Commission | Registrant; State of Incorporation; | I.R.S. Employer | ||
File Number | Address; and Telephone Number | Identification No. | ||
333-21011 | FIRSTENERGY CORP. | 34-1843785 | ||
(An Ohio Corporation) | ||||
76 South Main Street | ||||
Akron, OH 44308 | ||||
Telephone (800)736-3402 | ||||
(d) | Exhibits |
FIRSTENERGY CORP. | |
Registrant | |
By: | /s/ K. Jon Taylor |
K. Jon Taylor Vice President, Controller and Chief Accounting Officer |
Consolidated GAAP EPS to Operating (Non-GAAP) EPS* Reconciliation | ||||||||||
Third Quarter | Year-To-Date | Estimate | ||||||||
2017 | 2016 | 2017 | 2016 | Full Year 2017 | ||||||
Basic Earnings (Loss) Per Share (GAAP) | $0.89 | $0.89 | $1.75 | $(0.90) | $2.02 - $2.42 | |||||
Excluding Special Items*: | ||||||||||
Regulatory charges | 0.03 | 0.02 | 0.05 | 0.12 | 0.06 | |||||
Mark-to-market adjustments | ||||||||||
Pension/OPEB actuarial assumptions** | 0.06 - 0.36 | |||||||||
Other | 0.01 | (0.02) | 0.09 | (0.02) | 0.09 | |||||
Asset impairment/Plant exit costs | 0.03 | — | 0.45 | 2.99 | 0.45 | |||||
Trust securities impairment | — | — | 0.01 | 0.02 | 0.01 | |||||
Merger Accounting – commodity contracts | — | 0.01 | — | 0.04 | — | |||||
Debt redemption costs | 0.01 | — | 0.01 | — | 0.01 | |||||
Total Special Items* | 0.08 | 0.01 | 0.61 | 3.15 | 0.68 - 0.98 | |||||
Basic EPS - Operating (Non-GAAP) | $0.97 | $0.90 | $2.36 | $2.25 | $3.00 - $3.10 | |||||
* Per share amounts for the special items and earnings above are based on the after-tax effect of each item divided by weighted average basic shares outstanding for each period. The current and deferred income tax effect was calculated by applying the subsidiaries’ statutory tax rate to the pretax amount. The income tax rates range from 35% to 42%. ** Based on current discount rates ranging from 4.00% to 3.75% for the pension plans and 3.75% to 3.50% for the OPEB plans and actual gains through September 30, 2017 on pension plan assets of 12.5% and on OPEB plan assets of 8.6%. |
Competitive | FirstEnergy | |||||||||||
EPS Variance Analysis | Regulated | Regulated | Energy | Corporate / | Corp. | |||||||
(in millions, except per share amounts) | Distribution** | Transmission** | Services | Other | Consolidated | |||||||
3Q 2016 Net Income (Loss) - GAAP | $276 | $85 | $86 | $(67) | $380 | |||||||
3Q 2016 Basic Earnings (Loss) Per Share* (avg. shares outstanding 425M) | $0.65 | $0.19 | $0.20 | $(0.15) | $0.89 | |||||||
Special Items - 2016*** | ||||||||||||
Regulatory Charges | 0.02 | — | — | — | 0.02 | |||||||
Mark-to-market adjustments | — | — | (0.02) | — | (0.02) | |||||||
Merger accounting - commodity contracts | — | — | 0.01 | — | 0.01 | |||||||
Total Special Items - 3Q 2016 | 0.02 | — | (0.01) | — | 0.01 | |||||||
3Q 2016 Basic Earnings (Loss) Per Share - Operating (Non-GAAP)* | $0.67 | $0.19 | $0.19 | $(0.15) | $0.90 | |||||||
Distribution Deliveries - Weather | (0.14) | — | — | — | (0.14) | |||||||
OH DMR | 0.08 | — | — | — | 0.08 | |||||||
OH DCR | 0.02 | — | — | — | 0.02 | |||||||
PA Rate Case | 0.08 | — | — | — | 0.08 | |||||||
NJ Rate Case | 0.04 | — | — | — | 0.04 | |||||||
Transmission Revenues | — | 0.07 | — | — | 0.07 | |||||||
Commodity Margin | — | — | (0.12) | — | (0.12) | |||||||
O&M Expenses | — | (0.01) | 0.02 | — | 0.01 | |||||||
Depreciation | (0.02) | (0.02) | 0.07 | — | 0.03 | |||||||
General Taxes | — | (0.01) | 0.02 | — | 0.01 | |||||||
Investment Income | — | — | 0.02 | — | 0.02 | |||||||
Net Financing Costs | 0.01 | — | — | (0.04) | (0.03) | |||||||
Effective Income Tax Rate | — | — | — | 0.03 | 0.03 | |||||||
Share Dilution | (0.03) | (0.01) | (0.01) | 0.01 | (0.04) | |||||||
Other | 0.01 | — | — | — | 0.01 | |||||||
3Q 2017 Basic Earnings (Loss) Per Share - Operating (Non-GAAP)* | $0.72 | $0.21 | $0.19 | $(0.15) | $0.97 | |||||||
Special Items - 2017*** | ||||||||||||
Regulatory charges | (0.01) | (0.02) | — | — | (0.03) | |||||||
Mark-to-market adjustments | — | — | (0.01) | — | (0.01) | |||||||
Asset impairment/Plant exit costs | — | — | (0.03) | — | (0.03) | |||||||
Debt redemption costs | — | — | — | (0.01) | (0.01) | |||||||
Total Special Items - 3Q 2017 | (0.01) | (0.02) | (0.04) | (0.01) | (0.08) | |||||||
3Q 2017 Basic Earnings (Loss) Per Share* (avg. shares outstanding 444M) | $0.71 | $0.19 | $0.15 | $(0.16) | $0.89 | |||||||
3Q 2017 Net Income (Loss) - GAAP | $314 | $84 | $66 | $(68) | $396 | |||||||
Per share amounts for the special items and earnings drivers above and throughout this report are based on the after-tax effect of each item divided by the weighted average basic shares outstanding for the period. The current and deferred income tax effect was calculated by applying the subsidiaries' statutory tax rate to the pre-tax amount. The income tax rates range from 35% to 42%. |
Estimate for Year 2017* | ||||||||||||||||
(In millions, except per share amounts) | Regulated Distribution | Regulated Transmission | Competitive Energy Services | Corporate / Other | FirstEnergy Corp. Consolidated | |||||||||||
2017F Net Income (Loss) - GAAP | $895 - $990 | $355 - $365 | $(120) - ($45) | $(230) | $900 - $1,080 | |||||||||||
2017F Basic Earnings (Loss) Per Share (avg. shares outstanding 445M) | $2.01 - $2.22 | $0.80 - $0.82 | ($0.27) - ($0.10) | ($0.52) | $2.02 - $2.42 | |||||||||||
Excluding Special Items: | ||||||||||||||||
Regulatory charges | 0.04 | 0.02 | — | — | 0.06 | |||||||||||
Mark-to-market adjustments | ||||||||||||||||
Pension/OPEB actuarial assumptions** | 0.05 - 0.22 | — | 0.01 - 0.14 | — | 0.06 - 0.36 | |||||||||||
Other | — | — | 0.09 | — | 0.09 | |||||||||||
Asset impairment/Plant exit costs | — | — | 0.45 | — | 0.45 | |||||||||||
Trust securities impairment | — | — | 0.01 | — | 0.01 | |||||||||||
Debt redemption costs | — | — | — | 0.01 | 0.01 | |||||||||||
Total Special Items*** | 0.09 - 0.26 | 0.02 | 0.56 - 0.69 | 0.01 | 0.68 - 0.98 | |||||||||||
2017F Basic Earnings (Loss) Per Share - Operating (Non-GAAP) (avg. shares outstanding 445M) | $2.27 - $2.31 | $0.82 - $0.84 | $0.42 - $0.46 | $(0.51) | $3.00 - $3.10 | |||||||||||
Regulated Distribution - GAAP earnings for the third quarter of 2017 were $314 million, or $0.71 per basic share, compared with third quarter 2016 GAAP earnings of $276 million, or $0.65 per basic share. Operating (non-GAAP) earnings, excluding special items, were $0.72 per basic share for the third quarter of 2017 compared with $0.67 per basic share for the third quarter of 2016. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
3Q 2016 Net Income - GAAP | $276 | ||||||
3Q 2016 Basic Earnings Per Share (avg. shares outstanding 425M) | $0.65 | ||||||
Special Items - 2016* | 0.02 | ||||||
3Q 2016 Basic Earnings Per Share - Operating (Non-GAAP) | $0.67 | ||||||
Distribution Deliveries - Weather | (0.14) | ||||||
OH DMR | 0.08 | ||||||
OH DCR | 0.02 | ||||||
PA Rate Case | 0.08 | ||||||
NJ Rate Case | 0.04 | ||||||
Depreciation | (0.02) | ||||||
Net Financing Costs | 0.01 | ||||||
Share Dilution | (0.03) | ||||||
Other | 0.01 | ||||||
3Q 2017 Basic Earnings Per Share - Operating (Non-GAAP) | $0.72 | ||||||
Special Items - 2017* | (0.01) | ||||||
3Q 2017 Basic Earnings Per Share (avg. shares outstanding 444M) | $0.71 | ||||||
3Q 2017 Net Income - GAAP | $314 | ||||||
*See pages 24-37 for additional details on special items. |
• | Distribution Deliveries - Total distribution deliveries decreased earnings $0.14 per share primarily due to lower weather-related usage given the extreme temperatures in the third quarter of 2016. Total deliveries decreased 2,899,000 megawatt-hours (MWH), or 7.0%. Sales to residential customers decreased 2,275,000 MWH, or 14.1%, and sales to commercial customers decreased 777,000 MWH, or 6.5%. Cooling-degree-days were 27% below the same period last year and 3% above normal. Sales to industrial customers increased 150,000 MWH, or 1.2%, primarily due to higher usage in the shale gas and steel sectors. |
• | Ohio Distribution Modernization Rider (DMR) - Higher revenues increased earnings $0.08 per share due to the implementation of the DMR effective January 1, 2017. |
• | Ohio Delivery Capital Recovery (DCR) Rider - Higher revenues increased earnings $0.02 per share due to the change in DCR rates associated with the annual revenue increases. |
• | Pennsylvania Rate Case - Earnings increased $0.08 per share due to approved distribution rate increases, net of incremental operating expenses, effective January 27, 2017. |
• | New Jersey Rate Case - Earnings increased $0.04 per share due to an approved distribution rate increase, effective January 1, 2017. |
• | Depreciation - Higher depreciation expense reduced earnings $0.02 per share primarily due to a higher asset base. |
• | Net Financing Costs - Lower net financing costs increased earnings $0.01 per share primarily reflecting lower interest costs as a result of various debt redemptions. |
• | Share Dilution - Higher average shares outstanding decreased earnings $0.03 per share. |
• | Special Items - In the third quarter of 2017 and 2016, Regulated Distribution special items included regulatory charges of $0.01 per share and $0.02 per share, respectively. Descriptions of special items can be found on page 37. |
Regulated Transmission - GAAP earnings for the third quarter of 2017 were $84 million, or $0.19 per basic share, compared with third quarter 2016 GAAP earnings of $85 million, or $0.19 per basic share. Operating (non-GAAP) earnings, excluding special items, were $0.21 per basic share for the third quarter of 2017 compared with $0.19 per basic share for the third quarter of 2016. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
3Q 2016 Net Income - GAAP | $85 | ||||||
3Q 2016 Basic Earnings Per Share (avg. shares outstanding 425M) | $0.19 | ||||||
