Allegheny Power 2010 Annual Report Download - page 138

Download and view the complete annual report

Please find page 138 of the 2010 Allegheny Power annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 154

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154

123
16. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
In 2010, the FASB Emerging Issues Task Force amended the Goodwill and Other Topic of the FASB Accounting
Standards Codification. The amendment requires entities with a zero or negative carrying value to assess whether it is
more likely than not that a goodwill impairment exists through the consideration of qualitative factors. If an entity
concludes that it is more likely than not that a goodwill impairment exists, the entity must perform step 2 of the goodwill
impairment test. The amendment is effective for fiscal years, and interim periods within those years, beginning after
December 15, 2010. FirstEnergy does not expect this amendment to have a material effect on its financial statements.
In 2010, the FASB Emerging Issues Task Force amended the Business Combinations Topic of the FASB Accounting
Standards Codification. The amendment addresses how entities prepare pro forma financial information as a result of a
business combination. Under the amendment, if comparative financial statements are presented an entity should present
the pro forma disclosures as if the business combination occurred at the beginning of the prior annual period. An entity
must provide additional disclosures describing the nature and amount of material, nonrecurring pro forma adjustments.
The amendment is effective for business combinations consummated in periods beginning after December 15, 2010.
FirstEnergy will implement the amendment to Business Combinations guidance for acquisitions consummated after
January 1, 2011.
17. TRANSACTIONS WITH AFFILIATED COMPANIES
FES’ and the Utilities’ operating revenues, operating expenses, investment income and interest expense include
transactions with affiliated companies. These affiliated company transactions include PSAs between FES and the
Utilities, support service billings from FESC and FENOC, interest on associated company notes and other transactions
(see Note 7).
The Ohio Companies had a full requirements PSA with FES through December 31, 2008 to meet their POLR and default
service obligations. Met-Ed and Penelec had a partial requirement PSA with FES to meet a portion of their POLR and
default service obligations through the end of 2010 (see Note 9). FES is incurring interest expense through FGCO and
NGC on associated company notes payable to the Ohio Companies and Penn related to the 2005 intra-system
generation asset transfers. The primary affiliated company transactions for FES and the Utilities during the three years
ended December 31, 2010 are as follows:
Affiliated Company Transactions - 2010 FES OE CEI TE JCP&L Met-Ed Penelec
(In millions)
Revenues:
Electric sales to affiliates $ 2,227 $ 190 $ 2 $ 46 $ - $ 73 $ 65
Ground lease with ATSI - 12 7 2 - - -
Other 88 1 7 1 - 10 -
Expenses:
Purchased power from affiliates 371 521 361 181 - 612 643
Fuel 46 - - - - - -
Support services 620 128 64 52 94 59 58
Investment Income:
Interest income from affiliates - - - 12 - - -
Interest income from FirstEnergy 3 - - - - - -
Interest Expense:
Interest expense to affiliates 9 3 14 1 4 2 2
Interest expense to FirstEnergy - - 1 - - - -