LEASES

FirstEnergy leases certain generating facilities, office space and other property and equipment under cancelable and noncancelable leases.

In 1987, OE sold portions of its ownership interests in Perry Unit 1 and Beaver Valley Unit 2 and entered into operating leases on the portions sold for basic lease terms of approximately 29 years, which expired in 2016 for Perry Unit 1 and in 2017 for Beaver Valley Unit 2. In that same year, CEI and TE also sold portions of their ownership interests in Beaver Valley Unit 2 and entered into similar operating leases for lease terms of approximately 30 years, which expired in 2017.

In 2007, FG completed a sale and leaseback transaction for its 93.83% undivided interest in Bruce Mansfield Unit 1 and entered into operating leases for basic lease terms of approximately 33 years, expiring in 2040. FES has unconditionally and irrevocably guaranteed all of FG’s obligations under each of the leases. As of December 31, 2017, FES' leasehold interest was 93.83% of Bruce Mansfield Unit 1.

On May 23, 2016, NG completed the purchase of the 3.75% lessor equity interests of the remaining non-affiliated leasehold interest in Perry Unit 1 for $50 million. In addition, the Perry Unit 1 leases expired in accordance with their terms on May 30, 2016, resulting in NG being the sole owner of Perry Unit 1 and entitled to100% of the unit's output.

On June 1, 2017, NG completed the purchase of the 2.60% lessor equity interests of the remaining non-affiliated leasehold interests in Beaver Valley Unit 2 for $38 million. In addition, the Beaver Valley Unit 2 leases expired in accordance with their terms on June 1, 2017, resulting in NG being the sole owner of Beaver Valley Unit 2.

Operating lease expense for 2017, 2016 and 2015, is summarized as follows:



(In millions)	2017		2016		2015

FirstEnergy	$	158	$	168	$	174
FES	$	93	$	94	$	94

The future minimum capital lease payments as of December 31, 2017 are as follows:



Capital Leases	FirstEnergy			FES
	(In millions)
2018	$	28		$	2
2019	23			—
2020	18			—
2021	15			—
2022	13			—
Years thereafter	20			—
Total minimum lease payments	117			2
Interest portion	(26		)	—
Present value of net minimum lease payments	91			2
Less current portion	24			2
Noncurrent portion	$	67		$	—

The future minimum operating lease payments as of December 31, 2017, are as follows:



Operating Leases	FirstEnergy		FES
	(In millions)
2018	$	146	$	101
2019	128		97
2020	102		68
2021	124		93
2022	111		91
Years thereafter	1,263		1,131
Total minimum lease payments	$	1,874	$	1,581