Special Items - 2016* | — | ||||||
3Q 2016 Basic Earnings Per Share - Operating (Non-GAAP) | $0.19 | ||||||
Transmission Revenues | 0.07 | ||||||
O&M Expenses | (0.01) | ||||||
Depreciation | (0.02) | ||||||
General Taxes | (0.01) | ||||||
Share Dilution | (0.01) | ||||||
3Q 2017 Basic Earnings Per Share - Operating (Non-GAAP) | $0.21 | ||||||
Special Items - 2017* | (0.02) | ||||||
3Q 2017 Basic Earnings Per Share (avg. shares outstanding 444M) | $0.19 | ||||||
3Q 2017 Net Income - GAAP | $84 | ||||||
*See pages 24-37 for additional details on special items. | |||||||
• | Transmission Revenues - Higher transmission revenues increased earnings $0.07 per share, primarily due to recovery of incremental operating expenses, a higher rate base at American Transmission Systems, Incorporated (ATSI), and the implementation of a forward-looking formula rate at JCP&L and Mid-Atlantic Interstate Transmission, LLC (MAIT). JCP&L's and MAIT's forward-looking formula rates were implemented on June 1, and July 1, 2017, respectively, subject to refund pending the outcome of the hearing and settlement proceedings. |
• | O&M Expenses, Depreciation, and General Taxes - Higher depreciation, O&M expenses, and general taxes decreased earnings $0.04 per share. The majority of these expenses are recovered through formula rates. |
• | Share Dilution - Higher average shares outstanding decreased earnings $0.01 per share. |
• | Special Items - In the third quarter of 2017, Regulated Transmission special items included regulatory charges of $0.02 per share. Descriptions of special items can be found on page 37. |
Competitive Energy Services (CES) - GAAP income for the third quarter of 2017 was $66 million, or $0.15 per basic share, compared with third quarter 2016 GAAP earnings of $86 million, or $0.20 per basic share. Operating (non-GAAP) earnings, excluding special items, for the third quarter of 2017 and 2016 were $0.19 per basic share. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
3Q 2016 Net Income - GAAP | $86 | ||||||
3Q 2016 Basic Earnings Per Share (avg. shares outstanding 425M) | $0.20 | ||||||
Special Items - 2016* | (0.01) | ||||||
3Q 2016 Basic Earnings Per Share - Operating (Non-GAAP) | $0.19 | ||||||
Commodity Margin | (0.12) | ||||||
O&M Expenses | 0.02 | ||||||
Depreciation | 0.07 | ||||||
General Taxes | 0.02 | ||||||
Investment Income | 0.02 | ||||||
Share Dilution | (0.01) | ||||||
3Q 2017 Basic Earnings Per Share - Operating (Non-GAAP) | $0.19 | ||||||
Special Items - 2017* | (0.04) | ||||||
3Q 2017 Basic Earnings Per Share (avg. shares outstanding 444M) | $0.15 | ||||||
3Q 2017 Net Income - GAAP | $66 | ||||||
*See pages 24-37 for additional details on special items. | |||||||
• | Commodity Margin - CES commodity margin decreased earnings $0.12 per share primarily due to lower contract sales, partially offset by increased wholesale sales, lower fuel expense as a result of lower fossil generation and lower capacity expense. |
Commodity Margin EPS - 3Q17 vs 3Q16 | Rate | Volume | Total | |||||||||||
(a) Contract Sales | ||||||||||||||
- Direct Sales (LCI & MCI) | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.05 | ) | |||||
- Governmental Aggregation Sales | — | (0.18 | ) | (0.18 | ) | |||||||||
- Mass Market Sales | — | (0.02 | ) | (0.02 | ) | |||||||||
- POLR Sales | — | (0.06 | ) | (0.06 | ) | |||||||||
Subtotal - Contract Sales | $ | (0.03 | ) | $ | (0.28 | ) | $ | (0.31 | ) | |||||
(b) Wholesale Sales | (0.02 | ) | 0.08 | 0.06 | ||||||||||
(c) PJM Capacity, BR and CP Revenues | 0.02 | (0.01 | ) | 0.01 | ||||||||||
(d) Fuel Expense | — | 0.07 | 0.07 | |||||||||||
(e) Capacity Expense | (0.01 | ) | 0.04 | 0.03 | ||||||||||
(f) Net MISO - PJM Transmission Cost | — | 0.02 | 0.02 | |||||||||||
Net Change | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.12 | ) | |||||
(a) | Contract Sales - CES' contract sales decreased 3.3 million MWH, or 23%, and reduced earnings $0.31 per share. Retail contract sales decreased 2.8 million MWH, primarily in the governmental aggregation class. Non-retail contract sales decreased 0.5 million MWH due primarily to lower POLR sales. As of September 30, 2017, the total number of retail customers was approximately 842,000, a decrease of approximately 600,000 customers since September 30, 2016. |
CES Contract Sales - 3Q17 vs 3Q16 | ||||||||||||||
(thousand MWH) | Retail | Non-Retail | ||||||||||||
Direct | Aggr. | Mass Market | POLR | Structured | Total | |||||||||
Contract Sales Increase / (Decrease) | (267) | (2,306) | (195) | (723) | 220 | (3,271) | ||||||||
Planning Period | RTO | ATSI | MAAC | RTO/ATSI/MAAC | ||||||
Price Per Megawatt-Day | BR | BR | BR | CP | ||||||
June 2016 - May 2017 | $59.37 | $114.23 | $119.13 | $134.00 | ||||||
June 2017 - May 2018 | $120.00 | $120.00 | $120.00 | $151.50 | ||||||
(d) | Fuel Expense - Lower fuel expense increased earnings $0.07 per share primarily due to lower fossil generation output associated with outages and economic dispatch. |
• | O&M Expenses - Lower O&M expenses increased earnings $0.02 per share primarily due to the absence of a termination charge on a FirstEnergy Solutions Corp. (FES) customer contract recognized in the third quarter of 2016. |
• | Depreciation Expense - Lower depreciation expense increased earnings $0.07 per share primarily due to the impact of asset impairments recognized in 2016. |
• | General Taxes - Lower general taxes increased earnings $0.02 per share primarily due to lower property taxes and reduced gross receipts tax resulting from lower retail sales volumes. |
• | Investment Income - Higher investment income increased earnings $0.02 per share primarily due to higher investment income on nuclear decommissioning trust securities. |
• | Share Dilution - Higher average shares outstanding decreased earnings $0.01 per share. |
• | Special Items - In the third quarter of 2017, CES special items included impacts from asset impairment/plant exit costs of $0.03 per share and mark-to-market adjustments of $0.01 per share. In the third quarter of 2016, CES special items included merger accounting-commodity contracts of $0.01 per share, and mark-to-market adjustments of $(0.02) per share. Descriptions of special items can be found on page 37. |
Corporate / Other - GAAP losses for the third quarter of 2017 were $(68) million, or $(0.16) per basic share, compared with third quarter 2016 GAAP losses of $(67) million, or $(0.15) per basic share. Operating (non-GAAP) losses, excluding special items, for the third quarter 2017 and 2016 were $(0.15) per basic share. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
3Q 2016 Net Loss - GAAP | $(67) | ||||||
3Q 2016 Basic Loss Per Share (avg. shares outstanding 425M) | $(0.15) | ||||||
Special Items - 2016* | — | ||||||
3Q 2016 Basic Loss Per Share - Operating (Non-GAAP) | $(0.15) | ||||||
Net Financing Costs | (0.04) | ||||||
Effective Income Tax Rate | 0.03 | ||||||
Share Dilution | 0.01 | ||||||
3Q 2017 Basic Loss Per Share - Operating (Non-GAAP) | $(0.15) | ||||||
Special Items - 2017* | (0.01) | ||||||
3Q 2017 Basic Loss Per Share (avg. shares outstanding 444M) | $(0.16) | ||||||
3Q 2017 Net Loss - GAAP | $(68) | ||||||
*See pages 24-37 for additional details on special items. |
• | Net Financing Costs - Higher net financing costs decreased results $0.04 per share primarily due to the issuance of $3 billion of senior notes in June 2017, partially offset by lower average borrowings on the FE revolving credit facility. |
• | Effective Income Tax Rate - The impact of a lower consolidated effective income tax rate increased results $0.03 per share. The consolidated effective tax rate for the third quarter of 2017 was 37.5% compared to 39.7% for the same period of 2016. |
• | Share Dilution - Higher average shares outstanding improved results $0.01 per share. |
• | Special Items - In the third quarter of 2017, Corporate / Other special items included debt redemption costs of $0.01 per share. Descriptions of special items can be found on page 37. |
Irene M. Prezelj | Meghan G. Beringer | Jake M. Mackin | ||
Vice President, Investor Relations | Director, Investor Relations | Manager, Investor Relations | ||
(330) 384-3859 | (330) 384-5832 | (330) 384-4829 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
(1 | ) | Regulated distribution | $ | 2,610 | $ | 2,691 | $ | (81 | ) | $ | 7,362 | $ | 7,390 | $ | (28 | ) | |||||||||||||
(2 | ) | Regulated transmission | 342 | 294 | 48 | 982 | 851 | 131 | |||||||||||||||||||||
(3 | ) | Competitive energy services | 889 | 1,115 | (226 | ) | 2,684 | 3,535 | (851 | ) | |||||||||||||||||||
(4 | ) | Corporate / Other | (127 | ) | (183 | ) | 56 | (453 | ) | (589 | ) | 136 | |||||||||||||||||
(5 | ) | Total Revenues | 3,714 | 3,917 | (203 | ) | 10,575 | 11,187 | (612 | ) | |||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||
(6 | ) | Fuel | 363 | 450 | (87 | ) | 1,074 | 1,269 | (195 | ) | |||||||||||||||||||
(7 | ) | Purchased power | 861 | 979 | (118 | ) | 2,459 | 2,992 | (533 | ) | |||||||||||||||||||
(8 | ) | Other operating expenses | 942 | 953 | (11 | ) | 3,041 | 2,835 | 206 | ||||||||||||||||||||
(9 | ) | Provision for depreciation | 289 | 311 | (22 | ) | 845 | 974 | (129 | ) | |||||||||||||||||||
(10 | ) | Amortization of regulatory assets, net | 91 | 98 | (7 | ) | 215 | 222 | (7 | ) | |||||||||||||||||||
(11 | ) | General taxes | 253 | 265 | (12 | ) | 777 | 786 | (9 | ) | |||||||||||||||||||
(12 | ) | Impairment of assets | 31 | — | 31 | 162 | 1,447 | (1,285 | ) | ||||||||||||||||||||
(13 | ) | Total Operating Expenses | 2,830 | 3,056 | (226 | ) | 8,573 | 10,525 | (1,952 | ) | |||||||||||||||||||
