FirstEnergy accounts for revenues from contracts with customers under ASC 606, “Revenue from Contracts with Customers.” Revenue from leases, financial instruments, other contractual rights or obligations and other revenues that are not from contracts with customers are outside the scope of the new standard and accounted for under other existing GAAP. FirstEnergy has elected to exclude sales taxes and other similar taxes collected on behalf of third parties from revenue as prescribed in the new standard. As a result, tax collections and remittances are excluded from recognition in the income statement and instead recorded through the balance sheet. Excise and gross receipts taxes that are assessed on FirstEnergy are not subject to the election and are included in revenue. FirstEnergy has elected the optional invoice practical expedient for most of its revenues and, with the exception of JCP&L transmission, utilizes the optional short-term contract exemption for transmission revenues due to the annual establishment of revenue requirements, which eliminates the need to provide certain revenue disclosures regarding unsatisfied performance obligations.



	For the Three Months Ended September 30, 2019
Revenues by Type of Service	Regulated Distribution		Regulated Transmission		Corporate/Other and Reconciling Adjustments ⁽¹⁾			Total
	(In millions)
Distribution services⁽²⁾	$	1,457	$	—	$	(21	)	$	1,436
Retail generation	989		—		(14		)	975
Wholesale sales	100		—		2			102
Transmission⁽²⁾	—		371		—			371
Other	42		—		—			42
Total revenues from contracts with customers	$	2,588	$	371	$	(33	)	$	2,926
ARP	25		—		—			25
Other non-customer revenue	23		4		(15		)	12
Total revenues	$	2,636	$	375	$	(48	)	$	2,963

⁽²⁾Includes reductions to revenue related to amounts subject to refund resulting from the Tax Act ($4 million at Regulated Distribution and $4 million at Regulated Transmission) and Rider DMR as discussed in Note 12, “Regulatory Matters” (approximately $31 million at Regulated Distribution).



	For the Three Months Ended September 30, 2018
Revenues by Type of Service	Regulated Distribution		Regulated Transmission		Corporate/Other and Reconciling Adjustments ⁽¹⁾			Total
	(In millions)
Distribution services⁽²⁾	$	1,440	$	—	$	(22	)	$	1,418
Retail generation	1,059		—		(14		)	1,045
Wholesale sales	133		—		6			139
Transmission⁽²⁾	—		341		—			341
Other	43		—		—			43
Total revenues from contracts with customers	$	2,675	$	341	$	(30	)	$	2,986
ARP	66		—		—			66
Other non-customer revenue	25		5		(18		)	12
Total revenues	$	2,766	$	346	$	(48	)	$	3,064

Other non-customer revenue includes revenue from late payment charges of $9 million for both the three months ended September 30, 2019 and 2018, as well as revenue from derivatives of $2 million and $4 million, for the three months ended September 30, 2019 and 2018, respectively.



	For the Nine Months Ended September 30, 2019
Revenues by Type of Service	Regulated Distribution		Regulated Transmission		Corporate/Other and Reconciling Adjustments ⁽¹⁾			Total
	(In millions)
Distribution services⁽²⁾	$	3,903	$	—	$	(63	)	$	3,840
Retail generation	2,853		—		(42		)	2,811
Wholesale sales	316		—		9			325
Transmission⁽²⁾	—		1,090		—			1,090
Other	113		—		1			114
Total revenues from contracts with customers	$	7,185	$	1,090	$	(95	)	$	8,180
ARP	142		—		—			142
Other non-customer revenue	74		13		(47		)	40
Total revenues	$	7,401	$	1,103	$	(142	)	$	8,362

⁽²⁾Includes reductions to revenue related to amounts subject to refund resulting from the Tax Act ($31 million at Regulated Distribution and $11 million at Regulated Transmission) and Rider DMR as discussed in Note 12, “Regulatory Matters” (approximately $31 million at Regulated Distribution).



	For the Nine Months Ended September 30, 2018
Revenues by Type of Service	Regulated Distribution		Regulated Transmission		Corporate/Other and Reconciling Adjustments ⁽¹⁾			Total
	(In millions)
Distribution services⁽²⁾	$	3,949	$	—	$	(81	)	$	3,868
Retail generation	2,981		—		(42		)	2,939
Wholesale sales	377		—		16			393
Transmission⁽²⁾	—		996		—			996
Other	113		—		4			117
Total revenues from contracts with customers	$	7,420	$	996	$	(103	)	$	8,313
ARP	190		—		—			190
Other non-customer revenue	84		14		(50		)	48
Total revenues	$	7,694	$	1,010	$	(153	)	$	8,551

Other non-customer revenue includes revenue from late payment charges of $29 million and $28 million, as well as revenue from derivatives of $7 million and $18 million, for the nine months ended September 30, 2019 and 2018, respectively.

