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Derivative Instruments (Tables)
 3 Months Ended
Mar. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Fair value of derivatives instruments
The following table summarizes the fair value and classification of derivative instruments on FirstEnergy’s Consolidated Balance Sheets:

Derivative Assets
 
Derivative Liabilities
 
Fair Value
 
 
Fair Value
 
March 31,
2014
 
December 31,
2013
 
 
March 31,
2014
 
December 31,
2013
 
(In millions)
 
 
(In millions)
Current Assets - Derivatives
 
 
 
 
Current Liabilities - Derivatives
 
 
 
Commodity Contracts
$
240

 
$
162

 
    Commodity Contracts
$
(154
)
 
$
(102
)
FTRs
7

 
4

 
FTRs
(5
)
 
(9
)
 
247

 
166

 
 
(159
)
 
(111
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncurrent Liabilities - Adverse Power Contract Liability
 
 
 
 
 
 
 
 
NUGs
(188
)
 
(222
)
Deferred Charges and Other Assets - Other
 
 
 
 
Noncurrent Liabilities - Other
 
 
 
Commodity Contracts
64

 
53

 
Commodity Contracts
(33
)
 
(11
)
NUGs
3

 
20

 
FTRs
(3
)
 
(3
)
 
67

 
73

 
 
(224
)
 
(236
)
Derivative Assets
$
314

 
$
239

 
Derivative Liabilities
$
(383
)
 
$
(347
)
Offsetting assets and liabilities
The following tables summarize the fair value of derivative instruments on FirstEnergy’s Consolidated Balance Sheets and the effect of netting arrangements and collateral on its financial position:

 
 
 
 
Amounts Not Offset in Consolidated Balance Sheet
 
 
March 31, 2014
 
Fair Value
 
Derivative Instruments
 
Cash Collateral (Received)/Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
304

 
$
(182
)
 
$
(4
)
 
$
118

FTRs
 
7

 
(7
)
 
—

 
—

NUG contracts
 
3

 
—

 
—

 
3

 
 
$
314

 
$
(189
)
 
$
(4
)
 
$
121

 
 
 
 
 
 
 
 
 
Derivative Liabilities 
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(187
)
 
$
182

 
$
2

 
$
(3
)
FTRs
 
(8
)
 
7

 
1

 
—

NUG contracts
 
(188
)
 
—

 
—

 
(188
)
 
 
$
(383
)
 
$
189

 
$
3

 
$
(191
)
 
 
 
 
 
 
 
 
 


 
 
 
 
Amounts Not Offset in Consolidated Balance Sheet
 
 
December 31, 2013
 
Fair Value
 
Derivative Instruments
 
Cash Collateral (Received)/Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
215

 
$
(106
)
 
$
(9
)
 
$
100

FTRs
 
4

 
(4
)
 
—

 
—

NUG contracts
 
20

 
—

 
—

 
20

 
 
$
239

 
$
(110
)
 
$
(9
)
 
$
120

 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(113
)
 
$
106

 
$
7

 
$
—

FTRs
 
(12
)
 
4

 
5

 
(3
)
NUG contracts
 
(222
)
 
—

 
—

 
(222
)
 
 
$
(347
)
 
$
110

 
$
12

 
$
(225
)
Volume of First Energy's outstanding derivative transactions
The following table summarizes the volumes associated with FirstEnergy’s outstanding derivative transactions as of March 31, 2014:

 
Purchases
 
Sales
 
Net
 
Units
 
(In millions)
Power Contracts
41

 
38

 
3

 
MWH
FTRs
26

 
—

 
26

 
MWH
NUGs
7

 
—

 
7

 
MWH
Natural Gas
65

 
8

 
57

 
mmBTU
Effect of derivative instruments on statements of income and comprehensive income
The effect of derivative instruments not in a hedging relationship on the Consolidated Statements of Income during the three months ended March 31, 2014 and 2013, are summarized in the following tables:
 
Three Months Ended March 31
 
Commodity Contracts
 
FTRs
 
Total
 
(In millions)
2014
 

 
 

 
 

