2.2.0.25falsefalse00208 - Disclosure - Variable Interest Entitiestruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010 USD ($) USD ($) / shares $Jan-01-2010_Dec-31-2010http://www.sec.gov/CIK0001031296duration2010-01-01T00:00:002010-12-31T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170PureStandardhttp://www.xbrl.org/2003/instancepurexbrli0SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0fe_VariableInterestEntitiesAbstractfefalsenadurationVariable Interest Entities Abstract.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringVariable Interest Entities Abstract.falsefalseVariable Interest Entities [Abstract]3false0us-gaap_ScheduleOfVariableInterestEntitiesTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00  <div style="font-family: Helvetica,Arial,sans-serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>8. VARIABLE INTEREST ENTITIES</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">On January 1, 2010, FirstEnergy adopted the amendments to the consolidation topic addressing VIEs. This standard requires that FirstEnergy and its subsidiaries perform a qualitative analysis to determine whether a variable interest gives FirstEnergy or its subsidiaries a controlling financial interest in a VIE. This analysis identifies the primary beneficiary of a VIE as the enterprise that has both the power to direct the activities of a VIE that most significantly impacts the entity’s economic performance and the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. This standard also requires an ongoing reassessment of the primary beneficiary of a VIE and eliminates the quantitative approach previously required for determining whether an entity is the primary beneficiary. In order to evaluate contracts under the consolidation guidance, FirstEnergy aggregated contracts into categories based on similar risk characteristics and significance. The adoption of this new standard did not result in a change in the consolidation of VIEs by FirstEnergy or its subsidiaries. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">FirstEnergy’s consolidated financial statements include the accounts of entities in which it has a controlling financial interest. FirstEnergy consolidates certain VIEs in which it has financial control through disproportionate economics in its equity and debt investments in the entities. These VIEs include: FEV’s joint venture in the Signal Peak mining and coal transportation operations; the PNBV and Shippingport bond trusts that were created to refinance debt originally issued in connection with sale and leaseback transactions; and wholly owned limited liability companies of JCP&L created to sell transition bonds to securitize the recovery of JCP&L’s bondable stranded costs associated with the previously divested Oyster Creek Nuclear Generating Station, of which $310 million was outstanding as of December 31, 2010. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">FirstEnergy and its subsidiaries reflect the portion of VIEs not owned by them in the caption noncontrolling interest within the consolidated financial statements. The change in noncontrolling interest on the Consolidated Balance Sheets is the result of net losses of the noncontrolling interests ($24 million) and distributions to owners ($5 million) during the year ended December 31, 2010. </div>   </div>  <div style="font-family: Helvetica,Arial,sans-serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><i>Mining Operations</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">On July 16, 2008, FEV entered into a joint venture with WMB Loan Ventures LLC and WMB Loan Ventures II LLC, to acquire a majority stake in the Signal Peak mining and coal transportation operations near Roundup, Montana. FEV made a $125 million equity investment in the joint venture, which acquired 80% of the mining operations (Signal Peak Energy, LLC) and 100% of the transportation operations, with FEV owning a 45% economic interest and an affiliate of WMB Loan Ventures LLC and WMB Loan Ventures II LLC owning a 55% economic interest in the joint venture. Both parties have a 50% voting interest in the joint venture. FEV consolidates the mining and transportation operations of this joint venture in its financial statements. In March 2009, FEV agreed to pay a total of $8.5 million to affiliates of WMB Loan Ventures LLC and WMB Loan Ventures II LLC to purchase an additional 5% economic interest in the Signal Peak mining and coal transportation operations. Voting interests remained unchanged after the sale was completed in July 2009. Effective August 21, 2009, the joint venture acquired the remaining 20% stake in the mining operations by issuing a five-year note for $47.5 million. For both acquisitions, the difference between the consideration paid and the adjustment to the noncontrolling interest resulted in a charge to other paid in capital of approximately $30 million. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><i>Trusts</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">FirstEnergy’s consolidated financial statements include PNBV and Shippingport, VIEs created in 1996 and 1997, respectively, to refinance debt originally issued in connection with sale and leaseback transactions. PNBV and Shippingport financial data are included in the consolidated financial statements of OE and CEI, respectively. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">PNBV was established to purchase a portion of the lease obligation bonds issued in connection with OE’s 1987 sale and leaseback of its interests in the Perry Plant and Beaver Valley Unit 2. OE used debt and available funds to purchase the notes issued by PNBV for the purchase of lease obligation bonds. Ownership of PNBV includes a 3% equity interest by an unaffiliated third party and a 3% equity interest held by OES Ventures, a wholly owned subsidiary of OE. Shippingport was established to purchase all of the lease obligation bonds issued in connection with CEI’s and TE’s Bruce Mansfield Plant sale and leaseback transaction in 1987. CEI and TE used debt and available funds to purchase the notes issued by Shippingport. