Fair Value Measurements (Tables)
|
9 Months Ended |
Sep. 30, 2016 |
|---|
| Fair Value of Financial Instruments [Line Items] |
|
| Assets and liabilities measured on recurring basis |
The following tables set forth the recurring assets and liabilities that are accounted for at fair value by level within the fair value hierarchy:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | FirstEnergy | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Recurring Fair Value Measurements | September 30, 2016 | | December 31, 2015 | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | Assets | (In millions) | Corporate debt securities | $ | — |
| | $ | 1,242 |
| | $ | — |
| | $ | 1,242 |
| | $ | — |
| | $ | 1,245 |
| | $ | — |
| | $ | 1,245 |
| Derivative assets - commodity contracts | 7 |
| | 230 |
| | — |
| | 237 |
| | 4 |
| | 224 |
| | — |
| | 228 |
| Derivative assets - FTRs | — |
| | — |
| | 13 |
| | 13 |
| | — |
| | — |
| | 8 |
| | 8 |
| Derivative assets - NUG contracts(1) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1 |
| | 1 |
| Equity securities(2) | 908 |
| | — |
| | — |
| | 908 |
| | 576 |
| | — |
| | — |
| | 576 |
| Foreign government debt securities | — |
| | 77 |
| | — |
| | 77 |
| | — |
| | 75 |
| | — |
| | 75 |
| U.S. government debt securities | — |
| | 173 |
| | — |
| | 173 |
| | — |
| | 180 |
| | — |
| | 180 |
| U.S. state debt securities | — |
| | 255 |
| | — |
| | 255 |
| | — |
| | 246 |
| | — |
| | 246 |
| Other(3) | 551 |
| | 126 |
| | — |
| | 677 |
| | 105 |
| | 212 |
| | — |
| | 317 |
| Total assets | $ | 1,466 |
| | $ | 2,103 |
| | $ | 13 |
| | $ | 3,582 |
| | $ | 685 |
| | $ | 2,182 |
| | $ | 9 |
| | $ | 2,876 |
| | | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | | | | | | Derivative liabilities - commodity contracts | $ | (12 | ) | | $ | (122 | ) | | $ | — |
| | $ | (134 | ) | | $ | (9 | ) | | $ | (122 | ) | | $ | — |
| | $ | (131 | ) | Derivative liabilities - FTRs | — |
| | — |
| | (7 | ) | | (7 | ) | | — |
| | — |
| | (13 | ) | | (13 | ) | Derivative liabilities - NUG contracts(1) | — |
| | — |
| | (118 | ) | | (118 | ) | | — |
| | — |
| | (137 | ) | | (137 | ) | Total liabilities | $ | (12 | ) | | $ | (122 | ) | | $ | (125 | ) | | $ | (259 | ) | | $ | (9 | ) | | $ | (122 | ) | | $ | (150 | ) | | $ | (281 | ) | | | | | | | | | | | | | | | | | Net assets (liabilities)(4) | $ | 1,454 |
| | $ | 1,981 |
| | $ | (112 | ) | | $ | 3,323 |
| | $ | 676 |
| | $ | 2,060 |
| | $ | (141 | ) | | $ | 2,595 |
|
| | (1) | NUG contracts are subject to regulatory accounting treatment and do not impact earnings. |
| | (2) | NDT funds hold equity portfolios whose performance is benchmarked against the Alerian MLP Index or the Wells Fargo Hybrid and Preferred Securities REIT index. |
| | (3) | Primarily consists of short-term cash investments. |
| | (4) | Excludes $(8) million and $7 million as of September 30, 2016 and December 31, 2015, respectively, of receivables, payables, taxes and accrued income associated with financial instruments reflected within the fair value table. |
|
| Reconciliation of changes in the fair value roll forward of level 3 measurements of NUG contracts |
The following table provides a reconciliation of changes in the fair value of NUG contracts and FTRs that are classified as Level 3 in the fair value hierarchy for the periods ended September 30, 2016 and December 31, 2015:
| | | | | | | | | | | | | | | | | | | | | | | | | | NUG Contracts(1) | | FTRs | | Derivative Assets | | Derivative Liabilities | | Net | | Derivative Assets | | Derivative Liabilities | | Net | | (In millions) | January 1, 2015 Balance | $ | 2 |
| | $ | (153 | ) | | $ | (151 | ) | | $ | 39 |
| | $ | (14 | ) | | $ | 25 |
| Unrealized gain (loss) | 2 |
| | (49 | ) | | (47 | ) | | (5 | ) | | (7 | ) | | (12 | ) | Purchases | — |
| | — |
| | — |
| | 22 |
| | (11 | ) | | 11 |
| Settlements | (3 | ) | | 65 |
| | 62 |
| | (48 | ) | | 19 |
| | (29 | ) | December 31, 2015 Balance | $ | 1 |
| | $ | (137 | ) | | $ | (136 | ) | | $ | 8 |
| | $ | (13 | ) | | $ | (5 | ) | Unrealized gain (loss) | — |
| | (17 | ) | | (17 | ) | | (8 | ) | | 1 |
| | (7 | ) | Purchases | — |
