Allegheny Power 2014 Annual Report Download - page 112

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97
INVESTMENTS
All temporary cash investments purchased with an initial maturity of three months or less are reported as cash equivalents on the
Consolidated Balance Sheets at cost, which approximates their fair market value. Investments other than cash and cash equivalents
include held-to-maturity securities, AFS securities and notes receivable.
At the end of each reporting period, FirstEnergy evaluates its investments for OTTI. Investments classified as AFS securities are
evaluated to determine whether a decline in fair value below the cost basis is other than temporary. FirstEnergy first considers its
intent and ability to hold an equity security until recovery and then considers, among other factors, the duration and the extent to
which the security's fair value has been less than its cost and the near-term financial prospects of the security issuer when evaluating
an investment for impairment. For debt securities, FirstEnergy considers its intent to hold the securities, the likelihood that it will be
required to sell the securities before recovery of its cost basis and the likelihood of recovery of the securities' entire amortized cost
basis. If the decline in fair value is determined to be other than temporary, the cost basis of the securities is written down to fair
value.
Unrealized gains and losses on AFS securities are recognized in AOCI. However, unrealized losses held in the NDTs of FES, OE
and TE are recognized in earnings since the trust arrangements, as they are currently defined, do not meet the required ability and
intent to hold criteria in consideration of OTTI.
The investment policy for the NDT funds restricts or limits the trusts' ability to hold certain types of assets including private or direct
placements, warrants, securities of FirstEnergy, investments in companies owning nuclear power plants, financial derivatives,
securities convertible into common stock and securities of the trust funds' custodian or managers and their parents or subsidiaries.
AFS Securities
FirstEnergy holds debt and equity securities within its NDT, nuclear fuel disposal and NUG trusts. These trust investments are
considered AFS securities, recognized at fair market value. FirstEnergy has no securities held for trading purposes.
The following table summarizes the amortized cost basis, unrealized gains (there were no unrealized losses) and fair values of
investments held in NDT, nuclear fuel disposal and NUG trusts as of December 31, 2014 and December 31, 2013:
December 31, 2014(1) December 31, 2013(2)
Cost
Basis Unrealized
Gains Fair Value Cost
Basis Unrealized
Gains Fair Value
(In millions)
Debt securities
FirstEnergy $ 1,724 $ 27 $ 1,751 $1,881 $ 33 $ 1,914
FES 788 13 801 918 17 935
Equity securities
FirstEnergy $ 533 $ 58 $ 591 $ 308 $ 9 $ 317
FES 329 31 360 207 —207
(1) Excludes short-term cash investments: FE Consolidated - $241 million; FES - $204 million.
(2) Excludes short-term cash investments: FE Consolidated - $204 million; FES - $135 million.