XML 31 R20.htm IDEA: XBRL DOCUMENT v3.20.2

Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

LEASES

FirstEnergy primarily leases vehicles as well as building space, office equipment, and other property and equipment under cancelable and non-cancelable leases. FirstEnergy does not have any material leases in which it is the lessor.

FirstEnergy adopted ASU 2016-02, “Leases (Topic 842)” on January 1, 2019, and elected a number of transitional practical expedients provided within the standard. These included a “package of three” expedients that must be taken together and allowed entities to: (1) not reassess whether existing contracts contain leases, (2) carryforward the existing lease classification, and (3) not reassess initial direct costs associated with existing leases. In addition, FirstEnergy elected the option to apply the requirements of the standard in the period of adoption (January 1, 2019) with no restatement of prior periods. Adoption of the standard on January 1, 2019, did not result in a material cumulative effect adjustment upon adoption. FirstEnergy did not evaluate land easements under the new guidance as they were not previously accounted for as leases. FirstEnergy also elected not to separate lease components from non-lease components as non-lease components were not material.

Leases with an initial term of 12 months or less are recognized as lease expense on a straight-line basis over the lease term and not recorded on the balance sheet. Most leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 40 years, and certain leases include options to terminate. The exercise of lease renewal options is at FirstEnergy’s sole discretion. Renewal options are included within the lease liability if they are reasonably certain based on various factors relative to the contract. Certain leases also include options to purchase the leased property. The depreciable life of leased assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. FirstEnergy’s lease agreements do not contain any material restrictive covenants.

For vehicles leased under master lease agreements, the lessor is guaranteed a residual value up to a stated percentage of the equipment cost at the end of the lease term. As of December 31, 2019, the maximum potential loss for these lease agreements at the end of the lease term is approximately $15 million.

Finance leases for assets used in regulated operations are recognized in FirstEnergy’s Consolidated Statements of Income (Loss) such that amortization of the right-of-use asset and interest on lease liabilities equals the expense allowed for ratemaking purposes. Finance leases for regulated and non-regulated operations are accounted for as if the assets were owned and financed, with associated expense recognized in Interest expense and Provision for depreciation on FirstEnergy’s Consolidated Statements of Income (Loss), while all operating lease expenses are recognized in Other operating expense. The components of lease expense were as follows:

						For the Year Ended December 31, 2019
(In millions)						Vehicles						Buildings						Other						Total
Operating lease costs (1)						$	28					$	9					$	12					$	49
Finance lease costs:
Amortization of right-of-use assets						15						1						1						17
Interest on lease liabilities						3						3						—						6
Total finance lease cost						18						4						1						23
Total lease cost						$	46					$	13					$	13					$	72

(1) Includes $13 million of short-term lease costs.

Supplemental cash flow information related to leases was as follows:

(In millions)						For the Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases						$	29
Operating cash flows from finance leases						5
Finance cash flows from finance leases						25
Right-of-use assets obtained in exchange for lease obligations:
Operating leases						$	83
Finance leases						3

Lease terms and discount rates were as follows:

						As of December 31, 2019
Weighted-average remaining lease terms (years)
Operating leases						9.42
Finance leases						4.62
Weighted-average discount rate (1)
Operating leases						4.51		%
Finance leases						10.45		%

(1) When an implicit rate is not readily determinable, an incremental borrowing rate is utilized, determining the present value of lease payments. The rate is determined based on expected term and information available at the commencement date.

Supplemental balance sheet information related to leases was as follows:

(In millions)

Financial Statement Line Item

As of December 31, 2019

Assets

Operating lease assets, net of accumulated amortization of $23 million

Deferred charges and other assets

$

231

Finance lease assets, net of accumulated amortization of $90 million

Property, plant and equipment

73

Total leased assets

$

304

Liabilities

Current:

Operating

Other current liabilities

$

32

Finance

Currently payable long-term debt

15

Noncurrent:

Operating

Other noncurrent liabilities

241

Finance

Long-term debt and other long-term obligations

45

Total leased liabilities

$

333

Maturities of lease liabilities as of December 31, 2019, were as follows:

(In millions)						Operating Leases						Finance Leases						Total
2020						$	40					$	20					$	60
2021						40						17						57
2022						40						15						55
2023						36						8						44
2024						29						4						33
Thereafter						154						16						170
Total lease payments (1)						339						80						419
Less imputed interest						(66)						(20)						(86)
Total net present value						$	273					$	60					$	333

(1) Operating lease payments for certain leases are offset by sublease receipts of $13 million over 13 years.

As of December 31, 2019, additional operating leases agreements, primarily for vehicles, that have not yet commenced are $13 million. These leases are expected to commence within the next 18 months with lease terms of 3 to 10 years.

ASC 840, "Leases" Disclosures

The future minimum capital lease payments as of December 31, 2018, as reported in the 2018 Annual Report on Form 10-K for the year ended December 31, 2018 under ASC 840 ”Leases” are as follows:

Capital Leases
						(In millions)
2019						$	24
2020						19
2021						16
2022						13
2023						8
Years thereafter						16
Total minimum lease payments						96
Interest portion						(23)
Present value of net minimum lease payments						73
Less current portion						18
Noncurrent portion						$	55

The future minimum operating lease payments as of December 31, 2018, as reported in the 2018 Annual Report on Form 10-K for the year ended December 31, 2018 under ASC 840 ”Leases” are as follows:

Operating Leases
						(In millions)
2019						$	34
2020						36
2021						34
2022						30
2023						28
Years thereafter						127
Total minimum lease payments						$	289

Operating lease expense under ASC 840 ”Leases" for the years ended December 31, 2018 and 2017 were $48 million and $53 million, respectively.

