Segment Information

9 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

With the completion of the AE merger in the first quarter of 2011, FirstEnergy reorganized its management structure, which resulted in changes to its operating segments to be consistent with the manner in which management views the business. The new structure supports the combined company’s primary operations — distribution, transmission, generation and the marketing and sale of its products. The external segment reporting is consistent with the internal financial reporting used by FirstEnergy’s chief executive officer (its chief operating decision maker) to regularly assess the performance of the business and allocate resources. FirstEnergy now has three reportable operating segments — Regulated Distribution, Regulated Independent Transmission and Competitive Energy Services.

Prior to the change in composition of business segments, FirstEnergy’s business was comprised of two reportable operating segments. The Energy Delivery Services segment was comprised of FirstEnergy’s then eight existing utility operating companies that transmit and distribute electricity to customers and purchase power to serve their POLR and default service requirements. The Competitive Energy Services segment was comprised of FES, which supplies electric power to end-use customers through retail and wholesale arrangements. The “Other/Corporate” amounts consisted of corporate items and other businesses that were below the quantifiable threshold for separate disclosure. Disclosures for FirstEnergy’s operating segments for 2010 have been reclassified to conform to the current presentation.

The changes in FirstEnergy’s reportable segments during 2011 consisted primarily of the following:

• Energy Delivery Services was renamed Regulated Distribution and the operations of MP, PE and WP, which were acquired as part of the merger with AE, and certain regulatory asset recovery mechanisms formerly included in the “Other” segment, were placed into this segment.

• A new Regulated Independent Transmission segment was created consisting of ATSI, and the operations of TrAIL and FirstEnergy’s interest in PATH; TrAIL and PATH were acquired as part of the merger with AE. The transmission assets and operations of JCP&L, Met-Ed, Penelec, MP, PE and WP remained within the Regulated Distribution segment.

• AE Supply, an operator of generation facilities that was acquired as part of the merger with AE, was placed into the Competitive Energy Services segment.

The Regulated Distribution segment distributes electricity through FirstEnergy’s ten utility operating companies, serving approximately 6 million customers within 67,000 square miles of Ohio, Pennsylvania, West Virginia, Maryland, New Jersey and New York, and purchases power for its POLR, SOS and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland. This segment also includes the transmission operations of JCP&L, Met-Ed, Penelec, WP, MP and PE and the regulated electric generation facilities in West Virginia and New Jersey which MP and JCP&L, respectively, own or contractually control.

The Regulated Distribution segment’s revenues are primarily derived from the delivery of electricity within FirstEnergy’s service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR, SOS or default service) in its Maryland, New Jersey, Ohio and Pennsylvania franchise areas. Its results reflect the commodity costs of securing electric generation from FES and AE Supply and from non-affiliated power suppliers and the deferral and amortization of certain fuel costs.

The Regulated Independent Transmission segment transmits electricity through transmission lines and its revenues are primarily derived from the formula rate recovery of costs and a return on investment for capital expenditures in connection with TrAIL, PATH and other projects and revenues from providing transmission services to electric energy providers, power marketers and receiving transmission-related revenues from operating a portion of the FirstEnergy transmission system. Its results reflect the net PJM and MISO transmission expenses related to the delivery of the respective generation loads. On June 1, 2011, the ATSI transmission assets previously dedicated to MISO were integrated into the PJM market. All of FirstEnergy’s assets now reside in one RTO.

The Competitive Energy Services segment, through FES and AE Supply, supplies electric power to end-use customers through retail and wholesale arrangements, including affiliated company power sales to meet a portion of the POLR and default service requirements of FirstEnergy’s Ohio and Pennsylvania utility subsidiaries and competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Michigan, New Jersey and Maryland. FES purchases the entire output of the 18 generating facilities which it owns and operates through its FGCO subsidiary (fossil and hydroelectric generating facilities) and owns, through its NGC subsidiary, FirstEnergy’s nuclear generating facilities. FENOC, a separate subsidiary of FirstEnergy, operates and maintains NGC’s nuclear generating facilities as well as the output relating to leasehold interests of OE and TE in certain of those facilities that are subject to sale and leaseback arrangements with non-affiliates, pursuant to full output, cost-of-service PSAs. AE Supply together with its consolidated subsidiary, AGC owns, operates and controls the electric generation capacity of 18 facilities. AGC owns and sells generation capacity to AE Supply and MP, which own approximately 59% and 41% of AGC, respectively. AGC’s sole asset is a 40% undivided interest in the Bath County, Virginia pumped-storage hydroelectric generation facility and its connecting transmission facilities. All of AGC’s revenues are derived from sales of its 1,109 MW share of generation capacity from the Bath County generation facility to AE Supply and MP.

