REVENUE

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE

FirstEnergy accounts for revenues from contracts with customers under ASC 606, “Revenue from Contracts with Customers.” Revenue from leases, financial instruments, other contractual rights or obligations and other revenues that are not from contracts with customers are outside the scope of the standard and accounted for under other existing GAAP.

FirstEnergy has elected to exclude sales taxes and other similar taxes collected on behalf of third parties from revenue as prescribed in the standard. As a result, tax collections and remittances are excluded from recognition in the income statement and instead recorded through the balance sheet. Excise and gross receipts taxes that are assessed on FirstEnergy are not subject to the election and are included in revenue. FirstEnergy has elected the optional invoice practical expedient for most of its revenues and utilizes the optional short-term contract exemption for transmission revenues due to the annual establishment of revenue requirements, which eliminates the need to provide certain revenue disclosures regarding unsatisfied performance obligations.

FirstEnergy’s revenues are primarily derived from electric service provided by the Utilities and Transmission Companies.

Regulated Distribution

The Regulated Distribution segment distributes electricity through FirstEnergy’s utility operating companies and also controls 3,580 MWs of regulated electric generation capacity located primarily in West Virginia and Virginia. Each of the Utilities earns revenue from state-regulated rate tariffs under which it provides distribution services to residential, commercial and industrial customers in its service territory. The Utilities are obligated under the regulated construct to deliver power to customers reliably, as it is needed, which creates an implied monthly contract with the end-use customer. See Note 13, “Regulatory Matters,” for additional information on rate recovery mechanisms. Distribution and electric revenues are recognized over time as electricity is distributed and delivered to the customer and the customers consume the electricity immediately as delivery occurs.

Retail generation sales relate to POLR, SOS, SSO and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland, as well as generation sales in West Virginia that are regulated by the WVPSC. Certain of the Utilities have default service obligations to provide power to non-shopping customers who have elected to continue to receive service under regulated retail tariffs. The volume of these sales varies depending on the level of shopping that occurs. Supply plans vary by state and by service territory. Default service for the Ohio Companies, Pennsylvania Companies, JCP&L and PE’s Maryland jurisdiction are provided through a competitive procurement process approved by each state’s respective commission. Retail generation revenues are recognized over time as electricity is delivered and consumed immediately by the customer.

Wholesale sales primarily consist of generation and capacity sales into the PJM market from FirstEnergy’s regulated electric generation capacity and NUGs. Certain of the Utilities may also purchase power in the PJM markets to supply power to their customers. Generally, these power sales from generation and purchases to serve load are netted hourly and reported as either revenues or purchased power on the Consolidated Statements of Income based on whether the entity was a net seller or buyer each hour. Capacity revenues are recognized ratably over the PJM planning year at prices cleared in the annual PJM Reliability Pricing Model Base Residual Auction and Incremental Auctions. Capacity purchases and sales through PJM capacity auctions are reported within revenues on the Consolidated Statements of Income. Certain capacity income (bonuses) and charges (penalties) related to the availability of units that have cleared in the auctions are unknown and not recorded in revenue until, and unless, they occur.

The Utilities’ distribution customers are metered on a cycle basis. An estimate of unbilled revenues is calculated to recognize electric service provided from the last meter reading through the end of the month. This estimate includes many factors, among which are historical customer usage, load profiles, estimated weather impacts, customer shopping activity and prices in effect for each class of customer. In each accounting period, the Utilities accrue the estimated unbilled amount as revenue and reverse the related prior period estimate. Customer payments vary by state but are generally due within 30 days.

ASC 606 excludes industry-specific accounting guidance for recognizing revenue from Alternative Revenue Programs as these programs represent contracts between the utility and its regulators, as opposed to customers. Therefore, revenues from these programs are not within the scope of ASC 606 and regulated utilities are permitted to continue to recognize such revenues in accordance with existing practice but are presented separately from revenue arising from contracts with customers.

Regulated Transmission

The Regulated Transmission segment provides transmission infrastructure owned and operated by the Transmission Companies and certain of FirstEnergy's utilities (JCP&L, MP, PE and WP) to transmit electricity from generation sources to distribution facilities. The segment's revenues are derived from primarily forward-looking formula rates. See Note 13, “Regulatory Matters,” for additional information.

Forward-looking formula rates recover costs that the regulatory agencies determine are permitted to be recovered and provide a return on transmission capital investment. Under forward-looking formula rates, the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on rate base and actual costs. Revenues and cash receipts for the stand-ready obligation of providing transmission service are recognized ratably over time.