(14 | ) | Operating Income | 884 | 861 | 23 | 2,002 | 662 | 1,340 | |||||||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||||||||
(15 | ) | Investment income | 37 | 28 | 9 | 78 | 75 | 3 | |||||||||||||||||||||
(16 | ) | Interest expense | (305 | ) | (286 | ) | (19 | ) | (882 | ) | (863 | ) | (19 | ) | |||||||||||||||
(17 | ) | Capitalized financing costs | 19 | 28 | (9 | ) | 59 | 79 | (20 | ) | |||||||||||||||||||
(18 | ) | Total Other Expense | (249 | ) | (230 | ) | (19 | ) | (745 | ) | (709 | ) | (36 | ) | |||||||||||||||
(19 | ) | Income (Loss) Before Income Taxes | 635 | 631 | 4 | 1,257 | (47 | ) | 1,304 | ||||||||||||||||||||
(20 | ) | Income taxes | 239 | 251 | (12 | ) | 482 | 334 | 148 | ||||||||||||||||||||
(21 | ) | Net Income (Loss) | $ | 396 | $ | 380 | $ | 16 | $ | 775 | $ | (381 | ) | $ | 1,156 | ||||||||||||||
Earnings (Loss) Per Share of Common Stock | |||||||||||||||||||||||||||||
(22 | ) | Basic | $ | 0.89 | $ | 0.89 | $ | — | $ | 1.75 | $ | (0.90 | ) | $ | 2.65 | ||||||||||||||
(23 | ) | Diluted | $ | 0.89 | $ | 0.89 | $ | — | $ | 1.74 | $ | (0.90 | ) | $ | 2.64 | ||||||||||||||
Weighted Average Number of Common | |||||||||||||||||||||||||||||
Shares Outstanding | |||||||||||||||||||||||||||||
(24 | ) | Basic | 444 | 425 | 19 | 444 | 425 | 19 | |||||||||||||||||||||
(25 | ) | Diluted | 446 | 427 | 19 | 445 | 425 | 20 | |||||||||||||||||||||
Three Months Ended September 30, 2017 | |||||||||||||||||||||||
Competitive | |||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | |||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | |||||||||||||||||||
Revenues | |||||||||||||||||||||||
(1 | ) | Electric sales | $ | 2,563 | $ | 342 | $ | 790 | $ | (44 | ) | $ | 3,651 | ||||||||||
(2 | ) | Other | 47 | — | 6 | 10 | 63 | ||||||||||||||||
(3 | ) | Internal | — | — | 93 | (93 | ) | — | |||||||||||||||
(4 | ) | Total Revenues | 2,610 | 342 | 889 | (127 | ) | 3,714 | |||||||||||||||
Operating Expenses | |||||||||||||||||||||||
(5 | ) | Fuel | 126 | — | 237 | — | 363 | ||||||||||||||||
(6 | ) | Purchased power | 797 | — | 157 | (93 | ) | 861 | |||||||||||||||
(7 | ) | Other operating expenses | 620 | 55 | 324 | (57 | ) | 942 | |||||||||||||||
(8 | ) | Provision for depreciation | 183 | 59 | 30 | 17 | 289 | ||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 85 | 6 | — | — | 91 | ||||||||||||||||
(10 | ) | General taxes | 187 | 45 | 14 | 7 | 253 | ||||||||||||||||
(11 | ) | Impairment of assets | — | 13 | 18 | — | 31 | ||||||||||||||||
(12 | ) | Total Operating Expenses | 1,998 | 178 | 780 | (126 | ) | 2,830 | |||||||||||||||
(13 | ) | Operating Income (Loss) | 612 | 164 | 109 | (1 | ) | 884 | |||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(14 | ) | Investment income (loss) | 13 | — | 34 | (10 | ) | 37 | |||||||||||||||
(15 | ) | Interest expense | (133 | ) | (38 | ) | (44 | ) | (90 | ) | (305 | ) | |||||||||||
(16 | ) | Capitalized financing costs | 5 | 7 | 7 | — | 19 | ||||||||||||||||
(17 | ) | Total Other Expense | (115 | ) | (31 | ) | (3 | ) | (100 | ) | (249 | ) | |||||||||||
(18 | ) | Income (Loss) Before Income Taxes (Benefits) | 497 | 133 | 106 | (101 | ) | 635 | |||||||||||||||
(19 | ) | Income taxes (benefits) | 183 | 49 | 40 | (33 | ) | 239 | |||||||||||||||
(20 | ) | Net Income (Loss) | $ | 314 | $ | 84 | $ | 66 | $ | (68 | ) | $ | 396 | ||||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | ||||||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | ||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | ||||||||||||||||||||||
(d) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | ||||||||||||||||||||||
Three Months Ended September 30, 2016 | ||||||||||||||||||||||||
Competitive | ||||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | ||||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
(1 | ) | Electric sales | $ | 2,638 | $ | 294 | $ | 959 | $ | (44 | ) | $ | 3,847 | |||||||||||
(2 | ) | Other | 53 | — | 39 | (22 | ) | 70 | ||||||||||||||||
(3 | ) | Internal | — | — | 117 | (117 | ) | — | ||||||||||||||||
(4 | ) | Total Revenues | 2,691 | 294 | 1,115 | (183 | ) | 3,917 | ||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||
(5 | ) | Fuel | 156 | — | 294 | — | 450 | |||||||||||||||||
(6 | ) | Purchased power | 902 | — | 194 | (117 | ) | 979 | ||||||||||||||||
(7 | ) | Other operating expenses | 614 | 45 | 367 | (73 | ) | 953 | ||||||||||||||||
(8 | ) | Provision for depreciation | 169 | 47 | 79 | 16 | 311 | |||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 98 | — | — | — | 98 | |||||||||||||||||
(10 | ) | General taxes | 190 | 37 | 30 | 8 | 265 | |||||||||||||||||
(11 | ) | Impairment of assets | — | — | — | — | — | |||||||||||||||||
(12 | ) | Total Operating Expenses | 2,129 | 129 | 964 | (166 | ) | 3,056 | ||||||||||||||||
(13 | ) | Operating Income (Loss) | 562 | 165 | 151 | (17 | ) | 861 | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||
(14 | ) | Investment income (loss) | 13 | — | 23 | (8 | ) | 28 | ||||||||||||||||
(15 | ) | Interest expense | (143 | ) | (39 | ) | (48 | ) | (56 | ) | (286 | ) | ||||||||||||
(16 | ) | Capitalized financing costs | 6 | 9 | 9 | 4 | 28 | |||||||||||||||||
(17 | ) | Total Other Expense | (124 | ) | (30 | ) | (16 | ) | (60 | ) | (230 | ) | ||||||||||||
(18 | ) | Income (Loss) Before Income Taxes (Benefits) | 438 | 135 | 135 | (77 | ) | 631 | ||||||||||||||||
(19 | ) | Income taxes (benefits) | 162 | 50 | 49 | (10 | ) | 251 | ||||||||||||||||
(20 | ) | Net Income (Loss) | $ | 276 | $ | 85 | $ | 86 | $ | (67 | ) | $ | 380 | |||||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | |||||||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | |||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | |||||||||||||||||||||||
(d) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | |||||||||||||||||||||||
Changes Between the Three Months Ended September 30, 2017 and the Three Months Ended September 30, 2016 Increase (Decrease) | ||||||||||||||||||||||||
Competitive | ||||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | ||||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
(1 | ) | Electric sales | $ | (75 | ) | $ | 48 | $ | (169 | ) | $ | — | $ | (196 | ) | |||||||||
(2 | ) | Other | (6 | ) | — | (33 | ) | 32 | (7 | ) | ||||||||||||||
(3 | ) | Internal revenues | — | — | (24 | ) | 24 | — | ||||||||||||||||
(4 | ) | Total Revenues | (81 | ) | 48 | (226 | ) | 56 | (203 | ) | ||||||||||||||
Operating Expenses | ||||||||||||||||||||||||
(5 | ) | Fuel | (30 | ) | — | (57 | ) | — | (87 | ) | ||||||||||||||
(6 | ) | Purchased power | (105 | ) | — | (37 | ) | 24 | (118 | ) | ||||||||||||||
(7 | ) | Other operating expenses | 6 | 10 | (43 | ) | 16 | (11 | ) | |||||||||||||||
(8 | ) | Provision for depreciation | 14 | 12 | (49 | ) | 1 | (22 | ) | |||||||||||||||
(9 | ) | Amortization of regulatory assets, net | (13 | ) | 6 | — | — | (7 | ) | |||||||||||||||
(10 | ) | General taxes | (3 | ) | 8 | (16 | ) | (1 | ) | (12 | ) | |||||||||||||
(11 | ) | Impairment of assets | — | 13 | 18 | — | 31 | |||||||||||||||||
(12 | ) | Total Operating Expenses | (131 | ) | 49 | (184 | ) | 40 | (226 | ) | ||||||||||||||
(13 | ) | Operating Income (Loss) | 50 | (1 | ) | (42 | ) | 16 | 23 | |||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||
(14 | ) | Investment income (loss) | — | — | 11 | (2 | ) | 9 | ||||||||||||||||
(15 | ) | Interest expense | 10 | 1 | 4 | (34 | ) | (19 | ) | |||||||||||||||
(16 | ) | Capitalized financing costs | (1 | ) | (2 | ) | (2 | ) | (4 | ) | (9 | ) | ||||||||||||
(17 | ) | Total Other Expense | 9 | (1 | ) | 13 | (40 | ) | (19 | ) | ||||||||||||||
(18 | ) | Income (Loss) Before Income Taxes (Benefits) | 59 | (2 | ) | (29 | ) | (24 | ) | 4 | ||||||||||||||
(19 | ) | Income taxes (benefits) | 21 | (1 | ) | (9 | ) | (23 | ) | (12 | ) | |||||||||||||
(20 | ) | Net Income (Loss) | $ | 38 | $ | (1 | ) | $ | (20 | ) | $ | (1 | ) | $ | 16 | |||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | |||||||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | |||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | |||||||||||||||||||||||
(d) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | |||||||||||||||||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||||||||||
Competitive | |||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | |||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | |||||||||||||||||||
Revenues | |||||||||||||||||||||||
(1 | ) | Electric sales | $ | 7,222 | $ | 982 | $ | 2,313 | $ | (128 | ) | $ | 10,389 | ||||||||||
(2 | ) | Other | 140 | — | 75 | (29 | ) | 186 | |||||||||||||||
(3 | ) | Internal | — | — | 296 | (296 | ) | — | |||||||||||||||
(4 | ) | Total Revenues | 7,362 | 982 | 2,684 | (453 | ) | 10,575 | |||||||||||||||
Operating Expenses | |||||||||||||||||||||||
(5 | ) | Fuel | 388 | — | 686 | — | 1,074 | ||||||||||||||||
(6 | ) | Purchased power | 2,267 | — | 488 | (296 | ) | 2,459 | |||||||||||||||
(7 | ) | Other operating expenses | 1,871 | 150 | 1,237 | (217 | ) | 3,041 | |||||||||||||||
(8 | ) | Provision for depreciation | 540 | 164 | 87 | 54 | 845 | ||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 204 | 11 | — | — | 215 | ||||||||||||||||
(10 | ) | General taxes | 546 | 130 | 71 | 30 | 777 | ||||||||||||||||
(11 | ) | Impairment of assets | — | 13 | 149 | — | 162 | ||||||||||||||||
(12 | ) | Total Operating Expenses | 5,816 | 468 | 2,718 | (429 | ) | 8,573 | |||||||||||||||
(13 | ) | Operating Income (Loss) | 1,546 | 514 | (34 | ) | (24 | ) | 2,002 | ||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(14 | ) | Investment income (loss) | 41 | — | 66 | (29 | ) | 78 | |||||||||||||||
(15 | ) | Interest expense | (405 | ) | (116 | ) | (136 | ) | (225 | ) | (882 | ) | |||||||||||
(16 | ) | Capitalized financing costs | 16 | 20 | 22 | 1 | 59 | ||||||||||||||||
