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Pension and Other Postretirement Benefits
9 Months Ended
Sep. 30, 2011
Compensation and Retirement Disclosure [Abstract] 
PENSION AND OTHER POSTRETIREMENT BENEFITS
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 and nine months ended September 30, 2011, FirstEnergy made pre-tax contributions to its qualified pension plans of $112 million and $375 million, respectively.
As a result of the merger with AE, FirstEnergy assumed certain pension and OPEB plans. FirstEnergy measured the funded status of the Allegheny pension plans and other postretirement benefit plans 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 other postretirement benefit plans 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 other postretirement benefit plans.
The components of the consolidated net periodic cost for pension and OPEB benefits (including amounts capitalized) were as follows:

 
 
Three Months
Ended September 30
 
Nine Months
Ended September 30
Pension Benefit Cost (Credit)
 
2011
 
2010
 
2011
 
2010
 
 
(In millions)
Service cost
 
$
34

 
$
25

 
$
97

 
$
74

Interest cost
 
96

 
79

 
277

 
236

Expected return on plan assets
 
(115
)
 
(90
)
 
(332
)
 
(271
)
Amortization of prior service cost
 
4

 
3

 
12

 
10

Recognized net actuarial loss
 
49

 
47

 
146

 
141

Curtailments(1)
 
—

 
—

 
(2
)
 
—

Special termination benefits(1)
 
—

 
—

 
9

 
—

Net periodic cost
 
$
68

 
$
64

 
$
207

 
$
190

(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 September 30
 
Nine Months
Ended September 30
Other Postretirement Benefit Cost (Credit)
 
2011
 
2010
 
2011
 
2010
 
 
(In millions)
Service cost
 
$
4

 
$
2

 
$
10

 
$
7

Interest cost
 
13

 
11

 
36

 
33

Expected return on plan assets
 
(10
)
 
(9
)
 
(30
)
 
(27
)
Amortization of prior service cost
 
(51
)
 
(48
)
 
(151
)
 
(144
)
Recognized net actuarial loss
 
14

 
15

 
42

 
45

Net periodic cost (credit)
 
$
(30
)
 
$
(29
)
 
$
(93
)
 
$
(86
)

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 September 30
 
Nine Months
Ended September 30
Pension Benefit Cost
 
2011
 
2010
 
2011
 
2010
 
 
(In millions)
FES
 
$
22

 
$
22

 
$
66

 
$
66

OE
 
6

 
6

 
16

 
17

CEI
 
5

 
5

 
15

 
16

TE
 
1

 
2

 
4

 
5

JCP&L
 
5

 
6

 
15

 
19

Met-Ed
 
3

 
3

 
9

 
8

Penelec
 
4

 
5

 
13

 
14

Other FirstEnergy Subsidiaries
 
22

 
15

 
69

 
45

 
 
$
68

 
$
64

 
$
207

 
$
190

 
 
Three Months
Ended September 30
 
Nine Months
Ended September 30
Other Postretirement Benefit Credit
 
2011
 
2010
 
2011
 
2010
 
 
(In millions)
FES
 
$
(8
)
 
$
(7
)
 
$
(22
)
 
$
(20
)
OE
 
(6
)
 
(6
)
 
(17
)
 
(19
)
CEI
 
(1
)
 
(1
)
 
(5
)
 
(4
)
TE
 
(1
)
 
—

 
(1
)
 
(1
)
JCP&L
 
(1
)
 
(2
)
 
(5
)
 
(5
)
Met-Ed
 
(2
)
 
(2
)
 
(7
)
 
(6
)
Penelec
 
(2
)
 
(2
)
 
(7
)
 
(6
)
Other FirstEnergy Subsidiaries
 
(9
)
 
(9
)
 
(29
)
 
(25
)
 
 
$
(30
)
 
$
(29
)
 
$
(93
)
 
$
(86
)