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Capitalization | 12 Months Ended
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Dec. 31, 2016
Capitalization, Long-term Debt and Equity [Abstract] |
Capitalization | CAPITALIZATION COMMON STOCK Retained Earnings and Dividends As of December 31, 2016, FirstEnergy had an accumulated deficit of $4.5 billion. Dividends declared in 2016 and 2015 were $1.44 per share, which included dividends of $0.36 per share paid in the first, second, third and fourth quarters. The amount and timing of all dividend declarations are subject to the discretion of the Board of Directors and its consideration of business conditions, results of operations, financial condition and other factors. On January 19, 2017 the Board of Directors declared a quarterly dividend of $0.36 per share to be paid from other paid-in-capital in the first quarter of 2017. In addition to paying dividends from retained earnings, OE, CEI, TE, Penn, JCP&L, ME and PN have authorization from the FERC to pay cash dividends to FirstEnergy from paid-in capital accounts, as long as their FERC-defined equity to total capitalization ratio remains above 35%. In addition, TrAIL and AGC have authorization from the FERC to pay cash dividends to their respective parents from paid-in capital accounts, as long as their FERC-defined equity to total capitalization ratio remains above 45%. The articles of incorporation, indentures, regulatory limitations and various other agreements relating to the long-term debt of certain FirstEnergy subsidiaries contain provisions that could further restrict the payment of dividends on their common stock. None of these provisions materially restricted FirstEnergy’s subsidiaries’ abilities to pay cash dividends to FirstEnergy as of December 31, 2016. Stock Issuance On December 13, 2016, FE contributed 16,097,875 newly issued shares of its common stock to its qualified pension plan in a private placement transaction. These shares were valued at approximately $500 million in the aggregate, and were issued to satisfy a portion of FirstEnergy’s future pension funding obligations. An independent fiduciary was retained to manage and liquidate the stock over time at its discretion. FE issued approximately 2.7 million shares of common stock in 2016 and 2.5 million shares of common stock in 2015 and 2014 to registered shareholders and its employees and the employees of its subsidiaries under its Stock Investment Plan and certain share-based benefit plans. PREFERRED AND PREFERENCE STOCK FirstEnergy and the Utilities were authorized to issue preferred stock and preference stock as of December 31, 2016, as follows:
|  | Preferred Stock |  | Preference Stock
|  | Shares Authorized |  | Par Value |  | Shares Authorized |  | Par Value
FirstEnergy |  | 5,000,000 |  |  | $ | 100 |  |  |  |  |  |  |
OE |  | 6,000,000 |  |  | $ | 100 |  |  | 8,000,000 |  |  | no par |
OE |  | 8,000,000 |  |  | $ | 25 |  |  |  |  |  |  |
Penn |  | 1,200,000 |  |  | $ | 100 |  |  |  |  |  |  |
CEI |  | 4,000,000 |  |  | no par |  |  | 3,000,000 |  |  | no par |
TE |  | 3,000,000 |  |  | $ | 100 |  |  | 5,000,000 |  |  | $ | 25 |
TE |  | 12,000,000 |  |  | $ | 25 |  |  |  |  |
JCP&L |  | 15,600,000 |  |  | no par |  |  |  |  |
ME |  | 10,000,000 |  |  | no par |  |  |  |  |
PN |  | 11,435,000 |  |  | no par |  |  |  |  |
MP |  | 940,000 |  |  | $ | 100 |  |  |  |  |
PE |  | 10,000,000 |  |  | $ | 0.01 |  |  |  |  |
WP |  | 32,000,000 |  |  | no par |  |  |  |  |
As of December 31, 2016, and 2015, there were no preferred or preference shares outstanding. LONG-TERM DEBT AND OTHER LONG-TERM OBLIGATIONS The following tables present outstanding long-term debt and capital lease obligations for FirstEnergy and FES as of December 31, 2016 and 2015:
|  | As of December 31, 2016 |  | As of December 31
(Dollar amounts in millions) |  | Maturity Date |  | Interest Rate |  | 2016 |  | 2015
FirstEnergy: |  |  |  |  |  |  |  |
FMBs |  | 2017 - 2056 |  | 3.340% - 9.740% |  | $ | 3,328 |  |  | $ | 3,269 |
Secured notes - fixed rate |  | 2017 - 2037 |  | 0.679% - 12.000% |  | 2,295 |  |  | 2,096 |
Secured notes - variable rate |  | 2017 |  | 3.500% |  | 10 |  |  | 2 |
Total secured notes |  |  |  |  |  | 2,305 |  |  | 2,098 |
Unsecured notes - fixed rate |  | 2017 - 2045 |  | 2.150% - 7.700% |  | 13,058 |  |  | 13,580 |
Unsecured notes - variable rate |  | 2021 |  | 2.430% |  | 1,200 |  |  | 1,292 |
Total unsecured notes |  |  |  |  |  | 14,258 |  |  | 14,872 |
Capital lease obligations |  |  |  |  |  | 104 |  |  | 132 |
