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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value of Financial Instruments [Line Items]

Assets and liabilities measured on recurring basis

The following tables set forth the recurring assets and liabilities that are accounted for at fair value by level within the fair value hierarchy:

FirstEnergy
Recurring Fair Value Measurements	September 30, 2017																December 31, 2016
	Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
Assets	(In millions)
Corporate debt securities	$	—			$	1,201			$	—			$	1,201			$	—			$	1,247			$	—			$	1,247
Derivative assets - commodity contracts	—				35				—				35				10				200				—				210
Derivative assets - FTRs	—				—				5				5				—				—				7				7
Derivative assets - NUG contracts(1)	—				—				—				—				—				—				1				1
Equity securities(2)	1,045				—				—				1,045				925				—				—				925
Foreign government debt securities	—				92				—				92				—				78				—				78
U.S. government debt securities	—				152				—				152				—				161				—				161
U.S. state debt securities	—				274				—				274				—				246				—				246
Other(3)	399				152				—				551				199				123				—				322
Total assets	$	1,444			$	1,906			$	5			$	3,355			$	1,134			$	2,055			$	8			$	3,197
Liabilities
Derivative liabilities - commodity contracts	$	—			$	(12	)		$	—			$	(12	)		$	(6	)		$	(118	)		$	—			$	(124	)
Derivative liabilities - FTRs	—				—				(2		)		(2		)		—				—				(6		)		(6		)
Derivative liabilities - NUG contracts(1)	—				—				(92		)		(92		)		—				—				(108		)		(108		)
Total liabilities	$	—			$	(12	)		$	(94	)		$	(106	)		$	(6	)		$	(118	)		$	(114	)		$	(238	)
Net assets (liabilities)(4)	$	1,444			$	1,894			$	(89	)		$	3,249			$	1,128			$	1,937			$	(106	)		$	2,959

⁽¹⁾  NUG contracts are subject to regulatory accounting treatment and do not impact earnings.

⁽²⁾  NDT funds hold equity portfolios whose performance is benchmarked against the Alerian MLP Index or the Wells Fargo Hybrid and Preferred Securities REIT index.

⁽³⁾  Primarily consists of short-term cash investments.

⁽⁴⁾  Excludes $(13) million and $(3) million as of September 30, 2017 and December 31, 2016, respectively, of receivables, payables, taxes and accrued income associated with financial instruments reflected within the fair value table.

Reconciliation of changes in the fair value roll forward of level 3 measurements of NUG contracts

The following table provides a reconciliation of changes in the fair value of NUG contracts and FTRs that are classified as Level 3 in the fair value hierarchy for the periods ended September 30, 2017 and December 31, 2016:

	NUG Contracts(1)												FTRs
	Derivative Assets				Derivative Liabilities				Net				Derivative Assets				Derivative Liabilities				Net
	(In millions)
January 1, 2016 Balance	$	1			$	(137	)		$	(136	)		$	8			$	(13	)		$	(5	)
Unrealized gain (loss)	2				(17		)		(15		)		(6		)		(4		)		(10		)
Purchases	—				—				—				16				(7		)		9
Settlements	(2		)		46				44				(11		)		18				7
December 31, 2016 Balance	$	1			$	(108	)		$	(107	)		$	7			$	(6	)		$	1
Unrealized loss	—				(14		)		(14		)		—				(2		)		(2		)
Purchases	—				—				—				5				(2		)		3
Settlements	(1		)		30				29				(7		)		8				1
September 30, 2017 Balance	$	—			$	(92	)		$	(92	)		$	5			$	(2	)		$	3

⁽¹⁾  NUG contracts are subject to regulatory accounting treatment and do not impact earnings.

Quantitative information for level 3 valuation

The following table provides quantitative information for FTRs and NUG contracts that are classified as Level 3 in the fair value hierarchy for the period ended September 30, 2017:

Fair Value, Net (In millions)

Valuation Technique

Significant Input

Range

Weighted Average

Units

FTRs

$

3

Model

RTO auction clearing prices

$(5.00) to $4.60

$0.60

Dollars/MWH

NUG Contracts

$

(92

)

Model

Generation

400 to 2,322,000

470,000

MWH

Regional electricity prices

$29.90 to $31.40

$29.90

Dollars/MWH

Amortized cost basis, unrealized gains and losses and fair values of investments in available-for-sale securities

The following table summarizes the amortized cost basis, unrealized gains (there were no unrealized losses) and fair values of investments held in NDT and nuclear fuel disposal trusts as of September 30, 2017 and December 31, 2016:

		September 30, 2017(1)												December 31, 2016(2)
		Cost Basis				Unrealized Gains				Fair Value				Cost Basis				Unrealized Gains				Fair Value
		(In millions)
Debt securities
FirstEnergy		$	1,701			$	42			$	1,743			$	1,735			$	38			$	1,773
FES		942				27				969				847				27				874
Equity securities
FirstEnergy		$	927			$	118			$	1,045			$	822			$	103			$	925
FES		675				90				765				564				70				634

⁽¹⁾  Excludes short-term cash investments: FirstEnergy - $100 million; FES - $89 million.