This Competitive Energy Services segment controls approximately 20,000 MWs of capacity and also purchases electricity to meet sales obligations. The segment’s net income is primarily derived from affiliated and non-affiliated electric generation sales less the related costs of electricity generation, including purchased power and net transmission (including congestion) and ancillary costs charged by PJM and MISO (prior to June 1, 2011) to deliver energy to the segment’s customers.

Other/Corporate contains corporate items and other businesses that are below the quantifiable threshold for separate disclosure as a reportable segment.

Financial information for each of FirstEnergy’s reportable segments is presented in the table below, which includes financial results for Allegheny beginning February 25, 2011. FES and the Utility Registrants do not have separate reportable operating segments.

Segment Financial Information

Three Months Ended	Regulated Distribution		Competitive Energy Services			Regulated Independent Transmission		Other/Corporate			Reconciling Adjustments			Consolidated
	(In millions)
September 30, 2011
External revenues	$	2,934	$	1,714		$	106	$	(39	)	$	(9	)	$	4,706
Internal revenues	1		315			—		—			(303		)	13
Total revenues	2,935		2,029			106		(39		)	(312		)	4,719
Depreciation and amortization	282		110			16		6			—			414
Investment income (loss), net	32		28			—		—			(12		)	48
Net interest charges	144		73			12		21			—			250
Income taxes	170		136			20		(23		)	8			311
Net income (loss)	288		232			34		(39		)	(6		)	509
Total assets	26,951		16,541			2,353		816			—			46,661
Total goodwill	5,551		897			—		—			—			6,448
Property additions	281		197			34		—			—			512
September 30, 2010
External revenues	$	2,685	$	1,002		$	73	$	(22	)	$	(10	)	$	3,728
Internal revenues	60		599			—		—			(659		)	—
Total revenues	2,745		1,601			73		(22		)	(669		)	3,728
Depreciation and amortization	278		67			9		4			—			358
Investment income (loss), net	24		27			—		1			(6		)	46
Net interest charges	125		33			6		7			(4		)	167
Income taxes	124		(16		)	13		(9		)	7			119
Net income (loss)	202		(26		)	22		(14		)	(9		)	175
Total assets	21,763		11,078			1,011		856			—			34,708
Total goodwill	5,551		24			—		—			—			5,575
Property additions	191		264			18		(2		)	—			471
Nine Months Ended
September 30, 2011
External revenues	$	7,687	$	4,450		$	278	$	(92	)	$	(25	)	$	12,298
Internal revenues	1		976			—		—			(920		)	57
Total revenues	7,688		5,426			278		(92		)	(945		)	12,355
Depreciation and amortization	767		305			47		19			—			1,138
Investment income (loss), net	84		49			—		1			(34		)	100
Net interest charges	420		195			32		61			—			708
Income taxes	334		146			45		(73		)	38			490
Net income (loss)	568		249			78		(125		)	(45		)	725
Total assets	26,951		16,541			2,353		816			—			46,661
Total goodwill	5,551		897			—		—			—			6,448
Property additions	760		608			105		56			—			1,529
September 30, 2010
External revenues	$	7,483	$	2,518		$	189	$	(65	)	$	(24	)	$	10,101
Internal revenues	79		1,812			—		—			(1,824		)	67
Total revenues	7,562		4,330			189		(65		)	(1,848		)	10,168
Depreciation and amortization	855		215			34		10			—			1,114
Investment income (loss), net	78		41			—		2			(28		)	93
Net interest charges	373		99			16		29			(11		)	506
Income taxes	267		101			27		(33		)	2			364
Net income (loss)	437		164			45		(53		)	(13		)	580
Total assets	21,763		11,078			1,011		856			—			34,708
Total goodwill	5,551		24			—		—			—			5,575
Property additions	499		883			47		38			—			1,467

Reconciling adjustments primarily consist of elimination of intersegment transactions.