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Derivative Instruments (Tables)
 9 Months Ended
Sep. 30, 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
 
September 30,
2016
 
December 31,
2015
 
 
September 30,
2016
 
December 31,
2015
 
(In millions)
 
 
(In millions)
Current Assets - Derivatives
 
 
 
 
Current Liabilities - Derivatives
 
 
 
Commodity Contracts
$
139

 
$
150

 
Commodity Contracts
$
(84
)
 
$
(94
)
FTRs
13

 
7

 
FTRs
(7
)
 
(12
)
 
152

 
157

 
 
(91
)
 
(106
)
 
 
 
 
 
 
 
 
 
Deferred Charges and Other Assets - Other
 
 
 
 
Noncurrent Liabilities - Adverse Power Contract Liability
 
 
 
 
 
 
 
 
NUGs(1)
(118
)
 
(137
)
Commodity Contracts
98

 
78

 
Noncurrent Liabilities - Other
 
 
 
FTRs
—

 
1

 
Commodity Contracts
(50
)
 
(37
)
NUGs(1)
—

 
1

 
FTRs
—

 
(1
)
 
98

 
80

 
 
(168
)
 
(175
)
Derivative Assets
$
250

 
$
237

 
Derivative Liabilities
$
(259
)
 
$
(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
 
 
September 30, 2016
 
Fair Value
 
Derivative Instruments
 
Cash Collateral (Received)/Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
237

 
$
(120
)
 
$
(22
)
 
$
95

FTRs
 
13

 
(7
)
 
—

 
6

NUG contracts
 
—

 
—

 
—

 
—

 
 
$
250

 
$
(127
)
 
$
(22
)
 
$
101

 
 
 
 
 
 
 
 
 
Derivative Liabilities 
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(134
)
 
$
120

 
$
8

 
$
(6
)
FTRs
 
(7
)
 
7

 
—

 
—

NUG contracts
 
(118
)
 
—

 
—

 
(118
)
 
 
$
(259
)
 
$
127

 
$
8

 
$
(124
)
 
 
 
 
 
 
 
 
 


 
 
 
 
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 September 30, 2016:

 
Purchases
 
Sales
 
Net
 
Units
 
(In millions)
Power Contracts
9

 
49

 
(40
)
 
MWH
FTRs
42

 
—

 
42

 
MWH
NUGs
3

 
—

 
3

 
MWH
Natural Gas
49

 
—

 
49

 
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 (Loss) during the three months and nine months ended September 30, 2016 and 2015, are summarized in the following tables:
 
For the Three Months Ended September 30
 
Commodity Contracts
 
FTRs
 
Total
 
(In millions)
2016
 

 
 

 
 

Unrealized Gain (Loss) Recognized in:
 

 
 

 
 

Other Operating Expense(1)
$
19

 
$
(3
)
 
$
16

 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 

Revenues(1)
$
32

 
$
1

 
$
33

Purchased Power Expense(1)
(22
)
 
—

 
(22
)
Other Operating Expense(1)
—

 
(6
)
 
(6
)
Fuel Expense
(2
)
 
—

 
(2
)
 
 
 
 
 
 
(1) All amounts are associated with FES.
 
 
 
 
 
 
 
For the Three Months Ended September 30
 
Commodity Contracts
 
FTRs
 
Total
 
(In millions)
2015
 

 
 

 
 

Unrealized Gain (Loss) Recognized in:
 

 
 

 
 

Other Operating Expense(2)
$
59

 
$
(2
)
 
$
57

 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 

Revenues(2)
$
41

 
$
2

 
$
43

Purchased Power Expense(2)
(50
)
 
—

 
(50
)
Other Operating Expense(2)
—

 
(11
)
 
(11
)
Fuel Expense
(5
)
 
—

 
(5
)
 
 
 
 
 
 
(2) All amounts are associated with FES.
 
 
 
 
 
 
 
 
For the Nine Months Ended September 30
 
Commodity
Contracts
 
FTRs
 
 
Total
2016
(In millions)
Unrealized Gain Recognized in:
 

 
 

 
 
 

Other Operating Expense(1)
$
2

 
$
8

 
 
$
10

 
 
 
 
 
 


Realized Gain (Loss) Reclassified to:
 

 
 

 
 
 

Revenues(1)
$
162

 
$
5

 
 
$
167

Purchased Power Expense(1)
(105
)
 
—

 
 
(105
)
Other Operating Expense(1)
—

 
(28
)
 
 
(28
)
Fuel Expense
(9
)
 
—

 
 
(9
)
 
 
 
 
 
 
 
(1) All amounts are associated with FES.
 
 
 
 
 
 
 
 
For the Nine Months Ended September 30
 
Commodity
Contracts
 
FTRs
 
 
Total
 
(In millions)
2015
 

 
 

 
 
 

Unrealized Gain (Loss) Recognized in:
 

 
 

 
 
 

Other Operating Expense(2)
$
81

 
$
(17
)
 
 
$
64

 
 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 
 

Revenues(3)
$
48

 
$
48

 
 
$
96

Purchased Power Expense(4)
(78
)
 
—

 
 
(78
)
Other Operating Expense(5)
—

 
(38
)
 
 
(38
)
Fuel Expense
(26
)
 
—

 
 
(26
)
 
 
 
 
 
 
 
(2) Includes $81 million for commodity contracts and $(16) million for FTRs associated with FES.
(3) Includes $48 million for commodity contracts and $46 million for FTRs associated with FES.
(4)  All amounts are associated with FES.
(5)  Includes $(37) 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 and nine months ended September 30, 2016 and 2015. Changes in the value of these instruments are deferred for future recovery from (or credit to) customers:
 
 
For the Three Months Ended September 30
Derivatives Not in a Hedging Relationship with Regulatory Offset
 
NUGs
 
Regulated FTRs
 
Total
 
 
(In millions)
Outstanding net asset (liability) as of July 1, 2016
 
$
(124
)
 
$
4

 
$
(120
)
Unrealized loss
 
(6
)
 
—

 
(6
)
Settlements
 
12

 
—

 
12

Outstanding net asset (liability) as of September 30, 2016
 
$
(118
)
 
$
4

 
$
(114
)
 
 
 
 
 
 
 
Outstanding net asset (liability) as of July 1, 2015
 
$
(140
)
 
$
12

 
$
(128
)
Unrealized loss
 
(20
)
 
(4
)
 
(24
)
Settlements
 
17

 
(3
)
 
14

Outstanding net asset (liability) as of September 30, 2015
 
$
(143
)
 
$
5

 
$
(138
)
 
 
 
 
 
 
 
 
 
For the Nine Months Ended September 30
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
 
(17
)
 
(1
)
 
(18
)
Purchases
 
—

 
4

 
4

Settlements
 
35

 
—

 
35

Outstanding net asset (liability) as of September 30, 2016
 
$
(118
)
 
$
4

 
$
(114
)
 
 
 
 
 
 
 
Outstanding net asset (liability) as of January 1, 2015
 
$
(151
)
 
$
11

 
$
(140
)
Unrealized loss
 
(36
)
 
(3
)
 
(39
)
Purchases
 
—

 
12

 
12

Settlements
 
44

 
(15
)
 
29

Outstanding net asset (liability) as of September 30, 2015
 
$
(143
)
 
$
5

 
$
(138
)