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Derivative Instruments (Tables)
 9 Months Ended
Sep. 30, 2017
Derivative [Line Items]  
Fair value of derivatives instruments
The following table summarizes the fair value and classification of derivative instruments on FirstEnergy’s Consolidated Balance Sheets:
Derivative Assets
 
Derivative Liabilities
 
Fair Value
 
 
Fair Value
 
September 30,
2017
 
December 31,
2016
 
 
September 30,
2017
 
December 31,
2016
 
(In millions)
 
 
(In millions)
Current Assets - Derivatives
 
 
 
 
Current Liabilities - Other
 
 
 
Commodity Contracts
$
30

 
$
133

 
Commodity Contracts
$
(11
)
 
$
(72
)
FTRs
5

 
7

 
FTRs
(2
)
 
(6
)
 
35

 
140

 
 
(13
)
 
(78
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncurrent Liabilities - Adverse Power Contract Liability
 
 
 
 
 
 
 
 
NUGs(1)
(92
)
 
(108
)
Deferred Charges and Other Assets - Other
 
 
 
 
Noncurrent Liabilities - Other
 
 
 
Commodity Contracts
5

 
77

 
Commodity Contracts
(1
)
 
(52
)
NUGs(1)
—

 
1

 
 
 
 
 
 
5

 
78

 
 
(93
)
 
(160
)
Derivative Assets
$
40

 
$
218

 
Derivative Liabilities
$
(106
)
 
$
(238
)


(1) 
NUG contracts are subject to regulatory accounting treatment and do not impact earnings.
Offsetting assets
The following tables summarize the fair value of derivative assets and derivative liabilities on FirstEnergy’s Consolidated Balance Sheets and the effect of netting arrangements and collateral on its financial position:

 
 
 
 
Amounts Not Offset in Consolidated Balance Sheet
 
 
September 30, 2017
 
Fair Value
 
Derivative Instruments
 
Cash Collateral Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
35

 
$
(9
)
 
$
—

 
$
26

FTRs
 
5

 
(2
)
 
—

 
3

 
 
$
40

 
$
(11
)
 
$
—

 
$
29

 
 
 
 
 
 
 
 
 
Derivative Liabilities 
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(12
)
 
$
9

 
$
—

 
$
(3
)
FTRs
 
(2
)
 
2

 
—

 
—

NUG contracts
 
(92
)
 
—

 
—

 
(92
)
 
 
$
(106
)
 
$
11

 
$
—

 
$
(95
)
 
 
 
 
 
 
 
 
 




 
 
 
 
Amounts Not Offset in Consolidated Balance Sheet
 
 
December 31, 2016
 
Fair Value
 
Derivative Instruments
 
Cash Collateral Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
210

 
$
(117
)
 
$
—

 
$
93

FTRs
 
7

 
(6
)
 
—

 
1

NUG contracts
 
1

 
—

 
—

 
1

 
 
$
218

 
$
(123
)
 
$
—

 
$
95

 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(124
)
 
$
117

 
$
1

 
$
(6
)
FTRs
 
(6
)
 
6

 
—

 
—

NUG contracts
 
(108
)
 
—

 
—

 
(108
)
 
 
$
(238
)
 
$
123

 
$
1

 
$
(114
)
Offsetting liabilities
The following tables summarize the fair value of derivative assets and derivative liabilities on FirstEnergy’s Consolidated Balance Sheets and the effect of netting arrangements and collateral on its financial position:

 
 
 
 
Amounts Not Offset in Consolidated Balance Sheet
 
 
September 30, 2017
 
Fair Value
 
Derivative Instruments
 
Cash Collateral Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
35

 
$
(9
)
 
$
—

 
$
26

FTRs
 
5

 
(2
)
 
—

 
3

 
 
$
40

 
$
(11
)
 
$
—

 
$
29

 
 
 
 
 
 
 
 
 
Derivative Liabilities 
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(12
)
 
$
9

 
$
—

 
$
(3
)
FTRs
 
(2
)
 
2

 
—

 
—

NUG contracts
 
(92
)
 
—

 
—

 
(92
)
 
 
$
(106
)
 
$
11

 
$
—

 
$
(95
)
 
 
 
 
 
 
 
 
 




 
 
 
 
Amounts Not Offset in Consolidated Balance Sheet
 
 
December 31, 2016
 
Fair Value
 
Derivative Instruments
 
Cash Collateral Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
210

 
$
(117
)
 
