Allegheny Power 2015 Annual Report Download - page 95



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

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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Postemploym
ent
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