| | — |
| | — |
| | 17 |
| | (8 | ) | | 9 |
| Settlements | (1 | ) | | 36 |
| | 35 |
| | (4 | ) | | 13 |
| | 9 |
| September 30, 2016 Balance | $ | — |
| | $ | (118 | ) | | $ | (118 | ) | | $ | 13 |
| | $ | (7 | ) | | $ | 6 |
|
| | (1) | NUG contracts are subject to regulatory accounting treatment and do not impact earnings. |
|
| Quantitative information for level 3 valuation |
The following table provides quantitative information for FTRs and NUG contracts that are classified as Level 3 in the fair value hierarchy for the period ended September 30, 2016: | | | | | | | | | | | | | | | | | | | Fair Value, Net (In millions) | | Valuation
Technique | | Significant Input | | Range | | Weighted Average | | Units | FTRs | | $ | 6 |
| | Model | | RTO auction clearing prices | | $(2.20) to $7.60 | | $1.00 | | Dollars/MWH | | | | | | | | | | | | | | NUG Contracts | | $ | (118 | ) | | Model | | Generation | | 400 to 3,207,000 | | 661,000 |
| | MWH | | | | Regional electricity prices | | $30.90 to $35.30 | | $32.10 | | Dollars/MWH |
|
| 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 (there were no unrealized losses) and fair values of investments held in NDT and nuclear fuel disposal trusts as of September 30, 2016 and December 31, 2015:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2016(1) | | December 31, 2015(2) | | | Cost Basis | | Unrealized Gains | | Fair Value | | Cost Basis | | Unrealized Gains | | Fair Value | | | (In millions) | Debt securities | | | | | | | | | | | | | FirstEnergy | | $ | 1,728 |
| | $ | 69 |
| | $ | 1,797 |
| | $ | 1,778 |
| | $ | 16 |
|
| $ | 1,794 |
| FES | | 834 |
| | 45 |
| | 879 |
| | 801 |
| | 9 |
| | 810 |
| | | | | | | | | | | | | | Equity securities | | | | | | | | | | | | | FirstEnergy | | $ | 816 |
| | $ | 92 |
| | $ | 908 |
| | $ | 542 |
| | $ | 34 |
| | $ | 576 |
| FES | | 561 |
| | 63 |
| | 624 |
| | 354 |
| | 24 |
| | 378 |
|
| | (1) | Excludes short-term cash investments: FirstEnergy - $50 million; FES - $39 million. |
| | (2) | Excludes short-term cash investments: FirstEnergy - $157 million; FES - $139 million. |
|
| Proceeds from the sale of investments in available-for-sale securities, realized gains and losses on those sales, and interest and dividend income |
Proceeds from the sale of investments in AFS securities, realized gains and losses on those sales, OTTI and interest and dividend income for the three and nine months ended September 30, 2016 and 2015 were as follows:
| | | | | | | | | | | | | | | | | | | | | | For the Three Months Ended | September 30, 2016 | | Sale Proceeds | | Realized Gains | | Realized Losses | | OTTI | | Interest and Dividend Income | | | (In millions) | FirstEnergy | | $ | 337 |
| | $ | 36 |
| | $ | (15 | ) | | $ | (3 | ) | | $ | 27 |
| FES | | 135 |
| | 23 |
| | (6 | ) | | (3 | ) | | 16 |
| | | | | | | | | | | | September 30, 2015 | | Sale Proceeds | | Realized Gains | | Realized Losses | | OTTI | | Interest and Dividend Income | | | (In millions) | FirstEnergy | | $ | 307 |
| | $ | 33 |
| | $ | (32 | ) | | $ | (46 | ) | | $ | 25 |
| FES | | 127 |
| | 28 |
| | (24 | ) | | (41 | ) | | 14 |
| | | | | | | | | | | | | | | | | | | | | | | For the Nine Months Ended | September 30, 2016 | | Sale Proceeds | | Realized Gains | | Realized Losses | | OTTI | | Interest and Dividend Income | | | (In millions) | FirstEnergy | | $ | 1,361 |
| | $ | 131 |
| | $ | (88 | ) | | $ | (13 | ) | | $ | 75 |
| FES | | 576 |
| | 90 |
| | (49 | ) | | (12 | ) | | 42 |
| | | | | | | | | | | | September 30, 2015 | | Sale Proceeds | | Realized Gains | | Realized Losses | | OTTI | | Interest and Dividend Income | | | (In millions) | FirstEnergy | | $ | 1,126 |
| | $ | 135 |
| | $ | (121 | ) | | $ | (70 | ) | | $ | 75 |
| FES | | 503 |
| | 98 |
| | (79 | ) | | (63 | ) | | 43 |
|
|
| Fair value and related carrying amounts of long-term debt and other long-term obligations |
The following table provides the approximate fair value and related carrying amounts of long-term debt and other long-term obligations, excluding capital lease obligations and net unamortized debt issuance costs, premiums and discounts:
