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Income Taxes
3 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES
 
FirstEnergy’s interim effective tax rates reflect the estimated annual effective tax rates for 2019 and 2018. These tax rates are affected by estimated annual permanent items, such as AFUDC equity and other flow-through items, as well as discrete items that may occur in any given period, but are not consistent from period to period.

FirstEnergy's effective tax rate for the three months ended March 31, 2019 and 2018 was 20.8% and 56.3%, respectively. The higher effective tax rate in 2018 was primarily due to a one-time charge of $126 million to income tax expense in continuing operations associated with the re-measurement of West Virginia state deferred income taxes, resulting from the legal and financial separation of FES and FENOC from FirstEnergy, which occurred in the first quarter of 2018. See Note 3, "Discontinued Operations" for other tax matters relating to the FES Bankruptcy that were recognized in discontinued operations. Furthermore, starting in 2018, FirstEnergy’s regulated entities began amortizing the net excess deferred income taxes, which resulted in a net income tax benefit, reducing the effective tax rate. See Note 13, “Regulatory Matters,” for additional detail.

During the three months ended March 31, 2019, FirstEnergy increased its reserve for uncertain tax benefits by approximately $5 million, none of which had an impact to the effective tax rate as the full amount was recorded within discontinued operations. As of March 31, 2019, it is reasonably possible that FirstEnergy could record a net decrease to its reserve for uncertain tax positions by approximately $45 million within the next twelve months due to the statute of limitations expiring or resolution with taxing authorities, of which approximately $40 million would impact FirstEnergy's effective tax rate.