Unamortized debt discounts |  |  |  |  |  | (25 | ) |  | (18 | )
Unamortized debt issuance costs |  |  |  |  |  | (87 | ) |  | (93 | )
Unamortized fair value adjustments |  |  |  |  |  | (6 | ) |  | 5 |
Currently payable long-term debt |  |  |  |  |  | (1,685 | ) |  | (1,166 | )
Total long-term debt and other long-term obligations |  |  |  |  |  | $ | 18,192 |  |  | $ | 19,099 |
FES: |  |  |  |  |  |  |  |
Secured notes - fixed rate |  | 2017 - 2022 |  | 4.250% - 12.000% |  | $ | 617 |  |  | $ | 340 |
Secured notes - variable rate |  | 2017 |  | 3.500% |  | 10 |  |  | 2 |
Total secured notes |  |  |  |  |  | 627 |  |  | 342 |
Unsecured notes - fixed rate |  | 2017 - 2039 |  | 2.150% - 6.800% |  | 2,373 |  |  | 2,593 |
Unsecured notes - variable rate |  |  |  |  |  | — |  |  | 92 |
Total unsecured notes |  |  |  |  |  | 2,373 |  |  | 2,685 |
Capital lease obligations |  |  |  |  |  | 8 |  |  | 13 |
Unamortized debt discounts |  |  |  |  |  | (1 | ) |  | (1 | )
Unamortized debt issuance costs |  |  |  |  |  | (15 | ) |  | (17 | )
Currently payable long-term debt |  |  |  |  |  | (179 | ) |  | (512 | )
Total long-term debt and other long-term obligations |  |  |  |  |  | $ | 2,813 |  |  | $ | 2,510 |
On May 1, 2016, JCP&L repaid $300 million of 5.625% senior unsecured notes at maturity. On June 1 and July 1 of 2016, NG repurchased approximately $225 million and $60 million, respectively of PCRBs, which were subject to a mandatory put on such date. On August 15, 2016, NG remarketed the approximately $285 million of PCRBs secured by FMBs with a fixed interest rate of 4.375% and mandatory put dates ranging from June 1, 2022 to July 1, 2022. On July 11, 2016, Penn issued $50 million of 4.24% FMBs due 2056. Proceeds received from the issuance of the FMBs were used: (i) to fund capital expenditures; (ii) for working capital needs and other general business purposes; and (iii) to repay borrowings under the FirstEnergy regulated companies' money pool. On August 15, 2016, WP repaid $145 million of 5.875% FMBs at maturity. Also, on September 23, 2016, WP agreed to sell $475 million of new 3.84% FMBs due 2046 ($100 million), 4.09% FMBs due 2047 ($100 million) and 4.14% FMBs due 2047 ($275 million). On December 15, 2016, WP issued the $100 million of 3.84% FMBs due 2046. The remaining sales are expected to settle on September 15, 2017 and December 15, 2017, respectively. Proceeds to be received from the issuances of the FMBs were or are, as the case may be, expected to be used: (i) for general corporate purposes; and (ii) to repay a portion of WP's $275 million of 5.95% FMBs that mature on December 15, 2017. On August 15, 2016, FG remarketed approximately $86 million of PCRBs secured by FMBs with fixed interest rates ranging from 4.25% to 4.50% and mandatory put dates ranging from May 1, 2021 to June 1, 2021. On September 15, 2016, FG remarketed $100 million of PCRBs secured by FMBs with a fixed interest rate of 4.25% and a mandatory put of September 15, 2021. On September 15 and 30, 2016, respectively, FG retired an aggregate of $12 million of PCRBs with original maturity dates in 2018 and 2029. On October 17, 2016, PE issued $155 million of 3.89% FMBs due 2046. Proceeds received from the issuance were used: (i) to repay short-term borrowings incurred to repay PE's $100 million of 5.80% FMBs that matured on October 15, 2016; and (ii) for general corporate purposes. See "Note 7, Leases", for additional information related to capital leases. Securitized Bonds Environmental Control Bonds The consolidated financial statements of FirstEnergy include environmental control bonds issued by two bankruptcy remote, special purpose limited liability companies that are indirect subsidiaries of MP and PE. Proceeds from the bonds were used to construct environmental control facilities. Principal and interest owed on the environmental control bonds is secured by, and payable solely from, the proceeds of the environmental control charges. As of December 31, 2016 and 2015, $406 million and $429 million of environmental control bonds were outstanding, respectively. Transition Bonds The consolidated financial statements of FirstEnergy and JCP&L include transition bonds issued by JCP&L Transition Funding and JCP&L Transition Funding II, wholly owned limited liability companies of JCP&L. The proceeds were used to securitize the recovery of JCP&L’s bondable stranded costs associated with the previously divested Oyster Creek Nuclear Generating Station and to securitize the recovery