Allegheny Power 2010 Annual Report Download - page 126

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111
The following table classifies the outstanding PCRBs by year, for the next three years, representing the next time the
debt holders may exercise their right to tender their PCRBs.
Y
ear FE FES Met-Ed Penelec
(In millions)
2011 $ 1,043 $ 969 $ 29 $ 45
2012 270 270 - -
2013 235 235 - -
Obligations to repay certain PCRBs are secured by several series of FMBs. Certain PCRBs are entitled to the benefit of
irrevocable bank LOCs of $835 million as of December 31, 2010, or noncancelable municipal bond insurance of
$14 million as of December 31, 2010, to pay principal of, or interest on, the applicable PCRBs. To the extent that
drawings are made under the LOCs or the insurance, FGCO, NGC and the Utilities are entitled to a credit against their
obligation to repay those bonds. FGCO, NGC and the Utilities pay annual fees of 0.35% to 3.30% of the amounts of the
LOCs to the issuing banks and are obligated to reimburse the banks or insurers, as the case may be, for any drawings
thereunder. The insurers hold FMBs as security for such reimbursement obligations. OE has LOCs of $130 million and
$42 million in connection with the sale and leaseback of Beaver Valley Unit 2 and Perry Unit 1, respectively. The
amounts and annual fees for FirstEnergy, FES and the Utilities are as follows:
FE FES Met-Ed Penelec
(In millions)
Amounts
LOCs $ 835 $ 786 $ 29 $ 20
Insurance Policies 14 - 14 -
Annual Fee
0.35% to 0.35% to
LOCs 3.30% 3.30% 1.60% 1.60%
12. ASSET RETIREMENT OBLIGATIONS
FirstEnergy has recognized applicable legal obligations for AROs and their associated cost for nuclear power plant
decommissioning, reclamation of a sludge disposal pond and closure of two coal ash disposal sites. In addition,
FirstEnergy has recognized conditional retirement obligations (primarily for asbestos remediation).
The ARO liabilities for FES, OE and TE primarily relate to the decommissioning of the Beaver Valley, Davis-Besse and
Perry nuclear generating facilities (OE for its leasehold interest in Beaver Valley Unit 2 and Perry and TE for its leasehold
interest in Beaver Valley Unit 2). The ARO liabilities for JCP&L, Met-Ed and Penelec primarily relate to the
decommissioning of the TMI-2 nuclear generating facility. FES and the Utilities use an expected cash flow approach to
measure the fair value of their nuclear decommissioning AROs.
FirstEnergy, FES and the Utilities maintain nuclear decommissioning trust funds that are legally restricted for purposes of
settling the nuclear decommissioning ARO. The fair values of the decommissioning trust assets as of December 31,
2010 and 2009 were as follows:
2010 2009
(In millions)
FE $1,973 $1,859
FES 1,146 1,089
OE 127 121
TE 76 74
JCP&L 182 167
Met-Ed 289 266
Penelec 153 143
Accounting standards for conditional retirement obligations associated with tangible long-lived assets require recognition
of the fair value of a liability for an ARO in the period in which it is incurred if a reasonable estimate can made, even
though there may be uncertainty about timing or method of settlement. When settlement is conditional on a future event
occurring, it is reflected in the measurement of the liability, not in the recognition of the liability.