Derivative Instruments (Tables)

9 Months Ended

Sep. 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
	September 30, 2012		December 31, 2011			September 30, 2012			December 31, 2011
	(In millions)					(In millions)
Power Contracts					Power Contracts
Current Assets	$	178	$	185	Current Liabilities	$	(146	)	$	(196	)
Noncurrent Assets	79		79		Noncurrent Liabilities	(31		)	(51		)
FTRs					FTRs
Current Assets	7		1		Current Liabilities	(9		)	(22		)
Noncurrent Assets	—		—		Noncurrent Liabilities	(2		)	(1		)
NUGs	18		56		NUGs	(300		)	(349		)
LCAPP	—		—		LCAPP	(142		)	—
Other Current Assets	3		—		Other Current Liabilities	—			—
	$	285	$	321		$	(630	)	$	(619	)

Volume of First Energy's outstanding derivative transactions

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

	Purchases	Sales	Net		Units
	(In millions)
Power Contracts	33	38	(5	)	MWH
FTRs	67	—	67		MWH
NUGs	16	—	16		MWH
LCAPP	408	—	408		MW
Natural Gas	16	—	16		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 and nine months ended September 30, 2012 and 2011, are summarized in the following tables:

	Three Months Ended September 30
	Power Contracts			FTRs			Interest Rate Swaps			Other		Total
	(In millions)
Derivatives in a Hedging Relationship
2012
Loss Recognized in AOCI (Effective Portion)	$	(2	)	$	—		$	—		$	—	$	(2	)
2011
Gain (Loss) Recognized in AOCI (Effective Portion)	$	—		$	—		$	—		$	—	$	—
Derivatives Not in a Hedging Relationship
2012
Unrealized Gain (Loss) Recognized in:
Other Operating Expense	$	7		$	(5	)	$	—		$	—	$	2
Interest Expense	—			—			20			—		20
Realized Gain (Loss) Reclassified to:
Purchased Power Expense	$	(27	)	$	—		$	—		$	—	$	(27	)
Revenues	46			6			—			—		52
Other Operating Expense	—			(10		)	—			—		(10		)
Fuel Expense	—			—			—			3		3
Interest Expense	—			—			6			—		6
2011
Unrealized Gain (Loss) Recognized in:
Purchased Power Expense	$	27		$	—		$	—		$	—	$	27
Revenues	3			—			—			—		3
Other Operating Expense	(11		)	(9		)	1			—		(19		)
Realized Gain (Loss) Reclassified to:
Purchased Power Expense	$	(5	)	$	—		$	—		$	—	$	(5	)
Revenues	(39		)	20			(1		)	—		(20		)
Other Operating Expense	—			(22		)	—			—		(22		)

	Nine Months Ended September 30
	Power Contracts			FTRs			Interest Rate Swaps			Other		Total
	(In millions)
Derivatives in a Hedging Relationship
2012
Loss Recognized in AOCI (Effective Portion)	$	(6	)	$	—		$	—		$	—	$	(6	)
2011
Gain Recognized in AOCI (Effective Portion)	$	4		$	—		$	1		$	—	$	5
Effective Gain (Loss) Reclassified to:
Purchased Power Expense	16			—			—			—		16
Revenues	(12		)	—			—			—		(12		)
Derivatives Not in a Hedging Relationship
2012
Unrealized Gain Recognized in:
Other Operating Expense	$	69		$	12		$	—		$	3	$	84
Realized Gain (Loss) Reclassified to:
Purchased Power Expense	$	(248	)	$	—		$	—		$	—	$	(248	)
Revenues	260			18			—			—		278
Other Operating Expense	—			(51		)	—			—		(51		)
Fuel Expense	—			—			—			2		2
Interest Expense	—			—			6			—		6
2011
Unrealized Gain (Loss) Recognized in:
Purchased Power Expense	$	88		$	—		$	—		$	—	$	88
Revenues	(1		)	—			—			—		(1		)
Other Operating Expense	(65		)	2			2			—		(61		)
Realized Gain (Loss) Reclassified to:
Purchased Power Expense	$	(41	)	$	—		$	—		$	—	$	(41	)
Revenues	(69		)	36			(2		)	—		(35		)
Other Operating Expense	—			(77		)	—			—		(77		)

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 nine months ended September 30, 2012 and 2011, are summarized in the following tables:

	Three Months Ended September 30
	NUGs			LCAPP		Regulated FTRs			Other		Total
	(In millions)
Derivatives Not in a Hedging Relationship with Regulatory Offset
2012
Unrealized Gain (Loss) on Derivative Instrument	$	(50	)	$	3	$	—		$	—	$	(47	)
Realized Gain (Loss) on Derivative Instrument	61			—		(1		)	—		60
2011
Unrealized Loss on Derivative Instrument	$	(89	)	$	—	$	(3	)	$	—	$	(92	)
Realized Gain (Loss) on Derivative Instrument	53			—		(3		)	—		50

	Nine Months Ended September 30
	NUGs			LCAPP			Regulated FTRs			Other			Total
	(In millions)
Derivatives Not in a Hedging Relationship with Regulatory Offset
2012
Unrealized Loss on Derivative Instrument	$	(183	)	$	(142	)	$	—		$	—		$	(325	)
Realized Gain on Derivative Instrument	194			—			7			—			201
2011
Unrealized Loss on Derivative Instrument	$	(325	)	$	—		$	—		$	—		$	(325	)
Realized Gain (Loss) on Derivative Instrument	187			—			(4		)	(10		)	173

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 nine months ended September 30, 2012 and 2011:

	Three Months Ended September 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 July 1, 2012	$	(293	)	$	(145	)	$	—		$	—	$	(438	)
Additions/Change in value of existing contracts	(50		)	3			—			—		(47		)
Settled contracts	61			—			(1		)	—		60
Outstanding net asset (liability) as of September 30, 2012	$	(282	)	$	(142	)	$	(1	)	$	—	$	(425	)
Outstanding net asset (liability) as of July 1, 2011	$	(447	)	$	—		$	2		$	—	$	(445	)
Additions/Change in value of existing contracts	(89		)	—			(3		)	—		(92		)
Settled contracts	53			—			(3		)	—		50
Outstanding net asset (liability) as of September 30, 2011	$	(483	)	$	—		$	(4	)	$	—	$	(487	)

	Nine Months Ended September 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	(183		)	(142		)	—			—			(325		)
Settled contracts	194			—			7			—			201
Outstanding net asset (liability) as of September 30, 2012	$	(282	)	$	(142	)	$	(1	)	$	—		$	(425	)
Outstanding net asset (liability) as of January 1, 2011	$	(345	)	$	—		$	—		$	10		$	(335	)
Additions/Change in value of existing contracts	(325		)	—			—			—			(325		)
Settled contracts	187			—			(4		)	(10		)	173
Outstanding net asset (liability) as of September 30, 2011	$	(483	)	$	—		$	(4	)	$	—		$	(487	)

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