IMPAIRMENTS AND LONG-LIVED ASSETS PENDING SALE

FirstEnergy reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. The recoverability of a long-lived asset is measured by comparing its carrying value to the sum of undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is greater than the undiscounted cash flows, impairment exists and a loss is recognized for the amount by which the carrying value of the long-lived asset exceeds its estimated fair value.

Fremont Energy Center

On March 11, 2011, FirstEnergy and American Municipal Power, Inc., entered into an agreement for the sale of Fremont Energy Center, which includes two natural gas combined-cycle combustion turbines and a steam turbine capable of producing 544 MW of load-following capacity and 163 MW of peaking capacity. The execution of this agreement triggered a need to evaluate the recoverability of the carrying value of the assets associated with the Fremont Energy Center. The estimated fair value of the Fremont Energy Center was based on the purchase price outlined in the sale agreement with American Municipal Power, Inc. The result of this evaluation indicated that the carrying cost of the Fremont Energy Center was not fully recoverable. As a result of the recoverability evaluation, FirstEnergy recorded an impairment charge of $11 million to operating income during the quarter ended March 31, 2011. On July 28, 2011, FirstEnergy closed the sale of Fremont Energy Center to American Municipal Power, Inc.

Peaking Facilities

During the first nine months of 2011, FirstEnergy assessed the carrying values of certain peaking facilities that will more likely than not be sold or disposed of before the end of their useful lives. The estimated fair values were based on estimated sales prices quoted in an active market. The result of this evaluation indicated that the carrying costs of the peaking facilities were not fully recoverable. FirstEnergy recorded impairment charges of $3 million and $23 million during the three and nine months ended September 30, 2011, respectively, as a result of the recoverability evaluation. On October 18, 2011, FirstEnergy closed on the sale of the Richland and Stryker Peaking Facilities which are capable of generating a total of 450 MW of peaking capacity.

Signal Peak

On October 18, 2011, FirstEnergy announced that a subsidiary of Gunvor Group, Ltd purchased a one-third interest in the Signal Peak joint venture in which FEV held a 50% interest. As part of the transaction, FirstEnergy received approximately $257.5 million in proceeds and retained a 33-1/3% equity ownership in the joint venture. The transaction will result in an estimated after-tax gain of approximately $370 million, which includes a revaluation of its retained equity ownership. FirstEnergy previously consolidated this joint venture and, as a result of the sale, its retained 33-1/3% interest will be accounted for using the equity method of accounting.

As of September 30, 2011, assets and liabilities of the Signal Peak mining and transportation operations that were reclassified on FirstEnergy's Consolidated Balance Sheet include the following:



(In millions)
Assets Pending Sale:
	Current assets	$	17
	Property, plant and equipment	369
	Deferred charges and other assets	16
		402

Liabilities Related to Assets Pending Sale:
	Current liabilities	31
	Long-term debt	360
	Noncurrent liabilities	10
		401
Net Assets Pending Sale		$	1

In addition, the Noncontrolling interest reported on FirstEnergy's Consolidated Balance Sheet as of September 30, 2011, included approximately $(50) million relating to the joint venture.