Allegheny Power 2014 Annual Report Download - page 44

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• Impairments of long-lived assets increased $473 million due to the decision to deactivate the Hatfield and Mitchell generating
plants. The plants were deactivated on October 9, 2013.
• General taxes decreased $7 million primarily due to lower payroll taxes as a result of lower labor costs noted above,
partially offset by higher property taxes.
• Depreciation expense increased $30 million primarily due to a higher asset base and accelerated depreciation associated
with the deactivations noted above.
• Other operating expenses decreased $210 million primarily due to a $322 million decrease in pension and OPEB mark-
to-market charges primarily reflecting a higher discount rate to measure related obligations in 2013, partially offset by an
increase in mark-to-market expense on commodity contract positions ($98 million) and increased retail expenses ($26
million).
Other Expense —
Total other expense in 2013 increased $144 million compared to 2012 due to a $149 million loss on debt redemptions in connection
with senior notes that were repurchased, lower investment income of $55 million due to higher OTTI on NDT investments, partially
offset by lower net interest expense of $60 million due to debt redemptions and repurchases.
Corporate/Other — 2013 Compared with 2012
Financial results from Corporate/Other resulted in a $107 million increase in net income in 2013 compared to 2012 primarily due
to tax benefits and increased investment income of $39 million. Higher tax benefits were primarily due to changes in state income
tax allocation factors, the elimination of state obligations associated with income that was previously apportioned to certain tax
jurisdictions partially offset by valuation reserves against NOL carryforwards. Partially offsetting this increase was higher interest
expense of $73 million due to the issuance of $1.5 billion of senior unsecured notes in the first quarter of 2013.
Regulatory Assets
Regulatory assets represent incurred costs that have been deferred because of their probable future recovery from customers
through regulated rates. Regulatory liabilities represent amounts that are expected to be credited to customers through future
regulated rates or amounts collected from customers for costs not yet incurred. FirstEnergy and the Utilities net their regulatory
assets and liabilities based on federal and state jurisdictions. The following table provides information about the composition of net
regulatory assets as of December 31, 2014 and December 31, 2013, and the changes during the year ended December 31, 2014:
Regulatory Assets (Liabilities) by Source December 31, 2014 December 31, 2013 Increase (Decrease)
(In millions)
Regulatory transition costs $ 240 $ 266 $ (26)
Customer receivables for future income taxes 370 518 (148)
Nuclear decommissioning and spent fuel disposal costs (305) (198) (107)
Asset removal costs (254) (362) 108
Deferred transmission costs 90 112 (22)
Deferred generation costs 281 346 (65)
Deferred distribution costs 182 194 (12)
Contract valuations 153 260 (107)
Storm-related costs 465 455 10
Other 189 263 (74)
Net Regulatory Assets included in the Consolidated
Balance Sheet $ 1,411 $ 1,854 $ (443)
Regulatory assets that do not earn a current return totaled approximately $488 million and $477 million as of December 31, 2014
and 2013, respectively, primarily related to storm damage costs of which approximately $360 million relates to JCP&L for which
the recovery period is subject to current rate and regulatory proceedings (see Note 14, Regulatory Matters).
As of December 31, 2014 and December 31, 2013, FirstEnergy had approximately $243 million and $440 million of net regulatory
liabilities that are primarily related to asset removal costs and are classified within other noncurrent liabilities on the Consolidated
Balance Sheets, as opposed to being included in the net regulatory assets shown above.