Allegheny Power 2011 Annual Report Download - page 24

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Energy Services.
Prior to the change in composition of business segments, FirstEnergy's business was comprised of two reportable operating
segments. The Energy Delivery Services segment was comprised of FirstEnergy's then eight existing utility operating companies
that transmit and distribute electricity to customers and purchase power to serve their POLR and default service requirements. The
Competitive Energy Services segment was comprised of FES, which supplies electric power to end-use customers through retail
and wholesale arrangements. The “Other/Corporate” amounts consisted of corporate items and other businesses that were below
the quantifiable threshold for separate disclosure. Disclosures for FirstEnergy's operating segments for 2010 have been reclassified
to conform to the revised presentation.
The changes in FirstEnergy's reportable segments during 2011 consisted primarily of the following:
• Energy Delivery Services was renamed Regulated Distribution and the operations of MP, PE and WP, which were acquired
as part of the merger with AE, and certain regulatory asset recovery mechanisms formerly included in the “Other/Corporate”
segment, were placed into this segment.
• A new Regulated Independent Transmission segment was created consisting of ATSI, and the operations of TrAIL and
FirstEnergy's interest in PATH; TrAIL and PATH were acquired as part of the merger with AE. The transmission assets and
operations of JCP&L, Met-Ed, Penelec, MP, PE and WP remained within the Regulated Distribution segment.
• AE Supply, an operator of generation facilities that was acquired as part of the merger with AE, was placed into the
Competitive Energy Services segment with FES.
Regulated Distribution distributes electricity through our ten utility distribution companies, serving approximately 6 million
customers within 67,000 square miles of Ohio, Pennsylvania, West Virginia, Maryland, New Jersey and New York, and purchases
power for its POLR, SOS and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland. This segment also
includes the transmission operations of JCP&L, Met-Ed, Penelec, WP, MP and PE and the regulated electric generation facilities
in West Virginia and New Jersey which MP and JCP&L, respectively, own or contractually control. Its results reflect the commodity
costs of securing electric generation and the deferral and amortization of certain fuel costs.
The service areas of our regulated distribution utilities are summarized below:
Company
OE
Penn
CEI
TE
JCP&L
Met-Ed
Penelec
WP
MP
PE
Area Served
Central and Northeastern Ohio
Western Pennsylvania
Northeastern Ohio
Northwestern Ohio
Northern, Western and East Central New Jersey
Eastern Pennsylvania
Western Pennsylvania
Southwest, South Central and Northern Pennsylvania
Northern, Central and Southeastern West Virginia
Western Maryland and Eastern West Virginia
Customers
Served
1,032,000
161,000
747,000
309,000
1,099,000
553,000
590,000
718,000
387,000
390,000
5,986,000
Regulated Independent Transmission transmits electricity through transmission lines and its revenues are primarily derived from
a formulaic rate that recovers costs and a return on investment for capital expenditures in connection with TrAIL, PATH and other
projects, revenues from providing transmission services to electric energy providers and power marketers, and revenues from
operating a portion of the FirstEnergy transmission system. Its results reflect the net transmission expenses related to the delivery
of the respective generation loads.
Competitive Energy Services supplies, through FES and AE Supply, electric power to end-use customers through retail and
wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Michigan, New
Jersey and Maryland and the provision of partial POLR and default service for some utilities in Ohio, Pennsylvania and Maryland,
including but not limited to the Utilities. This segment controls approximately 17,000 MWs of capacity (excluding approximately
2,700 MWs from unregulated plants expected to be closed by September 1, 2012) (see Note 11, Impairment of Long-Lived Assets
of the Combined Notes to the Consolidated Financial Statements) and also purchases electricity to meet sales obligations. The
segment's net income is primarily derived from electric generation sales less the related costs of electricity generation, including
purchased power and net transmission (including congestion) and ancillary costs charged by PJM and MISO (prior to June 1, 2011)
to deliver energy to the segment's customers.