SEGMENT INFORMATION

FirstEnergy's reportable segments are as follows: Regulated Distribution, Regulated Transmission, and CES.

Financial information for each of FirstEnergy’s reportable segments is presented in the tables below. FES does not have separate reportable operating segments.

The Regulated Distribution segment distributes electricity through FirstEnergy’s ten utility operating companies, serving approximately six million customers within 65,000 square miles of Ohio, Pennsylvania, West Virginia, Maryland, New Jersey and New York, and purchases power for its POLR, SOS, SSO and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland. This segment also controls 3,790 MWs of regulated electric generation capacity located primarily in West Virginia, Virginia and New Jersey. The segment's results reflect the commodity costs of securing electric generation and the deferral and amortization of certain fuel costs.

The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by ATSI, TrAIL, MAIT (effective January 31, 2017) and certain of FirstEnergy's utilities (JCP&L, MP, PE and WP). The segment's revenues are primarily derived from forward-looking rates at ATSI and TrAIL, as well as stated transmission rates at certain of FirstEnergy’s utilities. As discussed in Note 10, "Regulatory Matters - FERC Matters" above, MAIT and JCP&L submitted applications to FERC requesting authorization to implement forward-looking formula transmission rates. In March 2017, FERC approved JCP&L's and MAIT's forward-looking formula rate with effective dates of June 1, 2017, and July 1, 2017, respectively, both subject to refund pending further FERC hearing and settlement procedures. Both the forward-looking and stated rates recover costs and provide a return on transmission capital investment. Under forward-looking 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 actual costs. The segment's results also reflect the net transmission expenses related to the delivery of electricity on FirstEnergy's transmission facilities.

The CES segment, through FES and AE Supply, primarily supplies electricity to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Michigan, New Jersey and Maryland, and the provision of partial POLR and default service for some utilities in Ohio, Pennsylvania and Maryland, including the Utilities. As of June 30, 2017, this business segment controlled 13,162 MWs of electric generating capacity, including, as discussed in Note 14, "Asset Impairments," 1,572 MWs of natural gas and hydroelectric generating capacity subject to an asset purchase agreement with a subsidiary of LS Power and the 1,300 MW Pleasants power station subject to an asset purchase agreement with MP resulting from MP's RFP process to address its generation shortfall, as discussed in Note 10, "Regulatory Matters - State Regulation - West Virginia." The CES segment’s operating results are primarily derived from electric generation sales less the related costs of electricity generation, including fuel, purchased power and net transmission (including congestion) and ancillary costs and capacity costs charged by PJM to deliver energy to the segment’s customers, as well as other operating and maintenance costs, including costs incurred by FENOC.

Corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment are categorized as Corporate/Other for reportable business segment purposes. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. As of June 30, 2017, Corporate/Other had $7.45 billion of stand-alone holding company long-term debt, of which 19% was subject to variable-interest rates, and $150 million was borrowed by FE under its revolving credit facility.

Segment Financial Information



For the Three Months Ended	Regulated Distribution		Regulated Transmission		Competitive Energy Services			Corporate/ Other			Reconciling Adjustments			Consolidated
	(In millions)

June 30, 2017
External revenues	$	2,262	$	327	$	778		$	—		$	(58	)	$	3,309
Internal revenues	—		—		86			—			(86		)	—
Total revenues	2,262		327		864			—			(144		)	3,309
Depreciation	179		54		29			19			—			281
Amortization of regulatory assets, net	62		3		—			—			—			65
Impairment of assets (Note 14)	—		—		131			—			—			131
Investment income	14		—		12			2			(11		)	17
Interest expense	134		39		47			70			—			290
Income taxes (benefits)	121		53		(30		)	(27		)	—			117
Net income (loss)	205		92		(56		)	(67		)	—			174
Total assets	27,660		9,142		5,887			638			—			43,327
Total goodwill	5,004		614		—			—			—			5,618
Property additions	304		245		96			21			—			666

June 30, 2016
External revenues	$	2,189	$	275	$	1,008		$	—		$	(71	)	$	3,401
Internal revenues	—		—		108			—			(108		)	—
Total revenues	2,189		275		1,116			—			(179		)	3,401
Depreciation	168		46		103			17			—			334
Amortization of regulatory assets, net	61		2		—			—			—			63
Impairment of assets (Note 14)	—		—		1,447			—			—			1,447
Investment income	13		—		18			—			(12		)	19
Interest expense	148		39		48			54			—			289
Income taxes (benefits)	80		46		(230		)	(26		)	—			(130		)
Net income (loss)	139		78		(1,259		)	(47		)	—			(1,089		)
Total assets	27,448		8,314		15,464			175			—			51,401
Total goodwill	5,004		614		—			—			—			5,618
Property additions	287		277		213			17			—			794

For the Six Months Ended

June 30, 2017
External revenues	$	4,752	$	640	$	1,592		$	—		$	(123	)	$	6,861
Internal revenues	—		—		203			—			(203		)	—
Total revenues	4,752		640		1,795			—			(326		)	6,861
Depreciation	357		105		57			37			—			556
Amortization of regulatory assets, net	119		5		—			—			—			124
Impairment of assets (Note 14)	—		—		131			—			—			131
Investment income	28		—		32			5			(24		)	41
Interest expense	272		78		92			135			—			577
Income taxes (benefits)	259		105		(65		)	(56		)	—			243
Net income (loss)	442		180		(123		)	(120		)	—			379
Property additions	568		469		188			29			—			1,254

June 30, 2016
External revenues	$	4,699	$	561	$	2,160		$	—		$	(150	)	$	7,270
Internal revenues	—		—		260			—			(260		)	—
Total revenues	4,699		561		2,420			—			(410		)	7,270
Depreciation	335		91		205			32			—			663
Amortization of regulatory assets, net	120		4		—			—			—			124
Impairment of assets (Note 14)	—		—		1,447			—			—			1,447
Investment income	24		—		33			11			(21		)	47
Interest expense	298		79		95			105			—			577
Income taxes (benefits)	174		93		(145		)	(39		)	—			83
Net income (loss)	297		159		(1,115		)	(102		)	—			(761		)
Property additions	528		556		382			26			—			1,492