Allegheny Power 2011 Annual Report Download - page 136

121
of JCP&L Transition Funding and JCP&L Transition Funding II and are collateralized by each company’s equity and assets, which
consist primarily of bondable transition property. As of December 31, 2011, $287 million of the transition bonds were outstanding.
Bondable transition property represents the irrevocable right under New Jersey law of a utility company to charge, collect and
receive from its customers, through a non-bypassable TBC, the principal amount and interest on transition bonds and other fees
and expenses associated with their issuance. JCP&L sold its bondable transition property to JCP&L Transition Funding and JCP&L
Transition Funding II and, as servicer, manages and administers the bondable transition property, including the billing, collection
and remittance of the TBC, pursuant to separate servicing agreements with JCP&L Transition Funding and JCP&L Transition Funding
II. For the two series of transition bonds, JCP&L is entitled to aggregate annual servicing fees of up to $628 thousand that are
payable from TBC collections.
Other Long-term Debt
The Ohio Companies, Penn, FGCO and NGC each have a first mortgage indenture under which they can issue FMBs secured by
a direct first mortgage lien on substantially all of their property and franchises, other than specifically excepted property.
Based on the amount of FMBs authenticated by the respective mortgage bond trustees as of December 31, 2011, the sinking fund
requirement for all FMBs issued under the various mortgage indentures amounted to payments, all of which relate to Penn, was
$6 million in 2011. Penn expects to meet its 2011 annual sinking fund requirement with a replacement credit under its mortgage
indenture.
As of December 31, 2011, FirstEnergy’s currently payable long-term debt includes approximately $632 million (FES — $558 million,
Penelec — $45 million and Met-Ed — $29 million) of variable interest rate PCRBs, the bondholders of which are entitled to the
benefit of irrevocable direct pay bank LOCs. The interest rates on the PCRBs are reset daily or weekly. Bondholders can tender
their PCRBs for mandatory purchase prior to maturity with the purchase price payable from remarketing proceeds, or if the PCRBs
are not successfully remarketed, by drawings on the irrevocable direct pay LOCs. The subsidiary obligor is required to reimburse
the applicable LOC bank for any such drawings or, if the LOC bank fails to honor its LOC for any reason, must itself pay the purchase
price.
The following table presents scheduled debt repayments for outstanding long-term debt, excluding capital leases, fair value purchase
accounting adjustments and unamortized debt discounts and premiums, for the next five years as of December 31, 2011. TE does
not have any long-term debt payments due during the next five years. PCRBs that can be tendered for mandatory purchase prior
to maturity are reflected in 2012.
Year
2012
2013
2014
2015
2016
FirstEnergy
(In millions)
$ 1,605
1,314
878
1,638
1,050
FES
$ 896
310
125
762
191
OE
$ —
—
—
150
250
CEI
$ —
300
—
—
—
JCP&L
$ 34
36
38
41
343
Met-Ed
$ 29
150
250
—
—
Penelec
$ 45
—
150
—
—
The following table classifies the outstanding variable rate put bond PCRBs and variable rate PCRBs by year, excluding unamortized
debt discounts and premiums, for the next five years based on the next date on which the debt holders may exercise their right to
tender their PCRBs. The Ohio Companies and JCP&L did not have any outstanding PCRBs as of December 31, 2011.
Year
2012
2013
2014
2015
2016
FirstEnergy
(In millions)
$ 901
235
26
313
170
FES
$ 828
235
26
313
170
Met-Ed
$ 28
—
—
—
—
Penelec
$ 45
—
—
—
—
Obligations to repay certain PCRBs are secured by several series of FMBs. Certain PCRBs are entitled to the benefit of irrevocable
bank LOCs , to pay principal of, or interest on, the applicable PCRBs. To the extent that drawings are made under the LOCs, FGCO,
NGC and the applicable Utilities are entitled to a credit against their obligation to repay those bonds. FGCO, NGC and the applicable
Utilities pay annual fees based on 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.
In addition, OE has LOCs of $116 million and $37 million in connection with the sale and leaseback of Beaver Valley Unit 2 and
Perry Unit 1, respectively.