$
—

 
$
93

FTRs
 
7

 
(6
)
 
—

 
1

NUG contracts
 
1

 
—

 
—

 
1

 
 
$
218

 
$
(123
)
 
$
—

 
$
95

 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(124
)
 
$
117

 
$
1

 
$
(6
)
FTRs
 
(6
)
 
6

 
—

 
—

NUG contracts
 
(108
)
 
—

 
—

 
(108
)
 
 
$
(238
)
 
$
123

 
$
1

 
$
(114
)
Volume of First Energy's outstanding derivative transactions
The following table summarizes the volumes associated with FirstEnergy’s outstanding derivative transactions as of September 30, 2017:

 
Purchases
 
Sales
 
Net
 
Units
 
(In millions)
Power Contracts
1

 
8

 
(7
)
 
MWH
FTRs
14

 
—

 
14

 
MWH
NUGs
2

 
—

 
2

 
MWH
Effect of derivative instruments on statements of income and comprehensive income
The effect of active derivative instruments not in a hedging relationship on FirstEnergy's Consolidated Statements of Income (Loss) during the three and nine months ended September 30, 2017 and 2016, are summarized in the following tables:
 
For the Three Months Ended September 30
 
Commodity Contracts
 
FTRs
 
Total
 
(In millions)
2017
 

 
 

 
 

Unrealized Loss Recognized in:
 

 
 

 
 

Other Operating Expense
$
(11
)
 
$
—

 
$
(11
)
 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 

Revenues
$
8

 
$
(1
)
 
$
7

Purchased Power Expense
(3
)
 
—

 
(3
)
Other Operating Expense
—

 
(1
)
 
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended September 30
 
Commodity Contracts
 
FTRs
 
Total
 
(In millions)
2016
 

 
 

 
 

Unrealized Gain (Loss) Recognized in:
 

 
 

 
 

Other Operating Expense
$
19

 
$
(3
)
 
$
16

 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 

Revenues
$
32

 
$
1

 
$
33

Purchased Power Expense
(22
)
 
—

 
(22
)
Other Operating Expense
—

 
(6
)
 
(6
)
Fuel Expense
(2
)
 
—

 
(2
)
 
 
 
 
 
 
 
For the Nine Months Ended September 30
 
Commodity Contracts
 
FTRs
 
Total
 
(In millions)
2017
 

 
 

 
 

Unrealized Gain (Loss) Recognized in:
 

 
 

 
 

Other Operating Expense
$
(65
)
 
$
1

 
$
(64
)
 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 

Revenues
$
48

 
$
—

 
$
48

Purchased Power Expense
(14
)
 
—

 
(14
)
Other Operating Expense
—

 
(14
)
 
(14
)
Fuel Expense
5

 
—

 
5

 
 
 
 
 
 
 
 
 
 
 
 
 
For the Nine Months Ended September 30
 
Commodity Contracts
 
FTRs
 
Total
 
(In millions)
2016
 

 
 

 
 

Unrealized Gain Recognized in:
 

 
 

 
 

Other Operating Expense
$
2

 
$
8

 
$
10

 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 

Revenues
$
162

 
$
5

 
$
167

Purchased Power Expense
(105
)
 
—

 
(105
)
Other Operating Expense
—

 
(28
)
 
(28
)
Fuel Expense
(9
)
 
—

 
(9
)
 
 
 
 
 
 
The effect of active derivative instruments not in a hedging relationship on FES' Consolidated Statements of Income (Loss) during the three and nine months ended September 30, 2017 and 2016, are summarized in the following tables:

 
 
 
 
 
 
 
 
For the Three Months Ended September 30
 
Commodity
Contracts
 
FTRs
 
 
Total
2017
(In millions)
Unrealized Loss Recognized in:
 

 
 

 
 
 

Other Operating Expense
$
(11
)
 
$
—

 
 
$
(11
)
 
 
 
 
 
 


Realized Gain (Loss) Reclassified to:
 

 
 

 
 
 

Revenues
$
8

 
$
(1
)
 
 
$
7

Purchased Power Expense
(3
)
 
—

 
 
(3
)
Other Operating Expense
—

 
(1
)
 
 
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended September 30
 
Commodity
Contracts
 
FTRs
 
 
Total
 
(In millions)
2016
 

 
 

 
 
