Allegheny Power 2015 Annual Report Download - page 54



38

Duringthesecondquarterof2015,FErefinanceda$200millionvariableinteresttermloan,maturingonDecember31,2016witha
new$200millionvariableinteresttermloanmaturingonMay29,2020.

OnJuly1,2015,FGandNGremarketedapproximately$43millionand$296million,respectively,ofPCRBs.ThePCRBswere
remarketedwithfixedinterestratesrangingfrom3.125%to4.00%andmandatoryputdatesrangingfromJuly2,2018toJuly1,
2021.

InAugust2015,JCP&Lissued$250millionof4.30%seniornotesdueJanuary2026.Theproceedsreceivedfromtheissuanceofthe
seniornoteswereusedtorepayaportionofJCP&L’sshorttermborrowingsundertheFirstEnergyregulatedcompanies'moneypool
andanexternalrevolvingcreditfacility.

Also,inthesecondquarterof2015,WPagreedtosell$150millionofnew4.45%FMBsdueSeptember2045andPEagreedtosell
$145 million of new 4.47% FMBs dueAugust 2045. The transactions closed on September 17, 2015 andAugust 17, 2015,
respectively.TheproceedsresultingfromtheissuanceoftheWPFMBswereusedtorepayWP’sborrowingsundertheFirstEnergy
regulatedcompanies'moneypoolandforothergeneralcorporatepurposes.TheproceedsresultingfromtheissuanceofthePE
FMBswereusedtorepayPE’s$145million5.125%FMBsthatmaturedonAugust15,2015.

InOctober2015,TrAILissued$75millionof3.76%seniornotesdueMay2025.Theproceedsresultingfromtheissuanceofthe
seniornoteswereused:(i)tofundcapitalexpenditures,includingwithrespecttoTrAIL'stransmissionexpansionplansand(ii)for
workingcapitalneedsandothergeneralbusinesspurposes.

Additionally,inOctober2015,ATSIissuedintotal$150millionofseniornotes:$75millionof4.00%seniornotesdueApril2026and
$75millionof5.23%seniornotesdueOctober2045.Theproceedsresultingfromtheissuanceoftheseniornoteswereused:(i)to
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.

CashFlowsFromInvestingActivities

Cashusedforinvestingactivitiesin2015principallyrepresentedcashusedforpropertyadditions.Thefollowingtablesummarizes
investingactivitiesfor2015,2014and2013:
FortheYearsEndedDecember31,
CashUsedforInvestingActivities
2015
2014
2013
(Inmillions)
PropertyAdditions:
Regulateddistribution
$
1,108
$

972
$
1,272
Regulatedtransmission
952
1,329
461
Competitiveenergyservices
588
939
827
Otherandreconcilingadjustments
56
72
78
Nuclearfuel
190
233
250
Proceedsfromassetsales
(20
)
(394
)
(4
)
Investments
107
68
72
Assetremovalcosts
142
153
146
Other
(1
)
(13
)
(9
)
$
3,122
$
3,359
$
3,093

Cashusedforinvestingactivityin2015ascomparedto2014wereimpactedbylowerpropertyadditionsof$608million,partially
offsetbya $374 millionreductionin proceedsreceived fromasset sales,as 2014includedproceedsfrom thesaleofcertain
hydroelectricassets.Thedeclineinpropertyadditionswereduetothefollowing:

•adecreaseof$351millionatCES,resultingfromtheabsenceofcapitalinvestmentsassociatedwiththeDavisBessesteam
generatorsthatwereplacedintoserviceinMay2014,
•adecreaseof$377millionatRegulatedTransmissionprimarilyrelatingtothetimingofcapitalinvestmentsassociatedwith
itsEnergizingtheFutureinvestmentprogram,partiallyoffsetby
•anincreaseof$136millionatRegulatedDistributionrelatingtoutilityspecificprojectinvestmentsandcostsassociatedwith
thePennsylvaniasmartmeterprogram.



