Revenue

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE

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 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 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 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.

FirstEnergy’s revenues are primarily derived from electric service provided by the Utilities and Transmission Companies.

The following tables represent a disaggregation of revenue from contracts with customers for the three and six months ended June 30, 2021 and 2020, by type of service from each reportable segment:

	For the Three Months Ended June 30, 2021
Revenues by Type of Service	Regulated Distribution		Regulated Transmission		Corporate/Other and Reconciling Adjustments (1)		Total
	(In millions)
Distribution services	$	1,304	$	—	$	(26)	$	1,278
Retail generation	831		—		(13)		818
Wholesale sales	74		—		3		77
Transmission	—		411		—		411
Other	26		—		—		26
Total revenues from contracts with customers	$	2,235	$	411	$	(36)	$	2,610
ARP	—		—		—		—
Other non-customer revenue	23		8		(19)		12
Total revenues	$	2,258	$	419	$	(55)	$	2,622

(1) Includes eliminations and reconciling adjustments of inter-segment revenues.

	For the Three Months Ended June 30, 2020
Revenues by Type of Service	Regulated Distribution		Regulated Transmission		Corporate/Other and Reconciling Adjustments (1)		Total
	(In millions)
Distribution services	$	1,241	$	—	$	(22)	$	1,219
Retail generation	826		—		(15)		811
Wholesale sales	50		—		2		52
Transmission	—		380		—		380
Other	31		—		—		31
Total revenues from contracts with customers	$	2,148	$	380	$	(35)	$	2,493
ARP (2)	15		—		—		15
Other non-customer revenue	25		4		(15)		14
Total revenues	$	2,188	$	384	$	(50)	$	2,522

(1) Includes eliminations and reconciling adjustments of inter-segment revenues.

(2) ARP revenue for the three months ended June 30, 2020, is primarily related to the reconciliation of Ohio decoupling rates that became effective on February 1, 2020. See Note 8, “Regulatory Matters,” for further discussion on Ohio decoupling rates.

Other non-customer revenue includes revenue from late payment charges of $9 million and $6 million for the three months ended June 30, 2021 and 2020, respectively. Other non-customer revenue also includes revenue from derivatives of $2 million and $6 million for the three months ended June 30, 2021 and 2020, respectively.

	For the Six Months Ended June 30, 2021
Revenues by Type of Service	Regulated Distribution		Regulated Transmission		Corporate/Other and Reconciling Adjustments (1)		Total
	(In millions)
Distribution services	$	2,643	$	—	$	(52)	$	2,591
Retail generation	1,766		—		(25)		1,741
Wholesale sales	143		—		7		150
Transmission	—		812		—		812
Other	59		—		—		59
Total revenues from contracts with customers	$	4,611	$	812	$	(70)	$	5,353
ARP (2)	(27)		—		—		(27)
Other non-customer revenue	44		12		(34)		22
Total revenues	$	4,628	$	824	$	(104)	$	5,348

(1) Includes eliminations and reconciling adjustments of inter-segment revenues.

(2) Reflects amount the Ohio Companies will collectively refund to customers that was previously collected under decoupling mechanisms, with interest. See Note 8, “Regulatory Matters,” for further discussion on Ohio decoupling rates.

	For the Six Months Ended June 30, 2020
Revenues by Type of Service	Regulated Distribution		Regulated Transmission		Corporate/Other and Reconciling Adjustments (1)		Total
	(In millions)
Distribution services	$	2,497	$	—	$	(43)	$	2,454
Retail generation	1,730		—		(30)		1,700
Wholesale sales	121		—		3		124
Transmission	—		777		—		777
Other	67		—		—		67
Total revenues from contracts with customers	$	4,415	$	777	$	(70)	$	5,122
ARP (2)	83		—		—		83
Other non-customer revenue	48		8		(30)		26
Total revenues	$	4,546	$	785	$	(100)	$	5,231

(1) Includes eliminations and reconciling adjustments of inter-segment revenues.

(2) ARP revenue for the six months ended June 30, 2020, is primarily related to the reconciliation of Ohio decoupling rates that became effective on February 1, 2020. See Note 8, “Regulatory Matters,” for further discussion on Ohio decoupling rates.

Other non-customer revenue includes revenue from late payment charges of $18 million and $16 million for the six months ended June 30, 2021 and 2020, respectively. Other non-customer revenue also includes revenue from derivatives of $2 million and $6 million for the six months ended June 30, 2021 and 2020, respectively.

Regulated Distribution

The Regulated Distribution segment distributes electricity through FirstEnergy’s ten utility operating companies and also controls 3,580 MWs of regulated electric generation capacity located primarily in West Virginia and Virginia. 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 8, “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 six months ended June 30, 2021 and 2020, by class:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Revenues by Customer Class	2021		2020		2021		2020
	(In millions)
Residential	$	1,287	$	1,280	$	2,744	$	2,599
Commercial	562		507		1,103		1,051
Industrial	268		259		526		536
Other	18		21		36		41
Total Revenues	$	2,135	$	2,067	$	4,409	$	4,227

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 as either revenues or purchased power on the Consolidated Statements of Income 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. 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, revenues 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 had ARPs in Ohio primarily for decoupling revenue in 2020, and has reflected refunds of decoupling revenue owed to customers as reductions to ARPs in 2021. Please see Note 8, “Regulatory Matters,” for further discussion on decoupling revenues in Ohio.

Regulated Transmission

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 and JCP&L, as well as stated transmission rates at, MP, PE and WP. MP, PE and WP filed with FERC on October 29, 2020, to convert their existing stated transmission rates to forward-looking formula rates. These transmission rate filings were accepted by FERC on December 31, 2020, effective January 1, 2021, subject to refund, pending further hearing and settlement procedures, and were consolidated with a related formula rate filing submitted by KATCo into a single proceeding. See Note 8, “Regulatory Matters,” for additional information.

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.

The following table represents a disaggregation of revenue from contracts with regulated transmission customers for the three and six months ended June 30, 2021 and 2020, by transmission owner:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Transmission Owner	2021		2020		2021		2020
	(In millions)
ATSI	$	193	$	192	$	398	$	394
TrAIL	57		57		117		121
MAIT	80		58		147		117
JCP&L	46		39		85		77
MP, PE and WP	35		34		65		68
Total Revenues	$	411	$	380	$	812	$	777