Allegheny Power 2015 Annual Report Download - page 110

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94
GeneralTaxes
2015
2014
2013
(Inmillions)
FirstEnergy
KWHexcise
$
193
$
194
$
219
Stategrossreceipts
224
226
240
Realandpersonalproperty
410
393
368
Socialsecurityandunemployment
119
112
110
Other
32
37
41
Totalgeneraltaxes
$
978
$
962
$
978
FES
Stategrossreceipts
$
44
$
69
$
77
Realandpersonalproperty
36
39
40
Socialsecurityandunemployment
16
17
19
Other
2
3
2
Totalgeneraltaxes
$
98
$
128
$
138
95
6.LEASES
FirstEnergyleasescertaingeneratingfacilities,officespaceandotherpropertyandequipmentundercancelableandnoncancelable
leases.
In1987,OEsoldportionsofitsownershipinterestsinPerryUnit1andBeaverValleyUnit2andenteredintooperatingleasesonthe
portionssoldforbasicleasetermsofapproximately29years,expiringin2016.Inthatsameyear,CEIandTEalsosoldportionsof
theirownershipinterestsinBeaverValleyUnit2andBruceMansfieldUnits1,2and3andenteredintosimilaroperatingleasesfor
leasetermsofapproximately30yearsexpiringin2017.OE,CEIandTEhavetheright,attheexpirationoftherespectivebasiclease
terms,torenewtheirrespectiveleases.Theyalsohavetherighttopurchasethefacilitiesattheexpirationofthebasicleasetermor
anyrenewaltermatapriceequaltothefairmarketvalueofthefacilities.Thebasicrentalpaymentsareadjustedwhenapplicable
federaltaxlawchanges.
In2007,FGcompletedasaleandleasebacktransactionforits93.825%undividedinterestinBruceMansfieldUnit1andenteredinto
operating leases for basic lease terms of approximately 33 years, expiring in 2040. FES has unconditionally and irrevocably
guaranteedallofFG’sobligationsundereachoftheleases.In2013,FGacquiredtheremaininglessorinterestsinBruceMansfield
Units1,2and3,whichwerepartoftheleasesenteredintobyCEIandTEin1987.
InFebruary2014,NGpurchased 47.7MWoflessorequityinterestsinOE'sexistingsaleandleasebackofBeaverValleyUnit2for
approximately $94million.OnJune24,2014,OEexerciseditsirrevocablerighttorepurchasefromtheremainingownerparticipants
thelessors'interestsinBeaverValleyUnit2attheendoftheleaseterm(June1,2017),whichrighttorepurchasewasassignedto
NG.Additionally,onJune24,2014,NGenteredintoapurchaseagreementwithanownerparticipanttopurchaseitslessorequity
interestsoftheremainingnonaffiliatedleaseholdinterestinPerryUnit1onMay23,2016,whichisjustpriortotheendofthelease
term.InNovember2014,NGrepurchased55.3MWoflessorequityinterestsinOE'sexistingsaleandleasebackofPerryUnit1for
approximately$87million.OEandTEcontinuetoleasetheseMWundertheirrespectivesaleandleasebackarrangementsandthe
relatedleasedebtremainsoutstanding.
EstablishedbyOEin1996,PNBVpurchasedaportionoftheleaseobligationbondsissuedonbehalfoflessorsinOE’sPerryUnit1
andBeaverValleyUnit2saleandleasebacktransactions.Similarly,CEIandTEestablishedShippingportin1997topurchasethe
leaseobligationbondsissuedonbehalfoflessorsintheirBruceMansfieldUnits1,2and3saleandleasebacktransactions.During
2013,theinvestmentsheldatShippingportwereliquidated.ThePNBVarrangementseffectivelyreduceleasecostsrelatedtothose
transactions(seeNote8,VariableInterestEntities).
AsofDecember31,2015,FirstEnergy'sleaseholdinterestwas3.75%ofPerryUnit1,93.83%ofBruceMansfieldUnit1and2.60%
ofBeaverValleyUnit2.
Operatingleaseexpensefor2015,2014and2013,issummarizedasfollows:
(Inmillions)201520142013
FirstEnergy $ 174 $ 199 $ 224
FES $ 94 $ 95 $ 97
ThefutureminimumcapitalleasepaymentsasofDecember31,2015areasfollows:
CapitalleasesFirstEnergyFES
(Inmillions)
2016 $ 36 $ 6
201731 6
201824 2
201918 —
202014 —
Yearsthereafter27 —
Totalminimumleasepayments15014
Interestportion(18) (1)
Presentvalueofnetminimumleasepayments13213
Lesscurrentportion32 5
Noncurrentportion $ 100 $ 8