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36
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shorttermworkingcapitalrequirements.AsimilarbutseparatearrangementexistsamongFirstEnergy’sunregulatedcompanies.
FESCadministersthesetwomoneypoolsand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rateof
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2015was0.84%perannumfortheregulatedcompanies’moneypool
and1.64%perannumfortheunregulatedcompanies’moneypool.
PollutionControlRevenueBonds
AsofDecember31,2015,FirstEnergy’scurrentlypayablelongtermdebtincludedapproximately$92millionofFESvariableinterest
ratePCRBs,thebondholdersofwhichareentitledtothebenefitofirrevocabledirectpay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December31,2015wereissuedbythefollowingbank:
Bank
Aggregate
Amount(1)
TerminationDate
Reimbursements
ofDrawsDue
(Inmillions)
TheBankofNovaScotia
$
92
March2017
March2017
(1) Excludesapproximately$1millionofapplicableinterestcoverage.
LongTerm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December31,2015:
SeniorSecured
SeniorUnsecured
Issuer
S&P
Moody’s
S&P
Moody’s
Fitch
FE
—
—
BB+
Baa3
BB+
FES
BBB
—
BBB
Baa3
—
AESupply
BBB
—
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
—
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December31,
2015,FEanditssubsidiariescouldissueadditionaldebtofapproximately$5.1billionandremainwithinthelimitationsofthefinancial
covenantsrequiredbytheFacilities.AsofDecember31,2015,FES'incrementaldebtcapacityunderitsconsolidateddebttototal
capitalizationfinancialcovenantisalso$5.1billiongivenFE'sconsolidateddebttototalcapitalizationratioundertheFEFacility.
37
ChangesinCashPosition
As of December 31, 2015, FirstEnergy had$131millionof cashandcashequivalents comparedto$85millionof cashandcash
equivalents as of December 31, 2014. As of December 31, 2015and2014, FirstEnergy hadapproximately $82millionand$79
million,respectively, of restrictedcashincludedinOther Current Assets ontheConsolidatedBalanceSheets.
CashFlowsFrom OperatingActivities
FirstEnergy’s most significant sources of casharederivedfrom electric services providedby its utility operatingsubsidiaries andthe
saleof energy andrelatedproducts andservices by its unregulatedcompetitivesubsidiaries. Themost significant useof cashfrom
operatingactivities is tobuy electricity inthewholesalemarket andpay fuel suppliers, interest, employees, tax authorities, lenders
andothers for awiderangeof materials andservices.
Net cashprovidedfrom operatingactivities was $3,447millionduring2015, $2,713millionduring2014and$2,662millionduring
2013. Cashflows from operations increased$734 millionin2015comparedwith2014duetothefollowing:
• Distributionrateincreases associatedwiththeimplementationof new rates, partially offset by ayearoveryear decline
indistributiondeliveries
• Higher transmissionrevenueandearnings, reflectingrecovery of incremental operatingexpenses, ahigher ratebase
andforwardlookingrates at ATSI
• Higher capacity revenues at CES, partially offset by adeclineinsales volume
• Lower disbursements for fuel andpurchased power resulting from thelower sales volumes and
• Lower postedcollateral partially offset by,
• A $143millioncontributiontothequalifiedpensionplanin2015.
CashFlowsFrom FinancingActivities
In 2015, cash used for financing activitieswas$279 million compared to $513 million and $477 million of net cash provided from
financing activitiesduring 2014 and 2013, respectively. Thefollowing table summarizesnew debt financing (net of anydiscounts),
redemptions andcommonstock dividendpayments:
For theYearsEndedDecember 31,
SecuritiesIssuedor Redeemed/ Repaid 2015 2014 2013
(In millions)
New Issues
Unsecurednotes $475 $2,400 $2,300
PCRBs 339 878 —
FMBs 295 200 1,000
Term loan 200 1,050 —
Senior securednotes 2 — 445
$1,311 $4,528 $3,745
Redemptions / Repayments
Unsecurednotes $ — $ (600) $ (2,284)
PCRBs (313)(793)(470)
FMBs (215)(175)(420)
Term loan (200) — —
Senior securednotes (151)(191)(376)
Longterm revolving credit — — (50)
$(879) $ (1,759) $ (3,600)
Tender premiums paidondebt redemptions $ — $ — $ (110)
Shortterm borrowings, net $(91) $ (1,605) $ 1,435
Commonstock dividendpayments $(607) $ (604) $ (920)