(17 | ) | Total Other Expense | (348 | ) | (96 | ) | (48 | ) | (253 | ) | (745 | ) | |||||||||||
(18 | ) | Income (Loss) Before Income Taxes (Benefits) | 1,198 | 418 | (82 | ) | (277 | ) | 1,257 | ||||||||||||||
(19 | ) | Income taxes (benefits) | 442 | 154 | (25 | ) | (89 | ) | 482 | ||||||||||||||
(20 | ) | Net Income (Loss) | $ | 756 | $ | 264 | $ | (57 | ) | $ | (188 | ) | $ | 775 | |||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | ||||||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | ||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | ||||||||||||||||||||||
(d) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | ||||||||||||||||||||||
Nine Months Ended September 30, 2016 | ||||||||||||||||||||||||
Competitive | ||||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | ||||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
(1 | ) | Electric sales | $ | 7,205 | $ | 851 | $ | 3,023 | $ | (129 | ) | $ | 10,950 | |||||||||||
(2 | ) | Other | 185 | — | 135 | (83 | ) | 237 | ||||||||||||||||
(3 | ) | Internal | — | — | 377 | (377 | ) | — | ||||||||||||||||
(4 | ) | Total Revenues | 7,390 | 851 | 3,535 | (589 | ) | 11,187 | ||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||
(5 | ) | Fuel | 436 | — | 833 | — | 1,269 | |||||||||||||||||
(6 | ) | Purchased power | 2,549 | — | 820 | (377 | ) | 2,992 | ||||||||||||||||
(7 | ) | Other operating expenses | 1,840 | 115 | 1,120 | (240 | ) | 2,835 | ||||||||||||||||
(8 | ) | Provision for depreciation | 504 | 138 | 284 | 48 | 974 | |||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 218 | 4 | — | — | 222 | |||||||||||||||||
(10 | ) | General taxes | 545 | 114 | 98 | 29 | 786 | |||||||||||||||||
(11 | ) | Impairment of assets | — | — | 1,447 | — | 1,447 | |||||||||||||||||
(12 | ) | Total Operating Expenses | 6,092 | 371 | 4,602 | (540 | ) | 10,525 | ||||||||||||||||
(13 | ) | Operating Income (Loss) | 1,298 | 480 | (1,067 | ) | (49 | ) | 662 | |||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||
(14 | ) | Investment income (loss) | 37 | — | 56 | (18 | ) | 75 | ||||||||||||||||
(15 | ) | Interest expense | (441 | ) | (118 | ) | (143 | ) | (161 | ) | (863 | ) | ||||||||||||
(16 | ) | Capitalized financing costs | 15 | 25 | 29 | 10 | 79 | |||||||||||||||||
(17 | ) | Total Other Expense | (389 | ) | (93 | ) | (58 | ) | (169 | ) | (709 | ) | ||||||||||||
(18 | ) | Income (Loss) Before Income Taxes (Benefits) | 909 | 387 | (1,125 | ) | (218 | ) | (47 | ) | ||||||||||||||
(19 | ) | Income taxes (benefits) | 336 | 143 | (96 | ) | (49 | ) | 334 | |||||||||||||||
(20 | ) | Net Income (Loss) | $ | 573 | $ | 244 | $ | (1,029 | ) | $ | (169 | ) | $ | (381 | ) | |||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | |||||||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | |||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | |||||||||||||||||||||||
(d) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | |||||||||||||||||||||||
Changes Between the First Nine Months of 2017 and the First Nine Months of 2016 Increase (Decrease) | ||||||||||||||||||||||||
Competitive | ||||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | ||||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
(1 | ) | Electric sales | $ | 17 | $ | 131 | $ | (710 | ) | $ | 1 | $ | (561 | ) | ||||||||||
(2 | ) | Other | (45 | ) | — | (60 | ) | 54 | (51 | ) | ||||||||||||||
(3 | ) | Internal revenues | — | — | (81 | ) | 81 | — | ||||||||||||||||
(4 | ) | Total Revenues | (28 | ) | 131 | (851 | ) | 136 | (612 | ) | ||||||||||||||
Operating Expenses | ||||||||||||||||||||||||
(5 | ) | Fuel | (48 | ) | — | (147 | ) | — | (195 | ) | ||||||||||||||
(6 | ) | Purchased power | (282 | ) | — | (332 | ) | 81 | (533 | ) | ||||||||||||||
(7 | ) | Other operating expenses | 31 | 35 | 117 | 23 | 206 | |||||||||||||||||
(8 | ) | Provision for depreciation | 36 | 26 | (197 | ) | 6 | (129 | ) | |||||||||||||||
(9 | ) | Amortization of regulatory assets, net | (14 | ) | 7 | — | — | (7 | ) | |||||||||||||||
(10 | ) | General taxes | 1 | 16 | (27 | ) | 1 | (9 | ) | |||||||||||||||
(11 | ) | Impairment of assets | — | 13 | (1,298 | ) | — | (1,285 | ) | |||||||||||||||
(12 | ) | Total Operating Expenses | (276 | ) | 97 | (1,884 | ) | 111 | (1,952 | ) | ||||||||||||||
(13 | ) | Operating Income (Loss) | 248 | 34 | 1,033 | 25 | 1,340 | |||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||
(14 | ) | Investment income (loss) | 4 | — | 10 | (11 | ) | 3 | ||||||||||||||||
(15 | ) | Interest expense | 36 | 2 | 7 | (64 | ) | (19 | ) | |||||||||||||||
(16 | ) | Capitalized financing costs | 1 | (5 | ) | (7 | ) | (9 | ) | (20 | ) | |||||||||||||
(17 | ) | Total Other Expense | 41 | (3 | ) | 10 | (84 | ) | (36 | ) | ||||||||||||||
(18 | ) | Income (Loss) From Before Income Taxes (Benefits) | 289 | 31 | 1,043 | (59 | ) | 1,304 | ||||||||||||||||
(19 | ) | Income taxes (benefits) | 106 | 11 | 71 | (40 | ) | 148 | ||||||||||||||||
(20 | ) | Net Income (Loss) | $ | 183 | $ | 20 | $ | 972 | $ | (19 | ) | $ | 1,156 | |||||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | |||||||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | |||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | |||||||||||||||||||||||
(d) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | |||||||||||||||||||||||
Condensed Consolidated Balance Sheets (GAAP) | |||||||||||
As of | As of | ||||||||||
Assets | Sep. 30, 2017 | Dec. 31, 2016 | |||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | 399 | $ | 199 | |||||||
Receivables | 1,542 | 1,615 | |||||||||
Other | 990 | 1,136 | |||||||||
Total Current Assets | 2,931 | 2,950 | |||||||||
Property, Plant and Equipment | 29,498 | 29,387 | |||||||||
Investments | 3,143 | 3,026 | |||||||||
Assets Held for Sale | 788 | — | |||||||||
Deferred Charges and Other Assets | 7,289 | 7,785 | |||||||||
Total Assets | $ | 43,649 | $ | 43,148 | |||||||
Liabilities and Capitalization | |||||||||||
Current Liabilities: | |||||||||||
Currently payable long-term debt | $ | 1,076 | $ | 1,685 | |||||||
Short-term borrowings | 500 | 2,675 | |||||||||
Accounts payable | 924 | 1,043 | |||||||||
Other | 1,755 | 1,723 | |||||||||
Total Current Liabilities | 4,255 | 7,126 | |||||||||
Capitalization: | |||||||||||
Total equity | 6,406 | 6,241 | |||||||||
Long-term debt and other long-term obligations | 21,089 | 18,192 | |||||||||
Total Capitalization | 27,495 | 24,433 | |||||||||
Noncurrent Liabilities | 11,899 | 11,589 | |||||||||
Total Liabilities and Capitalization | $ | 43,649 | $ | 43,148 | |||||||
General Information | ||||||||||||||||||
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Debt redemptions | $ | (976 | ) | $ | (436 | ) | $ | (1,711 | ) | $ | (1,017 | ) | ||||||
New long-term debt issues | $ | 550 | $ | 521 | $ | 4,050 | $ | 521 | ||||||||||
Short-term borrowings increase (decrease) | $ | 275 | $ | 50 | $ | (2,175 | ) | $ | 1,275 | |||||||||
Property additions | $ | 593 | $ | 664 | $ | 1,847 | $ | 2,156 | ||||||||||
Debt to Total Capitalization Ratio as Defined Under the FE Credit Facility | ||||||||||||||||
As of September 30 | As of December 31 | |||||||||||||||
2017 | % Total | 2016 | % Total | |||||||||||||
Total Equity (GAAP) | $ | 6,406 | 17 | % | $ | 6,241 | 17 | % | ||||||||
Non-cash Charges / Non-cash Write Downs* | 8,264 | 23 | % | 8,264 | 23 | % | ||||||||||
Accumulated Other Comprehensive Income | (151 | ) | — | % | (174 | ) | (1 | )% | ||||||||
Adjusted Equity (Non-GAAP)** | 14,519 | 40 | % | 14,331 | 39 | % | ||||||||||
Long-term Debt and Other Long-term Obligations (GAAP) | 21,089 | 57 | % | 18,192 | 50 | % | ||||||||||
Currently Payable Long-term Debt (GAAP) | 1,076 | 3 | % | 1,685 | 5 | % | ||||||||||
Short-term Borrowings (GAAP) | 500 | 1 | % | 2,675 | 7 | % | ||||||||||
Reimbursement Obligations | 10 | — | % | 54 | — | % | ||||||||||
Guarantees of Indebtedness | 321 | 1 | % | 325 | 1 | % | ||||||||||
Less Securitization Debt | (754 | ) | (2 | )% | (887 | ) | (2 | )% | ||||||||
Adjusted Debt (Non-GAAP)** | 22,242 | 60 | % | 22,044 | 61 | % | ||||||||||
Adjusted Capitalization (Non-GAAP)** | $ | 36,761 | 100 | % | $ | 36,375 | 100 | % | ||||||||
*Includes after-tax non-cash charges and non-cash write downs, primarily associated with the impairment of assets at CES, pension and OPEB mark-to-market adjustments and regulatory asset charges through September 30, 2017, as permitted by FE's current syndicated revolving credit facility (FE Credit Facility). | ||||||||||||||||
**Management uses Adjusted Equity, Adjusted Debt, and Adjusted Capitalization, each of which is a non-GAAP financial measure, to calculate and monitor its compliance with the debt to total capitalization financial covenant under the FE Credit Facility and term loans. These financial measures, as calculated in accordance with the FE Credit Facility and term loans, help shareholders understand FE's compliance with, and provide a basis for understanding FE's incremental debt capacity under the debt to total capitalization financial covenants. The financial covenants under the FE Credit Facility and term loans require FE to maintain a consolidated debt to total capitalization ratio of no more than 65%, measured at the end of each fiscal quarter. | ||||||||||||||||
Additionally under the FE Credit Facility, FE is also required to maintain a minimum interest coverage ratio of 1.75 to 1.00 until December 31, 2017, 2.00 to 1.00 beginning January 1, 2018 until December 31, 2018, 2.25 to 1.00 beginning January 1, 2019 until December 31, 2019, and 2.50 to 1.00 beginning January 1, 2020 until December 31, 2021. As of September 30, 2017, FE's interest coverage ratio was 5.79. | ||||||||||||||||
