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Derivative Instruments (Tables)
 3 Months Ended
Mar. 31, 2016
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
 
March 31,
2016
 
December 31,
2015
 
 
March 31,
2016
 
December 31,
2015
 
(In millions)
 
 
(In millions)
Current Assets - Derivatives
 
 
 
 
Current Liabilities - Derivatives
 
 
 
Commodity Contracts
$
205

 
$
150

 
Commodity Contracts
$
(109
)
 
$
(94
)
FTRs
2

 
7

 
FTRs
(8
)
 
(12
)
 
207

 
157

 
 
(117
)
 
(106
)
 
 
 
 
 
 
 
 
 
Deferred Charges and Other Assets - Other
 
 
 
 
Noncurrent Liabilities - Adverse Power Contract Liability
 
 
 
 
 
 
 
NUGs(1)
(136
)
 
(137
)
Commodity Contracts
88

 
78

 
Noncurrent Liabilities - Other
 
 
 
FTRs
1

 
1

 
Commodity Contracts
(20
)
 
(37
)
NUGs(1)
1

 
1

 
FTRs
(1
)
 
(1
)
 
90

 
80

 
 
(157
)
 
(175
)
Derivative Assets
$
297

 
$
237

 
Derivative Liabilities
$
(274
)
 
$
(281
)


(1) 
NUG contracts are subject to regulatory accounting treatment and do not impact earnings.
Offsetting assets and liabilities
The following tables summarize the fair value of derivative assets and derivative liabilities 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
 
 
March 31, 2016
 
Fair Value
 
Derivative Instruments
 
Cash Collateral (Received)/Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
293

 
$
(128
)
 
$
(25
)
 
$
140

FTRs
 
3

 
(3
)
 
—

 
—

NUG contracts
 
1

 
—

 
—

 
1

 
 
$
297

 
$
(131
)
 
$
(25
)
 
$
141

 
 
 
 
 
 
 
 
 
Derivative Liabilities 
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(129
)
 
$
128

 
$
—

 
$
(1
)
FTRs
 
(9
)
 
3

 
6

 
—

NUG contracts
 
(136
)
 
—

 
—

 
(136
)
 
 
$
(274
)
 
$
131

 
$
6

 
$
(137
)
 
 
 
 
 
 
 
 
 


 
 
 
 
Amounts Not Offset in Consolidated Balance Sheet
 
 
December 31, 2015
 
Fair Value
 
Derivative Instruments
 
Cash Collateral (Received)/Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
228

 
$
(125
)
 
$
—

 
$
103

FTRs
 
8

 
(8
)
 
—

 
—

NUG contracts
 
1

 
—

 
—

 
1

 
 
$
237

 
$
(133
)
 
$
—

 
$
104

 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(131
)
 
$
125

 
$
3

 
$
(3
)
FTRs
 
(13
)
 
8

 
5

 
—

NUG contracts
 
(137
)
 
—

 
—

 
(137
)
 
 
$
(281
)
 
$
133

 
$
8

 
$
(140
)
Volume of First Energy's outstanding derivative transactions
The following table summarizes the volumes associated with FirstEnergy’s outstanding derivative transactions as of March 31, 2016:

 
Purchases
 
Sales
 
Net
 
Units
 
(In millions)
Power Contracts
14

 
42

 
(28
)
 
MWH
FTRs
15

 
—

 
15

 
MWH
NUGs
4

 
—

 
4

 
MWH
Natural Gas
81

 
1

 
80

 
mmBTU
Effect of derivative instruments on statements of income and comprehensive income
The effect of active derivative instruments not in a hedging relationship on the Consolidated Statements of Income during the three months ended March 31, 2016 and 2015, are summarized in the following tables:

 
Three Months Ended March 31
 
Commodity Contracts
 
FTRs
 
Total
 
(In millions)
2016
 

 
 

 
 

Unrealized Gain Recognized in:
 

 
 

 
 

Other Operating Expense (1)
$
62

 
$
2

 
$
64

 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 

Revenues (1)
$
71

 
$
2

 
$
73

Purchased Power Expense (1)
(45
)
 
—

 
(45
)
Other Operating Expense (1)
—

 
(12
)
 
(12
)
Fuel Expense
(8
)
 
—

 
(8
)
 
 
 
 
 
 
(1) All amounts are associated with FES.
 
 
 
 
 
 
 
Three Months Ended March 31
 
Commodity Contracts
 
FTRs
 
Total
 
(In millions)
2015
 

 
 

 
 

Unrealized Gain (Loss) Recognized in:
 

 
 

 
 

Other Operating Expense (2)
$
11

 
$
(13
)
 
$
(2
)
 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 

Revenues (3)
$
(1
)
 
$
37

 
$
36

Purchased Power Expense (4)
(3
)
 
—

 
(3
)
Other Operating Expense (5)
—

 
(13
)
 
(13
)
Fuel Expense
(16
)
 
—

 
(16
)
 
 
 
 
 
 
(2) Includes $11 million for commodity contracts and ($12) million for FTRs associated with FES.
(3) Represents losses on structured financial contracts. Includes ($1) million for commodity contracts and $36 million for FTRs associated with FES.
(4) Realized losses on financially settled wholesale sales contracts of $22 million were netted in purchased power. Includes ($3) million for commodity contracts associated with FES.
(5) Includes ($13) million for FTRs associated with FES.
 
 
 
 
 
 
 
 
Reconciliation of changes in the fair value of certain contracts that are deferred
The following table provides a reconciliation of changes in the fair value of FirstEnergy's derivative instruments subject to regulatory accounting during the three months ended March 31, 2016 and 2015. Changes in the value of these instruments are deferred for future recovery from (or credit to) customers:
 
 
Three Months Ended March 31
Derivatives Not in a Hedging Relationship with Regulatory Offset
 
NUGs
 
Regulated FTRs
 
Total
 
 
(In millions)
Outstanding net asset (liability) as of January 1, 2016
 
$
(136
)
 
$
1

 
$
(135
)
Unrealized loss
 
(12
)
 
(1
)
 
(13
)
Settlements
 
13

 
(2
)
 
11

Outstanding net asset (liability) as of March 31, 2016
 
$
(135
)
 
$
(2
)
 
$
(137
)
 
 
 
 
 
 
 
Outstanding net asset (liability) as of January 1, 2015
 
$
(151
)
 
$
11

 
$
(140
)
Unrealized gain (loss)
 
(8
)
 
1

 
(7
)
Settlements
 
11

 
(11
)
 
—

Outstanding net asset (liability) as of March 31, 2015
 
$
(148
)
 
$
1

 
$
(147
)