Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair value of derivatives instruments

The following table summarizes the fair value and classification of derivative instruments on FirstEnergy’s Consolidated Balance Sheets:

Derivative Assets					Derivative Liabilities
	Fair Value					Fair Value
	September 30, 2013		December 31, 2012			September 30, 2013			December 31, 2012
	(In millions)					(In millions)
Current Assets - Derivatives					Current Liabilities - Derivatives
Commodity Contracts	$	137	$	153	Commodity Contracts	$	(94	)	$	(119	)
FTRs	3		7		FTRs	(11		)	(7		)
	140		160			(105		)	(126		)
					Noncurrent Liabilities - Adverse Power Contract Liability
					NUGs	(233		)	(290		)
Deferred Charges and Other Assets - Other					LCAAP	(166		)	(144		)
Commodity Contracts	64		99		Noncurrent Liabilities - Other
FTRs	—		1		Commodity Contracts	(18		)	(36		)
NUGs	23		36		FTRs	(3		)	(2		)
	87		136			(420		)	(472		)
Derivative Assets	$	227	$	296	Derivative Liabilities	$	(525	)	$	(598	)

Offsetting assets and liabilities

The following tables summarize the fair value of derivative instruments on FirstEnergy’s Consolidated Balance Sheets and the effect of netting arrangements and collateral on its financial position:

				Amounts Not Offset in Consolidated Balance Sheet
September 30, 2013	Fair Value			Derivative Instruments			Cash Collateral (Received)/Pledged			Net Fair Value
	(In millions)
Derivative Assets
Commodity contracts	$	201		$	(104	)	$	(11	)	$	86
FTRs	3			(3		)	—			—
NUG contracts	23			—			—			23
	$	227		$	(107	)	$	(11	)	$	109
Derivative Liabilities
Commodity contracts	$	(112	)	$	104		$	5		$	(3	)
FTRs	(14		)	3			6			(5		)
NUG contracts	(233		)	—			—			(233		)
LCAPP contracts	(166		)	—			—			(166		)
	$	(525	)	$	107		$	11		$	(407	)

				Amounts Not Offset in Consolidated Balance Sheet
December 31, 2012	Fair Value			Derivative Instruments			Cash Collateral (Received)/Pledged			Net Fair Value
	(In millions)
Derivative Assets
Commodity contracts	$	252		$	(142	)	$	(5	)	$	105
FTRs	8			(8		)	—			—
NUG contracts	36			—			—			36
	$	296		$	(150	)	$	(5	)	$	141
Derivative Liabilities
Commodity contracts	$	(155	)	$	142		$	12		$	(1	)
FTRs	(9		)	8			1			—
NUG contracts	(290		)	—			—			(290		)
LCAPP contracts	(144		)	—			—			(144		)
	$	(598	)	$	150		$	13		$	(435	)

Volume of First Energy's outstanding derivative transactions

The following table summarizes the volumes associated with FirstEnergy’s outstanding derivative transactions as of September 30, 2013:

	Purchases	Sales	Net		Units
	(In millions, except for LCAPP)
Power Contracts	32	37	(5	)	MWH
FTRs	59	—	59		MWH
NUGs	11	—	11		MWH
LCAPP	408	—	408		MW
Natural Gas	64	—	64		mmBTU

Effect of derivative instruments on statements of income and comprehensive income

The effect of derivative instruments not in a hedging relationship on the Consolidated Statements of Income during the three months and nine months ended September 30, 2013 and 2012, are summarized in the following tables:

	Three Months Ended September 30
	Commodity Contracts			FTRs			Interest Rate Swaps		Total
	(In millions)
2013
Unrealized Gain (Loss) Recognized in:
Other Operating Expense	$	11		$	(8	)	$	—	$	3
Realized Gain (Loss) Reclassified to:
Revenues	$	14		$	6		$	—	$	20
Purchased Power Expense	(17		)	—			—		(17		)
Other Operating Expense	—			(10		)	—		(10		)
Fuel Expense	(2		)	—			—		(2		)
2012
Unrealized Gain (Loss) Recognized in:
Other Operating Expense	$	7		$	(5	)	$	—	$	2
Interest Expense	—			—			20		20
Realized Gain (Loss) Reclassified to:
Revenues	$	46		$	6		$	—	$	52
Purchased Power Expense	(27		)	—			—		(27		)
Other Operating Expense	—			(10		)	—		(10		)
Fuel Expense	3			—			—		3
Interest Expense	—			—			6		6

