1.0.0.3falsePENSION AND OTHER POSTRETIREMENT BENEFITSfalse1$falsefalseu000Standardhttp://www.xbrl.org/2003/iso4217USDiso42170u001Standardhttp://www.xbrl.org/2003/instancesharesxbrli0u002Dividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli020fe_PensionAndOtherPostretirementBenefitsAbstractfefalsenadurationstringNo definition available.falsefalsefalsefalsefalsetruefalsefalsefalse1falsefalse00falsefalseNo definition available.false31us-gaap_PensionAndOtherPostretirementBenefitsDisclosureTextBlockus-gaaptruenadurationstringNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalse006. PENSION AND OTHER POSTRETIREMENT BENEFITS
FirstEnergy provides noncontributory qualified defined benefit pension plans that cover substantially all of its employees and non-qualified pension plans that cover certain employees. The plans provide defined benefits based on years of service and compensation levels. FirstEnergy's funding policy is based on actuarial computations using the projected unit credit method. FirstEnergy uses a December 31 measurement date for its pension and other postretirement benefit plans. The fair value of the plan assets represents the actual market value as of December 31. FirstEnergy also provides a minimum amount of noncontributory life insurance to retired employees in addition to optional contributory insurance. Health care benefits, which include certain employee contributions, deductibles and co-payments, are available upon retirement to employees hired prior to January 1, 2005, their dependents and, under certain circumstances, their survivors. FirstEnergy recognizes the expected cost of providing pension benefits and other postretirement benefits from the time employees are hired until they become eligible to receive those benefits. In addition, FirstEnergy has obligations to former or inactive employees after employment, but before retirement, for disability-related benefits.
On June 2, 2009, FirstEnergy amended its health care benefits plan (Plan) for all employees and retirees eligible to participate in the Plan. The Plan amendment, which reduces future health care coverage subsidies paid by FirstEnergy on behalf of participants, triggered a remeasurement of FirstEnergy's other postretirement benefit plans as of May 31, 2009. As a result of the remeasurement, the Plan's discount rate was revised to 7.5% while the expected long-term rate of return on assets remained at 9%. The remeasurement and Plan amendment increased FirstEnergy's AOCI by approximately $449 million ($252 million, net of tax) in the second quarter of 2009 and reduced FirstEnergy's 2009 net postretirement benefit cost (including amounts capitalized) by $48 million, including $27 million applicable to the first nine months of 2009. In the third quarter of 2009, FirstEnergy incurred a $13 million net postretirement benefit cost (including amounts capitalized) related to an additional liability created by the VERO offered by FirstEnergy to qualified employees. The special termination benefits of the VERO included additional health care coverage subsidies paid by FirstEnergy to those qualified employees who elected to retire. A total of 715 employees accepted the VERO.
On September 2, 2009, the Utilities and ATSI made a $500 million voluntary contribution to the FirstEnergy Corp. Pension Plan (Pension Plan). Due to the significance of the voluntary contribution, FirstEnergy elected to remeasure its Pension Plan as of August 31, 2009. As a result of the remeasurement, the Pension Plan's discount rate was revised to 6% while the expected long-term rate of return on assets remained at 9%. The remeasurement and voluntary contribution decreased FirstEnergy's AOCI by approximately $494 million ($304 million, net of tax) in the third quarter of 2009 and will reduce FirstEnergy's net postretirement benefit cost (including amounts capitalized) for the remainder of 2009 by $7 million, including a $2 million reduction that is applicable to the third quarter of 2009.
FirstEnergy's net pension and OPEB expenses (benefits) for the three months ended September 30, 2009 and 2008 were $36 million (including $9 million attributable to the VERO-related charge mentioned above), and $(15) million, respectively. For the nine months ended September 30, 2009 and 2008, FirstEnergy's net pension and OPEB expenses (benefits) were $117 million and $(44) million, respectively. The components of FirstEnergy's net pension and other postretirement benefit costs (including amounts capitalized) for the three months and nine months ended September 30, 2009 and 2008, consisted of the following:
Three Months Ended Nine Months Ended September 30 September 30 Pension Benefits 2009 2008 2009 2008 (In millions) Service cost $ 23 $ 22 $ 66 $ 65 Interest cost 79 75 239 224 Expected return on plan assets (86 ) (116 ) (248 ) (347 )Amortization of prior service cost 3 3 10 10 Recognized net actuarial loss 45 2 129 6 Net periodic cost (credit) $ 64 $ (14 ) $ 196 $ (42 )
Three Months Ended Nine Months Ended September 30 September 30 Other Postretirement Benefits 2009 2008 2009 2008 (In millions) Service cost $ 15 $ 5 $ 23 $ 14 Interest cost 13 18 51 55 Expected return on plan assets (9 ) (13 ) (27 ) (38 )Amortization of prior service cost (48 ) (37 ) (127 ) (111 )
Recognized net actuarial loss 15 12 46 35 Net periodic cost (credit) $ (14 ) $ (15 ) $ (34 ) $ (45 )
Pension and postretirement benefit obligations are allocated to FirstEnergy's subsidiaries employing the plan participants. FES and the Utilities capitalize employee benefits related to construction projects. The net periodic pension costs and net periodic postretirement benefit costs (including amounts capitalized) recognized by FES and each of the Utilities for the three months and nine months ended September 30, 2009 and 2008 were as follows:
Three Months Ended Nine Months Ended September 30 September 30 Pension Benefit Cost (Credit) 2009 2008 2009 2008 (In millions) FES $ 19 $ 5 $ 56 $ 16 OE 6 (6 ) 20 (18 )CEI 5 (1 ) 14 (3 )TE 2 (1 ) 5 (2 )JCP&L 8 (3 ) 26 (10 )Met-Ed 5 (2 ) 16 (7 )Penelec 4 (3 ) 13 (9 )Other FirstEnergy subsidiaries 15 (3 ) 46 (9 ) $ 64 $ (14 ) $ 196 $ (42 )
Three Months Ended Nine Months Ended September 30 September 30 Other Postretirement Benefit Cost (Credit) 2009 2008 2009 2008 (In millions) FES $ (4 ) $ (2 ) $ (8 ) $ (5 )OE (3 ) (2 ) (8 ) (5 )CEI - 1 1 2 TE 1 1 2 3 JCP&L (2 ) (4 ) (4 ) (12 )Met-Ed (1 ) (3 ) (3 ) (8 )Penelec (1 ) (3 ) (2 ) (10 )Other FirstEnergy subsidiaries (4 ) (3 ) (12 ) (10 ) $ (14 ) $ (15 ) $ (34 ) $ (45 )6. PENSION AND OTHER POSTRETIREMENT BENEFITS
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