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Pension and Other Postemployment Benefits (Tables)
 12 Months Ended
Dec. 31, 2017
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]  
Obligations and Funded Status
 
 
Pension
 
OPEB
Obligations and Funded Status - Qualified and Non-Qualified Plans
 
2017
 
2016
 
2017
 
2016
 
 
(In millions)
Change in benefit obligation:
 
 
 
 
 
 
 
 
Benefit obligation as of January 1
 
$
9,426

 
$
9,079

 
$
711

 
$
724

 
 
 
 
 
 
 
 
 
Service cost
 
208

 
191

 
5

 
5

Interest cost
 
390

 
398

 
27

 
30

Plan participants’ contributions
 
—

 
—

 
4

 
5

Plan amendments
 
11

 
—

 
—

 
(13
)
Medicare retiree drug subsidy
 
—

 
—

 
1

 
1

Actuarial loss
 
610

 
224

 
32

 
14

Benefits paid
 
(478
)
 
(466
)
 
(49
)
 
(55
)
Benefit obligation as of December 31
 
$
10,167

 
$
9,426

 
$
731

 
$
711

 
 
 
 
 
 
 
 
 
Change in fair value of plan assets:
 
 
 
 
 
 
 
 
Fair value of plan assets as of January 1
 
$
6,213

 
$
5,338

 
$
420

 
$
431

Actual return on plan assets
 
950

 
442

 
49

 
30

Company contributions
 
18

 
899

 
16

 
9

Plan participants’ contributions
 
—

 
—

 
4

 
5

Benefits paid
 
(477
)
 
(466
)
 
(50
)
 
(55
)
Fair value of plan assets as of December 31
 
$
6,704

 
$
6,213

 
$
439

 
$
420

 
 
 
 
 
 
 
 
 
Funded Status:
 
 
 
 
 
 
 
 
Qualified plan
 
$
(3,043
)
 
$
(2,821
)
 
 
 
 
Non-qualified plans
 
(420
)
 
(392
)
 
 
 
 
Funded Status
 
$
(3,463
)
 
$
(3,213
)
 
$
(292
)
 
$
(291
)
 
 
 
 
 
 
 
 
 
Accumulated benefit obligation
 
$
9,583

 
$
8,913

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
Amounts Recognized on the Balance Sheet:
 
 
 
 
 
 
 
 
Noncurrent assets
 
$
—

 
$
9

 
$
—

 
$
—

Current liabilities
 
(19
)
 
(19
)
 
—

 
—

Noncurrent liabilities
 
(3,444
)
 
(3,203
)
 
(292
)
 
(291
)
Net liability as of December 31
 
$
(3,463
)
 
$
(3,213
)
 
$
(292
)
 
$
(291
)
 
 
 
 
 
 
 
 
 
Amounts Recognized in AOCI:
 
 
 
 
 
 
 
 
Prior service cost (credit)
 
$
32

 
$
28

 
$
(206
)
 
$
(288
)
 
 
 
 
 
 
 
 
 
Assumptions Used to Determine Benefit Obligations
 
 
 
 
 
 
 
 
(as of December 31)
 
 
 
 
 
 
 
 
Discount rate
 
3.75
%
 
4.25
%
 
3.50
%
 
4.00
%
Rate of compensation increase
 
4.20
%
 
4.20
%
 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
Assumed Health Care Cost Trend Rates
 
 
 
 
 
 
 
 
(as of December 31)
 
 
 
 
 
 
 
 
Health care cost trend rate assumed (pre/post-Medicare)
 
N/A

 
N/A

 
6.0-5.5%

 
6.0-5.5%

Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
 
N/A

 
N/A

 
4.5
%
 
4.5
%
Year that the rate reaches the ultimate trend rate
 
N/A

 
N/A

 
2028

 
2027

 
 
 
 
 
 
 
 
 
Allocation of Plan Assets (as of December 31)
 
 
 
 
 
 
 
 
Equity securities
 
42
%
 
44
%
 
50
%
 
53
%
Bonds
 
32
%
 
30
%
 
33
%
 
41
%
Absolute return strategies
 
10
%
 
8
%
 
—
%
 
—
%
Real estate funds
 
9
%
 
10
%
 
—
%
 
—
%
Private equity funds
 
1
%
 
—
%
 
—
%
 
—
%
Cash and short-term securities
 
6
%
 
8
%
 
17
%
 
6
%
Total
 
100
%
 
100
%
 
100
%
 
100
%
Components of Net Periodic Benefit Costs
 
 
Pension
 
OPEB
Components of Net Periodic Benefit Costs
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
 
 
(In millions)
Service cost
 
$
208

 
$
191

 
$
193

 
$
5

 
$
5

 
$
5

Interest cost
 
390

 
398

 
383

 
27

 
30

 
29

Expected return on plan assets
 
(448
)
 
(399
)
 
(443
)
 
(30
)
 
(30
)
 
