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36
FirstEnergyMoneyPools
FirstEnergy’sutilityoperatingsubsidiarycompaniesalsohavetheabilitytoborrowfromeachotherandtheholdingcompanytomeet
theirshorttermworkingcapitalrequirements.AsimilarbutseparatearrangementexistsamongFirstEnergy’sunregulatedcompanies.
FESCadministersthesetwomoneypoolsandtrackssurplusfundsofFirstEnergyandtherespectiveregulatedandunregulated
subsidiaries,aswellasproceedsavailablefrombankborrowings.Companiesreceivingaloanunderthemoneypoolagreements
mustrepaytheprincipalamountoftheloan,togetherwithaccruedinterest,within364daysofborrowingthefunds.Therateof
interestisthesameforeachcompanyreceivingaloanfromtheirrespectivepoolandisbasedontheaveragecostoffundsavailable
throughthepool.Theaverageinterestrateforborrowingsin2015was0.84%perannumfortheregulatedcompanies’moneypool
and1.64%perannumfortheunregulatedcompanies’moneypool.
PollutionControlRevenueBonds
AsofDecember31,2015,FirstEnergy’scurrentlypayablelongtermdebtincludedapproximately$92millionofFESvariableinterest
ratePCRBs,thebondholdersofwhichareentitledtothebenefitofirrevocabledirectpaybankLOCs.Theinterestratesonthe
PCRBsareresetdailyorweekly.BondholderscantendertheirPCRBsformandatorypurchasepriortomaturitywiththepurchase
pricepayablefromremarketingproceedsor,ifthePCRBsarenotsuccessfullyremarketed,bydrawingsontheirrevocabledirectpay
LOCs.ThesubsidiaryobligorisrequiredtoreimbursetheapplicableLOCbankforanysuchdrawingsor,iftheLOCbankfailsto
honor its LOC for any reason, must itself pay the purchase price. The LOCs for FirstEnergy's variable interest rate PCRBs
outstandingasofDecember31,2015wereissuedbythefollowingbank:
Bank
Aggregate
Amount(1)TerminationDate
Reimbursements
ofDrawsDue
(Inmillions)
TheBankofNovaScotia $ 92
March2017March2017
(1)Excludesapproximately$1millionofapplicableinterestcoverage.
LongTermDebtCapacity
FE'sanditssubsidiaries'accesstocapitalmarketsandcostsoffinancingareinfluencedbythecreditratingsoftheirsecurities.The
followingtabledisplaysFE’sanditssubsidiaries’creditratingsasofDecember31,2015:
SeniorSecuredSeniorUnsecured
Issuer
S&P
Moody’s
S&P
Moody’s
Fitch
FE
—
—
BB+
Baa3
BB+
FES
BBB
—
BBB
Baa3
—
AESupplyBBB — 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
—
—
—
OEBBB+A2BBB Baa1 —
PN — — BBB Baa2 —
Penn
—
A2
—
—
—
PE
BBB+
A3
—
—
—
TEBBBBaa1 — — —
TrAIL — — BBB A3 —
WP
BBB+
A2
—
—
—
DebtcapacityissubjecttotheconsolidateddebttototalcapitalizationlimitsintheFacilitiespreviouslydiscussed.AsofDecember31,
2015,FEanditssubsidiariescouldissueadditionaldebtofapproximately$5.1billionandremainwithinthelimitationsofthefinancial
covenantsrequiredbytheFacilities.AsofDecember31,2015,FES'incrementaldebtcapacityunderitsconsolidateddebttototal
capitalizationfinancialcovenantisalso$5.1billiongivenFE'sconsolidateddebttototalcapitalizationratioundertheFEFacility.
37
ChangesinCashPosition
AsofDecember31,2015,FirstEnergyhad$131millionofcashandcashequivalentscomparedto$85millionofcashandcash
equivalentsasofDecember31,2014.AsofDecember31,2015and2014,FirstEnergyhadapproximately$82millionand$79
million,respectively,ofrestrictedcashincludedinOtherCurrentAssetsontheConsolidatedBalanceSheets.
CashFlowsFromOperatingActivities
FirstEnergy’smostsignificantsourcesofcasharederivedfromelectricservicesprovidedbyitsutilityoperatingsubsidiariesandthe
saleofenergyandrelatedproductsandservicesbyitsunregulatedcompetitivesubsidiaries.Themostsignificantuseofcashfrom
operatingactivitiesistobuyelectricityinthewholesalemarketandpayfuelsuppliers,interest,employees,taxauthorities,lenders
andothersforawiderangeofmaterialsandservices.
Netcashprovidedfromoperatingactivitieswas$3,447millionduring2015,$2,713millionduring2014and$2,662millionduring
2013.Cashflowsfromoperationsincreased$734millionin2015comparedwith2014duetothefollowing:
•Distributionrateincreasesassociatedwiththeimplementationofnewrates,partiallyoffsetbyayearoveryeardecline
indistributiondeliveries
•Highertransmissionrevenueandearnings,reflectingrecoveryofincrementaloperatingexpenses,ahigherratebase
andforwardlookingratesatATSI
•HighercapacityrevenuesatCES,partiallyoffsetbyadeclineinsalesvolume
•Lowerdisbursementsforfuelandpurchasedpowerresultingfromthelowersalesvolumesand
•Lowerpostedcollateralpartiallyoffsetby,
•A$143millioncontributiontothequalifiedpensionplanin2015.
CashFlowsFromFinancingActivities
In2015,cashusedforfinancingactivitieswas$279millioncomparedto$513millionand$477millionofnetcashprovidedfrom
financingactivitiesduring2014and2013,respectively.Thefollowingtablesummarizesnewdebtfinancing(netofanydiscounts),
redemptionsandcommonstockdividendpayments:
FortheYearsEndedDecember31,
SecuritiesIssuedorRedeemed/Repaid
2015
2014
2013
(Inmillions)
NewIssues
Unsecurednotes
$
475
$
2,400
$
2,300
PCRBs
339
878
—
FMBs
295
200
1,000
Termloan
200
1,050
—
Seniorsecurednotes
2
—
445
$
1,311
$
4,528
$
3,745
Redemptions/Repayments
Unsecurednotes
$
—
$
(600
)
$
(2,284
)
PCRBs
(313
)
(793
)
(470
)
FMBs
(215
)
(175
)
(420
)
Termloan
(200
)
—
—
Seniorsecurednotes
(151
)
(191
)
(376
)
Longtermrevolvingcredit
—
—
(50
)
$
(879
)
$
(1,759
)
$
(3,600
)
Tenderpremiumspaidondebtredemptions
$
—
$
—
$
(110
)
Shorttermborrowings,net
$
(91
)
$
(1,605
)
$
1,435
Commonstockdividendpayments
$
(607
)
$
(604
)
$
(920
)