Segment Information

6 Months Ended

Jun. 30, 2019

Regulated Distribution and Regulated Transmission are FirstEnergy’s reportable segments.

On March 31, 2018, as discussed in Note 3, “Discontinued Operations,” FirstEnergy deconsolidated FES and FENOC and presented FES, FENOC, BSPC and a portion of AE Supply, representing substantially all of FirstEnergy’s operations that previously comprised the CES reportable operating segment, as discontinued operations in FirstEnergy’s consolidated financial statements resulting from actions taken as part of the strategic review to exit commodity-exposed generation. The financial information for all periods has been revised to present the discontinued operations within Reconciling Adjustments. The remaining business activities that previously comprised the CES reportable operating segment were not material and, as such, have been combined into Corporate/Other for reporting purposes.

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 costs of securing and delivering electric generation from transmission facilities to customers, including the deferral and amortization of certain related costs.

The Regulated Transmission segment provides transmission infrastructure owned and operated by the Transmission Companies and certain of FirstEnergy’s utilities (JCP&L, MP, PE and WP) to transmit electricity from generation sources to distribution facilities. The segment’s revenues are primarily derived from forward-looking formula rates at the Transmission Companies as well as stated transmission rates at certain of JCP&L, MP, PE and WP. Both the forward-looking formula and stated rates recover costs that the regulatory agencies determine are permitted to be recovered and provide a return on transmission capital investment. Under forward-looking formula rates, the revenue requirement is updated annually based on a projected rate base and projected costs, which is 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 Corporate/Other segment reflects corporate support not charged to FE’s subsidiaries, interest expense on FE’s holding company debt and other businesses that do not constitute an operating segment. Reconciling adjustments for the elimination of inter-segment transactions and discontinued operations are shown separately in the following table of Segment Financial Information. As of June 30, 2019, 67 MWs of electric generating capacity, representing AE Supply’s OVEC capacity entitlement, was included in continuing operations of the Corporate/Other reportable segment. As of June 30, 2019, Corporate/Other had approximately $7.1 billion of FE holding company debt.

Financial information for each of FirstEnergy’s reportable segments is presented in the tables below:

Segment Financial Information



For the Three Months Ended	Regulated Distribution			Regulated Transmission		Corporate/ Other			Reconciling Adjustments			Consolidated
	(In millions)

June 30, 2019
External revenues	$	2,145		$	368	$	3		$	—		$	2,516
Internal revenues	47			4		—			(51		)	—
Total revenues	$	2,192		$	372	$	3		$	(51	)	$	2,516
Depreciation	220			71		1			17			309
Amortization of regulatory assets, net	34			3		—			—			37
Miscellaneous income, net	46			4		38			(8		)	80
Interest expense	124			48		95			(8		)	259
Income taxes (benefits)	67			30		(16		)	—			81
Income (loss) from continuing operations	258			116		(33		)	—			341
Property additions	354			300		20			—			674

June 30, 2018
External revenues	$	2,285		$	336	$	4		$	—		$	2,625
Internal revenues	67			5		7			(79		)	—
Total revenues	$	2,352		$	341	$	11		$	(79	)	$	2,625
Depreciation	200			62		3			18			283
Deferral of regulatory assets, net	(107		)	—		—			—			(107		)
Miscellaneous income (expense), net	56			3		(1		)	(10		)	48
Interest expense	129			42		194			(10		)	355
Income taxes (benefits)	138			38		(75		)	—			101
Income (loss) from continuing operations	377			104		(173		)	—			308
Property additions	391			282		44			7			724

For the Six Months Ended

June 30, 2019
External revenues	$	4,671		$	720	$	8		$	—		$	5,399
Internal revenues	94			8		—			(102		)	—
Revenues	$	4,765		$	728	$	8		$	(102	)	$	5,399
Depreciation	429			140		3			34			606
Amortization of regulatory assets, net	37			5		—			—			42
Miscellaneous income, net	92			8		49			(15		)	134
Interest expense	246			93		188			(15		)	512
Income taxes (benefits)	156			61		(43		)	—			174
Income (loss) from continuing operations	587			220		(111		)	—			696
Property additions	672			531		25			—			1,228

June 30, 2018
External revenues	$	4,823		$	655	$	9		$	—		$	5,487
Internal revenues	105			9		13			(127		)	—
Revenues	$	4,928		$	664	$	22		$	(127	)	$	5,487
Depreciation	396			123		5			36			560
Amortization (deferral) of regulatory assets, net	(259		)	4		—			—			(255		)
Miscellaneous income, net	112			7		15			(19		)	115
Interest expense	257			81		284			(19		)	603
Income taxes	231			70		33			—			334
Income (loss) from continuing operations	699			203		(413		)	—			489
Property additions	655			574		55			23			1,307

As of June 30, 2019
Total assets	$	29,240		$	11,070	$	574		$	—		$	40,884
Total goodwill	5,004			614		—			—			5,618

As of December 31, 2018
Total assets	$	28,690		$	10,404	$	969		$	—		$	40,063
Total goodwill	5,004			614		—			—			5,618