The Regulated Distribution segment distributes electricity through FirstEnergy’s ten utility operating companies and also controls 3,790 MWs of regulated electric generation capacity located primarily in West Virginia, Virginia and New Jersey. Each of the Utilities earns revenue from state-regulated rate tariffs under which it provides distribution services to residential, commercial and industrial customers in its service territory. The Utilities are obligated under the regulated construct to deliver power to customers reliably, as it is needed, which creates an implied monthly contract with the end-use customer. See Note 12, “Regulatory Matters,” for additional information on rate recovery mechanisms. Distribution and electric revenues are recognized over time as electricity is distributed and delivered to the customer and the customers consume the electricity immediately as delivery occurs.

Retail generation sales relate to POLR, SOS, SSO and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland, as well as generation sales in West Virginia that are regulated by the WVPSC. Certain of the Utilities have default service

obligations to provide power to non-shopping customers who have elected to continue to receive service under regulated retail tariffs. The volume of these sales varies depending on the level of shopping that occurs. Supply plans vary by state and by service territory. Default service for the Ohio Companies, Pennsylvania Companies, JCP&L and PE’s Maryland jurisdiction are provided through a competitive procurement process approved by each state’s respective commission. Retail generation revenues are recognized over time as electricity is delivered and consumed immediately by the customer.

The following table represents a disaggregation of the Regulated Distribution segment revenue from contracts with distribution service and retail generation customers for the three and nine months ended September 30, 2019 and 2018, by class:



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Revenues by Customer Class	2019		2018		2019		2018
	(In millions)
Residential	$	1,538	$	1,572	$	4,145	$	4,290
Commercial	600		628		1,759		1,778
Industrial	286		276		786		792
Other	22		23		66		70
Total Revenues	$	2,446	$	2,499	$	6,756	$	6,930

Wholesale sales primarily consist of generation and capacity sales into the PJM market from FirstEnergy’s regulated electric generation capacity and NUGs. Certain of the Utilities may also purchase power in the PJM markets to supply power to their customers. Generally, these power sales from generation and purchases to serve load are netted hourly and reported gross as either revenues or purchased power on the Consolidated Statements of Income (Loss) based on whether the entity was a net seller or buyer each hour. Capacity revenues are recognized ratably over the PJM planning year at prices cleared in the annual PJM Reliability Pricing Model Base Residual Auction and incremental auctions. Capacity purchases and sales through PJM capacity auctions are reported within revenues on the Consolidated Statements of Income (Loss). Certain capacity income (bonuses) and charges (penalties) related to the availability of units that have cleared in the auctions are unknown and not recorded in revenue until, and unless, they occur.

The Utilities’ distribution customers are metered on a cycle basis. An estimate of unbilled revenues is calculated to recognize electric service provided from the last meter reading through the end of the month. This estimate includes many factors, among which are historical customer usage, load profiles, estimated weather impacts, customer shopping activity and prices in effect for each class of customer. In each accounting period, the Utilities accrue the estimated unbilled amount as revenue and reverse the related prior period estimate. Customer payments vary by state but are generally due within 30 days.

ASC 606 excludes industry-specific accounting guidance for recognizing revenue from ARPs as these programs represent contracts between the utility and its regulators, as opposed to customers. Therefore, revenue from these programs are not within the scope of ASC 606 and regulated utilities are permitted to continue to recognize such revenues in accordance with existing practice but are presented separately from revenue arising from contracts with customers. FirstEnergy currently has ARPs in Ohio, primarily under Rider DMR, and in New Jersey. Please see Note 12, “Regulatory Matters,” for further discussion on Rider DMR.

The Regulated Transmission segment provides transmission infrastructure owned and operated by ATSI, TrAIL, MAIT 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 ATSI, TrAIL and MAIT, 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. Revenue requirements under stated rates are calculated annually by multiplying the highest one-hour peak load in each respective transmission zone by the approved, stated rate in that zone. Revenues and cash receipts for the stand-ready obligation of providing transmission service are recognized ratably over time.



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Transmission Owner	2019		2018		2019		2018
	(In millions)
ATSI	$	184	$	167	$	542	$	492
TrAIL	55		60		172		183
MAIT	58		43		157		106
Other	74		71		219		215
Total Revenues	$	371	$	341	$	1,090	$	996