⁽²⁾  Excludes short-term cash investments: FirstEnergy - $61 million; FES - $44 million.

Proceeds from the sale of investments in available-for-sale securities, realized gains and losses on those sales, and interest and dividend income

Proceeds from the sale of investments in AFS securities, realized gains and losses on those sales, OTTI and interest and dividend income for the three and nine months ended September 30, 2017 and 2016 were as follows:

For the Three Months Ended
September 30, 2017		Sale Proceeds				Realized Gains				Realized Losses				OTTI				Interest and Dividend Income
		(In millions)
FirstEnergy		$	666			$	93			$	(53	)		$	(3	)		$	24
FES		397				73				(42		)		(3		)		15
September 30, 2016		Sale Proceeds				Realized Gains				Realized Losses				OTTI				Interest and Dividend Income
		(In millions)
FirstEnergy		$	337			$	36			$	(15	)		$	(3	)		$	27
FES		135				23				(6		)		(3		)		16
For the Nine Months Ended
September 30, 2017		Sale Proceeds				Realized Gains				Realized Losses				OTTI				Interest and Dividend Income
		(In millions)
FirstEnergy		$	1,923			$	276			$	(207	)		$	(10	)		$	72
FES		834				206				(152		)		(10		)		44
September 30, 2016		Sale Proceeds				Realized Gains				Realized Losses				OTTI				Interest and Dividend Income
		(In millions)
FirstEnergy		$	1,361			$	131			$	(88	)		$	(13	)		$	75
FES		576				90				(49		)		(12		)		42

Fair value and related carrying amounts of long-term debt and other long-term obligations

The following table provides the approximate fair value and related carrying amounts of long-term debt, which excludes capital lease obligations and net unamortized debt issuance costs, premiums and discounts:

	September 30, 2017								December 31, 2016
	Carrying Value				Fair Value				Carrying Value				Fair Value
	(In millions)
FirstEnergy	$	22,218			$	22,994			$	19,885			$	19,829
FES	2,837				1,620				3,000				1,555

FES

Fair Value of Financial Instruments [Line Items]

Assets and liabilities measured on recurring basis

FES
Recurring Fair Value Measurements	September 30, 2017																December 31, 2016
	Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
Assets	(In millions)
Corporate debt securities	$	—			$	722			$	—			$	722			$	—			$	726			$	—			$	726
Derivative assets - commodity contracts	—				35				—				35				10				200				—				210
Derivative assets - FTRs	—				—				1				1				—				—				4				4
Equity securities(1)	765				—				—				765				634				—				—				634
Foreign government debt securities	—				65				—				65				—				58				—				58
U.S. government debt securities	—				138				—				138				—				48				—				48
U.S. state debt securities	—				21				—				21				—				3				—				3
Other(2)	2				120				—				122				2				81				—				83
Total assets	$	767			$	1,101			$	1			$	1,869			$	646			$	1,116			$	4			$	1,766
Liabilities
Derivative liabilities - commodity contracts	$	—			$	(12	)		$	—			$	(12	)		$	(6	)		$	(118	)		$	—			$	(124	)
Derivative liabilities - FTRs	—				—				(1		)		(1		)		—				—				(5		)		(5		)
Total liabilities	$	—			$	(12	)		$	(1	)		$	(13	)		$	(6	)		$	(118	)		$	(5	)		$	(129	)
Net assets (liabilities)(3)	$	767			$	1,089			$	—			$	1,856			$	640			$	998			$	(1	)		$	1,637

⁽¹⁾  NDT funds hold equity portfolios whose performance is benchmarked against the Alerian MLP Index or the Wells Fargo Hybrid and Preferred Securities REIT index.

⁽²⁾  Primarily consists of short-term cash investments.

⁽³⁾  Excludes $(8) million and $2 million as of September 30, 2017 and December 31, 2016, respectively, of receivables, payables, taxes and accrued income associated with the financial instruments reflected within the fair value table.

Reconciliation of changes in the fair value roll forward of level 3 measurements of NUG contracts

The following table provides a reconciliation of changes in the fair value of FTRs held by FES and classified as Level 3 in the fair value hierarchy for the periods ended September 30, 2017 and December 31, 2016:

		Derivative Asset				Derivative Liability				Net Asset (Liability)
		(In millions)
January 1, 2016 Balance		$	5			$	(11	)		$	(6	)
Unrealized loss		(4		)		(3		)		(7		)
Purchases		10				(5		)		5
Settlements		(7		)		14				7
December 31, 2016 Balance		$	4			$	(5	)		$	(1	)
Unrealized loss		—				(1		)		(1		)
Purchases		1				(1		)		—
Settlements		(4		)		6				2
September 30, 2017 Balance		$	1			$	(1	)		$	—

Quantitative information for level 3 valuation

The following table provides quantitative information for FTRs held by FES that are classified as Level 3 in the fair value hierarchy for the period ended September 30, 2017:

Fair Value, Net (In millions)

Valuation Technique

Significant Input

Range

Weighted Average

Units

FTRs

$

—

Model

RTO auction clearing prices

($5.00) to $2.60

$0.20

Dollars/MWH

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