Condensed Consolidated Statements of Cash Flows (GAAP) | ||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||
September 30 | September 30 | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Cash flows from operating activities | ||||||||||||||||||
Net income (loss) | $ | 396 | $ | 380 | $ | 775 | $ | (381 | ) | |||||||||
Adjustments to reconcile net income (loss) to net cash from operating activities: | ||||||||||||||||||
Depreciation and amortization (1) | 456 | 527 | 1,248 | 1,477 | ||||||||||||||
Deferred purchased power and other costs | 21 | (1 | ) | 55 | (34 | ) | ||||||||||||
Deferred income taxes and investment tax credits, net | 229 | 246 | 453 | 318 | ||||||||||||||
Impairments of assets | 31 | — | 162 | 1,447 | ||||||||||||||
Investments impairments | 3 | 3 | 10 | 13 | ||||||||||||||
Deferred costs on sale leaseback transaction, net | 13 | 12 | 37 | 36 | ||||||||||||||
Retirement benefits, net of payments | 11 | 14 | 28 | 45 | ||||||||||||||
Pension trust contributions | — | (137 | ) | — | (297 | ) | ||||||||||||
Unrealized (gain) loss on derivative transactions | 11 | (15 | ) | 64 | (10 | ) | ||||||||||||
Lease payment on sale leaseback transaction, net | — | — | (47 | ) | (94 | ) | ||||||||||||
Changes in working capital and other | 109 | 91 | (23 | ) | 72 | |||||||||||||
Cash flows provided from operating activities | 1,280 | 1,120 | 2,762 | 2,592 | ||||||||||||||
Cash flows (used for) provided from financing activities | (325 | ) | (59 | ) | (381 | ) | 304 | |||||||||||
Cash flows used for investing activities | (670 | ) | (709 | ) | (2,181 | ) | (2,476 | ) | ||||||||||
Net change in cash and cash equivalents | $ | 285 | $ | 352 | $ | 200 | $ | 420 | ||||||||||
(1) Includes amortization of regulatory assets, net, nuclear fuel, intangible assets, and deferred debt-related costs. | ||||||||||||||||||
Liquidity position as of September 30, 2017 | ||||||||||
Company | Type | Maturity | Amount | Available* | ||||||
FirstEnergy(1) | Revolving | December 2021 | $4,000 | $3,490 | ||||||
FET / ATSI / TrAIL / MAIT | Revolving | December 2021 | 1,000 | 1,000 | ||||||
(1) FirstEnergy Corp. and FEU subsidiary borrowers | Subtotal: | $5,000 | $4,490 | |||||||
Cash: | — | 399 | ||||||||
Total: | $5,000 | $4,889 | ||||||||
Electric Distribution Deliveries | Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||
(MWH in thousand) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||
Ohio | - Residential | 4,512 | 5,321 | -15.2 | % | 12,462 | 13,592 | -8.3 | % | ||||||||||||
- Commercial | 3,941 | 4,304 | -8.4 | % | 11,131 | 11,721 | -5.0 | % | |||||||||||||
- Industrial | 5,296 | 5,360 | -1.2 | % | 15,448 | 15,346 | 0.7 | % | |||||||||||||
- Other | 87 | 82 | 6.1 | % | 250 | 250 | 0.0 | % | |||||||||||||
Total Ohio | 13,836 | 15,067 | -8.2 | % | 39,291 | 40,909 | -4.0 | % | |||||||||||||
Pennsylvania | - Residential | 4,486 | 5,183 | -13.4 | % | 13,230 | 14,253 | -7.2 | % | ||||||||||||
- Commercial | 3,350 | 3,534 | -5.2 | % | 9,553 | 9,880 | -3.3 | % | |||||||||||||
- Industrial | 5,338 | 5,181 | 3.0 | % | 15,694 | 15,202 | 3.2 | % | |||||||||||||
- Other | 26 | 29 | -10.3 | % | 79 | 89 | -11.2 | % | |||||||||||||
Total Pennsylvania | 13,200 | 13,927 | -5.2 | % | 38,556 | 39,424 | -2.2 | % | |||||||||||||
New Jersey | - Residential | 2,894 | 3,332 | -13.1 | % | 7,089 | 7,593 | -6.6 | % | ||||||||||||
- Commercial | 2,427 | 2,566 | -5.4 | % | 6,730 | 6,888 | -2.3 | % | |||||||||||||
- Industrial | 555 | 548 | 1.3 | % | 1,653 | 1,631 | 1.3 | % | |||||||||||||
- Other | 23 | 22 | 4.5 | % | 66 | 65 | 1.5 | % | |||||||||||||
Total New Jersey | 5,899 | 6,468 | -8.8 | % | 15,538 | 16,177 | -4.0 | % | |||||||||||||
Maryland | - Residential | 748 | 868 | -13.8 | % | 2,280 | 2,483 | -8.2 | % | ||||||||||||
- Commercial | 544 | 582 | -6.5 | % | 1,554 | 1,599 | -2.8 | % | |||||||||||||
- Industrial | 428 | 421 | 1.7 | % | 1,213 | 1,201 | 1.0 | % | |||||||||||||
- Other | 4 | 4 | 0.0 | % | 12 | 12 | 0.0 | % | |||||||||||||
Total Maryland | 1,724 | 1,875 | -8.1 | % | 5,059 | 5,295 | -4.5 | % | |||||||||||||
West Virginia | - Residential | 1,223 | 1,434 | -14.7 | % | 3,785 | 4,209 | -10.1 | % | ||||||||||||
- Commercial | 966 | 1,019 | -5.2 | % | 2,725 | 2,825 | -3.5 | % | |||||||||||||
- Industrial | 1,556 | 1,513 | 2.8 | % | 4,563 | 4,366 | 4.5 | % | |||||||||||||
- Other | 7 | 7 | 0.0 | % | 21 | 21 | 0.0 | % | |||||||||||||
Total West Virginia | 3,752 | 3,973 | -5.6 | % | 11,094 | 11,421 | -2.9 | % | |||||||||||||
Total Residential | 13,863 | 16,138 | -14.1 | % | 38,846 | 42,130 | -7.8 | % | |||||||||||||
Total Commercial | 11,228 | 12,005 | -6.5 | % | 31,693 | 32,913 | -3.7 | % | |||||||||||||
Total Industrial | 13,173 | 13,023 | 1.2 | % | 38,571 | 37,746 | 2.2 | % | |||||||||||||
Total Other | 147 | 144 | 2.1 | % | 428 | 437 | -2.1 | % | |||||||||||||
Total Distribution Deliveries | 38,411 | 41,310 | -7.0 | % | 109,538 | 113,226 | -3.3 | % | |||||||||||||
Weather | Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||
2017 | 2016 | Normal | 2017 | 2016 | Normal | ||||||||||
Composite Heating-Degree-Days | 56 | 22 | 71 | 2,846 | 3,202 | 3,442 | |||||||||
Composite Cooling-Degree-Days | 693 | 955 | 676 | 987 | 1,251 | 944 | |||||||||
Shopping Statistics (Based on MWH) | Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||
2017 | 2016 | 2017 | 2016 | |||||||
OE | 82% | 82% | 82% | 80% | ||||||
Penn | 68% | 63% | 68% | 63% | ||||||
CEI | 89% | 87% | 88% | 85% | ||||||
TE | 91% | 88% | 89% | 82% | ||||||
JCP&L | 50% | 48% | 52% | 51% | ||||||
Met-Ed | 69% | 67% | 69% | 67% | ||||||
Penelec | 73% | 69% | 72% | 70% | ||||||
PE(1) | 52% | 49% | 50% | 49% | ||||||
WP | 64% | 64% | 65% | 65% | ||||||
(1) Represents Maryland only. | ||||||||||
Competitive Operating Statistics | Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Generation Capacity Factors: | |||||||||||
Nuclear | 98% | 91% | 91% | 89% | |||||||
Fossil - Baseload | 49% | 69% | 49% | 54% | |||||||
Fossil - Load Following | 25% | 37% | 25% | 39% | |||||||
Generation Fuel Rate: | |||||||||||
Nuclear | $7 | $7 | $7 | $7 | |||||||
Fossil | $23 | $23 | $25 | $24 | |||||||
Total Fleet | $14 | $16 | $15 | $15 | |||||||
Generation Output Mix: | |||||||||||
Nuclear | 53% | 45% | 53% | 49% | |||||||
Fossil - Baseload | 33% | 42% | 35% | 36% | |||||||
Fossil - Load Following | 4% | 5% | 4% | 6% | |||||||
Peaking/CT/Hydro | 10% | 8% | 8% | 9% | |||||||
Competitive Energy Services - Sources and Uses (MWH in thousands) | ||||||||||||||||||||||
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||
Contract Sales | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||
POLR | 2,170 | 2,893 | (723 | ) | 6,983 | 7,526 | (543 | ) | ||||||||||||||
Structured Sales | 2,657 | 2,437 | 220 | 6,564 | 9,175 | (2,611 | ) | |||||||||||||||
Direct | 3,646 | 3,913 | (267 | ) | 11,504 | 11,391 | 113 | |||||||||||||||
Aggregation | 1,932 | 4,238 | (2,306 | ) | 5,686 | 10,798 | (5,112 | ) | ||||||||||||||
Mass Market | 478 | 673 | (195 | ) | 1,425 | 1,912 | (487 | ) | ||||||||||||||
Total Contract Sales | 10,883 | 14,154 | (3,271 | ) | 32,162 | 40,802 | (8,640 | ) | ||||||||||||||
Wholesale Spot Sales | 6,363 | 4,447 | 1,916 | 16,753 | 9,938 | 6,815 | ||||||||||||||||
Purchased Power | ||||||||||||||||||||||
- Bilaterals | 496 | 532 | (36 | ) | 1,998 | 1,612 | 386 | |||||||||||||||
- Spot | 948 | 728 | 220 | 2,683 | 2,769 | (86 | ) | |||||||||||||||
Total Purchased Power | 1,444 | 1,260 | 184 | 4,681 | 4,381 | 300 | ||||||||||||||||
Generation Output | ||||||||||||||||||||||
- Fossil | 7,716 | 10,139 | (2,423 | ) | 21,371 | 24,844 | (3,473 | ) | ||||||||||||||
- Nuclear | 8,767 | 8,137 | 630 | 24,213 | 23,683 | 530 | ||||||||||||||||
Total Generation Output | 16,483 | 18,276 | (1,793 | ) | 45,584 | 48,527 | (2,943 | ) | ||||||||||||||
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 3,714 | $ | — | $ | 3,917 | $ | — | ||||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 363 | — | 450 | (8 | ) | (e) | ||||||||||||||
(3 | ) | Purchased power | 861 | — | 979 | — | ||||||||||||||||
(4 | ) | Other operating expenses | 942 | (18 | ) | (a,b) | 953 | 8 | (a,b) | |||||||||||||
(5 | ) | Provision for depreciation | 289 | — | 311 | — | ||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 91 | — | 98 | — | ||||||||||||||||
(7 | ) | General taxes | 253 | — | 265 | — | ||||||||||||||||
(8 | ) | Impairment of assets | 31 | (31 | ) | (a,c) | — | — | ||||||||||||||
(9 | ) | Total Operating Expenses | 2,830 | (49 | ) | 3,056 | — | |||||||||||||||
(10 | ) | Operating Income | 884 | 49 | 861 | — | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(11 | ) | Investment income | 37 | 3 | (d) | 28 | 2 | (d) | ||||||||||||||
(12 | ) | Interest expense | (305 | ) | 6 | (f) | (286 | ) | 2 | (f) | ||||||||||||
(13 | ) | Capitalized financing costs | 19 | — | 28 | — | ||||||||||||||||
(14 | ) | Total Other Expense | (249 | ) | 9 | (230 | ) | 4 | ||||||||||||||
(15 | ) | Income Before Income Taxes | 635 | 58 | 631 | 4 | ||||||||||||||||
(16 | ) | Income taxes | 239 | 21 | 251 | 1 | ||||||||||||||||
(17 | ) | Net Income | $ | 396 | $ | 37 | $ | 380 | $ | 3 | ||||||||||||
The above special items, if any, provide additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 34 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Regulatory charges: 2017 ($0.03 per share), ($8) million included in "Other operating expenses"; ($13) million included in "Impairment of assets". 2016 ($0.02 per share), ($8) million included in "Other operating expenses". | |||||||||||||||||||||
(b) | Mark-to-market adjustments: 2017 ($0.01 per share), ($10) million included in "Other operating expenses". 2016 (($0.02) per share), $16 million included in "Other operating expenses". | |||||||||||||||||||||
