Allegheny Power 2014 Annual Report Download - page 126

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111
Term Loans
On March 31, 2014, FE executed, and fully utilized, a new $1 billion variable rate term loan credit agreement with a maturity date
of March 31, 2019. The initial borrowing under the term loan, which took the form of a Eurodollar rate advance, may be converted
from time to time, in whole or in part, to alternate base rate advances or other Eurodollar rate advances. The proceeds from this
term loan reduced borrowings under the FE Facility. Additionally, FE has a $200 million variable rate term loan, for which the maturity
was extended in December 2014 for an additional year to December 31, 2016. The term loan contains covenants and other terms
and conditions substantially similar to FE's $1 billion variable rate term loan entered into on March 31, 2014 and FE's existing
revolving credit facility, including the same consolidated debt to total capitalization ratio requirement.
As of December 31, 2014, FE was in compliance with the financial covenants associated with the applicable debt to total capitalization
ratios under each of these term loans.
FirstEnergy Money Pools
FirstEnergy’s utility operating subsidiary companies also have the ability to borrow from each other and the holding company to
meet their short-term working capital requirements. A similar but separate arrangement exists among FirstEnergy’s unregulated
companies. FESC administers these two money pools and tracks surplus funds of FirstEnergy and the respective regulated and
unregulated subsidiaries, as well as proceeds available from bank borrowings. Companies receiving a loan under the money pool
agreements must repay the principal amount of the loan, together with accrued interest, within 364 days of borrowing the funds.
The rate of interest is the same for each company receiving a loan from their respective pool and is based on the average cost of
funds available through the pool. The average interest rate for borrowings in 2014 was 1.45% per annum for the regulated companies’
money pool and 1.35% per annum for the unregulated companies’ money pool.
Weighted Average Interest Rates
The weighted average interest rates on short-term borrowings outstanding, including borrowings under the FirstEnergy Money
Pools, as of December 31, 2014 and 2013, were as follows:
2014 2013
FirstEnergy 1.96% 1.80%
FES 3.34% —%
13. ASSET RETIREMENT OBLIGATIONS
FirstEnergy has recognized applicable legal obligations for AROs and their associated cost primarily for nuclear power plant
decommissioning, reclamation of sludge disposal ponds, closure of coal ash disposal sites, underground and above-ground storage
tanks, wastewater treatment lagoons and transformers containing PCBs. In addition, FirstEnergy has recognized conditional
retirement obligations, primarily for asbestos remediation.
The ARO liabilities for FES primarily relate to the decommissioning of the Beaver Valley, Davis-Besse and Perry nuclear generating
facilities. FES uses an expected cash flow approach to measure the fair value of their nuclear decommissioning AROs.
FirstEnergy and FES maintain NDTs that are legally restricted for purposes of settling the nuclear decommissioning ARO. The fair
values of the decommissioning trust assets as of December 31, 2014 and 2013 were as follows:
2014 2013
(In millions)
FirstEnergy $ 2,341 $ 2,201
FES $ 1,365 $ 1,276