	Nine Months Ended September 30
	Commodity Contracts			FTRs			Interest Rate Swaps		Total
	(In millions)
2013
Unrealized Loss Recognized in:
Other Operating Expense	$	(5	)	$	(10	)	$	—	$	(15	)
Realized Gain (Loss) Reclassified to:
Revenues	$	29		$	19		$	—	$	48
Purchased Power Expense	(30		)	—			—		(30		)
Other Operating Expense	—			(28		)	—		(28		)
2012
Unrealized Gain Recognized in:
Other Operating Expense	$	72		$	12		$	—	$	84
Realized Gain (Loss) Reclassified to:
Revenues	$	260		$	18		$	—	$	278
Purchased Power Expense	(248		)	—			—		(248		)
Other Operating Expense	—			(51		)	—		(51		)
Fuel Expense	2			—			—		2
Interest Expense	—			—			6		6

Derivative instruments subject to regulatory accounting

The unrealized and realized gains (losses) on FirstEnergy’s derivative instruments subject to regulatory accounting during the three and nine months ended September 30, 2013 and 2012, are summarized in the following tables:

	Three Months Ended September 30
Derivatives Not in a Hedging Relationship with Regulatory Offset	NUGs			LCAPP			Regulated FTRs			Total
	(In millions)
2013
Unrealized Gain (Loss) on Derivative Instrument	$	7		$	(8	)	$	1		$	—
Realized Gain (Loss) on Derivative Instrument	14			—			(1		)	13
2012
Unrealized Gain (Loss) on Derivative Instrument	$	(50	)	$	3		$	—		$	(47	)
Realized Gain (Loss) on Derivative Instrument	61			—			(1		)	60

	Nine Months Ended September 30
Derivatives Not in a Hedging Relationship with Regulatory Offset	NUGs			LCAPP			Regulated FTRs			Total
	(In millions)
2013
Unrealized Gain (Loss) on Derivative Instrument	$	(13	)	$	(22	)	$	1		$	(34	)
Realized Gain (Loss) on Derivative Instrument	57			—			(1		)	56
2012
Unrealized Loss on Derivative Instrument	$	(183	)	$	(142	)	$	—		$	(325	)
Realized Gain on Derivative Instrument	194			—			7			201

Reconciliation of changes in the fair value of certain contracts that are deferred

The following tables provide a reconciliation of changes in the fair value of certain contracts that are deferred for future recovery from (or credit to) customers during the three months and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30
Derivatives Not in a Hedging Relationship with Regulatory Offset	NUGs			LCAPP			Regulated FTRs			Total
	(In millions)
Outstanding net liability as of July 1, 2013	$	(231	)	$	(158	)	$	—		$	(389	)
Additions/Change in value of existing contracts	7			(8		)	1			—
Settled contracts	14			—			(1		)	13
Outstanding net liability as of September 30, 2013	$	(210	)	$	(166	)	$	—		$	(376	)
Outstanding net liability as of July 1, 2012	$	(293	)	$	(145	)	$	—		$	(438	)
Additions/Change in value of existing contracts	(50		)	3			—			(47		)
Settled contracts	61			—			(1		)	60
Outstanding net liability as of September 30, 2012	$	(282	)	$	(142	)	$	(1	)	$	(425	)

	Nine Months Ended September 30
Derivatives Not in a Hedging Relationship with Regulatory Offset	NUGs			LCAPP			Regulated FTRs			Total
	(In millions)
Outstanding net liability as of January 1, 2013	$	(254	)	$	(144	)	$	—		$	(398	)
Additions/Change in value of existing contracts	(13		)	(22		)	1			(34		)
Settled contracts	57			—			(1		)	56
Outstanding net liability as of September 30, 2013	$	(210	)	$	(166	)	$	—		$	(376	)
Outstanding net liability as of January 1, 2012	$	(293	)	$	—		$	(8	)	$	(301	)
Additions/Change in value of existing contracts	(183		)	(142		)	—			(325		)
Settled contracts	194			—			7			201
Outstanding net liability as of September 30, 2012	$	(282	)	$	(142	)	$	(1	)	$	(425	)