 

Unrealized Gain (Loss) Recognized in:
 

 
 

 
 
 

Other Operating Expense
$
19

 
$
(3
)
 
 
$
16

 
 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 
 

Revenues
$
32

 
$
1

 
 
$
33

Purchased Power Expense
(22
)
 
—

 
 
(22
)
Other Operating Expense
—

 
(6
)
 
 
(6
)
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
For the Nine Months Ended September 30
 
Commodity
Contracts
 
FTRs
 
 
Total
2017
(In millions)
Unrealized Gain (Loss) Recognized in:
 

 
 

 
 
 

Other Operating Expense
$
(65
)
 
$
1

 
 
$
(64
)
 
 
 
 
 
 


Realized Gain (Loss) Reclassified to:
 

 
 

 
 
 

Revenues
$
48

 
$
—

 
 
$
48

Purchased Power Expense
(14
)
 
—

 
 
(14
)
Other Operating Expense
—

 
(14
)
 
 
(14
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Nine Months Ended September 30
 
Commodity
Contracts
 
FTRs
 
 
Total
 
(In millions)
2016
 

 
 

 
 
 

Unrealized Gain Recognized in:
 

 
 

 
 
 

Other Operating Expense
$
2

 
$
8

 
 
$
10

 
 
 
 
 
 
 
Realized Gain (Loss) Reclassified to:
 

 
 

 
 
 

Revenues
$
162

 
$
5

 
 
$
167

Purchased Power Expense
(105
)
 
—

 
 
(105
)
Other Operating Expense
—

 
(28
)
 
 
(28
)
 
 
 
 
 
 
 
Reconciliation of changes in the fair value of certain contracts that are deferred
The following table provides a reconciliation of changes in the fair value of FirstEnergy's derivative instruments subject to regulatory accounting during the three and nine months ended September 30, 2017 and 2016. Changes in the value of these instruments are deferred for future recovery from (or credit to) customers:
 
 
For the Three Months Ended September 30
Derivatives Not in a Hedging Relationship with Regulatory Offset
 
NUGs
 
Regulated FTRs
 
Total
 
 
(In millions)
Outstanding net asset (liability) as of July 1, 2017
 
$
(98
)
 
$
3

 
$
(95
)
Unrealized loss
 
(4
)
 
—

 
(4
)
Settlements
 
10

 
—

 
10

Outstanding net asset (liability) as of September 30, 2017
 
$
(92
)
 
$
3

 
$
(89
)
 
 
 
 
 
 
 
Outstanding net asset (liability) as of July 1, 2016
 
$
(124
)
 
$
4

 
$
(120
)
Unrealized loss
 
(6
)
 
—

 
(6
)
Settlements
 
12

 
—

 
12

Outstanding net asset (liability) as of September 30, 2016
 
$
(118
)
 
$
4

 
$
(114
)
 
 
 
 
 
 
 

 
 
For the Nine Months Ended September 30
Derivatives Not in a Hedging Relationship with Regulatory Offset
 
NUGs
 
 
Regulated FTRs
 
 
Total
 
 
(In millions)
Outstanding net asset (liability) as of January 1, 2017
 
$
(107
)
 
 
$
2

 
 
$
(105
)
Unrealized loss
 
(14
)
 
 
(1
)
 
 
(15
)
Purchases
 
—

 
 
3

 
 
3

Settlements
 
29

 
 
(1
)
 
 
28

Outstanding net asset (liability) as of September 30, 2017
 
$
(92
)
 
 
$
3

 
 
$
(89
)
 
 
 
 
 
 
 
 
 
Outstanding net asset (liability) as of January 1, 2016
 
$
(136
)
 
 
$
1

 
 
$
(135
)
Unrealized loss
 
(17
)
 
 
(1
)
 
 
(18
)
Purchases
 
—

 
 
4

 
 
4

Settlements
 
35

 
 
—

 
 
35

Outstanding net asset (liability) as of September 30, 2016
 
$
(118
)
 
 
$
4

 
 
$
(114
)
 
 
 
 
 
 
 
 
 
FES  
Derivative [Line Items]  
Fair value of derivatives instruments
FES records the fair value of derivative instruments on a gross basis. The following table summarizes the fair value and classification of derivative instruments on FES' Consolidated Balance Sheets:
Derivative Assets
 
