XML 34 R14.htm IDEA: XBRL DOCUMENT
v3.24.3

INCOME TAXES | 9 Months Ended
--- | ---
Sep. 30, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES FirstEnergy’s interim effective income tax rates reflect the estimated annual effective income tax rates for 2024 and 2023. These tax rates are affected by estimated annual permanent items, such as AFUDC equity and other flow-through items, as well as certain discrete items. The following tables reconcile the effective income tax rate to the federal income tax statutory rate for the three and nine months ended September 30, 2024 and 2023:
|  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (In millions)
Income before income taxes |  | $ | 560 |  |  | $ | 470 |  |  | $ | 1,125 |  |  | $ | 1,198 |
Federal income tax expense at statutory rate (21%) |  | $ | 118 |  |  | $ | 99 |  |  | $ | 236 |  |  | $ | 252 |
Increases (reductions) in tax expense resulting from: |  |  |  |  |  |  |  |
State and municipal income taxes, net of federal tax benefit |  | 33 |  |  | 25 |  |  | 76 |  |  | 49 |
AFUDC equity and other flow-through |  | (6) |  |  | (15) |  |  | (19) |  |  | (25) |
Deductions associated with certain equity method investments |  | (14) |  |  | — |  |  | (14) |  |  | — |
Deferred taxes related to sale of equity interest in FET, net |  | — |  |  | — |  |  | 7 |  |  | — |
Excess deferred tax amortization due to the Tax Act |  | (13) |  |  | 2 |  |  | (40) |  |  | (30) |
Federal tax credits claimed |  | — |  |  | (2) |  |  | — |  |  | (2) |
Nondeductible SEC and OOCIC settlements |  | — |  |  | — |  |  | 27 |  |  | — |
Remeasurement of excess deferred taxes |  | (21) |  |  | — |  |  | (21) |  |  | — |
Uncertain tax positions |  | — |  |  | 50 |  |  | — |  |  | 50 |
Valuation allowances |  | (3) |  |  | (122) |  |  | 33 |  |  | (113) |
Other, net |  | — |  |  | (8) |  |  | 9 |  |  | 12 |
Total income taxes |  | $ | 94 |  |  | $ | 29 |  |  | $ | 294 |  |  | $ | 193 |
Effective income tax rate |  | 16.8 | % |  | 6.2 | % |  | 26.1 | % |  | 16.1 | %
The IRA of 2022, among other things, imposes a new 15% corporate AMT based on AFSI applicable to corporations with a three-year average AFSI over $1 billion. The AMT is effective for the 2023 tax year and, if applicable, corporations must pay the greater of the regular corporate income tax or the AMT. The IRA of 2022 requires the U.S. Treasury to provide regulations and other guidance necessary to administer the AMT, including further defining allowable adjustments to determine AFSI, which directly impacts the amount of AMT to be paid. On September 12, 2024, the U.S. Treasury issued proposed regulations for the AMT for comment. The U.S. Treasury will issue final regulations after it has reviewed comments and held a public hearing on the proposed regulations, which is not expected to occur until next year. Although FirstEnergy is assessing the proposed regulations, it continues to believe that it is more likely than not that it will be subject to AMT going forward, however, the completion of the U.S. Treasury’s rulemaking process and the future issuance of final regulations could significantly change FirstEnergy’s AMT estimates or its conclusion as to whether it is an AMT payer at all. Additionally, the regulatory treatment of the impacts of this legislation may also be subject to regulation by FERC and/or applicable state regulatory authorities. Any adverse development in this legislation, including guidance from the U.S. Treasury and/or the IRS or unfavorable regulatory treatment, could negatively impact FirstEnergy’s cash flows, results of operations, and financial condition. As further discussed below, FirstEnergy expects to pay regular federal corporate income tax in 2024, due in large part to the gain realized from closing the FET Equity Interest Sale. As discussed above, on March 25, 2024, FirstEnergy closed on the FET Equity Interest Sale, realizing an approximate $7.3 billion tax gain from the combined sale of 49.9% of the membership interests in FET for the consideration received and recapture of negative tax basis in FET. In the first quarter of 2024, FirstEnergy recognized a net tax charge of approximately $46 million, comprised of updates to estimated deferred tax liability for the deferred gain from the 19.9% sale of FET in May 2022, deferred tax liability related to its ongoing investment in FET, and valuation allowance associated with the expected utilization of certain state NOL carryforwards impacted by the sale and the PA Consolidation. During the first quarter of 2024, FirstEnergy also recognized a reduction to OPIC of approximately $797 million for federal and state income tax associated with the tax gain from closing on the FET Equity Interest Sale. As of December 31, 2023, FirstEnergy had approximately $8.1 billion of gross federal NOL carryforwards that will be used to offset a majority of the tax gain from the FET Equity Interest Sale and expected taxable income in 2024, however, due to certain limitations on NOL utilization enacted in the Tax Act, FirstEnergy expects that a portion of the NOL will carry into 2025 and possibly beyond. As a result of the FET Equity Interest Sale, FET and its subsidiaries deconsolidated from FirstEnergy’s consolidated federal income tax group and now constitute their own consolidated federal income tax group subject to their own income tax allocation agreement. Due to a private letter ruling recently issued by the IRS to an unaffiliated utility company, FirstEnergy is evaluating the potential requirement to transition certain of its Electric Companies and Transmission Companies to stand-alone treatment of NOL carryforwards for ratemaking purposes. Currently, none of FirstEnergy’s Electric Companies or Transmission Companies have transitioned to stand-alone treatment. FirstEnergy expects that if and where transitioning is required, those impacted Electric Companies and Transmission Companies will make the appropriate regulatory filing(s) in their applicable jurisdiction to include the NOL carryforward deferred tax asset in rate base and revenue requirement, which could have a material, favorable impact on future net income.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration