Pension and Other Postretirement Benefits

6 Months Ended

Jun. 30, 2011

Pension and Other Postretirement Benefits [Abstract]

PENSION AND OTHER POSTRETIREMENT BENEFITS

6. PENSION AND OTHER POSTRETIREMENT BENEFITS

FirstEnergy provides noncontributory qualified defined benefit pension plans that cover substantially all of its employees and non-qualified pension plans that cover certain employees. The plans provide defined benefits based on years of service and compensation levels.

FirstEnergy provides a portion of non-contributory pre-retirement basic life insurance for employees who are eligible to retire. Health care benefits, which include certain employee contributions, deductibles and co-payments, are also available upon retirement to certain employees, their dependents and, under certain circumstances, their survivors. FirstEnergy also has obligations to former or inactive employees after employment, but before retirement, for disability-related benefits.

FirstEnergy’s funding policy is based on actuarial computations using the projected unit credit method. During the three months and six months ended June 30, 2011, FirstEnergy made pre-tax contributions to its qualified pension plans of $105 million and $262 million, respectively. FirstEnergy intends to make additional contributions of $116 million and $2 million to its qualified pension plans and postretirement benefit plans, respectively, in the last two quarters of 2011.

As result of the merger with Allegheny, FirstEnergy assumed certain pension and OPEB plans. FirstEnergy measured the funded status of the Allegheny pension plans and postretirement benefit plans other than pensions as of the merger closing date using discount rates of 5.50% and 5.25%, respectively. The fair values of plan assets for Allegheny’s pension plans and postretirement benefit plans other than pensions at the date of the merger were $954 million and $75 million, respectively, and the actuarially determined benefit obligations for such plans as of that date were $1,341 million and $272 million, respectively. The expected returns on plan assets used to calculate net periodic costs for periods in 2011 subsequent to the date of the merger are 8.25% for Allegheny’s qualified pension plan and 5.00% for Allegheny’s postretirement benefit plans other than pensions.

The components of the consolidated net periodic cost for pension and OPEB benefits (including amounts capitalized) were as follows:

	Three Months Ended						Six Months Ended
	June 30						June 30
Pension Benefit Cost (Credit)	2011			2010			2011			2010
	(In millions)
Service cost	$	34		$	25		$	62		$	49
Interest cost		97			79			181			157
Expected return on plan assets		(115	)		(90	)		(216	)		(181	)
Amortization of prior service cost		4			3			7			6
Recognized net actuarial loss		48			47			97			94
Curtailments(1)		—			—			(2	)		—
Special termination benefits(1)		—			—			9			—
Net periodic cost	$	68		$	64		$	138		$	125

⁽¹⁾ Represents costs (credits) incurred related to change in control provision payments to certain executives who were terminated or were expected to be terminated as a result of the merger.

	Three Months Ended						Six Months Ended
	June 30						June 30
Other Postretirement Benefit Cost (Credit)	2011			2010			2011			2010
	(In millions)
Service cost	$	3		$	3		$	7		$	5
Interest cost		12			11			23			22
Expected return on plan assets		(10	)		(9	)		(20	)		(18	)
Amortization of prior service cost		(52	)		(48	)		(100	)		(96	)
Recognized net actuarial loss		14			15			28			30
Net periodic cost (credit)	$	(33	)	$	(28	)	$	(62	)	$	(57	)

Pension and OPEB obligations are allocated to FirstEnergy’s subsidiaries employing the plan participants. The net periodic pension costs and net periodic OPEB (including amounts capitalized) recognized by FirstEnergy’s subsidiaries were as follows:

	Three Months Ended				Six Months Ended
	June 30				June 30
Pension Benefit Cost	2011		2010		2011		2010
	(In millions)
FES	$	22	$	22	$	43	$	44
OE		5		6		11		11
CEI		5		5		10		11
TE		2		2		3		4
JCP&L		5		6		11		12
Met-Ed		3		3		5		5
Penelec		4		5		9		9
Other FirstEnergy Subsidiaries		22		15		46		29
	$	68	$	64	$	138	$	125

	Three Months Ended						Six Months Ended
	June 30						June 30
Other Postretirement Benefit Credit	2011			2010			2011			2010
	(In millions)
FES	$	(8	)	$	(7	)	$	(14	)	$	(13	)
OE		(5	)		(6	)		(12	)		(12	)
CEI		(2	)		(1	)		(3	)		(3	)
TE		—			—			(1	)		(1	)
JCP&L		(2	)		(2	)		(3	)		(4	)
Met-Ed		(2	)		(2	)		(5	)		(4	)
Penelec		(2	)		(2	)		(5	)		(4	)
Other FirstEnergy Subsidiaries		(12	)		(8	)		(19	)		(16	)
	$	(33	)	$	(28	)	$	(62	)	$	(57	)