Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2011


Derivative Assets

	Fair Value
	June 30,		December 31,
	2011		2010
	*(In millions)*

Power Contracts
Current Assets	$	210	$	96
Noncurrent Assets		102		40
FTRs
Current Assets		13		—
Noncurrent Assets		—		—
NUGs
Current Assets		4		3
Noncurrent Assets		71		119
Interest Rate Swaps
Current Assets		4		—
Noncurrent Assets		—		—
Other
Current Assets		—		10
Noncurrent Assets		—		—

Total Derivatives	$	404	$	268


Derivative Liabilities

	Fair Value
	June 30,		December 31,
	2011		2010
	*(In millions)*

Power Contracts
Current Liabilities	$	274	$	209
Noncurrent Liabilities		88		38
FTRs
Current Liabilities		7		—
Noncurrent Liabilities		—		—
NUGs
Current Liabilities		317		229
Noncurrent Liabilities		205		238
Interest Rate Swaps
Current Liabilities		5		—
Noncurrent Liabilities		—		—
Other
Current Liabilities		—		—
Noncurrent Liabilities		—		—

Total Derivatives	$	896	$	714

Volume of First Energy's outstanding derivative transactions


	Purchases		Sales			Net			Units
	*(In thousands)*
Power Contracts		45,573		(59,549	)		(13,976	)	MWH
FTRs		53,656		—			53,656		MWH
Interest Rate Swaps		200,000		(200,000	)		—		notional dollars
NUGs		26,903		—			26,903		MWH

Effect of derivative instruments on statements of income and comprehensive income


	Three Months Ended June 30,
	Power					Interest
	Contracts			FTRs		Rate Swaps		Other			Total
	*(In millions)*
Derivatives in a Hedging Relationship
2011
Gain (Loss) Recognized in AOCL (Effective Portion)	$	14		$	—	$	—	$	—		$	14
Effective Gain (Loss) Reclassified to: ⁽¹⁾
Purchase Power Expense		—			—		—		—			—
Revenues		—			—		—		—			—

2010
Gain (Loss) Recognized in AOCL (Effective Portion)	$	—		$	—	$	—	$	3		$	3
Effective Gain (Loss) Reclassified to:⁽¹⁾
Purchase Power Expense		(3	)		—		—		—			(3	)
Revenues		(5	)		—		—		—			(5	)
Fuel Expense		—			—		—		(4	)		(4	)



Derivatives Not in a Hedging Relationship
2011
Unrealized Gain (Loss) Recognized in:
Purchase Power Expense	$	33		$	—		$	—	$	—	$	33
Revenues		(4	)		—			—		—		(4	)
Other Operating Expense		(34	)		13			—		—		(21	)

Realized Gain (Loss) Reclassified to:
Purchase Power Expense		1			—			—		—		1
Revenues		(39	)		18			—		—		(21	)
Other Operating Expense		—			(59	)		—		—		(59	)

2010
Unrealized Gain (Loss) Recognized in:
Purchase Power Expense	$	66		$	—		$	—	$	—	$	66

Realized Gain (Loss) Reclassified to:
Purchase Power Expense		(26	)		—			—		—		(26	)


	Six Months Ended June 30,
	Power						Interest
	Contracts			FTRs			Rate Swaps		Other			Total
	*(In millions)*
Derivatives in a Hedging Relationship
2011
Gain (Loss) Recognized in AOCL (Effective Portion)	$	5		$	—		$	—	$	—		$	5
Effective Gain (Loss) Reclassified to: ⁽¹⁾
Purchase Power Expense		16			—			—		—			16
Revenues		(12	)		—			—		—			(12	)

2010
Gain (Loss) Recognized in AOCL (Effective Portion)	$	(2	)	$	—		$	—	$	6		$	4
Effective Gain (Loss) Reclassified to:⁽¹⁾
Purchase Power Expense		(7	)		—			—		—			(7	)
Revenues		(5	)		—			—		—			(5	)
Fuel Expense		—			—			—		(8	)		(8	)

Derivatives Not in a Hedging Relationship
2011
Unrealized Gain (Loss) Recognized in:
Purchase Power Expense	$	61		$	—		$	—	$	—		$	61
Revenues		(3	)		—			—		—			(3	)
Other Operating Expense		(54	)		13			1		—			(40	)