Derivative Liabilities
 
Fair Value
 
 
Fair Value
 
September 30,
2017
 
December 31,
2016
 
 
September 30,
2017
 
December 31,
2016
 
(In millions)
 
 
(In millions)
Current Assets - Derivatives
 
 
 
 
Current Liabilities - Derivatives
 
 
 
Commodity Contracts
$
30

 
$
133

 
    Commodity Contracts
$
(11
)
 
$
(72
)
FTRs
1

 
4

 
FTRs
(1
)
 
(5
)
 
31

 
137

 
 
(12
)
 
(77
)
 
 
 
 
 
 
 
 
 
Deferred Charges and Other Assets - Derivatives
 
 
 
 
Noncurrent Liabilities - Other
 
 
 
Commodity Contracts
5

 
77

 
    Commodity Contracts
(1
)
 
(52
)
 
5

 
77

 
 
(1
)
 
(52
)
Derivative Assets
$
36

 
$
214

 
Derivative Liabilities
$
(13
)
 
$
(129
)
 
 
 
 
 
 
 
 
 
Offsetting assets
The following tables summarize the fair value of derivative assets and derivative liabilities on FES’ Consolidated Balance Sheets and the effect of netting arrangements and collateral on its financial position:

 
 
 
 
Amounts Not Offset in Consolidated Balance Sheet
 
 
September 30, 2017
 
Fair Value
 
Derivative Instruments
 
Cash Collateral Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
35

 
$
(9
)
 
$
—

 
$
26

FTRs
 
1

 
(1
)
 
—

 
—

 
 
$
36

 
$
(10
)
 
$
—

 
$
26

 
 
 
 
 
 
 
 
 
Derivative Liabilities 
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(12
)
 
$
9

 
$
—

 
$
(3
)
FTRs
 
(1
)
 
1

 
—

 
—

 
 
$
(13
)
 
$
10

 
$
—

 
$
(3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts Not Offset in Consolidated Balance Sheet
 
 
December 31, 2016
 
Fair Value
 
Derivative Instruments
 
Cash Collateral Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
210

 
$
(117
)
 
$
—

 
$
93

FTRs
 
4

 
(4
)
 
—

 
—

 
 
$
214

 
$
(121
)
 
$
—

 
$
93

 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(124
)
 
$
117

 
$
1

 
$
(6
)
FTRs
 
(5
)
 
4

 
1

 
—

 
 
$
(129
)
 
$
121

 
$
2

 
$
(6
)
Offsetting liabilities
The following tables summarize the fair value of derivative assets and derivative liabilities on FES’ Consolidated Balance Sheets and the effect of netting arrangements and collateral on its financial position:

 
 
 
 
Amounts Not Offset in Consolidated Balance Sheet
 
 
September 30, 2017
 
Fair Value
 
Derivative Instruments
 
Cash Collateral Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
35

 
$
(9
)
 
$
—

 
$
26

FTRs
 
1

 
(1
)
 
—

 
—

 
 
$
36

 
$
(10
)
 
$
—

 
$
26

 
 
 
 
 
 
 
 
 
Derivative Liabilities 
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(12
)
 
$
9

 
$
—

 
$
(3
)
FTRs
 
(1
)
 
1

 
—

 
—

 
 
$
(13
)
 
$
10

 
$
—

 
$
(3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts Not Offset in Consolidated Balance Sheet
 
 
December 31, 2016
 
Fair Value
 
Derivative Instruments
 
Cash Collateral Pledged
 
Net Fair Value
 
 
(In millions)
Derivative Assets
 
 
 
 
 
 
 
 
Commodity contracts
 
$
210

 
$
(117
)
 
$
—

 
$
93

FTRs
 
4

 
(4
)
 
—

 
—

 
 
$
214

 
$
(121
)
 
$
—

 
$
93

 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
 
 
 
 
 
 
 
Commodity contracts
 
$
(124
)
 
$
117

 
$
1

 
$
(6
)
FTRs
 
(5
)
 
4

 
1

 
—

 
 
$
(129
)
 
$
121

 
$
2

 
$
(6
)
Volume of First Energy's outstanding derivative transactions
The following table summarizes the volumes associated with FES' outstanding derivative transactions as of September 30, 2017:

 
Purchases
 
Sales
 
Net
 
Units
 
(In millions)
Power Contracts
1

 
8

 
(7
)
 
MWH
FTRs
7

 
—

 
7

 
MWH