| | | | | | | | | | | | | | | | | | September 30, 2016 | | December 31, 2015 | | Carrying Value | | Fair Value | | Carrying Value | | Fair Value | | (In millions) | FirstEnergy | $ | 19,745 |
| | $ | 21,465 |
| | $ | 20,244 |
| | $ | 21,519 |
| FES | 3,003 |
| | 2,662 |
| | 3,027 |
| | 3,121 |
|
|
| FES |
|
| Fair Value of Financial Instruments [Line Items] |
|
| Assets and liabilities measured on recurring basis |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | FES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Recurring Fair Value Measurements | September 30, 2016 | | December 31, 2015 | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | Assets | (In millions) | Corporate debt securities | $ | — |
| | $ | 714 |
| | $ | — |
| | $ | 714 |
| | $ | — |
| | $ | 678 |
| | $ | — |
| | $ | 678 |
| Derivative assets - commodity contracts | 7 |
| | 230 |
| | — |
| | 237 |
| | 4 |
| | 224 |
| | — |
| | 228 |
| Derivative assets - FTRs | — |
| | — |
| | 7 |
| | 7 |
| | — |
| | — |
| | 5 |
| | 5 |
| Equity securities(1) | 624 |
| | — |
| | — |
| | 624 |
| | 378 |
| | — |
| | — |
| | 378 |
| Foreign government debt securities | — |
| | 59 |
| | — |
| | 59 |
| | — |
| | 59 |
| | — |
| | 59 |
| U.S. government debt securities | — |
| | 53 |
| | — |
| | 53 |
| | — |
| | 23 |
| | — |
| | 23 |
| U.S. state debt securities | — |
| | 4 |
| | — |
| | 4 |
| | — |
| | 4 |
| | — |
| | 4 |
| Other(2) | 2 |
| | 87 |
| | — |
| | 89 |
| | — |
| | 184 |
| | — |
| | 184 |
| Total assets | $ | 633 |
| | $ | 1,147 |
| | $ | 7 |
| | $ | 1,787 |
| | $ | 382 |
| | $ | 1,172 |
| | $ | 5 |
| | $ | 1,559 |
| | | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | | | | | | Derivative liabilities - commodity contracts | $ | (12 | ) | | $ | (122 | ) | | $ | — |
| | $ | (134 | ) | | $ | (9 | ) | | $ | (122 | ) | | $ | — |
| | $ | (131 | ) | Derivative liabilities - FTRs | — |
| | — |
| | (5 | ) | | (5 | ) | | — |
| | — |
| | (11 | ) | | (11 | ) | Total liabilities | $ | (12 | ) | | $ | (122 | ) | | $ | (5 | ) | | $ | (139 | ) | | $ | (9 | ) | | $ | (122 | ) | | $ | (11 | ) | | $ | (142 | ) | | | | | | | | | | | | | | | | | Net assets (liabilities)(3) | $ | 621 |
| | $ | 1,025 |
| | $ | 2 |
| | $ | 1,648 |
| | $ | 373 |
| | $ | 1,050 |
| | $ | (6 | ) | | $ | 1,417 |
|
| | (1) | NDT funds hold equity portfolios whose performance is benchmarked against the Alerian MLP Index or the Wells Fargo Hybrid and Preferred Securities REIT index. |
| | (2) | Primarily consists of short-term cash investments. |
| | (3) | Excludes $1 million as of September 30, 2016 and December 31, 2015, of receivables, payables, taxes and accrued income associated with the financial instruments reflected within the fair value table. |
|
| Reconciliation of changes in the fair value roll forward of level 3 measurements of NUG contracts |
The following table provides a reconciliation of changes in the fair value of FTRs held by FES and classified as Level 3 in the fair value hierarchy for the periods ended September 30, 2016 and December 31, 2015:
| | | | | | | | | | | | | | | | Derivative Asset | | Derivative Liability | | Net Asset (Liability) | | | (In millions) | January 1, 2015 Balance | | $ | 27 |
| | $ | (13 | ) | | $ | 14 |
| Unrealized gain (loss) | | 2 |
| | (5 | ) | | (3 | ) | Purchases | | 9 |
| | (10 | ) | | (1 | ) | Settlements | | (33 | ) | | 17 |
| | (16 | ) | December 31, 2015 Balance | | $ | 5 |
| | $ | (11 | ) | | $ | (6 | ) | Unrealized gain (loss) | | (7 | ) | | 1 |
| | (6 | ) | Purchases | | 10 |
| | (5 | ) | | 5 |
| Settlements | | (1 | ) | | 10 |
| | 9 |
| September 30, 2016 Balance | | $ | 7 |
| | $ | (5 | ) | | $ | 2 |
|
|
| Quantitative information for level 3 valuation |
The following table provides quantitative information for FTRs held by FES that are classified as Level 3 in the fair value hierarchy for the period ended September 30, 2016: | | | | | | | | | | | | | | | | | | Fair Value, Net (In millions) | | Valuation
Technique | | Significant Input | | Range | | Weighted Average | | Units | FTRs | | $ | 2 |
| | Model | | RTO auction clearing prices | | ($2.20) to $7.60 | | $0.70 | | Dollars/MWH |
|