Realized Gain (Loss) Reclassified to:
Purchase Power Expense		(36	)		—			—		—			(36	)
Revenues		(29	)		26			—		—			(3	)
Other Operating Expense		—			(87	)		—		—			(87	)

2010
Unrealized Gain (Loss) Recognized in:
Purchase Power Expense	$	39		$	—		$	—	$	—		$	39

Realized Gain (Loss) Reclassified to:
Purchase Power Expense		(49	)		—			—		—			(49	)

Derivatives not in a hedging relationship with regulatory offset


Derivatives Not in a Hedging	Three Months Ended June 30,
Relationship with Regulatory Offset⁽²⁾	NUGs			Other			Total
	*(In millions)*
2011
Unrealized Gain (Loss) to Derivative Instrument:	$	(147	)	$	2		$	(145	)
Unrealized Gain (Loss) to Regulatory Assets:		147			(2	)		145

Realized Gain (Loss) to Derivative Instrument:		62			—			62
Realized Gain (Loss) to Regulatory Assets:		(62	)		—			(62	)

2010
Unrealized Gain (Loss) to Derivative Instrument:	$	(35	)		—		$	(35	)
Unrealized Gain (Loss) to Regulatory Assets:		35			—			35

Realized Gain (Loss) to Derivative Instrument:		68			—			68
Realized Gain (Loss) to Regulatory Assets:		(68	)		—			(68	)


Derivatives Not in a Hedging	Six Months Ended June 30,
Relationship with Regulatory Offset⁽²⁾	NUGs			Other			Total
	*(In millions)*
2011
Unrealized Gain (Loss) to Derivative Instrument:	$	(236	)	$	2		$	(234	)
Unrealized Gain (Loss) to Regulatory Assets:		236			(2	)		234

Realized Gain (Loss) to Derivative Instrument:		134			(10	)		124
Realized Gain (Loss) to Regulatory Assets:		(134	)		10			(124	)

2010
Unrealized Gain (Loss) to Derivative Instrument:	$	(259	)		—		$	(259	)
Unrealized Gain (Loss) to Regulatory Assets:		259			—			259

Realized Gain (Loss) to Derivative Instrument:		146			(9	)		137
Realized Gain (Loss) to Regulatory Assets:		(146	)		9			(137	)


⁽¹⁾		The ineffective portion was immaterial.

⁽²⁾		Changes in the fair value of certain contracts are deferred for future recovery from (or refund to) customers.

Reconciliation of changes in the fair value of certain contracts that are deferred


	Three Months Ended June 30,
Derivatives Not in a Hedging Relationship with Regulatory Offset⁽¹⁾	NUGs			Other		Total
	*(In millions)*
Outstanding net asset (liability) as of April 1, 2011	$	(362	)	$	—	$	(362	)
Additions/Change in value of existing contracts		(147	)		2		(145	)
Settled contracts		62			—		62

Outstanding net asset (liability) as of June 30, 2011	$	(447	)	$	2	$	(445	)


Outstanding net asset (liability) as of April 1, 2010	$	(590	)	$	10	$	(580	)
Additions/Change in value of existing contracts		(35	)		—		(35	)
Settled contracts		68			—		68

Outstanding net asset (liability) as of June 30, 2010	$	(557	)	$	10	$	(547	)


	Six Months Ended June 30,
Derivatives Not in a Hedging Relationship with Regulatory Offset⁽¹⁾	NUGs			Other			Total
	*(In millions)*
Outstanding net asset (liability) as of January 1, 2011	$	(345	)	$	10		$	(335	)
Additions/Change in value of existing contracts		(236	)		2			(234	)
Settled contracts		134			(10	)		124

Outstanding net asset (liability) as of June 30, 2011	$	(447	)	$	2		$	(445	)


Outstanding net asset (liability) as of January 1, 2010	$	(444	)	$	19		$	(425	)
Additions/Change in value of existing contracts		(259	)		—			(259	)
Settled contracts		146			(9	)		137

Outstanding net asset (liability) as of June 30, 2010	$	(557	)	$	10		$	(547	)


⁽¹⁾		Changes in the fair value of certain contracts are deferred for future recovery from (or refund to) customers.

- Definition

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

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