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><i>Power Purchase Agreements</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">FirstEnergy subsidiaries JCPL, Met-Ed and Penelec have 21 long term power purchase agreements totaling 1,339 MW with NUG entities. The agreements were entered into pursuant to the Public Utility Regulatory Policies Act of 1978. FirstEnergy was not involved in the creation of, and has no equity or debt invested in, these entities. FirstEnergy evaluated these power purchase agreements to determine if certain NUG entities may be VIEs to the extent they own a plant that sells substantially all of its output to the Utilities and the contract price for power is correlated with the plant’s variable costs of production. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">FirstEnergy has determined that for all but two of these NUG entities, neither JCP&L, nor Met-Ed nor Penelec have variable interests in the entities or the entities are governmental or not-for-profit organizations that are not within the scope of consolidation consideration for VIEs. JCP&L may hold variable interests in the remaining two entities, which sell their output at variable prices that correlate to some extent with the operating costs of the plants. However, FirstEnergy applied the scope exception that exempts enterprises unable to obtain the necessary information to evaluate entities. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Since JCP&L has no equity or debt interests in the NUG entities, its maximum exposure to loss relates primarily to the above-market costs it incurs for power. FirstEnergy expects any above-market costs it incurs to be recovered from customers. Purchased power costs related to the two contracts that may contain a variable interest were $243 million and $225 million for the years ended December 31, 2010 and 2009, respectively. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><i>Loss Contingencies</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">FirstEnergy has variable interests in certain sale-leaseback transactions. FirstEnergy is not the primary beneficiary of these interests as it does not have control over the significant activities affecting the economics of the arrangement. </div>   </div>  <div style="font-family: Helvetica,Arial,sans-serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt">FES and the Ohio Companies are exposed to losses under their applicable sale-leaseback agreements upon the occurrence of certain contingent events that each company considers unlikely to occur. The maximum exposure under these provisions represents the net amount of casualty value payments due upon the occurrence of specified casualty events that render the applicable plant worthless. Net discounted lease payments would not be payable if the casualty loss payments were made. The following table discloses each company’s net exposure to loss based upon the casualty value provisions mentioned above as of December 31, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Maximum</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Discounted Lease</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Net</b></td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Exposure</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Payments, net </b><sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Exposure</b></td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="10"><b><i>(In millions)</i></b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">FES </div></td> <td> </td> <td align="left">$</td> <td align="right">1,360</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,167</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">193</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">OE </div></td> <td> </td> <td> </td> <td align="right">666</td> <td> </td> <td> </td> <td> </td> <td align="right">474</td> <td> </td> <td> </td> <td> </td> <td align="right">192</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">CEI<sup style="font-size: 85%; vertical-align: text-top">(2)</sup> </div></td> <td> </td> <td> </td> <td align="right">622</td> <td> </td> <td> </td> <td> </td> <td align="right">72</td> <td> </td> <td> </td> <td> </td> <td align="right">550</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">TE<sup style="font-size: 85%; vertical-align: text-top">(2)</sup> </div></td> <td> </td> <td> </td> <td align="right">622</td> <td> </td> <td> </td> <td> </td> <td align="right">346</td> <td> </td> <td> </td> <td> </td> <td align="right">276</td> <td> </td> </tr>  </table> </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96%"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td> <td> </td> <td> <div style="text-align: justify">The net present value of FirstEnergy’s consolidated sale and leaseback operating lease commitments is $1.6 billion. </div></td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(2)</sup></td> <td> </td> <td> <div style="text-align: justify">CEI and TE are jointly and severally liable for the maximum loss amounts under certain sale-leaseback agreements. </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">See Note 7 for a discussion of CEI’s and TE’s assignment of their leasehold interests in the Bruce Mansfield Plant to FGCO. </div> </div>  <!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDisclosure of variable interest entities (VIE), including, but not limited to the nature, purpose, size, and activities of the VIE, the carrying amount and classification of consolidated assets that are collateral for the VIE's obligations, lack of recourse if creditors (or beneficial interest holders) of a consolidated VIE have no recourse to the general credit of the primary beneficiary. An enterprise that holds a significant variable interest in a VIE but is not the primary beneficiary may disclose the nature of its involvement with the VIE and when that involvement began, the nature, purpose, size, and activities of the VIE and the enterprise's maximum exposure to loss as a result of its involvement with the VIE.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 140 -Paragraph 35 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 46R -Paragraph 2, 14, 15, 16, 23, 24, 25, 26 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 46R -Paragraph 4 -Subparagraph g Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Staff Position (FSP) -Number FAS140-4 and FIN46(R)-8 -Paragraph C4 -Subparagraph d falsefalseVARIABLE INTEREST ENTITIES12Variable Interest EntitiesUnKnownUnKnownUnKnownUnKnownfalsetrue