of deferred costs associated with JCP&L’s supply of BGS. As of December 31, 2016 and 2015, $85 million and $128 million of the transition bonds were outstanding, respectively. Phase-In Recovery Bonds In June 2013, the SPEs formed by the Ohio Companies issued approximately $445 million of pass-through trust certificates supported by phase-in recovery bonds to securitize the recovery of certain all electric customer heating discounts, fuel and purchased power regulatory assets. As of December 31, 2016 and 2015, $339 million and $362 million of the phase-in recovery bonds were outstanding, respectively. See "Note 9, Variable Interest Entities" for additional information on securitized bonds. Other Long-term Debt The Ohio Companies, Penn, FG and NG each have a first mortgage indenture under which they can issue FMBs secured by a direct first mortgage lien on substantially all of their property and franchises, other than specifically excepted property. Based on the amount of FMBs authenticated by the respective mortgage bond trustees as of December 31, 2016, the sinking fund requirement for all FMBs issued under the various mortgage indentures was zero. In 2016, FG remarketed $86 million of fixed rate PCRBs and retired $12 million of variable interest rate PCRBs, which resulted in the elimination of LOCs related to $92 million of variable interest rate PCRBs that are no longer outstanding. The following table presents scheduled debt repayments for outstanding long-term debt, excluding capital leases, fair value purchase accounting adjustments and unamortized debt discounts and premiums, for the next five years as of December 31, 2016. PCRBs that are scheduled to be tendered for mandatory purchase prior to maturity are reflected in the applicable year in which such PCRBs are scheduled to be tendered.
Year |  | FirstEnergy |  | FES
|  | (In millions)
2017 |  | $ | 1,641 |  |  | $ | 163 |
2018 |  | 1,702 |  |  | 516 |
2019 |  | 2,266 |  |  | 478 |
2020 |  | 1,231 |  |  | 667 |
2021 |  | 832 |  |  | 774 |
Certain PCRBs allow bondholders to tender their PCRBs for mandatory purchase prior to maturity. The following table classifies these PCRBs by year, excluding unamortized debt discounts and premiums, for the next five years based on the next date on which the debt holders may exercise their right to tender their PCRBs.
Year |  | FirstEnergy |  | FES
|  | (In millions)
2017 |  | $ | 130 |  |  | $ | 130 |
2018 |  | 375 |  |  | 375 |
2019 |  | 232 |  |  | 232 |
2020 |  | 490 |  |  | 490 |
2021 |  | 342 |  |  | 342 |
Obligations to repay certain PCRBs are secured by several series of FMBs. Certain PCRBs are entitled to the benefit of irrevocable bank LOCs, to pay principal of, or interest on, the applicable PCRBs. To the extent that drawings are made under the LOCs, FG is entitled to a credit against its obligation to repay those bonds. FG pays annual fees based on the amounts of the LOCs to the issuing bank and is obligated to reimburse the bank for any drawings thereunder. Debt Covenant Default Provisions FirstEnergy has various debt covenants under certain financing arrangements, including its revolving credit facilities. The most restrictive of the debt covenants relate to the nonpayment of interest and/or principal on such debt and the maintenance of certain financial ratios. The failure by FirstEnergy to comply with the covenants contained in its financing arrangements could result in an event of default, which may have an adverse effect on its financial condition. As of December 31, 2016, FirstEnergy and FES remain in compliance with all debt covenant provisions. Additionally, there are cross-default provisions in a number of the financing arrangements. These provisions generally trigger a default in the applicable financing arrangement of an entity if it or any of its significant subsidiaries, excluding FES and AES, default under another financing arrangement in excess of a certain principal amount, typically $100 million. Although such defaults by any of the Utilities, ATSI or TrAIL would generally cross-default FE financing arrangements containing these provisions, defaults by any of AE Supply, FES, FG or NG would generally not cross-default to applicable financing arrangements of FE. Also, defaults by FE would generally not cross-default applicable financing arrangements of any of FE’s subsidiaries. Cross-default provisions are not typically found in any of the senior notes or FMBs of FE, FG, NG or the Utilities.

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