SEGMENT INFORMATION

FirstEnergy's reportable segments are as follows: Regulated Distribution, Regulated Transmission and CES.

Financial information for each of FirstEnergy’s reportable segments is presented in the tables below. FES does not have separate reportable operating segments.

The Regulated Distribution segment distributes electricity through FirstEnergy’s ten utility operating companies, serving approximately six million customers within 65,000 square miles of Ohio, Pennsylvania, West Virginia, Maryland, New Jersey and New York, and purchases power for its POLR, SOS, SSO and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland. This segment also controls 3,790 MWs of regulated electric generation capacity located primarily in West Virginia, Virginia and New Jersey. The segment's results reflect the commodity costs of securing electric generation and the deferral and amortization of certain fuel costs.

The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by ATSI, TrAIL, MAIT (effective January 31, 2017) and certain of FirstEnergy's utilities (JCP&L, MP, PE and WP). The segment's revenues are primarily derived from forward-looking rates at ATSI and TrAIL, as well as stated transmission rates at certain of FirstEnergy's utilities. As discussed in Note 15, "Regulatory Matters - FERC Matters," above, MAIT and JCP&L submitted applications to FERC requesting authorization to implement forward-looking formula transmission rates. In March 2017, FERC approved JCP&L's and MAIT's forward-looking formula rates, subject to refund, with effective dates of June 1, 2017, and July 1, 2017, respectively. Additionally, MAIT and JCP&L filed settlement agreements with FERC on October 13, 2017 and December 21, 2017, respectively, both pending final orders by FERC. Both the forward-looking and stated rates recover costs and provide a return on transmission capital investment. Under forward-looking rates, the revenue requirement is updated annually based on a projected rate base and projected costs, which are subject to an annual true-up based on actual costs. The segment's results also reflect the net transmission expenses related to the delivery of electricity on FirstEnergy's transmission facilities.

The CES segment, through FES and AE Supply, primarily supplies electricity to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Maryland, Michigan, New Jersey and Illinois, and the provision of partial POLR and default service for some utilities in Ohio, Pennsylvania and Maryland, including the Utilities. As of January 31, 2018, this business segment controlled 12,303 MWs of electric generating capacity, including, as discussed in Note 2, "Asset Sales and Impairments," 756 MWs of generating capacity which remain subject to an asset purchase agreement with a subsidiary of LS Power that is expected to close in the first half of 2018. The CES segment’s operating results are primarily derived from electric generation sales less the related costs of electricity generation, including fuel, purchased power and net transmission (including congestion) and ancillary costs and capacity costs charged by PJM to deliver energy to the segment’s customers, as well as other operating and maintenance costs, including costs incurred by FENOC.

Interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment are categorized as Corporate/Other for reportable business segment purposes. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. As of December 31, 2017, Corporate/Other had $6.8 billion of stand-alone holding company long-term debt, of which $1.45 billion was subject to variable-interest rates, and $300 million was borrowed by FE under its revolving credit facility. On January 22, 2018, FE repaid its $1.45 billion of outstanding variable-interest rate debt using the proceeds from the $2.5 billion equity investment.

Segment Financial Information



For the Years Ended December 31	Regulated Distribution		Regulated Transmission		Competitive Energy Services			Corporate/ Other			Reconciling Adjustments			Consolidated
	(In millions)

2017
External revenues	$	9,734	$	1,325	$	3,143		$	—		$	(185	)	$	14,017
Internal revenues	—		—		386			—			(386		)	—
Total revenues	9,734		1,325		3,529			—			(571		)	14,017
Depreciation	724		224		118			72			—			1,138
Amortization of regulatory assets, net	292		16		—			—			—			308
Impairment of assets and related charges	—		41		2,365			—			—			2,406
Investment income	54		—		81			11			(48		)	98
Interest expense	535		156		179			308			—			1,178
Income taxes (benefits)	580		205		155			(45		)	—			895
Net income (loss)	916		336		(2,641		)	(335		)	—			(1,724		)
Total assets	27,730		9,525		4,339			663			—			42,257
Total goodwill	5,004		614		—			—			—			5,618
Property additions	1,191		1,030		317			49			—			2,587

2016
External revenues	$	9,629	$	1,144	$	4,070		$	—		$	(281	)	$	14,562
Internal revenues	—		—		479			—			(479		)	—
Total revenues	9,629		1,144		4,549			—			(760		)	14,562
Depreciation	676		187		387			63			—			1,313
Amortization of regulatory assets, net	290		7		—			—			—			297
Impairment of assets and related charges	—		—		10,665			—			—			10,665
Investment income	49		—		66			10			(41		)	84
Interest expense	586		158		194			219			—			1,157
Income taxes (benefits)	375		187		(3,498		)	(119		)	—			(3,055		)
Net income (loss)	651		331		(6,919		)	(240		)	—			(6,177		)
Total assets	27,702		8,755		5,952			739			—			43,148
Total goodwill	5,004		614		—			—			—			5,618
Property additions	1,063		1,101		619			52			—			2,835

2015
External revenues	$	9,582	$	1,046	$	4,698		$	—		$	(300	)	$	15,026
Internal revenues	—		—		686			—			(686		)	—
Total revenues	9,582		1,046		5,384			—			(986		)	15,026
Depreciation	664		164		394			60			—			1,282
Amortization of regulatory assets, net	165		7		—			—			—			172
Impairment of assets and related charges	8		—		34			—			—			42
Investment income (loss)	42		—		(16		)	(9		)	(39		)	(22		)
Impairment of equity method investment	—		—		—			362			—			362
Interest expense	600		147		192			193			—			1,132
Income taxes (benefits)	325		191		50			(251		)	—			315
Net income (loss)	588		328		89			(427		)	—			578
Total assets	27,390		7,800		16,027			877			—			52,094
Total goodwill	5,092		526		800			—			—			6,418
Property additions	1,040		1,020		588			56			—			2,704