Allegheny Power 2015 Annual Report Download - page 94



78
ThechangesinAOCIfortheyearsendedDecember31,2015,2014and2013forFESareshowninthefollowingtable:
FES
Gains&
Losseson
CashFlow
Hedges
Unrealized
Gainson
AFS
Securities
Defined
Benefit
Pension&
OPEBPlans
Total
(Inmillions)
AOCIBalance,January1,2013 $

3
$
13
$

56
$

72
Othercomprehensiveincomebeforereclassifications
—
41
5
46
AmountsreclassifiedfromAOCI
(6
)
(49
)
(20
)
(75
)
Othercomprehensiveloss
(6
)
(8
)
(15
)
(29
)
Incometaxbenefitsonothercomprehensiveloss
(2
)
(3
)
(6
)
(11

)
Othercomprehensiveloss,netoftax
(4
)
(5
)
(9
)
(18
)
AOCIBalance,December31,2013 $

(1
)
$
8
$

47
$

54
Othercomprehensiveincomebeforereclassifications
—
80
13
93
AmountsreclassifiedfromAOCI
(10
)
(59
)
(19
)
(88
)
Othercomprehensiveincome(loss)
(10
)
21
(6
)
5
Incometax(benefits)onothercomprehensiveincome(loss)
(4
)
8
(2
)
2
Othercomprehensiveincome(loss),netoftax
(6
)
13
(4
)
3
AOCIBalance,December31,2014 $

(7
)
$
21
$

43
$

57
Othercomprehensiveincomebeforereclassifications
—
15
10
25
AmountsreclassifiedfromAOCI
(3
)
(24
)
(16
)
(43
)
Othercomprehensiveloss
(3
)
(9
)
(6
)
(18
)
Incometaxbenefitsonothercomprehensiveloss
(1
)
(4
)
(2
)
(7
)
Othercomprehensiveloss,netoftax
(2
)
(5
)
(4
)
(11
)
AOCIBalance,December31,2015 $

(9
)
$
16
$

39
$

46


79
ThefollowingamountswerereclassifiedfromAOCIforFESintheyearsendedDecember31,2015,2014and2013:
FES
YearEndedDecember31,AffectedLineIteminConsolidated
StatementsofIncome
ReclassificationsfromAOCI(2)201520142013
(Inmillions)
Gains&lossesoncashflowhedges
Commoditycontracts $ (3) $ (10) $ (8) Otheroperatingexpenses
Longtermdebt — — 2 Interestexpenseother
(3) (10) (6) Totalbeforetaxes
1 4 2 Incometaxes(benefits)
$ (2) $ (6) $ (4) Netoftax
UnrealizedgainsonAFSsecurities
Realizedgainsonsalesofsecurities $ (24) $ (59) $ (49) Investmentincome(loss)
9 2218Incometaxes(benefits)
$ (15) $ (37) $ (31) Netoftax
DefinedbenefitpensionandOPEBplans
Priorservicecosts $ (16) $ (19) $ (20) (1)
6 7 8 Incometaxes(benefits)
$ (10) $ (12) $ (12) Netoftax
(1)TheseAOCIcomponentsareincludedinthecomputationofnetperiodicpensioncost.SeeNote3,PensionandOtherPostemployment
Benefitsforadditionaldetails.
(2)ParenthesisrepresentcreditstotheConsolidatedStatementsofIncomefromAOCI.
3.PENSIONANDOTHERPOSTEMPLOYMENTBENEFITS
FirstEnergyprovidesnoncontributoryqualifieddefinedbenefitpensionplansthatcoversubstantiallyallofitsemployeesandnon
qualified pension plans that cover certain employees. The plansprovide defined benefits based on years of service and
compensationlevels.Inaddition,FirstEnergyprovidesaminimumamountofnoncontributorylifeinsurancetoretiredemployeesin
additiontooptionalcontributoryinsurance.Healthcarebenefits,whichincludecertainemployeecontributions,deductiblesandco
payments, are also available upon retirement to certain employees, their dependents and, under certain circumstances, their
survivors.FirstEnergyrecognizestheexpectedcostofprovidingpensionandOPEBtoemployeesandtheirbeneficiariesand
covereddependentsfromthetimeemployeesarehireduntiltheybecomeeligibletoreceivethosebenefits.FirstEnergyalsohas
obligationstoformerorinactiveemployeesafteremployment,butbeforeretirement,fordisabilityrelatedbenefits.In2014,the
qualifiedpensionplanwasamendedauthorizingavoluntarycashoutwindowprogramforcertaineligibleterminatedparticipantswith
vestedbenefits.Paymentofbenefitsforparticipantsthatelectedanimmediatelumpsumcashpaymentoranannuityresultedina
$40millionreductiontotheunderfundedstatusofthepensionplan.Additionally,during2015and2014,certainunionsratifiedtheir
laboragreementsthatendedsubsidizedretireehealthcareresultinginareductiontotheOPEBbenefitobligationbyapproximately
$10millionand$97million,respectively.
FirstEnergyrecognizesasapensionandOPEBmarktomarketadjustmentthechangeinthefairvalueofplanassetsandnet
actuarialgainsandlossesannuallyinthefourthquarterofeachfiscalyearandwheneveraplanisdeterminedtoqualifyfora
remeasurement.TheremainingcomponentsofpensionandOPEBexpense,primarilyservicecosts,interestonobligations,assumed
returnonassetsandpriorservicecosts,arerecordedonamonthlybasis.ThepensionandOPEBmarktomarketadjustmentforthe
yearsendedDecember31,2015,2014,and2013were$369million($242millionnetofamountscapitalized),$1,243million($835
millionnetofamountscapitalized),and$(396)million($(256)millionnetofamountscapitalized),respectively.In2015,thepension
andOPEBmarktomarketadjustmentprimarilyreflectslowerthanexpectedassetreturnsaswellastheimpactofotherdemographic
assumptions,includingrevisionstomortalityassumptions,partiallyoffsetbya25basispointincreaseinthediscountrate.
FirstEnergy’spensionandOPEBfundingpolicyisbasedonactuarialcomputationsusingtheprojectedunitcreditmethod.Duringthe
yearendedDecember31,2015,FirstEnergymadecontributionsof$143milliontoitsqualifiedpensionplan.In2016,FirstEnergyhas
minimumrequiredfundingobligationsof $381milliontoitsqualifiedpensionplan,ofwhich$160millionhasbeencontributedtodate.
FirstEnergyexpectstomakefuturecontributionstothequalifiedpensionplanin2016withcash,equityoracombinationthereof,
dependingon,amongotherthings,marketconditions.
PensionandOPEBcostsareaffectedbyemployeedemographics(includingage,compensationlevelsandemploymentperiods),the
levelofcontributionsmadetotheplansandearningsonplanassets.PensionandOPEBcostsmayalsobeaffectedbychangesin