(33
)
Amortization of prior service cost (credit)
 
7

 
8

 
8

 
(81
)
 
(80
)
 
(134
)
Pension & OPEB mark-to-market adjustment
 
108

 
179

 
344

 
13

 
15

 
25

Net periodic benefit cost (credit)
 
$
265

 
$
377

 
$
485

 
$
(66
)
 
$
(60
)
 
$
(108
)
Assumptions Used to Determine Net Periodic Benefit Cost
Assumptions Used to Determine Net Periodic Benefit Cost *
for Years Ended December 31
 
Pension
 
OPEB
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
Weighted-average discount rate
 
4.25
%
 
4.50
%
 
4.25
%
 
4.00
%
 
4.25
%
 
4.00
%
Expected long-term return on plan assets
 
7.50
%
 
7.50
%
 
7.75
%
 
7.50
%
 
7.50
%
 
7.75
%
Rate of compensation increase
 
4.20
%
 
4.20
%
 
4.20
%
 
N/A

 
N/A

 
N/A



*Excludes impact of pension and OPEB mark-to-market adjustment.
Target asset allocations for pension and OPEB portfolio
FirstEnergy’s target asset allocations for its pension and OPEB trust portfolios for 2017 and 2016 are shown in the following table:
Target Asset Allocations
 
 
 
Equities
 
38
%
Fixed income
 
30
%
Absolute return strategies
 
8
%
Real estate
 
10
%
Alternative investments
 
8
%
Cash
 
6
%
 
 
100
%
Effect of One-Percentage Point change in assumed health care cost trend rates
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:
 
 
1-Percentage-Point Increase
 
1-Percentage-Point Decrease
 
 
(In millions)
Effect on total of service and interest cost
 
$
1

 
$
(1
)
Effect on accumulated benefit obligation
 
$
21

 
$
(18
)
Estimated Future Benefit Payments
Taking into account estimated employee future service, FirstEnergy expects to make the following benefit payments from plan assets and other payments, net of participant contributions:
 
 
 
 
OPEB
 
 
Pension
 
Benefit Payments
 
Subsidy Receipts
 
 
(In millions)
2018
 
$
518

 
$
55

 
$
(1
)
2019
 
531

 
54

 
(1
)
2020
 
552

 
53

 
(1
)
2021
 
567

 
53

 
(1
)
2022
 
581

 
52

 
(1
)
Years 2023-2027
 
3,056

 
241

 
(3
)
Net Pension and OPEB Asset (Liability)
FES’ share of the pension and OPEB net (liability) asset as of December 31, 2017 and 2016, was as follows:
 
 
Pension
 
OPEB
 
 
2017

2016
 
2017

2016
 
 
(In millions)
Net (Liability) Asset(1)
 
$
(97
)
 
$
(158
)
 
$
40

 
$
36



(1) Excludes $954 million and $866 million as of December 31, 2017 and 2016, respectively, of affiliated non-current liabilities related to pension and OPEB mark-to-market costs allocated to FES of which $626 million and $570 million, respectively, are from FENOC.
Net Periodic Pension and OPEB Costs
FES’ share of the net periodic benefit cost (credit), including the pension and OPEB mark-to-market adjustment, for the three years ended December 31, 2017, was as follows:
 
 
Pension
 
OPEB
 
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
 
 
(In millions)
Net Periodic Cost (Credit)
 
$
60

 
$
(5
)
 
$
10

 
$
(17
)
 
$
(26
)
 
$
(22
)
Pension  
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]  
Pension investments measured at fair value
The following tables set forth pension financial assets that are accounted for at fair value by level within the fair value hierarchy. See Note 10, "Fair Value Measurements," for a description of each level of the fair value hierarchy. There were no significant transfers between levels during 2017 and 2016.
 
 
December 31, 2017
 
Asset Allocation
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
 
(In millions)
 
 
Cash and short-term securities
 
$
—

 
$
379

 
$
—

 
$
379

 
6
 %
Equity investments
 
 
 
 
 
 
 
 
 
 
Domestic
 
695

 
27

 
—

 
722

 
11
 %
International
 
514

 
1,569

 
—

 
2,083

 
31
 %
Fixed income
 
 
 
 
 
 
 
 
 
 
Government bonds
 
—

 
251

 
—

 
251

 
4
 %
Corporate bonds
 
—

 
1,237

 
—

 
1,237

 
18
 %
High yield debt
 
—

 
689

 
—

 
689

 
10
 %
Mortgage-backed securities (non-government)
 
—

 
31

 
—

 
31

 
—
 %
Alternatives
 
 
 
 
 
 
 


 
 
Hedge funds (Absolute return)
 
—

 
635

 
—

 
635

 
10
 %
Derivatives
 
—

 
(1
)
 
—

 
(1
)
 
—
 %
Real estate funds
 
—

 
—

 
631

 
631

 
9
 %
Total (1)
 
$
1,209


$
4,817


$
631

 
$
6,657

 
99
 %
 
 
 
 
 
 
 
 
 
 
 
Private equity funds (2)
 
 
 
 
 
 
 
57

 
1
 %
 
 
 
 
 
 
 
 
 
 
 
Total Investments
 
 
 
 
 
 
 
$
6,714

 
100
 %

(1) 
Excludes $(10) million as of December 31, 2017, of receivables, payables, taxes and accrued income associated with financial instruments reflected within the fair value table.
(2)
Net asset value used as a practical expedient to approximate fair value.


