Allegheny Power 2015 Annual Report Download - page 129

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112
fundcapitalexpenditures,includingwithrespecttoATSI'stransmissionexpansionplans(ii)forworkingcapitalneedsandother
generalbusinesspurposesand(iii)torepayborrowingsundertheFirstEnergyregulatedcompanies'moneypool.
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SeeNote6,Leasesforadditionalinformationrelatedtocapitalleases.
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SecuritizedBonds

EnvironmentalControlBonds
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TheconsolidatedfinancialstatementsofFirstEnergyincludeenvironmentalcontrolbondsissuedbytwobankruptcyremote,special
purposelimitedliabilitycompaniesthatareindirectsubsidiariesofMPandPE.Proceedsfromthebondswereusedtoconstruct
environmentalcontrolfacilities.Principalandinterestowedontheenvironmentalcontrolbondsissecuredby,andpayablesolely
from,theproceedsoftheenvironmentalcontrolcharges.AsofDecember31,2015and2014,$429millionand$450millionof
environmentalcontrolbondswereoutstanding,respectively.
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TransitionBonds
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TheconsolidatedfinancialstatementsofFirstEnergyandJCP&LincludetransitionbondsissuedbyJCP&LTransitionFundingand
JCP&LTransitionFundingII,whollyownedlimitedliabilitycompaniesofJCP&L.Theproceedswereusedtosecuritizetherecoveryof
JCP&L’sbondablestrandedcostsassociatedwiththepreviouslydivestedOysterCreekNuclearGeneratingStationandtosecuritize
therecoveryofdeferredcostsassociatedwithJCP&L’ssupplyofBGS.AsofDecember31,2015and2014,$128millionand$168
millionofthetransitionbondswereoutstanding,respectively.

PhaseInRecoveryBonds

In June 2013, the SPEs formed by the Ohio Companies issued approximately $445 million of passthrough trust certificates
supportedbyphaseinrecoverybondstosecuritizetherecoveryofcertainallelectriccustomerheatingdiscounts,fuelandpurchased
powerregulatoryassets.AsofDecember31,2015and2014,$362millionand$386millionofthephaseinrecoverybondswere
outstanding,respectively.

SeeNote8,VariableInterestEntitiesforadditionalinformationonsecuritizedbonds.
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OtherLongtermDebt

TheOhioCompanies,Penn,FGandNGeachhaveafirstmortgageindentureunderwhichtheycanissueFMBssecuredbyadirect
firstmortgagelienonsubstantiallyalloftheirpropertyandfranchises,otherthanspecificallyexceptedproperty.
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BasedontheamountofFMBsauthenticatedbytherespectivemortgagebondtrusteesasofDecember31,2015,thesinkingfund
requirementforallFMBsissuedunderthevariousmortgageindenturesamountedtopaymentsof$3millionin2015,allofwhich
relatetoPenn.Pennexpectstomeetits2016annualsinkingfund requirementwithareplacementcreditunderitsmortgage
indenture.
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AsofDecember31,2015,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.
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Thefollowingtablepresentsscheduleddebtrepaymentsforoutstandinglongtermdebt,excludingcapitalleases,fairvaluepurchase
accountingadjustmentsandunamortizeddebtdiscountsandpremiums,forthenextfiveyearsasofDecember31,2015.PCRBsthat
arescheduledtobetenderedformandatorypurchasepriortomaturityarereflectedintheapplicableyearinwhichsuchPCRBsare
scheduledtobetendered.
YearFirstEnergyFES
(Inmillions)
2016 $ 1,039
$ 414
2017 1,733
257
2018 1,702
516
20192,268
322
2020 1,231
667
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113
ThefollowingtableclassifiestheoutstandingfixedratePCRBsandvariableratePCRBsbyyear,excludingunamortizeddebt
discountsandpremiums,forthenextfiveyearsbasedonthenextdateonwhichthedebtholdersmayexercisetheirrighttotender
theirPCRBs.
Year
FirstEnergy FES
(Inmillions)
2016
$
391
$
391
2017
222
222
2018
375
375
2019
232
232
2020
490
490
ObligationstorepaycertainPCRBsaresecuredbyseveralseriesofFMBs.CertainPCRBsareentitledtothebenefitofirrevocable
bankLOCs,topayprincipalof,orintereston,theapplicablePCRBs.TotheextentthatdrawingsaremadeundertheLOCs,FGis
entitledtoacreditagainstitsobligationtorepaythosebonds.FGpaysannualfeesbasedontheamountsoftheLOCstotheissuing
bankandisobligatedtoreimbursethebankforanydrawingsthereunder.
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TheamountsandannualfeesforPCRBrelatedLOCsforFirstEnergyandFESasofDecember31,2015,areasfollows:
AggregateLOC
Amount(1)
AnnualFees
(Inmillions)
FirstEnergy
$
93
1.25%
FES
93
1.25%

(1)Includesapproximately$1millionofapplicableinterest
coverage.
DebtCovenantDefaultProvisions

FirstEnergyhasvariousdebtcovenantsundercertainfinancingarrangements,includingitsrevolvingcreditfacilities.Themost
restrictiveofthedebtcovenantsrelatetothenonpaymentofinterestand/orprincipalonsuchdebtandthemaintenanceofcertain
financialratios.ThefailurebyFirstEnergytocomplywiththecovenantscontainedinitsfinancingarrangementscouldresultinan
eventofdefault,whichmayhaveanadverseeffectonitsfinancialcondition.AsofDecember31,2015,FirstEnergyandFESremain
incompliancewithalldebtcovenantprovisions.

Additionally,therearecrossdefaultprovisionsinanumberofthefinancingarrangements.Theseprovisionsgenerallytriggeradefault
in the applicable financing arrangement of an entity if it or any of its significant subsidiaries default under another financing
arrangementinexcessofacertainprincipalamount,typically$100million.AlthoughsuchdefaultsbyanyoftheUtilities,ATSIor
TrAILwouldgenerallycrossdefaultFEfinancingarrangementscontainingtheseprovisions,defaultsbyanyofAESupply,FES,FGor
NGwouldgenerallynotcrossdefaulttoapplicablefinancingarrangementsofFE.Also,defaultsbyFEwouldgenerallynotcross
defaultapplicablefinancingarrangementsofanyofFE’ssubsidiaries.Crossdefaultprovisionsarenottypicallyfoundinanyofthe
seniornotesorFMBsofFE,FG,NGortheUtilities.