Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair value of derivatives instruments

The following tables summarize the fair value of derivative instruments on FirstEnergy’s Consolidated Balance Sheets:

Derivatives not designated as hedging instruments:
Derivative Assets					Derivative Liabilities
	Fair Value					Fair Value
	June 30, 2012		December 31, 2011			June 30, 2012			December 31, 2011
	(In millions)					(In millions)
Power Contracts					Power Contracts
Current Assets	$	232	$	185	Current Liabilities	$	(213	)	$	(196	)
Noncurrent Assets	106		79		Noncurrent Liabilities	(49		)	(51		)
FTRs					FTRs
Current Assets	12		1		Current Liabilities	(8		)	(22		)
Noncurrent Assets	—		—		Noncurrent Liabilities	(1		)	(1		)
NUGs	9		56		NUGs	(302		)	(349		)
LCAPP	—		—		LCAPP	(145		)	—
Interest Rate Swaps					Interest Rate Swaps
Noncurrent Assets	3		—		Noncurrent Liabilities	(23		)	—
Other					Other
Current Assets	4		—		Current Liabilities	(1		)	—
	$	366	$	321		$	(742	)	$	(619	)

Volume of First Energy's outstanding derivative transactions

The following table summarizes the volumes associated with FirstEnergy’s outstanding derivative transactions as of June 30, 2012:

	Purchases	Sales	Net		Units
	(In millions)
Power Contracts	29	40	(11	)	MWH
FTRs	82	—	82		MWH
Interest Rate Swaps	1,600	—	1,600		notional dollars
NUGs	22	—	22		MWH
LCAPP	408	—	408		MW
Natural Gas	26	—	26		Million BTUs

Effect of derivative instruments on statements of income and comprehensive income

The effect of derivative instruments on the Consolidated Statements of Income during the three months ended June 30, 2012 and 2011, are summarized in the following tables:

	Three Months Ended June 30
	Power Contracts			FTRs			Interest Rate Swaps			Other			Total
	(In millions)
Derivatives in a Hedging Relationship
2012
Gain (Loss) Recognized in AOCI (Effective Portion)	$	1		$	—		$	—		$	—		$	1
2011
Gain (Loss) Recognized in AOCI (Effective Portion)	$	14		$	—		$	—		$	—		$	14
Derivatives Not in a Hedging Relationship
2012
Unrealized Gain (Loss) Recognized in:
Other Operating Expense	$	7		$	12		$	—		$	5		$	24
Interest Expense	—			—			(20		)	—			(20		)
Realized Gain (Loss) Reclassified to:
Purchased Power Expense	$	(104	)	$	—		$	—		$	—		$	(104	)
Revenues	95			5			—			—			100
Other Operating Expense	—			(18		)	—			—			(18		)
Fuel Expense	—			—			—			(1		)	(1		)
Interest Expense	—			—			—			—			—
2011
Unrealized Gain (Loss) Recognized in:
Purchased Power Expense	$	33		$	—		$	—		$	—		$	33
Revenues	(4		)	—			—			—			(4		)
Other Operating Expense	(34		)	11			—			—			(23		)
Interest Expense	—			—			—			—			—
Realized Gain (Loss) Reclassified to:
Purchased Power Expense	$	1		$	—		$	—		$	—		$	1
Revenues	(39		)	13			—			—			(26		)
Other Operating Expense	—			(40		)	—			—			(40		)
Interest Expense	—			—			—			—			—

	Six Months Ended June 30
	Power Contracts			FTRs			Interest Rate Swaps			Other			Total
	(In millions)
Derivatives in a Hedging Relationship
2012
Gain (Loss) Recognized in AOCI (Effective Portion)	$	(4	)	$	—		$	—		$	—		$	(4	)
2011
Gain (Loss) Recognized in AOCI (Effective Portion)	$	5		$	—		$	—		$	—		$	5
Effective Gain (Loss) Reclassified to:
Purchased Power Expense	16			—			—			—			16
Revenues	(12		)	—			—			—			(12		)
Fuel Expense	—			—			—			—			—
Derivatives Not in a Hedging Relationship
2012
Unrealized Gain (Loss) Recognized in:
Other Operating Expense	$	62		$	17		$	—		$	3		$	82
Interest Expense	—			—			(20		)	—			(20		)
Realized Gain (Loss) Reclassified to:
Purchased Power Expense	$	(221	)	$	—		$	—		$	—		$	(221	)
Revenues	206			11			—			—			217
Other Operating Expense	—			(41		)	—			—			(41		)
Fuel Expense	—			—			—			(1		)	(1		)
Interest Expense	—			—			—			—			—
2011
Unrealized Gain (Loss) Recognized in:
Purchased Power Expense	$	61		$	—		$	—		$	—		$	61
Revenues	(3		)	—			—			—			(3		)
Other Operating Expense	(54		)	12			1			—			(41		)
Interest Expense	—			—			—			—			—
Realized Gain (Loss) Reclassified to:
Purchased Power Expense	$	(36	)	$	—		$	—		$	—		$	(36	)
Revenues	(29		)	16			(1		)	—			(14		)
Other Operating Expense	—			(54		)	—			—			(54		)
Interest Expense	—			—			—			—			—

