Allegheny Power 2015 Annual Report Download - page 111

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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MWoflessorequityinterestsinOE'sexistingsaleandleasebackofBeaverValleyUnit2for
approximately $94million.OnJune24,2014,OEexercised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MWunder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)
2015
2014
2013
FirstEnergy
$
174
$
199
$
224
FES
$
94
$
95
$
97
ThefutureminimumcapitalleasepaymentsasofDecember31,2015areasfollows:
Capitalleases
FirstEnergy
FES
(Inmillions)
2016
$
36
$
6
2017
31
6
2018
24
2
2019
18
—
2020
14
—
Yearsthereafter
27
—
Totalminimumleasepayments
150
14
Interestportion
(18
)
(1
)
Presentvalueofnetminimumleasepayments
132
13
Lesscurrentportion
32
5
Noncurrentportion
$
100
$
8