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 the outcome of settlement and hearing proceedings and a final order by FERC. 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 September 30, 2017, this business segment controlled 13,162 MWs of electric generating capacity, including, as discussed in Note 14, "Asset Impairments," 1,615 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 September 30, 2017, Corporate/Other had $6.8 billion of stand-alone holding company long-term debt, of which $1.45 billion was subject to variable-interest rates, and $500 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)

September 30, 2017
External revenues	$	2,610	$	342	$	796		$	—		$	(34	)	$	3,714
Internal revenues	—		—		93			—			(93		)	—
Total revenues	2,610		342		889			—			(127		)	3,714
Depreciation	183		59		30			17			—			289
Amortization of regulatory assets, net	85		6		—			—			—			91
Impairment of assets (Note 14)	—		13		18			—			—			31
Investment income	13		—		34			3			(13		)	37
Interest expense	133		38		44			90			—			305
Income taxes (benefits)	183		49		40			(33		)	—			239
Net income (loss)	314		84		66			(68		)	—			396
Total assets	27,866		9,356		5,814			613			—			43,649
Total goodwill	5,004		614		—			—			—			5,618
Property additions	286		248		45			14			—			593

September 30, 2016
External revenues	$	2,691	$	294	$	998		$	—		$	(66	)	$	3,917
Internal revenues	—		—		117			—			(117		)	—
Total revenues	2,691		294		1,115			—			(183		)	3,917
Depreciation	169		47		79			16			—			311
Amortization of regulatory assets, net	98		—		—			—			—			98
Investment income	13		—		23			2			(10		)	28
Interest expense	143		39		48			56			—			286
Income taxes (benefits)	162		50		49			(10		)	—			251
Net income (loss)	276		85		86			(67		)	—			380
Total assets	27,818		8,492		15,165			486			—			51,961
Total goodwill	5,004		614		—			—			—			5,618
Property additions	281		268		110			5			—			664

For the Nine Months Ended

September 30, 2017
External revenues	$	7,362	$	982	$	2,388		$	—		$	(157	)	$	10,575
Internal revenues	—		—		296			—			(296		)	—
Total revenues	7,362		982		2,684			—			(453		)	10,575
Depreciation	540		164		87			54			—			845
Amortization of regulatory assets, net	204		11		—			—			—			215
Impairment of assets (Note 14)	—		13		149			—			—			162
Investment income	41		—		66			8			(37		)	78
Interest expense	405		116		136			225			—			882
Income taxes (benefits)	442		154		(25		)	(89		)	—			482
Net income (loss)	756		264		(57		)	(188		)	—			775
Property additions	854		717		233			43			—			1,847

September 30, 2016
External revenues	$	7,390	$	851	$	3,158		$	—		$	(212	)	$	11,187
Internal revenues	—		—		377			—			(377		)	—
Total revenues	7,390		851		3,535			—			(589		)	11,187
Depreciation	504		138		284			48			—			974
Amortization of regulatory assets, net	218		4		—			—			—			222
Impairment of assets (Note 14)	—		—		1,447			—			—			1,447
Investment income	37		—		56			13			(31		)	75
Interest expense	441		118		143			161			—			863
Income taxes (benefits)	336		143		(96		)	(49		)	—			334
Net income (loss)	573		244		(1,029		)	(169		)	—			(381		)
Property additions	809		824		492			31			—			2,156