 
 
December 31, 2016
 
Asset Allocation
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
 
(In millions)
 
 
Cash and short-term securities
 
$
—

 
$
464

 
$
—

 
$
464

 
8
%
Equity investments
 


 


 


 
 
 
 
Domestic (1)
 
1,048

 
13

 
—

 
1,061

 
17
%
International
 
422

 
1,269

 
—

 
1,691

 
27
%
Fixed income
 


 


 


 
 
 
 
Government bonds
 
—

 
106

 
—

 
106

 
2
%
Corporate bonds
 
—

 
1,245

 
—

 
1,245

 
20
%
High yield debt
 
—

 
372

 
—

 
372

 
6
%
Mortgage-backed securities (non-government)
 
—

 
112

 
—

 
112

 
2
%
Alternatives
 


 


 


 
 
 
 
Hedge funds (Absolute return)
 
—

 
500

 
—

 
500

 
8
%
Derivatives
 
—

 
(1
)
 
—

 
(1
)
 
—
%
Real estate funds
 
—

 
—

 
615

 
615

 
10
%
Total (2)
 
$
1,470

 
$
4,080

 
$
615

 
$
6,165

 
100
%
 
 
 
 
 
 
 
 
 
 
 
Private equity funds (3)
 
 
 
 
 
 
 
33

 
—
%
 
 
 
 
 
 
 
 
 
 
 
Total Investments
 


 


 


 
$
6,198

 
100
%



(1) 
As a result of the $500 million equity contribution on December 13, 2016, there was $293 million of FE Stock included in the pension plan assets as of December 31, 2016.
(2) 
Excludes $16 million as of December 31, 2016, of receivables, payables, taxes and accrued income associated with financial instruments reflected within the fair value table.
(3)
Net asset value used as a practical expedient to approximate fair value.
Reconciliation of changes in the fair value of pension investments
The following table provides a reconciliation of changes in the fair value of pension investments classified as Level 3 in the fair value hierarchy during 2017 and 2016:
 
 
Real Estate Funds
 
 
 
Balance as of January 1, 2016
 
$
587

Actual return on plan assets:
 


Unrealized gains
 
29

Realized gains (losses)
 
14

Transfers in
 
(15
)
Balance as of December 31, 2016
 
$
615

Actual return on plan assets:
 
 
Unrealized gains
 
3

Realized gains
 
10

Transfers in (out)
 
3

Balance as of December 31, 2017
 
$
631
OPEB  
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]  
Pension investments measured at fair value
As of December 31, 2017 and 2016, the OPEB trust investments measured at fair value were as follows:
 
 
December 31, 2017
 
Asset Allocation
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
 
(In millions)
 
 
Cash and short-term securities
 
$
—

 
$
75

 
$
—

 
$
75

 
17
%
Equity investment
 
 
 
 
 
 
 
 
 
 
Domestic
 
220

 
—

 
—

 
220

 
50
%
Fixed income
 
 
 
 
 
 
 
 
 
 
Government bonds
 
—

 
109

 
—

 
109

 
24
%
Corporate bonds
 
—

 
34

 
—

 
34

 
8
%
Mortgage-backed securities (non-government)
 


 
3

 
—

 
3

 
1
%
Total (1)
 
$
220

 
$
221

 
$
—

 
$
441

 
100
%

(1) 
Excludes $(2) million as of December 31, 2017, of receivables, payables, taxes and accrued income associated with financial instruments reflected within the fair value table.
 
 
December 31, 2016
 
Asset Allocation
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
 
(In millions)
 
 
Cash and short-term securities
 
$
—

 
$
27

 
$
—

 
$
27

 
6
%
Equity investment
 
 
 
 
 
 
 
 
 
 
Domestic
 
223

 
—

 
—

 
223

 
53
%
Fixed income
 
 
 
 
 
 
 
 
 
 
U.S. treasuries
 
—

 
40

 
—

 
40

 
9
%
Government bonds
 
—

 
108

 
—

 
108

 
26
%
Corporate bonds
 
—

 
24

 
—

 
24

 
6
%
Mortgage-backed securities (non-government)
 
—

 
2

 
—

 
2

 
—
%
Total (1)
 
$
223

 
$
201

 
$
—

 
$
424

 
100
%

(1)
Excludes $(4) million as of December 31, 2016, of receivables, payables, taxes and accrued income associated with financial instruments reflected within the fair value table.