Leases

LEASES

FirstEnergy primarily leases vehicles as well as building space, office equipment, and other property and equipment under cancelable and non-cancelable leases. FirstEnergy does not have any material leases in which it is the lessor.

FirstEnergy adopted ASU 2016-02, “Leases (Topic 842)” on January 1, 2019, and elected a number of transitional practical expedients provided within the standard. These included a “package of three” expedients that must be taken together and allowed entities to: (1) not reassess whether existing contracts contain leases, (2) carryforward the existing lease classification, and (3) not reassess initial direct costs associated with existing leases. In addition, FirstEnergy elected the option to apply the requirements of the standard in the period of adoption (January 1, 2019) with no restatement of prior periods. Adoption of the standard on January 1, 2019, did not result in a material cumulative effect adjustment upon adoption. FirstEnergy did not evaluate land easements under the new guidance as they were not previously accounted for as leases. FirstEnergy also elected not to separate lease components from non-lease components as non-lease components were not material.

Leases with an initial term of 12 months or less are recognized as lease expense on a straight-line basis over the lease term and not recorded on the balance sheet. Most leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 40 years, and certain leases include options to terminate. The exercise of lease renewal options is at FirstEnergy’s sole discretion. Renewal options are included within the lease liability if they are reasonably certain based on various factors relative to the contract. Certain leases also include options to purchase the leased property. The depreciable life of leased assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. FirstEnergy’s lease agreements do not contain any material restrictive covenants.

For vehicles leased under master lease agreements, the lessor is guaranteed a residual value up to a stated percentage of the equipment cost at the end of the lease term. As of December 31, 2019, the maximum potential loss for these lease agreements at the end of the lease term is approximately $15 million.

Finance leases for assets used in regulated operations are recognized in FirstEnergy’s Consolidated Statements of Income (Loss) such that amortization of the right-of-use asset and interest on lease liabilities equals the expense allowed for ratemaking purposes. Finance leases for regulated and non-regulated operations are accounted for as if the assets were owned and financed, with associated expense recognized in Interest expense and Provision for depreciation on FirstEnergy’s Consolidated Statements of Income (Loss), while all operating lease expenses are recognized in Other operating expense. The components of lease expense were as follows:

						For the Year Ended December 31, 2019
(In millions)						Vehicles						Buildings						Other						Total
Operating lease costs (1)						$	28					$	9					$	12					$	49
Finance lease costs:
Amortization of right-of-use assets						15						1						1						17
Interest on lease liabilities						3						3						—						6
Total finance lease cost						18						4						1						23
Total lease cost						$	46					$	13					$	13					$	72

(1) Includes $13 million of short-term lease costs.

Supplemental cash flow information related to leases was as follows:

(In millions)						For the Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases						$	29
Operating cash flows from finance leases						5
Finance cash flows from finance leases						25
Right-of-use assets obtained in exchange for lease obligations:
Operating leases						$	83
Finance leases						3

Lease terms and discount rates were as follows:

						As of December 31, 2019
Weighted-average remaining lease terms (years)
Operating leases						9.42
Finance leases						4.62
Weighted-average discount rate (1)
Operating leases						4.51		%
Finance leases						10.45		%

(1) When an implicit rate is not readily determinable, an incremental borrowing rate is utilized, determining the present value of lease payments. The rate is determined based on expected term and information available at the commencement date.

Supplemental balance sheet information related to leases was as follows:

(In millions)

Financial Statement Line Item

As of December 31, 2019

Assets

Operating lease assets, net of accumulated amortization of $23 million

Deferred charges and other assets

$

231

Finance lease assets, net of accumulated amortization of $90 million

Property, plant and equipment

73

Total leased assets

$

304

Liabilities

Current:

Operating

Other current liabilities

$

32

Finance

Currently payable long-term debt

15

Noncurrent:

Operating

Other noncurrent liabilities

241

Finance

Long-term debt and other long-term obligations

45

Total leased liabilities

$

333

Maturities of lease liabilities as of December 31, 2019, were as follows:

(In millions)						Operating Leases						Finance Leases						Total
2020						$	40					$	20					$	60
2021						40						17						57
2022						40						15						55
2023						36						8						44
2024						29						4						33
Thereafter						154						16						170
Total lease payments (1)						339						80						419
Less imputed interest						(66)						(20)						(86)
Total net present value						$	273					$	60					$	333

(1) Operating lease payments for certain leases are offset by sublease receipts of $13 million over 13 years.

As of December 31, 2019, additional operating leases agreements, primarily for vehicles, that have not yet commenced are $13 million. These leases are expected to commence within the next 18 months with lease terms of 3 to 10 years.

ASC 840, "Leases" Disclosures

The future minimum capital lease payments as of December 31, 2018, as reported in the 2018 Annual Report on Form 10-K for the year ended December 31, 2018 under ASC 840 ”Leases” are as follows:

Capital Leases
						(In millions)
2019						$	24
2020						19
2021						16
2022						13
2023						8
Years thereafter						16
Total minimum lease payments						96
Interest portion						(23)
Present value of net minimum lease payments						73
Less current portion						18
Noncurrent portion						$	55

The future minimum operating lease payments as of December 31, 2018, as reported in the 2018 Annual Report on Form 10-K for the year ended December 31, 2018 under ASC 840 ”Leases” are as follows:

Operating Leases
						(In millions)
2019						$	34
2020						36
2021						34
2022						30
2023						28
Years thereafter						127
Total minimum lease payments						$	289

Operating lease expense under ASC 840 ”Leases" for the years ended December 31, 2018 and 2017 were $48 million and $53 million, respectively.

X

- References

No definition available.

+ Details

Name:	us-gaap_LeasesAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

+ Details

Name:	us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

+ Details

Name:	us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration