Allegheny Power 2014 Annual Report Download - page 48

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33
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.
Pollution Control Revenue Bonds
As of December 31, 2014, FirstEnergy’s currently payable long-term debt included approximately $92 million of FES variable interest
rate PCRBs, the bondholders of which are entitled to the benefit of irrevocable direct pay bank LOCs. The interest rates on the
PCRBs are reset daily or weekly. Bondholders can tender their PCRBs for mandatory purchase prior to maturity with the purchase
price payable from remarketing proceeds or, if the PCRBs are not successfully remarketed, by drawings on the irrevocable direct
pay LOCs. The subsidiary obligor is required to reimburse the applicable LOC bank for any such drawings or, if the LOC bank fails
to honor its LOC for any reason, must itself pay the purchase price.
The LOCs for FirstEnergy's variable interest rate PCRBs outstanding as of December 31, 2014 were issued by the following banks:
Bank Aggregate
Amount(1) Termination Date Reimbursements
of Draws Due
(In millions)
The Bank of Nova Scotia 52 April 2015 April 2015
The Bank of Nova Scotia 40 December 2015 December 2015
Total $ 92
(1) Excludes approximately $1 million of applicable interest coverage.
Long-Term Debt Capacity
FE's and its subsidiaries' access to capital markets and costs of financing are influenced by the credit ratings of their securities.
The following table displays FE’s and its subsidiaries’ credit ratings as of December 31, 2014:
Senior Secured Senior Unsecured
Issuer S&P Moody’s Fitch S&P Moody’s Fitch
FE — — — BB+ Baa3 BB+
FES — — — BBB- Baa3 —
AE Supply — — — BBB- Baa3 —
AGC — — — BBB- Baa3 —
ATSI — — — BBB- Baa2 —
CEI BBB+ Baa1 — BBB- Baa3 —
FET — — — BB+ Baa3
JCP&L — — — BBB- Baa2 —
ME — — — BBB- Baa1 —
MP BBB+ A3 — — — —
OE BBB+ A2 — BBB- Baa1 —
PN — — — BBB- Baa2 —
Penn BBB+ A2 — — — —
PE BBB+ A3 — — — —
TE BBB Baa1 — — — —
TrAIL — — — BBB- A3 —
WP BBB+ A2 — — — —
Debt capacity is subject to the consolidated debt to total capitalization limits in the Facilities previously discussed. As of December 31,
2014, FE and its subsidiaries could issue additional debt of approximately $4.9 billion and remain within the limitations of the financial