Segment Information

9 Months Ended

Sep. 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 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 September 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 September 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)

September 30, 2019
External revenues	$	2,590		$	371	$	2		$	—		$	2,963
Internal revenues	46			4		—			(50		)	—
Total revenues	$	2,636		$	375	$	2		$	(50	)	$	2,963
Depreciation	215			71		—			18			304
Amortization of regulatory assets, net	42			1		—			—			43
Miscellaneous income (expense), net	36			4		24			(7		)	57
Interest expense	124			49		95			(7		)	261
Income taxes (benefits)	103			26		(22		)	—			107
Income (loss) from continuing operations	370			113		(94		)	—			389
Property additions	365			304		15			—			684

September 30, 2018
External revenues	$	2,717		$	341	$	6		$	—		$	3,064
Internal revenues	49			5		—			(54		)	—
Total revenues	$	2,766		$	346	$	6		$	(54	)	$	3,064
Depreciation	202			64		1			16			283
Amortization of regulatory assets, net	65			2		—			—			67
Miscellaneous income (expense), net	34			4		19			(8		)	49
Interest expense	127			43		93			(8		)	255
Income taxes (benefits)	126			34		(39		)	—			121
Income (loss) from continuing operations	416			99		(116		)	—			399
Property additions	356			262		5			12			635

For the Nine Months Ended

September 30, 2019
External revenues	$	7,261		$	1,091	$	10		$	—		$	8,362
Internal revenues	140			12		—			(152		)	—
Total revenues	$	7,401		$	1,103	$	10		$	(152	)	$	8,362
Depreciation	644			211		3			52			910
Amortization of regulatory assets, net	79			6		—			—			85
Miscellaneous income (expense), net	128			12		73			(22		)	191
Interest expense	370			142		283			(22		)	773
Income taxes (benefits)	259			87		(65		)	—			281
Income (loss) from continuing operations	957			333		(205		)	—			1,085
Property additions	1,037			835		40			—			1,912

September 30, 2018
External revenues	$	7,540		$	996	$	15		$	—		$	8,551
Internal revenues	154			14		13			(181		)	—
Total revenues	$	7,694		$	1,010	$	28		$	(181	)	$	8,551
Depreciation	598			187		6			52			843
Amortization (deferral) of regulatory assets, net	(194		)	6		—			—			(188		)
Miscellaneous income (expense), net	146			11		34			(27		)	164
Interest expense	384			124		377			(27		)	858
Income taxes (benefits)	357			104		(6		)	—			455
Income (loss) from continuing operations	1,115			302		(529		)	—			888
Property additions	1,011			836		68			27			1,942

As of September 30, 2019
Total assets	$	29,428		$	11,255	$	790		$	33		$	41,506
Total goodwill	5,004			614		—			—			5,618

As of December 31, 2018
Total assets	$	28,690		$	10,404	$	944		$	25		$	40,063
Total goodwill	5,004			614		—			—			5,618