Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value of Financial Instruments [Line Items]

Assets and liabilities measured on recurring basis

The following tables set forth the recurring assets and liabilities that are accounted for at fair value by level within the fair value hierarchy:



FirstEnergy

Recurring Fair Value Measurements	March 31, 2014												December 31, 2013
	Level 1			Level 2			Level 3			Total			Level 1			Level 2			Level 3			Total
Assets	(In millions)
Corporate debt securities	$	—		$	1,168		$	—		$	1,168		$	—		$	1,365		$	—		$	1,365
Derivative assets - commodity contracts	11			293			—			304			7			208			—			215
Derivative assets - FTRs	—			—			7			7			—			—			4			4
Derivative assets - NUG contracts⁽¹⁾	—			—			3			3			—			—			20			20
Equity securities⁽²⁾	464			—			—			464			317			—			—			317
Foreign government debt securities	—			94			—			94			—			109			—			109
U.S. government debt securities	—			167			—			167			—			165			—			165
U.S. state debt securities	—			237			—			237			—			228			—			228
Other⁽³⁾	54			379			—			433			187			255			—			442
Total assets	$	529		$	2,338		$	10		$	2,877		$	511		$	2,330		$	24		$	2,865

Liabilities
Derivative liabilities - commodity contracts	$	(8	)	$	(179	)	$	—		$	(187	)	$	(13	)	$	(100	)	$	—		$	(113	)
Derivative liabilities - FTRs	—			—			(8		)	(8		)	—			—			(12		)	(12		)
Derivative liabilities - NUG contracts⁽¹⁾	—			—			(188		)	(188		)	—			—			(222		)	(222		)
Total liabilities	$	(8	)	$	(179	)	$	(196	)	$	(383	)	$	(13	)	$	(100	)	$	(234	)	$	(347	)

Net assets (liabilities)⁽⁴⁾	$	521		$	2,159		$	(186	)	$	2,494		$	498		$	2,230		$	(210	)	$	2,518


⁽¹⁾	NUG contracts are generally subject to regulatory accounting treatment and do not impact earnings.


⁽²⁾	NDT funds hold equity portfolios whose performance is benchmarked against the Alerian MLP Index or the Wells Fargo Hybrid and Preferred Securities REIT index.


⁽³⁾	Primarily consists of short-term cash investments.


⁽⁴⁾	Excludes $9 million and $10 million as of March 31, 2014 and December 31, 2013, respectively, of receivables, payables, taxes and accrued income associated with financial instruments reflected within the fair value table.

Reconciliation of changes in the fair value roll forward of level 3 measurements of NUG contracts

The following table provides a reconciliation of changes in the fair value of NUG contracts, LCAPP contracts and FTRs that are classified as Level 3 in the fair value hierarchy for the periods ended March 31, 2014 and December 31, 2013:



	NUG Contracts⁽¹⁾									LCAPP Contracts⁽¹⁾								FTRs
	Derivative Assets			Derivative Liabilities			Net			Derivative Assets		Derivative Liabilities			Net			Derivative Assets			Derivative Liabilities			Net
	(In millions)
January 1, 2013 Balance	$	36		$	(290	)	$	(254	)	$	—	$	(144	)	$	(144	)	$	8		$	(9	)	$	(1	)
Unrealized gain (loss)	(8		)	(17		)	(25		)	—		(22		)	(22		)	3			1			4
Purchases	—			—			—			—		—			—			6			(15		)	(9		)
Terminations⁽²⁾	—			—			—			—		166			166			—			—			—
Settlements	(8		)	85			77			—		—			—			(13		)	11			(2		)
December 31, 2013 Balance	$	20		$	(222	)	$	(202	)	$	—	$	—		$	—		$	4		$	(12	)	$	(8	)
Unrealized gain	—			27			27			—		—			—			6			2			8
Settlements	(17		)	7			(10		)	—		—			—			(3		)	2			(1		)
March 31, 2014 Balance	$	3		$	(188	)	$	(185	)	$	—	$	—		$	—		$	7		$	(8	)	$	(1	)


⁽¹⁾	Changes in the fair value of NUG and LCAPP contracts are generally subject to regulatory accounting treatment and do not impact earnings.

Quantitative information for level 3 valuation

The following table provides quantitative information for FTRs and NUG contracts that are classified as Level 3 in the fair value hierarchy for the period ended March 31, 2014:

Fair Value, Net (In millions)

Valuation

Technique

Significant Input

Range

Weighted Average

Units

FTRs

)

Model

RTO auction clearing prices

($4.20) to $7.60

$0.80

Dollars/MWH

NUG Contracts

(185

)

Model

Generation

Electricity regional prices

600 to 5,422,000

$47.90 to $59.00

1,033,000

$53.50

MWH

Dollars/MWH

Amortized cost basis, unrealized gains and losses and fair values of investments in available-for-sale securities

The following table summarizes the amortized cost basis, unrealized gains (there were no unrealized losses) and fair values of investments held in NDT, nuclear fuel disposal and NUG trusts as of March 31, 2014 and December 31, 2013:



	March 31, 2014⁽¹⁾						December 31, 2013⁽²⁾
	Cost Basis		Unrealized Gains		Fair Value		Cost Basis		Unrealized Gains		Fair Value
	(In millions)
Debt securities
FirstEnergy	$	1,670	$	44	$	1,714	$	1,881	$	33	$	1,914
FES	698		22		720		918		17		935

Equity securities
FirstEnergy	$	433	$	31	$	464	$	308	$	9	$	317
FES	308		19		327		207		—		207


⁽¹⁾	Excludes short-term cash investments: FE Consolidated - $324 million; FES - $276 million.