39
CONTRACTUALOBLIGATIONS

AsofDecember31,2015,ourestimatedcashpaymentsunderexistingcontractualobligationsthatweconsiderfirmobligationsare
asfollows:
ContractualObligationsTotal20162017201820192020Thereafter
(Inmillions)
Longtermdebt(1) $ 20,238 $ 1,039 $ 3,435 $ 3,499 $ 12,265
Shorttermborrowings1,7081,708 — — —
Interestonlongtermdebt(2)12,5231,0151,8391,5008,169
Operatingleases(3)2,0831842542071,438
Capitalleases(3)15036553227
Fuelandpurchasedpower(4)13,5781,8122,5392,1177,110
Capitalexpenditures(5)2,213877938398 —
Pensionfunding3,5643811,1227871,274
Total $ 56,057 $ 7,052 $ 10,182 $ 8,540 $ 30,283

(1)Excludesunamortizeddiscountsandpremiums,fairvalueaccountingadjustmentsandcapitalleases.
(2)InterestonvariableratedebtbasedonratesasofDecember31,2015.
(3)SeeNote6,Leases,oftheCombinedNotestoConsolidatedFinancialStatements.
(4)Amountsundercontractwithfixedorminimumquantitiesbasedonestimatedannualrequirements.
(5)AmountsrepresentcommittedcapitalexpendituresasofDecember31,2015.

ExcludedfromthetableaboveareestimatesforthecashoutlaysfrompowerpurchasecontractsenteredintobymostoftheUtilities
andunderwhichtheyprocurethepowersupplynecessarytoprovidegenerationservicetotheircustomerswhodonotchoosean
alternativesupplier.Althoughactualamountswillbedeterminedbyfuturecustomerbehaviorandconsumptionlevels,management
currentlyestimatesthesecashoutlayswillbeapproximately$3.5billionin2016,$0.5billionofwhichareexpectedtorelatetothe
Utilities'contractswithFES.

Thetableabovealsoexcludesregulatoryliabilities(seeNote14, RegulatoryMatters),AROs(see Note13,AssetRetirement
Obligations),reservesforlitigation,injuriesanddamages,environmentalremediation,andannualinsurancepremiums,including
nuclearinsurance(seeNote15,Commitments,GuaranteesandContingencies)sincetheamountandtimingofthecashpayments
areuncertain.Thetablealsoexcludesaccumulateddeferredincometaxesandinvestmenttaxcreditssincecashpaymentsfor
incometaxesaredeterminedbasedprimarilyontaxableincomeforeachapplicablefiscalyear.
NUCLEARINSURANCE
ThePriceAndersonActlimitsthepublicliabilitywhichcanbeassessedwithrespecttoanuclearpowerplantto$13.5billion
(assuming103unitslicensedtooperate)forasinglenuclearincident,whichamountiscoveredby:(i)privateinsuranceamountingto
$375millionand(ii)$13.1billionprovidedbyanindustryretrospectiveratingplanrequiredbytheNRCpursuantthereto.Undersuch
retrospectiveratingplan,intheeventofanuclearincidentatanyunitintheUnitedStatesresultinginlossesinexcessofprivate
insurance,upto$127million(butnotmorethan$19millionperunitperyearintheeventofmorethanoneincident)mustbe
contributedforeachnuclearunitlicensedtooperateinthecountrybythelicenseesthereoftocoverliabilitiesarisingoutofthe
incident.Basedontheirpresentnuclearownershipandleaseholdinterests,FirstEnergy’smaximumpotentialassessmentunder
theseprovisionswouldbe$509million(NG$501million)perincidentbutnotmorethan$76million(NG$75million)inanyoneyear
foreachincident.

InadditiontothepublicliabilityinsuranceprovidedpursuanttothePriceAndersonAct,FirstEnergyhasalsoobtainedinsurance
coverageinlimitedamountsforeconomiclossandpropertydamagearisingoutofnuclearincidents.FirstEnergyisamemberof
NEIL,whichprovidescoverage(NEILI)fortheextraexpenseofreplacementpowerincurredduetoprolongedaccidentaloutagesof
nuclearunits.UnderNEILI,FirstEnergy’ssubsidiarieshavepolicies,renewableannually,correspondingtotheirrespectivenuclear
interests,whichprovideanaggregateindemnityofuptoapproximately$1.96billion(NG$1.93billion)forreplacementpowercosts
incurredduringanoutageafteraninitial20weekwaitingperiod.MembersofNEILIpayannualpremiumsandaresubjectto
assessmentsiflossesexceedtheaccumulatedfundsavailabletotheinsurer.FirstEnergy’spresentmaximumaggregateassessment
forincidentsatanycoverednuclearfacilityoccurringduringapolicyyearwouldbeapproximately$15million(NG$15.1million).
FirstEnergyisinsuredastoitsrespectivenuclearinterestsunderpropertydamageinsuranceprovidedbyNEILtotheoperating
companyforeachplant.Underthesearrangements,upto$2.75billionofcoveragefordecontaminationcosts,decommissioning
costs,debrisremovalandrepairand/orreplacementofpropertyisprovided.FirstEnergypaysannualpremiumsforthiscoverageand
isliableforretrospectiveassessmentsofuptoapproximately$83million(NG$81million).