Allegheny Power 2013 Annual Report Download - page 77

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needed to fill emergency positions. These and other NRC requirements adopted as a result of the accident at Fukushima Daiichi
are likely to result in additional material costs from plant modifications and upgrades at FENOC's nuclear facilities.
ICG Litigation
On December 28, 2006, AE Supply and MP filed a complaint in the Court of Common Pleas of Allegheny County, Pennsylvania
against ICG, Anker WV, and Anker Coal. Anker WV entered into a long term Coal Sales Agreement with AE Supply and MP for the
supply of coal to the Harrison generating facility. Prior to the time of trial, ICG was dismissed as a defendant by the Court, which
issue can be the subject of a future appeal. As a result of defendants' past and continued failure to supply the contracted coal, AE
Supply and MP have incurred and will continue to incur significant additional costs for purchasing replacement coal. A non-jury trial
was held from January 10, 2011 through February 1, 2011. At trial, AE Supply and MP presented evidence that they have incurred
in excess of $80 million in damages for replacement coal purchased through the end of 2010 and will incur additional damages in
excess of $150 million for future shortfalls. Defendants primarily claim that their performance is excused under a force majeure
clause in the coal sales agreement and presented evidence at trial that they will continue to not provide the contracted yearly
tonnage amounts. On May 2, 2011, the court entered a verdict in favor of AE Supply and MP for $104 million ($90 million in future
damages and $14 million for replacement coal/interest). On August 25, 2011, the Allegheny County Court denied all Motions for
Post-Trial relief and the May 2, 2011 verdict became final. On August 26, 2011, the defendants posted bond and filed a Notice of
Appeal with the Superior Court. On August 13, 2012, the Superior Court affirmed the $14 million past damages award but vacated
the $90 million future damages award. While the Superior Court found that the defendants still owed future damages, it remanded
the calculation of those damages back to the trial court. The specific amount of those future damages is not known at this time, but
they are expected to be calculated at a market price of coal that is significantly lower than the price used by the trial court. On
August 27, 2012, AE Supply and MP filed an Application for Reargument En Banc with the Superior Court, which was denied on
October 19, 2012. AE Supply and MP filed a Petition for Allowance of Appeal with the Pennsylvania Supreme Court on November
19, 2012. On July 2, 2013, the Petition for Allowance of Appeal was denied and in the second quarter of 2013 the now final past
damage award of $15.5 million (including interest) was recognized. The case was sent back to the trial court to recalculate the
future damages only and is currently in the discovery phase. A hearing is scheduled for May 13-14, 2014.
Other Legal Matters
In 2010, a lawsuit was filed in Allegheny County Court of Common Pleas by Michael Goretzka, for wrongful death and negligence
after his wife was fatally electrocuted when she contacted a downed power line. The trial resulted in a verdict against WP and the
parties settled this matter. WP's portion of the settlement was covered by insurance subject to the remainder of its deductible. On
May 30, 2012, the PPUC's Bureau of Investigation and Enforcement (I&E) filed a Formal Complaint at the PPUC regarding this
matter. On February 13, 2013, WP and I&E filed a Joint Petition for Full Settlement that includes, among other things, WP's agreement
to conduct an infrared inspection of its primary distribution system, modify certain training programs, and pay an $86,000 civil
penalty, which settlement is subject to PPUC approval. On August 29, 2013, the PPUC entered an Order granting the Goretzka
family limited party status for the sole purpose of submitting comments to the settlement and issuing the settlement for comment
by the parties. On September 16, 2013, the Goretzka family filed Limited Objections to the settlement. Reply comments were filed
by WP on September 30, 2013. The PPUC entered an Opinion and Order on January 9, 2014 approving the Settlement with limited
modifications regarding the frequency of refresher training and reporting obligations. WP filed a letter on January 17, 2014 accepting
those modifications and noting its intent to begin implementation of the settlement terms.
There are various lawsuits, claims (including claims for asbestos exposure) and proceedings related to FirstEnergy's normal business
operations pending against FirstEnergy and its subsidiaries. The loss or range of loss in these matters is not expected to be material
to FirstEnergy or its subsidiaries. The other potentially material items not otherwise discussed above are described under Note 15,
Regulatory Matters of the Combined Notes to Consolidated Financial Statements.
FirstEnergy accrues legal liabilities only when it concludes that it is probable that it has an obligation for such costs and can
reasonably estimate the amount of such costs. In cases where FirstEnergy determines that it is not probable, but reasonably possible
that it has a material obligation, it discloses such obligations and the possible loss or range of loss if such estimate can be made.
If it were ultimately determined that FirstEnergy or its subsidiaries have legal liability or are otherwise made subject to liability based
on any of the matters referenced above, it could have a material adverse effect on FirstEnergy's or its subsidiaries' financial condition,
results of operations and cash flows.