⁽²⁾	Excludes short-term cash investments: FE Consolidated - $204 million; FES - $135 million.

Proceeds from the sale of investments in available-for-sale securities, realized gains and losses on those sales, and interest and dividend income

Proceeds from the sale of investments in AFS securities, realized gains and losses on those sales, OTTI and interest and dividend income for the three months ended March 31, 2014 and 2013 were as follows:



Three Months Ended
March 31, 2014	Sale Proceeds		Realized Gains		Realized Losses			OTTI			Interest and Dividend Income
	(In millions)
FirstEnergy	$	621	$	28	$	(16	)	$	(2	)	$	25
FES	423		19		(5		)	(2		)	15
March 31, 2013	Sale Proceeds		Realized Gains		Realized Losses			OTTI			Interest and Dividend Income
	(In millions)
FirstEnergy	$	539	$	24	$	(6	)	$	(7	)	$	26
FES	252		20		(3		)	(7		)	13

Amortized cost basis, unrealized gains and losses, and approximate fair values of investments in held-to-maturity securities

The following table provides the amortized cost basis, unrealized gains (there were no unrealized losses) and approximate fair values of investments in held-to-maturity securities as of March 31, 2014 and December 31, 2013:



	March 31, 2014						December 31, 2013
	Cost Basis		Unrealized Gains		Fair Value		Cost Basis		Unrealized Gains		Fair Value
	(In millions)
Debt Securities
FirstEnergy	$	24	$	8	$	32	$	33	$	2	$	35

Fair value and related carrying amounts of long-term debt and other long-term obligations

The following table provides the approximate fair value and related carrying amounts of long-term debt and other long-term obligations, excluding capital lease obligations and net unamortized premiums and discounts:



	March 31, 2014				December 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In millions)
FirstEnergy	$	18,034	$	19,321	$	17,049	$	17,957
FES	2,996		3,098		3,001		3,073

FES

Fair Value of Financial Instruments [Line Items]

Assets and liabilities measured on recurring basis



FES

Recurring Fair Value Measurements	March 31, 2014												December 31, 2013
	Level 1			Level 2			Level 3			Total			Level 1			Level 2			Level 3			Total
Assets	(In millions)
Corporate debt securities	$	—		$	586		$	—		$	586		$	—		$	792		$	—		$	792
Derivative assets - commodity contracts	11			294			—			305			7			208			—			215
Derivative assets - FTRs	—			—			4			4			—			—			3			3
Equity securities⁽¹⁾	327			—			—			327			207			—			—			207
Foreign government debt securities	—			55			—			55			—			65			—			65
U.S. government debt securities	—			25			—			25			—			27			—			27
U.S. state debt securities	—			3			—			3			—			—			—			—
Other⁽²⁾	—			319			—			319			—			176			—			176
Total assets	$	338		$	1,282		$	4		$	1,624		$	214		$	1,268		$	3		$	1,485

Liabilities
Derivative liabilities - commodity contracts	$	(8	)	$	(179	)	$	—		$	(187	)	$	(13	)	$	(100	)	$	—		$	(113	)
Derivative liabilities - FTRs	—			—			(8		)	(8		)	—			—			(11		)	(11		)
Total liabilities	$	(8	)	$	(179	)	$	(8	)	$	(195	)	$	(13	)	$	(100	)	$	(11	)	$	(124	)

Net assets (liabilities)⁽³⁾	$	330		$	1,103		$	(4	)	$	1,429		$	201		$	1,168		$	(8	)	$	1,361


⁽¹⁾	NDT funds hold equity portfolios whose performance is benchmarked against the Alerian MLP Index or the Wells Fargo Hybrid and Preferred Securities REIT index.


⁽²⁾	Primarily consists of short-term cash investments.


⁽³⁾	Excludes $8 million and $9 million as of March 31, 2014 and December 31, 2013, respectively, of receivables, payables, taxes and accrued income associated with the financial instruments reflected within the fair value table.

Reconciliation of changes in the fair value roll forward of level 3 measurements of NUG contracts

The following table provides a reconciliation of changes in the fair value of FTRs held by FES and classified as Level 3 in the fair value hierarchy for the periods ended March 31, 2014 and December 31, 2013:



	Derivative Asset FTRs			Derivative Liability FTRs			Net FTRs
	(In millions)
January 1, 2013 Balance	$	6		$	(6	)	$	—
Unrealized loss	—			(2		)	(2		)
Purchases	5			(12		)	(7		)
Settlements	(8		)	9			1
December 31, 2013 Balance	$	3		$	(11	)	$	(8	)
Unrealized gain	3			1			4
Settlements	(2		)	2			—
March 31, 2014 Balance	$	4		$	(8	)	$	(4	)

Quantitative information for level 3 valuation

The following table provides quantitative information for FTRs held by FES that are classified as Level 3 in the fair value hierarchy for the period ended March 31, 2014:

Fair Value, Net (In millions)

Valuation

Technique

Significant Input

Range

Weighted Average

Units

FTRs

)

Model

RTO auction clearing prices

($4.20) to $7.60

$0.60

Dollars/MWH

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of all investments in certain debt and equity securities for which the entity has the positive intent and ability to hold until maturity.

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