Unrealized Gain Recognized in:
 

 
 

 
 

Other Operating Expense (1)

$12

 

$5

 

$17

 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 

Revenues (2)

($13
)
 

$52

 

$39

Purchased Power Expense (3)
436

 
—

 
436

Other Operating Expense (4)
—

 
(7
)
 
(7
)
Fuel Expense
9

 
—

 
9

 
 
 
 
 
 
(1) Includes $12 million for commodity contracts and $5 million for FTRs associated with FES.
(2) Represents losses on structured financial contracts. Includes ($13) million for commodity contracts and $51 million for FTRs associated with FES.
(3) Realized losses on financially settled wholesale sales contracts of $321 million resulting from higher market prices were netted in purchased power. Includes $436 million for commodity contracts associated with FES.
(4) Includes ($7) million for FTRs associated with FES.
 
 
 
 
 
 
2013
 

 
 

 
 

Unrealized Loss Recognized in:
 

 
 

 
 

Other Operating Expense (5)

($5
)
 

($2
)
 

($7
)
 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 

Revenues (6)

$10

 

$7

 

$17

Purchased Power Expense (7)
(11
)
 
—

 
(11
)
Other Operating Expense (8)
—

 
(9
)
 
(9
)
Fuel Expense
(1
)
 
—

 
(1
)
 
 
 
 
 
 
(5) Includes ($5) million for commodity contracts and ($1) million for FTRs associated with FES.
(6) Includes $10 million for commodity contracts and $6 million for FTRs associated with FES.
(7) Includes ($11) million for commodity contracts associated with FES.
(8) Includes ($8) million for FTRs associated with FES.
Derivative instruments subject to regulatory accounting
The unrealized and realized gains (losses) on FirstEnergy’s derivative instruments subject to regulatory accounting during the three months ended March 31, 2014 and 2013, are summarized in the following tables:

 
 
Three Months Ended March 31
Derivatives Not in a Hedging Relationship with Regulatory Offset
 
NUGs
 
LCAPP(1)
 
Regulated FTRs
 
Total
 
 
(In millions)
2014
 
 
 
 
 
 
 
 
Unrealized Gain on Derivative Instrument
 
$
27

 
$
—

 
$
4

 
$
31

Realized Loss on Derivative Instrument
 
(10
)
 
—

 
(1
)
 
(11
)
 
 
 
 
 
 
 
 
 
2013
 
 
 
 
 
 
 
 
Unrealized Gain (Loss) on Derivative Instrument
 
$
18

 
$
(2
)
 
$
—

 
$
16

Realized Gain (Loss) on Derivative Instrument
 
23

 
—

 
(1
)
 
22



(1) 
During the fourth quarter of 2013, all LCAPP contracts were terminated as discussed above.
Reconciliation of changes in the fair value of certain contracts that are deferred
The following tables provide 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 ended March 31, 2014 and 2013:

 
 
Three Months Ended March 31
Derivatives Not in a Hedging Relationship with Regulatory Offset
 
NUGs
 
LCAPP(1)
 
Regulated FTRs
 
Total
 
 
(In millions)
Outstanding net liability as of January 1, 2014
 
$
(202
)
 
$
—

 
$
—

 
$
(202
)
Additions/Change in value of existing contracts
 
27

 
—

 
4

 
31

Settled contracts
 
(10
)
 
—

 
(1
)
 
(11
)
Outstanding net liability as of March 31, 2014
 
$
(185
)
 
$
—

 
$
3

 
$
(182
)
 
 
 
 
 
 
 
 
 
Outstanding net liability as of January 1, 2013
 
$
(254
)
 
$
(144
)
 
$
—

 
$
(398
)
Additions/Change in value of existing contracts
 
18

 
(2
)
 
—

 
16

Settled contracts
 
23

 
—

 
(1
)
 
22

Outstanding net liability as of March 31, 2013
 
$
(213
)
 
$
(146
)
 
$
(1
)
 
$
(360
)


(1) 
During the fourth quarter of 2013, all LCAPP contracts were terminated as discussed above.