitional generation services segment represents the generation commodity operations of FirstEnergy's Ohio electric utility subsidiaries. Its revenues are primarily derived from electric generation sales to non-shopping customers under the PLR obligations of the Ohio Companies. Its results reflect the purchase of electricity from third parties and the competitive energy services segment through a CBP, the deferral and amortization of certain fuel costs authorized for recovery by the energy delivery services segment and the net MISO transmission revenues and expenses related to the delivery of generation load. This segment's total assets consist primarily of accounts receivable for generation revenues from retail customers. Segment Financial Information OhioEnergyCompetitiveTransitionalDeliveryEnergyGenerationReconcilingThree Months EndedServicesServicesServicesOtherAdjustmentsConsolidated(In millions)June 30, 2009External revenues $1,924 $504 $868 $5 $(30) $3,271 Internal revenues - 839 - - (839) - Total revenues 1,924 1,343 868 5 (869) 3,271 Depreciation and amortization 294 68 4 3 4 373 Investment income 35 6 - - (14) 27 Net interest charges 113 18 - 2 40 173 Income taxes 89 185 14 (20) (20) 2 |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 | |
Document Information [Line Items] | |
Document Type | 10-Q |
Document Period End Date | 2009-06-30 |
Amendment Flag | false |
Entity Information
Entity Information (USD $) | |
6 Months Ended
Jun. 30, 2009 | |
Entity Information [Line Items] | |
Entity Registrant Name | FirstEnergy Corp. |
Entity Central Index Key | 0001031296 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Public Float | $11,781,523,704 |
Entity Common Stock, Shares Outstanding | 304,835,407 |