(c) | Asset impairment/Plant exit costs: 2017 ($0.03 per share), ($18) million included in "Impairment of assets". | |||||||||||||||||||||
(d) | Trust securities impairment: 2017, $3 million included in "Investment income". 2016, $2 million included in "Investment income". | |||||||||||||||||||||
(e) | Merger accounting - commodity contracts: 2016 ($0.01 per share), ($8) million included in "Fuel". | |||||||||||||||||||||
(f) | Debt redemption costs: 2017 ($0.01 per share), $6 million included in "Interest expense". 2016, $2 million included in "Interest expense". | |||||||||||||||||||||
See page 37 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by the weighted average shares outstanding of 444 million shares in the third quarter of 2017 and 425 million shares in the third quarter of 2016. | ||||||||||||||||||||||
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 10,575 | $ | (5 | ) | (c) | $ | 11,187 | $ | — | ||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 1,074 | — | 1,269 | (82 | ) | (c,e) | ||||||||||||||
(3 | ) | Purchased power | 2,459 | — | 2,992 | — | ||||||||||||||||
(4 | ) | Other operating expenses | 3,041 | (252 | ) | (a,b,c) | 2,835 | (69 | ) | (a,b) | ||||||||||||
(5 | ) | Provision for depreciation | 845 | — | 974 | — | ||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 215 | — | 222 | — | ||||||||||||||||
(7 | ) | General taxes | 777 | — | 786 | — | ||||||||||||||||
(8 | ) | Impairment of assets | 162 | (162 | ) | (a,c) | 1,447 | (1,447 | ) | (c) | ||||||||||||
(9 | ) | Total Operating Expenses | 8,573 | (414 | ) | 10,525 | (1,598 | ) | ||||||||||||||
(10 | ) | Operating Income | 2,002 | 409 | 662 | 1,598 | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(11 | ) | Investment income | 78 | 10 | (d) | 75 | 11 | (c,d) | ||||||||||||||
(12 | ) | Interest expense | (882 | ) | 6 | (f) | (863 | ) | 4 | (f) | ||||||||||||
(13 | ) | Capitalized financing costs | 59 | — | 79 | — | ||||||||||||||||
(14 | ) | Total Other Expense | (745 | ) | 16 | (709 | ) | 15 | ||||||||||||||
(15 | ) | Income (Loss) Before Income Taxes | 1,257 | 425 | (47 | ) | 1,613 | |||||||||||||||
(16 | ) | Income taxes | 482 | 152 | 334 | 275 | (c) | |||||||||||||||
(17 | ) | Net Income (Loss) | $ | 775 | $ | 273 | $ | (381 | ) | $ | 1,338 | |||||||||||
The above special items, if any, provide additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 35 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Regulatory charges: 2017 ($0.05 per share), ($25) million included in "Other operating expenses"; ($13) million included in "Impairment of assets". 2016 ($0.12 per share), ($79) million included in "Other operating expenses". | |||||||||||||||||||||
(b) | Mark-to-market adjustments: 2017 ($0.09 per share), ($64) million included in "Other operating expenses". 2016 (($0.02) per share), $10 million included in "Other operating expenses". | |||||||||||||||||||||
(c) | Asset impairment/Plant exit costs: 2017 ($0.45 per share), ($5) million included in "Revenues"; ($163) million included in "Other operating expenses"; and ($149) million included in "Impairment of assets". 2016 ($2.99 per share), ($58) million included in "Fuel"; ($1,447) million included in "Impairment of assets"; ($2) million included in "Investment income"; and $159 million in "Income taxes". | |||||||||||||||||||||
(d) | Trust securities impairment: 2017 ($0.01 per share), $10 million included in "Investment income". 2016 ($0.02 per share), $13 million included in "Investment income". | |||||||||||||||||||||
(e) | Merger accounting - commodity contracts: 2016 ($0.04 per share), ($24) million included in "Fuel". | |||||||||||||||||||||
(f) | Debt redemption costs: 2017 ($0.01 per share), $6 million included in "Interest expense". 2016, $4 million included in "Interest expense". | |||||||||||||||||||||
See page 37 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by the weighted average shares outstanding of 444 million shares in the first nine months of 2017 and 425 million shares in the first nine months of 2016. | ||||||||||||||||||||||
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 2,610 | $ | — | $ | 2,691 | $ | — | ||||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 126 | — | 156 | — | ||||||||||||||||
(3 | ) | Purchased power | 797 | — | 902 | — | ||||||||||||||||
(4 | ) | Other operating expenses | 620 | (8 | ) | (a) | 614 | (8 | ) | (a) | ||||||||||||
(5 | ) | Provision for depreciation | 183 | — | 169 | — | ||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 85 | — | 98 | — | ||||||||||||||||
(7 | ) | General taxes | 187 | — | 190 | — | ||||||||||||||||
(8 | ) | Impairment of assets | — | — | — | — | ||||||||||||||||
(9 | ) | Total Operating Expenses | 1,998 | (8 | ) | 2,129 | (8 | ) | ||||||||||||||
(10 | ) | Operating Income | 612 | 8 | 562 | 8 | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(11 | ) | Investment income | 13 | — | 13 | — | ||||||||||||||||
(12 | ) | Interest expense | (133 | ) | — | (143 | ) | — | ||||||||||||||
(13 | ) | Capitalized financing costs | 5 | — | 6 | — | ||||||||||||||||
(14 | ) | Total Other Expense | (115 | ) | — | (124 | ) | — | ||||||||||||||
(15 | ) | Income Before Income Taxes | 497 | 8 | 438 | 8 | ||||||||||||||||
(16 | ) | Income taxes | 183 | 3 | 162 | 3 | ||||||||||||||||
(17 | ) | Net Income | $ | 314 | $ | 5 | $ | 276 | $ | 5 | ||||||||||||
The above special items, if any, provide additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 34 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Regulatory charges: 2017 ($0.01 per share), ($8) million included in "Other operating expenses". 2016 ($0.02 per share), ($8) million included in "Other operating expenses". | |||||||||||||||||||||
See page 37 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by the weighted average shares outstanding of 444 million shares in the third quarter of 2017 and 425 million shares in the third quarter of 2016. | ||||||||||||||||||||||
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 7,362 | $ | — | $ | 7,390 | $ | — | ||||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 388 | — | 436 | — | ||||||||||||||||
(3 | ) | Purchased power | 2,267 | — | 2,549 | — | ||||||||||||||||
(4 | ) | Other operating expenses | 1,871 | (25 | ) | (a) | 1,840 | (79 | ) | (a) | ||||||||||||
(5 | ) | Provision for depreciation | 540 | — | 504 | — | ||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 204 | — | 218 | — | ||||||||||||||||
(7 | ) | General taxes | 546 | — | 545 | — | ||||||||||||||||
(8 | ) | Impairment of assets | — | — | — | — | ||||||||||||||||
(9 | ) | Total Operating Expenses | 5,816 | (25 | ) | 6,092 | (79 | ) | ||||||||||||||
(10 | ) | Operating Income | 1,546 | 25 | 1,298 | 79 | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(11 | ) | Investment income | 41 | — | 37 | 1 | (b) | |||||||||||||||
(12 | ) | Interest expense | (405 | ) | — | (441 | ) | — | ||||||||||||||
(13 | ) | Capitalized financing costs | 16 | — | 15 | — | ||||||||||||||||
(14 | ) | Total Other Expense | (348 | ) | — | (389 | ) | 1 | ||||||||||||||
(15 | ) | Income Before Income Taxes | 1,198 | 25 | 909 | 80 | ||||||||||||||||
(16 | ) | Income taxes | 442 | 9 | 336 | 29 | ||||||||||||||||
(17 | ) | Net Income | $ | 756 | $ | 16 | $ | 573 | $ | 51 | ||||||||||||
The above special items, if any, provide additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 35 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Regulatory charges: 2017 ($0.03 per share), ($25) million included in "Other operating expenses". 2016 ($0.12 per share), ($79) million included in "Other operating expenses". | |||||||||||||||||||||
(b) | Trust securities impairment: 2016, $1 million included in "Investment income". | |||||||||||||||||||||
See page 37 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by the weighted average shares outstanding of 444 million shares in the first nine months of 2017 and 425 million shares in the first nine months of 2016. | ||||||||||||||||||||||
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||
(1 | ) | Revenues | $ | 342 | $ | — | $ | 294 | $ | — | ||||||||||
Operating Expenses | ||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | ||||||||||||||
(3 | ) | Purchased power | — | — | — | — | ||||||||||||||
(4 | ) | Other operating expenses | 55 | — | 45 | — | ||||||||||||||
(5 | ) | Provision for depreciation | 59 | — | 47 | — | ||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 6 | — | — | — | ||||||||||||||
(7 | ) | General taxes | 45 | — | 37 | — | ||||||||||||||
(8 | ) | Impairment of assets | 13 | (13 | ) | (a) | — | — | ||||||||||||
(9 | ) | Total Operating Expenses | 178 | (13 | ) | 129 | — | |||||||||||||
(10 | ) | Operating Income | 164 | 13 | 165 | — | ||||||||||||||
Other Income (Expense) | ||||||||||||||||||||
(11 | ) | Investment income | — | — | — | — | ||||||||||||||
(12 | ) | Interest expense | (38 | ) | — | (39 | ) | — | ||||||||||||
(13 | ) | Capitalized financing costs | 7 | — | 9 | — | ||||||||||||||
(14 | ) | Total Other Expense | (31 | ) | — | (30 | ) | — | ||||||||||||
(15 | ) | Income Before Income Taxes | 133 | 13 | 135 | — | ||||||||||||||
(16 | ) | Income taxes | 49 | 5 | 50 | — | ||||||||||||||
(17 | ) | Net Income | $ | 84 | $ | 8 | $ | 85 | $ | — | ||||||||||
The above special items, if any, provide additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 34 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||
(a) | Regulatory charges: 2017 ($0.02 per share), ($13) million included in "Impairment of assets". | |||||||||||||||||||
See page 37 for additional descriptions related to special items. | ||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by the weighted average shares outstanding of 444 million shares in the third quarter of 2017 and 425 million shares in the third quarter of 2016. | ||||||||||||||||||||