Derivative instruments subject to regulatory accounting

The unrealized and realized gains (losses) on FirstEnergy’s derivative instruments subject to regulatory accounting during the three and six months ended June 30, 2012 and 2011, are summarized in the following tables:

	Three Months Ended June 30
	NUGs			LCAPP			Regulated FTRs		Other		Total
	(In millions)
Derivatives Not in a Hedging Relationship with Regulatory Offset
2012
Unrealized Gain (Loss) to Derivative Instrument	$	(54	)	$	(145	)	$	—	$	—	$	(199	)
Realized Gain (Loss) to Derivative Instrument	61			—			5		—		66
2011
Unrealized Gain (Loss) to Derivative Instrument	$	(147	)	$	—		$	2	$	—	$	(145	)
Realized Gain (Loss) to Derivative Instrument	62			—			—		—		62

	Six Months Ended June 30
	NUGs			LCAPP			Regulated FTRs			Other		Total
	(In millions)
Derivatives Not in a Hedging Relationship with Regulatory Offset
2012
Unrealized Gain (Loss) to Derivative Instrument	$	(133	)	$	(145	)	$	(1	)	$	—	$	(279	)
Realized Gain (Loss) to Derivative Instrument	133			—			9			—		142
2011
Unrealized Gain (Loss) to Derivative Instrument	$	(236	)	$	—		$	2		$	—	$	(234	)
Realized Gain (Loss) to Derivative Instrument	134			—			(10		)	—		124

Reconciliation of changes in the fair value of certain contracts that are deferred

The following table provides a reconciliation of changes in the fair value of certain contracts that are deferred for future recovery from (or credit to) customers during the three months and six months ended June 30, 2012 and 2011:

	Three Months Ended June 30
Derivatives Not in a Hedging Relationship with Regulatory Offset(1)	NUGs			LCAPP			Regulated FTRs			Other		Total
	(In millions)
Outstanding net asset (liability) as of April 1, 2012	$	(300	)	$	—		$	(5	)	$	—	$	(305	)
Additions/Change in value of existing contracts	(54		)	(145		)	—			—		(199		)
Settled contracts	61			—			5			—		66
Outstanding net asset (liability) as of June 30, 2012	$	(293	)	$	(145	)	$	—		$	—	$	(438	)
Outstanding net asset (liability) as of April 1, 2011	$	(362	)	$	—		$	—		$	—	$	(362	)
Additions/Change in value of existing contracts	(147		)	—			2			—		(145		)
Settled contracts	62			—			—			—		62
Outstanding net asset (liability) as of June 30, 2011	$	(447	)	$	—		$	2		$	—	$	(445	)

	Six Months Ended June 30
Derivatives Not in a Hedging Relationship with Regulatory Offset(1)	NUGs			LCAPP			Regulated FTRs			Other			Total
	(In millions)
Outstanding net asset (liability) as of January 1, 2012	$	(293	)	$	—		$	(8	)	$	—		$	(301	)
Additions/Change in value of existing contracts	(133		)	(145		)	(1		)	—			(279		)
Settled contracts	133			—			9			—			142
Outstanding net asset (liability) as of June 30, 2012	$	(293	)	$	(145	)	$	—		$	—		$	(438	)
Outstanding net asset (liability) as of January 1, 2011	$	(345	)	$	—		$	—		$	10		$	(335	)
Additions/Change in value of existing contracts	(236		)	—			2			—			(234		)
Settled contracts	134			—			—			(10		)	124
Outstanding net asset (liability) as of June 30, 2011	$	(447	)	$	—		$	2		$	—		$	(445	)

⁽¹⁾  Changes in the fair value of certain contracts are deferred for future recovery from (or credited to) customers.