Allegheny Power 2013 Annual Report Download - page 21

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mix of its assets. While these actions will result in the competitive fleet being about the same size as before the Allegheny merger,
FirstEnergy believes it is a much stronger, more efficient, and environmentally controlled platform of units.
In late 2013, FirstEnergy announced plans to grow its regulated operations - specifically its transmission segment. FirstEnergy
plans to implement a transmission expansion plan designed to improve operating flexibility, increase the reliability of the regional
transmission system, position capacity for future load growth and facilitate response to system events. These investments will focus
primarily in ATSI, which has a formula rate recovery mechanism, but will ultimately extend throughout FirstEnergy's service area.
Operational Matters
Employee Relations
As of December 31, 2013, the IBEW, the UWUA and the OPEIU unions collectively represented approximately 48% of FirstEnergy's
total employees. There are various CBAs between FirstEnergy's subsidiaries and these unions, most of which have three year
terms. There were seven CBAs covering approximately 2,850 bargaining unit employees that expired in 2013. Negotiations on five
of the seven CBAs resulted in new CBAs that expire in 2014, 2015, or 2016.
FirstEnergy is engaged in separate negotiations with Local 102 and Local 180 of the UWUA. The CBA with Local 102, which
represents approximately 700 employees at WP and PE, expired on April 30, 2013. WP and PE have work continuation plans in
place in the event of any work stoppage. The CBA with Local 180, which represents approximately 150 employees at PN, expired
on August 31, 2013. After multiple bargaining sessions without an agreement on a new CBA, FirstEnergy issued a final offer, which
Local 180 rejected. Beginning November 25, 2013, FirstEnergy locked out members of Local 180 and commenced its work
continuation plan.
In addition, two other CBAs due to expire in 2014 were extended to 2017 prior to their expiration.
West Virginia Asset Transfer - 2013
On October 9, 2013, MP sold its approximate 8% share of Pleasants at its fair market value of $73 million to AE Supply, and AE
Supply sold its approximate 80% share of Harrison to MP at its book value of $1.2 billion. The transaction resulted in AE Supply
receiving net consideration of $1.1 billion and MP's assumption of a $73.5 million pollution control note. The $1.1 billion net
consideration was originally financed by MP through an equity infusion from FE of approximately $527 million and a note payable
to AE Supply of approximately $573 million. The note payable to AE Supply was repaid in the fourth quarter of 2013. In connection
with the closing, in the fourth quarter of 2013, MP recorded a pre-tax impairment charge of approximately $322 million to reduce
the net book value of the Harrison Power Station to the amount that was permitted to be included in jurisdictional rate base.
Additionally, MP recognized a regulatory liability of approximately $23 million in the fourth quarter of 2013 representing refunds to
customers associated with the excess purchase price received by MP above the net book value of MP's minority interest in the
Pleasants Power Station.
Hatfield's Ferry, Mitchell & Mad River Plant Deactivations
As a result of the cost of compliance with current and future environmental regulations and the continued low market price for
electricity, FirstEnergy deactivated its 1,700-MW Hatfield's Ferry and 370-MW Mitchell coal-fired plants on October 9, 2013. In
connection with the deactivations, in the second quarter of 2013, FirstEnergy recorded a pre-tax impairment of approximately $473
million to continuing operations, which also includes pre-tax impairments of $13 million related to excessive inventory at these
facilities. The impairment charge is included within the results of the Competitive Energy Services segment.
Approximately 240 plant employees and generation related positions were affected by these plant deactivations. FirstEnergy
recorded approximately $6 million (pre-tax) of severance related expenses that were recognized in Other operating expenses in
the Consolidated Statements of Income for the year ended December 31, 2013.
On January 9, 2014, FirstEnergy deactivated the 60 MW Mad River power station in Springfield, Ohio as PJM found no reliability
issues.
Davis-Besse Inspection
As part of routine inspections of the concrete shield building at Davis-Besse Nuclear Power Station in 2013, FENOC identified
changes to the subsurface laminar cracking condition originally discovered in 2011. The shield building is a 2 1/2-foot thick reinforced
concrete structure that provides biological shielding, protection from natural phenomena including wind and tornadoes and additional
shielding in the event of an accident. FENOC then expanded its sample size to include all of the existing core bores in the shield
building. These inspections, which are now complete, identified additional subsurface cracking that was determined to be pre-
existing, but only now identified with the aid of improved inspection technology. These inspections also revealed that the cracking
condition has propagated a small amount in select areas. Preliminary analysis of the inspections results confirm that the building
continues to maintain its structural integrity, and its ability to safely perform all of its functions.