Allegheny Power 2015 Annual Report Download - page 84

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68
FIRSTENERGYCORP.ANDSUBSIDIARIES
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COMBINEDNOTESTOCONSOLIDATEDFINANCIALSTATEMENTS
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Note
Number
Page
Number
1
OrganizationandBasisofPresentation ........................................................................................... 
69
2
AccumulatedOtherComprehensiveIncome .................................................................................... 
76
3 PensionandOtherPostemploymentBenefits ................................................................
.................. 
79
4 StockBasedCompensationPlans
................................................................................................... 
86
5
Taxes ................................................................................................................................................ 
89
6 Leases ................................................................................................................................
.............. 
95
7 IntangibleAssets
.............................................................................................................................. 
96
8
VariableInterestEntities ................................................................................................................... 
96
9 FairValueMeasurements ................................................................................................
................. 
99
10
DerivativeInstruments ...................................................................................................................... 
104
11
Capitalization .................................................................................................................................... 
109
12ShortTermBorrowingsandBankLinesofCredit ................................................................
............ 
114
13AssetRetirementObligations
........................................................................................................... 
115
14
RegulatoryMatters ........................................................................................................................... 
116
15Commitments,GuaranteesandContingencies ................................................................
................ 
124
16TransactionswithAffiliatedCompanies
............................................................................................ 
130
17
SupplementalGuarantorInformation ............................................................................................... 
132
18SegmentInformation ................................................................................................
........................ 
141
19
DiscontinuedOperations .................................................................................................................. 
143
20
SummaryofQuarterlyFinancialData(Unaudited) .......................................................................... 
144
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69
COMBINEDNOTESTOCONSOLIDATEDFINANCIALSTATEMENTS
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1.ORGANIZATIONANDBASISOFPRESENTATION
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Unlessotherwiseindicated,definedtermsandabbreviationsusedhereinhavethemeaningssetforthintheaccompanyingGlossary
ofTerms.

FirstEnergyCorp.wasorganizedunderthelawsoftheStateofOhioin1996.FE’sprincipalbusinessistheholding,directlyor
indirectly,ofalloftheoutstandingcommonstockofitsprincipalsubsidiaries:OE,CEI,TE,Penn(awhollyownedsubsidiaryofOE),
JCP&L,ME,PN,FESC,FESanditsprincipalsubsidiaries(FGandNG),AESupply,MP,PE,WP,FETanditsprincipalsubsidiaries
(ATSIandTrAIL),andAESC.Inaddition,FEholdsalloftheoutstandingcommonstockofotherdirectsubsidiariesincluding:
FirstEnergyProperties,Inc.,FEV,FENOC,FELHC,Inc.,GPUNuclear,Inc.,andAEVentures,Inc.
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FirstEnergyanditssubsidiariesareinvolvedinthegeneration,transmission,anddistributionofelectricity.FirstEnergy’stenutility
operatingcompaniescompriseoneofthenation’slargestinvestorownedelectricsystems,servingsixmillioncustomersinthe
MidwestandMidAtlanticregions.Itsgenerationsubsidiariescontrolnearly17,000MWofcapacityfromadiversemixofnonemitting
nuclear,scrubbedcoal,naturalgas,hydroelectricandotherrenewables.FirstEnergy’stransmissionoperationsincludeapproximately
24,000milesoflinesandtworegionaltransmissionoperationcenters.
FirstEnergyfollowsGAAPandcomplieswiththerelatedregulations,orders,policiesandpracticesprescribedbytheSEC,FERC,
and,asapplicable,thePUCO,thePPUC,theMDPSC,theNYPSC,theWVPSC,theVSCCandtheNJBPU.Thepreparationof
financialstatementsinconformitywithGAAPrequiresmanagementtomakeperiodicestimatesandassumptionsthataffectthe
reportedamountsofassets,liabilities,revenues,expensesanddisclosureofcontingentassetsandliabilities.Actualresultscould
differfromtheseestimates.Thereportedresultsofoperationsarenotnecessarilyindicativeofresultsofoperationsforanyfuture
period.FEanditssubsidiarieshaveevaluatedeventsandtransactionsforpotentialrecognitionordisclosurethroughthedatethe
financialstatementswereissued.
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FEanditssubsidiariesconsolidateallmajorityownedsubsidiariesoverwhichtheyexercisecontroland,whenapplicable,entitiesfor
which they have a controlling financial interest. Intercompany transactions and balances are eliminated in consolidation as
appropriate.FEanditssubsidiariesconsolidateaVIEwhenitisdeterminedthatitistheprimarybeneficiary(seeNote8,Variable
InterestEntities).InvestmentsinaffiliatesoverwhichFEanditssubsidiarieshavetheabilitytoexercisesignificantinfluence,butwith
respecttowhichtheyarenottheprimarybeneficiaryanddonotexercisecontrol,followtheequitymethodofaccounting.Underthe
equitymethod,theinterestintheentityisreportedasaninvestmentintheConsolidatedBalanceSheetsandthepercentageshareof
the entity’s earnings is reported in the Consolidated Statements of Income and Comprehensive Income. These Notes to the
ConsolidatedFinancialStatementsarecombinedforFirstEnergyandFES.
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Certainprioryearamountshavebeenreclassifiedtoconformtothecurrentyearpresentation.
ACCOUNTINGFORTHEEFFECTSOFREGULATION
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FirstEnergyaccountsfortheeffectsofregulationthroughtheapplicationofregulatoryaccountingtotheUtilities,AGC,ATSI,PATH
andTrAILsincetheirratesareestablishedbyathirdpartyregulatorwiththeauthoritytosetratesthatbindcustomers,arecostbased
andcanbechargedtoandcollectedfromcustomers.
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FirstEnergyrecordsregulatoryassetsandliabilitiesthatresultfromtheregulatedratemakingprocessthatwouldnotberecorded
under GAAP for nonregulated entities.These assets and liabilities are amortized in the Consolidated Statements of Income
concurrentwiththerecoveryorrefundthroughcustomerrates.FirstEnergybelievesthatitisprobablethatitsregulatoryassetsand
liabilitieswillberecoveredandsettled,respectively,throughfuturerates.FirstEnergyandtheUtilitiesnettheirregulatoryassetsand
liabilitiesbasedonfederalandstatejurisdictions.
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