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | ||||||||||||||||||
(1 | ) | Revenues | $ | 982 | $ | — | $ | 851 | $ | — | |||||||||||
Operating Expenses | |||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | |||||||||||||||
(3 | ) | Purchased power | — | — | — | — | |||||||||||||||
(4 | ) | Other operating expenses | 150 | — | 115 | — | |||||||||||||||
(5 | ) | Provision for depreciation | 164 | — | 138 | — | |||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 11 | — | 4 | — | |||||||||||||||
(7 | ) | General taxes | 130 | — | 114 | — | |||||||||||||||
(8 | ) | Impairment of assets | 13 | (13 | ) | (a) | — | — | |||||||||||||
(9 | ) | Total Operating Expenses | 468 | (13 | ) | 371 | — | ||||||||||||||
(10 | ) | Operating Income | 514 | 13 | 480 | — | |||||||||||||||
Other Income (Expense) | |||||||||||||||||||||
(11 | ) | Investment income | — | — | — | — | |||||||||||||||
(12 | ) | Interest expense | (116 | ) | — | (118 | ) | — | |||||||||||||
(13 | ) | Capitalized financing costs | 20 | — | 25 | — | |||||||||||||||
(14 | ) | Total Other Expense | (96 | ) | — | (93 | ) | — | |||||||||||||
(15 | ) | Income Before Income Taxes | 418 | 13 | 387 | — | |||||||||||||||
(16 | ) | Income taxes | 154 | 5 | 143 | — | |||||||||||||||
(17 | ) | Net Income | $ | 264 | $ | 8 | $ | 244 | $ | — | |||||||||||
The above special items, if any, provide additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 35 for GAAP to Operating (non-GAAP) EPS Reconciliation. | |||||||||||||||||||||
(a) | Regulatory charges: 2017 ($0.02 per share), ($13) million included in "Impairment of assets". | ||||||||||||||||||||
See page 37 for additional descriptions related to special items. | |||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by the weighted average shares outstanding of 444 million shares in the first nine months of 2017 and 425 million shares in the first nine months of 2016. | |||||||||||||||||||||
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 889 | $ | — | $ | 1,115 | $ | — | ||||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 237 | — | 294 | (8 | ) | (d) | ||||||||||||||
(3 | ) | Purchased power | 157 | — | 194 | — | ||||||||||||||||
(4 | ) | Other operating expenses | 324 | (10 | ) | (a) | 367 | 16 | (a) | |||||||||||||
(5 | ) | Provision for depreciation | 30 | — | 79 | — | ||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | — | ||||||||||||||||
(7 | ) | General taxes | 14 | — | 30 | — | ||||||||||||||||
(8 | ) | Impairment of assets | 18 | (18 | ) | (b) | — | — | ||||||||||||||
(9 | ) | Total Operating Expenses | 780 | (28 | ) | 964 | 8 | |||||||||||||||
(10 | ) | Operating Income | 109 | 28 | 151 | (8 | ) | |||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(11 | ) | Investment income | 34 | 3 | (c) | 23 | 2 | (c) | ||||||||||||||
(12 | ) | Interest expense | (44 | ) | — | (48 | ) | 2 | (e) | |||||||||||||
(13 | ) | Capitalized financing costs | 7 | — | 9 | — | ||||||||||||||||
(14 | ) | Total Other Expense | (3 | ) | 3 | (16 | ) | 4 | ||||||||||||||
(15 | ) | Income Before Income Taxes | 106 | 31 | 135 | (4 | ) | |||||||||||||||
(16 | ) | Income taxes | 40 | 11 | 49 | (2 | ) | |||||||||||||||
(17 | ) | Net Income | $ | 66 | $ | 20 | $ | 86 | $ | (2 | ) | |||||||||||
The above special items, if any, provide additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 34 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Mark-to-market adjustments: 2017 ($0.01 per share), ($10) million included in "Other operating expenses". 2016 (($0.02) per share), $16 million included in "Other operating expenses". | |||||||||||||||||||||
(b) | Asset impairment/Plant exit costs: 2017 ($0.03 per share), ($18) million included in "Impairment of assets". | |||||||||||||||||||||
(c) | Trust securities impairment: 2017, $3 million included in "Investment income". 2016, $2 million included in "Investment income". | |||||||||||||||||||||
(d) | Merger accounting - commodity contracts: 2016 ($0.01 per share), ($8) million included in "Fuel". | |||||||||||||||||||||
(e) | Debt redemption costs: 2016, $2 million included in "Interest expense". | |||||||||||||||||||||
See page 37 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by the weighted average shares outstanding of 444 million shares in the third quarter of 2017 and 425 million shares in the third quarter of 2016. | ||||||||||||||||||||||
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 2,684 | $ | (5 | ) | (b) | $ | 3,535 | $ | — | ||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 686 | — | 833 | (82 | ) | (b,d) | ||||||||||||||
(3 | ) | Purchased power | 488 | — | 820 | — | ||||||||||||||||
(4 | ) | Other operating expenses | 1,237 | (227 | ) | (a,b) | 1,120 | 10 | (a) | |||||||||||||
(5 | ) | Provision for depreciation | 87 | — | 284 | — | ||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | — | ||||||||||||||||
(7 | ) | General taxes | 71 | — | 98 | — | ||||||||||||||||
(8 | ) | Impairment of assets | 149 | (149 | ) | (b) | 1,447 | (1,447 | ) | (b) | ||||||||||||
(9 | ) | Total Operating Expenses | 2,718 | (376 | ) | 4,602 | (1,519 | ) | ||||||||||||||
(10 | ) | Operating Income (Loss) | (34 | ) | 371 | (1,067 | ) | 1,519 | ||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(11 | ) | Investment income | 66 | 10 | (c) | 56 | 10 | (b,c) | ||||||||||||||
(12 | ) | Interest expense | (136 | ) | — | (143 | ) | 4 | (e) | |||||||||||||
(13 | ) | Capitalized financing costs | 22 | — | 29 | — | ||||||||||||||||
(14 | ) | Total Other Expense | (48 | ) | 10 | (58 | ) | 14 | ||||||||||||||
(15 | ) | Income (Loss) Before Income Taxes (Benefits) | (82 | ) | 381 | (1,125 | ) | 1,533 | ||||||||||||||
(16 | ) | Income taxes (benefits) | (25 | ) | 136 | (96 | ) | 246 | (b) | |||||||||||||
(17 | ) | Net Income (Loss) | $ | (57 | ) | $ | 245 | $ | (1,029 | ) | $ | 1,287 | ||||||||||
The above special items, if any, provide additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 35 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Mark-to-market adjustments: 2017 ($0.09 per share), ($64) million included in "Other operating expenses". 2016 (($0.02) per share), $10 million included in "Other operating expenses". | |||||||||||||||||||||
(b) | Asset impairment/Plant exit costs: 2017 ($0.45 per share), ($5) million included in "Revenues"; ($163) million included in "Other operating expenses"; and ($149) million included in "Impairment of assets". 2016 ($2.99 per share), ($58) million included in "Fuel"; ($1,447) million included in "Impairment of assets"; ($2) million included in "Investment income"; and $159 million included in "Income taxes (benefits)". | |||||||||||||||||||||
(c) | Trust securities impairment: 2017 ($0.01 per share), $10 million included in "Investment income". 2016 ($0.02 per share), $12 million included in "Investment income". | |||||||||||||||||||||
(d) | Merger accounting - commodity contracts: 2016 ($0.04 per share), ($24) million included in "Fuel". | |||||||||||||||||||||
(e) | Debt redemption costs: 2016, $4 million included in "Interest expense". | |||||||||||||||||||||
See page 37 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by the weighted average shares outstanding of 444 million shares in the first nine months of 2017 and 425 million shares in the first nine months of 2016. | ||||||||||||||||||||||
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | (127 | ) | $ | — | $ | (183 | ) | $ | — | ||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | ||||||||||||||||
(3 | ) | Purchased power | (93 | ) | — | (117 | ) | — | ||||||||||||||
(4 | ) | Other operating expenses | (57 | ) | — | (73 | ) | — | ||||||||||||||
(5 | ) | Provision for depreciation | 17 | — | 16 | — | ||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | — | ||||||||||||||||
(7 | ) | General taxes | 7 | — | 8 | — | ||||||||||||||||
(8 | ) | Impairment of assets | — | — | — | — | ||||||||||||||||
(9 | ) | Total Operating Expenses | (126 | ) | — | (166 | ) | — | ||||||||||||||
(10 | ) | Operating Loss | (1 | ) | — | (17 | ) | — | ||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(11 | ) | Investment loss | (10 | ) | — | (8 | ) | — | ||||||||||||||
(12 | ) | Interest expense | (90 | ) | 6 | (a) | (56 | ) | — | |||||||||||||
(13 | ) | Capitalized financing costs | — | — | 4 | — | ||||||||||||||||
(14 | ) | Total Other Expense | (100 | ) | 6 | (60 | ) | — | ||||||||||||||
(15 | ) | Loss Before Income Tax Benefits | (101 | ) | 6 | (77 | ) | — | ||||||||||||||
(16 | ) | Income tax benefits | (33 | ) | 2 | (10 | ) | — | ||||||||||||||
(17 | ) | Net Loss | $ | (68 | ) | $ | 4 | $ | (67 | ) | $ | — | ||||||||||
The above special items, if any, provide additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 34 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Debt redemption costs: 2017 ($0.01 per share), $6 million included in "Interest expense". | |||||||||||||||||||||
See page 37 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by the weighted average shares outstanding of 444 million shares in the third quarter of 2017 and 425 million shares in the third quarter of 2016. | ||||||||||||||||||||||
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | (453 | ) | $ | — | $ | (589 | ) | $ | — | ||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | ||||||||||||||||
(3 | ) | Purchased power | (296 | ) | — | (377 | ) | — | ||||||||||||||
(4 | ) | Other operating expenses | (217 | ) | — | (240 | ) | — | ||||||||||||||
(5 | ) | Provision for depreciation | 54 | — | 48 | — | ||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | — | ||||||||||||||||
(7 | ) | General taxes | 30 | — | 29 | — | ||||||||||||||||