The following represents a disaggregation of revenue from contracts with customers for the years ended December 31, 2023, 2022 and 2021:

	For the Years Ended December 31,
(In millions)	2023		2022		2021
Regulated Distribution
Retail generation and distribution services(1)
Residential	$	6,583	$	6,180	$	5,713
Commercial	2,600		2,499		2,284
Industrial	1,298		1,338		1,091
Street lighting/Other	105		85		75
Wholesale	228		494		362
Other revenue from contracts with customers(2)	113		104		119
Total revenues from contracts with customers	10,927		10,700		9,644
Alternative Revenue Program(3)	—		—		(27)
Other revenue unrelated to contracts with customers(4)	111		101		94
Total Regulated Distribution	$	11,038	$	10,801	$	9,711
Regulated Transmission
ATSI	$	968	$	912	$	799
TrAIL	279		270		233
MAIT	395		340		288
JCP&L	205		203		164
MP, PE and WP	202		138		124
Total revenues from contracts with customers	2,049		1,863		1,608
Other revenue unrelated to contracts with customers	5		5		10
Total Regulated Transmission	$	2,054	$	1,868	$	1,618
Corporate/Other and Reconciling Adjustments(5)
Wholesale	$	11	$	27	$	14
Retail generation and distribution services(5)	(181)		(186)		(154)
Other revenue unrelated to contracts with customers(5)	(52)		(51)		(57)
Total Corporate/Other and Reconciling	$	(222)	$	(210)	$	(197)
FirstEnergy Total Revenues	$	12,870	$	12,459	$	11,132

(1) Includes approximately $58 million and $38 million as of December 31, 2022 and 2021, respectively, of customer refunds associated with the Ohio Stipulation that became effective in December 2021. See Note 13, “Regulatory Matters,” for further discussion.

(2) Primarily includes amounts collected from customers to administer and repay securitization bonds and pole attachment revenue.

(3) Reflects amount the Ohio Companies refunded to customers that was previously collected under decoupling mechanisms, with interest.

(4) Primarily includes late payment charges and revenue from derivatives.

(5) Includes eliminations and reconciling adjustments of inter-segment revenues.

RECEIVABLES

Receivables from contracts with customers include retail electric sales and distribution deliveries to residential, commercial and industrial customers of the Utilities. Billed and unbilled customer receivables as of December 31, 2023 and 2022, are included below.

	As of December 31,
Customer Receivables	2023		2022
	(In millions)
Billed(1)	$	717	$	674
Unbilled	665		781
	1,382		1,455
Less: Uncollectible Reserve	64		137
Total Customer Receivables	$	1,318	$	1,318

(1) Includes approximately $288 million and $290 million as of December 31, 2023 and 2022, respectively, that are past due by greater than 30 days.

The allowance for uncollectible customer receivables is based on historical loss information comprised of a rolling 36-month average net write-off percentage of revenues, in conjunction with a qualitative assessment of elements that impact the collectability of receivables to determine if allowances for uncollectible customer receivables should be further adjusted in accordance with the accounting guidance for credit losses.

FirstEnergy reviews its allowance for uncollectible customer receivables utilizing a quantitative and qualitative assessment. Management contemplates available current information such as changes in economic factors, regulatory matters, industry trends, customer credit factors, amount of receivable balances that are past-due, payment options and programs available to customers, and the methods that the Utilities are able to utilize to ensure payment. This analysis includes consideration of the outbreak of the pandemic and the impact on customer receivable balances outstanding and write-offs since the pandemic began and subsequent economic slowdown. FirstEnergy’s uncollectible risk on PJM receivables, resulting from transmission and wholesale sales, is minimal due to the nature of PJM’s settlement process and as a result there is no current allowance for doubtful accounts.

During 2023, various regulatory actions, including extended installment plans, continue to impact the level of past due balances in certain states, resulting in the allowances for uncollectible customer receivables to remain elevated above 2019 pre-pandemic levels. However, normal collection activity has resumed, and arrears levels continue to decline towards pre-pandemic levels. As a result, FirstEnergy recognized a $77 million decrease to its allowance during 2023, of which $41 million was applied to existing deferred regulatory assets.

Activity in the allowance for uncollectible accounts on receivables for the years ended December 31, 2023, 2022 and 2021 are as follows:

(In millions)	2023		2022		2021
Customer Receivables:
Beginning of year balance	$	137	$	159	$	164
Charged to income(1)	8		59		54
Charged to other accounts(2)	34		62		42
Write-offs	(115)		(143)		(101)
End of year balance	$	64	$	137	$	159
Other Receivables:
Beginning of year balance	$	11	$	10	$	26
Charged to income	7		4		3
Charged to other accounts(2)	(1)		4		3
Write-offs	(2)		(7)		(22)
End of year balance	$	15	$	11	$	10

(1) Customer receivable amounts charged to income for the years ended December 31, 2023, 2022, and 2021, include approximately $(15) million, $11 million, and $12 million, respectively, deferred for future recovery (refund).

(2) Represents recoveries and reinstatements of accounts previously written off for uncollectible accounts.