Transactions With Affiliated Companies

12 Months Ended

Dec. 31, 2011

Transactions With Affiliated Companies [Abstract]

TRANSACTIONS WITH AFFILIATED COMPANIES

TRANSACTIONS WITH AFFILIATED COMPANIES

FES’ and the Registrant Utilities’ operating revenues, operating expenses, investment income and interest expenses include transactions with affiliated companies. These affiliated company transactions include affiliated company power sales agreements between FirstEnergy's competitive and regulated companies, support service billings, interest on affiliated company notes including the money pools and other transactions.

FirstEnergy's competitive companies provide power through affiliated company power sales to meet a portion of the Ohio and Pennsylvania Companies' POLR and default service requirements. Prior to 2011, Met-Ed and Penelec had a partial requirement PSA with FES to meet a portion of their POLR obligations. The primary affiliated company transactions for FES and the Registrant Utilities during the three years ended December 31, 2011 are as follows:

Affiliated Company Transactions —
2011	FES		OE		CEI		TE		JCP&L		Met-Ed		Penelec
	(In millions)
Revenues:
Electric sales to affiliates	$	752	$	200	$	2	$	55	$	—	$	—	$	—
Ground lease with ATSI	—		12		7		2		—		—		—
Other	80		1		3		—		—		10		—
Expenses:
Purchased power from affiliates	252		287		143		94		—		143		208
Fuel	37		—		—		—		—		—		—
Support services	655		130		51		53		90		53		54
Investment Income:
Interest income from affiliates	—		—		—		9		—		—		—
Interest income from FE	2		—		—		—		—		—		—
Interest Expense:
Interest expense to affiliates	5		4		10		1		4		3		2
Interest expense to FE	1		—		—		—		1		1		1

Affiliated Company Transactions —
2010	FES		OE		CEI		TE		JCP&L		Met-Ed		Penelec
	(In millions)
Revenues:
Electric sales to affiliates	$	2,227	$	190	$	2	$	46	$	—	$	73	$	65
Ground lease with ATSI	—		12		7		2		—		—		—
Other	88		1		7		1		—		10		—
Expenses:
Purchased power from affiliates	371		522		361		181		—		612		643
Fuel	46		—		—		—		—		—		—
Support services	620		128		64		52		94		59		58
Investment Income:
Interest income from affiliates	—		—		—		12		—		—		—
Interest income from FE	3		—		—		—		—		—		—
Interest Expense:
Interest expense to affiliates	9		3		14		1		4		2		2
Interest expense to FE	—		—		1		—		—		—		—

Affiliated Company Transactions —
2009	FES		OE		CEI		TE		JCP&L		Met-Ed		Penelec
	(In millions)
Revenues:
Electric sales to affiliates	$	2,826	$	189	$	2	$	38	$	—	$	—	$	—
Ground lease with ATSI	—		12		7		2		—		—		—
Other	30		1		6		1		—		10		—
Expenses:
Purchased power from affiliates	222		993		735		393		—		365		342
Fuel	15		—		—		—		—		—		—
Support services	584		141		62		59		91		54		57
Investment Income:
Interest income from affiliates	—		15		—		17		—		—		—
Interest income from FE	4		1		—		—		—		1		—
Interest Expense:
Interest expense to affiliates	6		5		17		2		4		3		2
Interest expense to FE	4		1		1		1		—		—		1

FirstEnergy does not bill directly or allocate any of its costs to any subsidiary company. Costs are allocated to FES and the Registrant Utilities from FESC, AESC and FENOC. The majority of costs are directly billed or assigned at no more than cost. The remaining costs are for services that are provided on behalf of more than one company, or costs that cannot be precisely identified and are allocated using formulas developed by FESC, AESC and FENOC. The current allocation or assignment formulas used and their bases include multiple factor formulas: each company’s proportionate amount of FirstEnergy’s aggregate direct payroll, number of employees, asset balances, revenues, number of customers, other factors and specific departmental charge ratios. Management believes that these allocation methods are reasonable. Intercompany transactions are generally settled under commercial terms within thirty days.

FES and the Utilities are parties to an intercompany income tax allocation agreement with FirstEnergy and its other subsidiaries that provides for the allocation of consolidated tax liabilities. Net tax benefits attributable to FirstEnergy are generally reallocated to the subsidiaries of FirstEnergy that have taxable income. That allocation is accounted for as a capital contribution to the company receiving the tax benefit (see Note 5, Taxes).