(8 | ) | Impairment of assets | — | — | — | — | ||||||||||||||||
(9 | ) | Total Operating Expenses | (429 | ) | — | (540 | ) | — | ||||||||||||||
(10 | ) | Operating Loss | (24 | ) | — | (49 | ) | — | ||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(11 | ) | Investment loss | (29 | ) | — | (18 | ) | — | ||||||||||||||
(12 | ) | Interest expense | (225 | ) | 6 | (a) | (161 | ) | — | |||||||||||||
(13 | ) | Capitalized financing costs | 1 | — | 10 | — | ||||||||||||||||
(14 | ) | Total Other Expense | (253 | ) | 6 | (169 | ) | — | ||||||||||||||
(15 | ) | Loss Before Income Tax Benefits | (277 | ) | 6 | (218 | ) | — | ||||||||||||||
(16 | ) | Income tax benefits | (89 | ) | 2 | (49 | ) | — | ||||||||||||||
(17 | ) | Net Loss | $ | (188 | ) | $ | 4 | $ | (169 | ) | $ | — | ||||||||||
The above special items, if any, provide additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 35 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Debt redemption costs: 2017 ($0.01 per share), $6 million included in "Interest expense". | |||||||||||||||||||||
See page 37 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by the weighted average shares outstanding of 444 million shares in the first nine months of 2017 and 425 million shares in the first nine months of 2016. | ||||||||||||||||||||||
Earnings Per Share (EPS) | |||||||||||||||||||||||
(Reconciliation of GAAP to Operating (Non-GAAP) Earnings) | |||||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||||
Three Months Ended September 30, 2017 | Competitive | FirstEnergy | |||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||||||||||||
Distribution | Transmission | Services | Other | Consolidated | |||||||||||||||||||
3Q 2017 Net Income (Loss) - GAAP | $ | 314 | $ | 84 | $ | 66 | $ | (68 | ) | $ | 396 | ||||||||||||
3Q 2017 Basic Earnings (Loss) per share (avg. shares outstanding 444M) | $ | 0.71 | $ | 0.19 | $ | 0.15 | $ | (0.16 | ) | $ | 0.89 | ||||||||||||
Excluding Special Items: | |||||||||||||||||||||||
Regulatory charges | 0.01 | 0.02 | — | — | 0.03 | ||||||||||||||||||
Mark-to-market adjustments | — | — | 0.01 | — | 0.01 | ||||||||||||||||||
Asset impairment/Plant exit costs | — | — | 0.03 | — | 0.03 | ||||||||||||||||||
Debt redemption costs | — | — | — | 0.01 | 0.01 | ||||||||||||||||||
Total Special Items | $ | 0.01 | $ | 0.02 | $ | 0.04 | $ | 0.01 | $ | 0.08 | |||||||||||||
Basic Earnings (Loss) per share - Operating (Non-GAAP) | $ | 0.72 | $ | 0.21 | $ | 0.19 | $ | (0.15 | ) | $ | 0.97 | ||||||||||||
Three Months Ended September 30, 2016 | Competitive | FirstEnergy | |||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||||||||||||
Distribution | Transmission | Services | Other | Consolidated | |||||||||||||||||||
3Q 2016 Net Income (Loss) - GAAP | $ | 276 | $ | 85 | $ | 86 | $ | (67 | ) | $ | 380 | ||||||||||||
3Q 2016 Basic Earnings (Loss) per share (avg. shares outstanding 425M) | $ | 0.65 | $ | 0.19 | $ | 0.20 | $ | (0.15 | ) | $ | 0.89 | ||||||||||||
Excluding Special Items: | |||||||||||||||||||||||
Regulatory charges | 0.02 | — | — | — | 0.02 | ||||||||||||||||||
Mark-to-market adjustments | — | — | (0.02 | ) | — | (0.02 | ) | ||||||||||||||||
Merger accounting - commodity contracts | — | — | 0.01 | — | 0.01 | ||||||||||||||||||
Total Special Items | $ | 0.02 | $ | — | $ | (0.01 | ) | $ | — | $ | 0.01 | ||||||||||||
Basic Earnings (Loss) per share - Operating (Non-GAAP) | $ | 0.67 | $ | 0.19 | $ | 0.19 | $ | (0.15 | ) | $ | 0.90 | ||||||||||||
Per share amounts for the special items and earnings drivers above and throughout this report are based on the after-tax effect of each item divided by the weighted average basic shares outstanding for the period. The current and deferred income tax effect was calculated by applying the subsidiaries' statutory tax rate to the pre-tax amount. The income tax rates range from 35% to 42%. |
Earnings Per Share (EPS) | |||||||||||||||||||||||
(Reconciliation of GAAP to Operating (Non-GAAP) Earnings) | |||||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||||
Nine Months Ended September 30, 2017 | Competitive | FirstEnergy | |||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||||||||||||
Distribution | Transmission | Services | Other | Consolidated | |||||||||||||||||||
2017 Net Income (Loss) - GAAP | $ | 756 | $ | 264 | $ | (57 | ) | $ | (188 | ) | $ | 775 | |||||||||||
2017 Basic Earnings (Loss) Per Share (avg. shares outstanding 444M) | $ | 1.71 | $ | 0.59 | $ | (0.12 | ) | $ | (0.43 | ) | $ | 1.75 | |||||||||||
Excluding Special Items: | |||||||||||||||||||||||
Regulatory charges | 0.03 | 0.02 | — | — | 0.05 | ||||||||||||||||||
Mark-to-market adjustments | — | — | 0.09 | — | 0.09 | ||||||||||||||||||
Asset impairment/Plant exit costs | — | — | 0.45 | — | 0.45 | ||||||||||||||||||
Trust securities impairment | — | — | 0.01 | — | 0.01 | ||||||||||||||||||
Debt redemption costs | — | — | — | 0.01 | 0.01 | ||||||||||||||||||
Total Special Items | $ | 0.03 | $ | 0.02 | $ | 0.55 | $ | 0.01 | $ | 0.61 | |||||||||||||
Basic Earnings (Loss) Per Share - Operating (Non-GAAP) | $ | 1.74 | $ | 0.61 | $ | 0.43 | $ | (0.42 | ) | $ | 2.36 | ||||||||||||
Nine Months Ended September 30, 2016 | Competitive | FirstEnergy | |||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||||||||||||
Distribution | Transmission | Services | Other | Consolidated | |||||||||||||||||||
2016 Net Income (Loss) - GAAP | $ | 573 | $ | 244 | $ | (1,029 | ) | $ | (169 | ) | $ | (381 | ) | ||||||||||
2016 Basic Earnings (Loss) Per Share (avg. shares outstanding 425M) | $ | 1.35 | $ | 0.57 | $ | (2.43 | ) | $ | (0.39 | ) | $ | (0.90 | ) | ||||||||||
Excluding Special Items: | |||||||||||||||||||||||
Regulatory charges | 0.12 | — | — | — | 0.12 | ||||||||||||||||||
Mark-to-market adjustments | — | — | (0.02 | ) | — | (0.02 | ) | ||||||||||||||||
Asset impairment/Plant exit costs | — | — | 2.99 | — | 2.99 | ||||||||||||||||||
Trust securities impairment | — | — | 0.02 | — | 0.02 | ||||||||||||||||||
Merger accounting - commodity contracts | — | — | 0.04 | — | 0.04 | ||||||||||||||||||
Total Special Items | $ | 0.12 | $ | — | $ | 3.03 | $ | — | $ | 3.15 | |||||||||||||
Basic Earnings (Loss) Per Share - Operating (Non-GAAP) | $ | 1.47 | $ | 0.57 | $ | 0.60 | $ | (0.39 | ) | $ | 2.25 | ||||||||||||
Per share amounts for the special items and earnings drivers above and throughout this report are based on the after-tax effect of each item divided by the weighted average basic shares outstanding for the period. The current and deferred income tax effect was calculated by applying the subsidiaries' statutory tax rate to the pre-tax amount. The income tax rates range from 35% to 42%. |
(In millions, except per share amount) | ||||||||||||||
Estimate for Year 2017 | Pre-tax | After-tax | EPS* | |||||||||||
Special Items: | ||||||||||||||
Regulatory charges | $ | 43 | $ | 27 | $ | 0.06 | ||||||||
Asset impairment/Plant exit costs | 307 | 199 | 0.45 | |||||||||||
Trust securities impairment | 10 | 6 | 0.01 | |||||||||||
Debt redemption costs | 6 | 4 | 0.01 | |||||||||||
Mark-to-market adjustments | ||||||||||||||
Pension/OPEB actuarial assumptions** | 40 - 260 | 25 - 160 | 0.06 - 0.36 | |||||||||||
Other | 64 | 40 | 0.09 | |||||||||||
Total Special Items | $ 470 - 690 | $ 301 - 436 | $ 0.68 - 0.98 | |||||||||||
*Per share amounts for the special items above are based on the after-tax effect of each item divided by forecasted weighted average basic shares outstanding of 445 million shares. The current and deferred income tax effect was calculated by applying the subsidiaries' statutory rate to the pre-tax amount. The income tax rates range from 35% to 42%. | ||||||||||||||
**Based on current discount rates ranging from 4.00% to 3.75% for the pension plans and 3.75% to 3.50% for the OPEB plans and actual gains through September 30, 2017, on pension plan assets of 12.5% and on OPEB plan assets of 8.6%. | ||||||||||||||
• | Regulatory charges - Primarily reflects the impact of regulatory agreements or orders requiring certain commitments and/or disallowing the recoverability of costs. |
• | Mark-to-market adjustments - Primarily reflects non-cash mark-to-market gains and losses on commodity contract positions and the change in fair value of plan assets and net actuarial gains and losses associated with the company's pension and postemployment benefit plans. |
• | Asset impairment/Plant exit costs - Primarily reflects charges or credits resulting from management's plan to exit competitive operations. Also reflects the non-cash amortization/impairment of certain non-core investments. |
• | Trust securities impairment - Primarily reflects non-cash other than temporary impairment charges on nuclear decommissioning trust assets. |
• | Merger accounting - commodity contracts - Primarily reflects the non-cash amortization of acquired commodity contracts from the Allegheny Energy Merger. |
• | Debt redemption costs - Primarily reflects costs associated with the redemption and early retirement of debt. |
• | the all cash purchase price has been reduced from $925 million to $825 million in the aggregate subject to adjustments pursuant to the terms of the amended and restated purchase agreement; |
• | the addition of BU Energy’s 50% interest in a joint venture that owns Buchanan Generating Facility, representing 43-megawatts (MW) of gas fired generation in Oakwood, Virginia, bringing the total generating capacity of assets being sold to 1,615 MW; and |
• | each component of the transaction (i.e. the AE Supply natural gas facilities, AGC’s interest in the Bath County hydroelectric power station and BU Energy’s interest in the Buchanan Generating Facility) may close independently. |