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Cover and table of contents

10-K 1 fe-12312018x10k.htm 10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the FISCAL YEAR ended December 31, 2018

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

CommissionRegistrant; State of Incorporation;I.R.S. Employer
File NumberAddress; and Telephone NumberIdentification No.
333-21011FIRSTENERGY CORP.34-1843785
(An Ohio Corporation)
76 South Main Street
Akron, OH 44308
Telephone (800)736-3402

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

RegistrantTitle of Each ClassName of Each Exchange on Which Registered
FirstEnergy Corp.Common Stock, $0.10 par value per shareNew York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer þ
Accelerated Filer o
Non-accelerated Filer o
Smaller Reporting Company o
Emerging Growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No þ

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and ask price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

$17,109,706,919 as of June 30, 2018

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

CLASSAS OF JANUARY 31, 2019
Common Stock, $0.10 par value530,152,175

Documents Incorporated By Reference

PART OF FORM 10-K INTO WHICH
DOCUMENTDOCUMENT IS INCORPORATED
Proxy Statement for 2019 Annual Meeting of Shareholders of FirstEnergy Corp. to be held May 21, 2019Part III
TABLE OF CONTENTS
Page
Glossary of Termsiii
Part I.
Item 1. Business1
The Companies1
Utility Regulation3
Regulatory Accounting3
State Regulation3
Federal Regulation4
Maryland Regulatory Matters5
New Jersey Regulatory Matters5
Ohio Regulatory Matters6
Pennsylvania Regulatory Matters7
West Virginia Regulatory Matters8
FERC Regulatory Matters9
Capital Requirements12
Nuclear Regulation15
Nuclear Insurance15
Environmental Matters15
Fuel Supply18
System Demand18
Supply Plan19
Regional Reliability19
Competition19
Seasonality19
Research and Development19
Executive Officers20
Employees21
FirstEnergy Website and Other Social Media Sites and Applications21
Item 1A. Risk Factors22
Item 1B. Unresolved Staff Comments35
Item 2. Properties35
Item 3. Legal Proceedings36
Item 4. Mine Safety Disclosures36
Part II36
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities36
Item 6. Selected Financial Data37
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations39

i

TABLE OF CONTENTS
Page
Item 7A. Quantitative and Qualitative Disclosures About Market Risk85
Item 8. Financial Statements and Supplementary Data86
Report of Independent Registered Public Accounting Firm86
Financial Statements
Consolidated Statements of Income (Loss)88
Consolidated Statements of Comprehensive Income (Loss)89
Consolidated Balance Sheets90
Consolidated Statements of Stockholders' Equity91
Consolidated Statements of Cash Flows92
Notes To Consolidated Financial Statements93
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure152
Item 9A. Controls and Procedures152
Item 9B. Other Information152
Part III152
Item 10. Directors, Executive Officers and Corporate Governance152
Item 11. Executive Compensation152
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters153
Item 13. Certain Relationships and Related Transactions, and Director Independence153
Item 14. Principal Accounting Fees and Services154
Part IV154
Item 15. Exhibits, Financial Statement Schedule154
Item 16. Form 10-K Summary159

ii

GLOSSARY OF TERMS

The following abbreviations and acronyms are used in this report to identify FirstEnergy Corp. and its current and former subsidiaries:

AEAllegheny Energy, Inc., a Maryland utility holding company that merged with a subsidiary of FirstEnergy on February 25, 2011, which subsequently merged with and into FE on January 1, 2014
AESCAllegheny Energy Service Corporation, a subsidiary of FirstEnergy Corp.
AE SupplyAllegheny Energy Supply Company, LLC, an unregulated generation subsidiary
AGCAllegheny Generating Company, formerly a generation subsidiary of AE Supply that became a wholly owned subsidiary of MP in May 2018
ATSIAmerican Transmission Systems, Incorporated, formerly a direct subsidiary of FE that became a subsidiary of FET in April 2012, which owns and operates transmission facilities
BSPCBay Shore Power Company
CEIThe Cleveland Electric Illuminating Company, an Ohio electric utility operating subsidiary
CESCompetitive Energy Services, formerly a reportable operating segment of FirstEnergy
FEFirstEnergy Corp., a public utility holding company
FELHCFirstEnergy License Holding Company
FENOCFirstEnergy Nuclear Operating Company, a subsidiary of FE, which operates NG's nuclear generating facilities
FESFirstEnergy Solutions Corp., together with its consolidated subsidiaries, FG, NG, FE Aircraft Leasing Corp., Norton Energy Storage L.L.C., and FGMUC, which provides energy-related products and services
FES DebtorsFES and FENOC
FESCFirstEnergy Service Company, which provides legal, financial and other corporate support services
FETFirstEnergy Transmission, LLC, formerly known as Allegheny Energy Transmission, LLC, which is the parent of ATSI, MAIT and TrAIL, and has a joint venture in PATH
FEVFirstEnergy Ventures Corp., which invests in certain unregulated enterprises and business ventures
FGFirstEnergy Generation, LLC, a wholly owned subsidiary of FES, which owns and operates non-nuclear generating facilities
FGMUCFirstEnergy Generation Mansfield Unit 1 Corp., a wholly owned subsidiary of FG, which has certain leasehold interests in a portion of Unit 1 at the Bruce Mansfield plant
FirstEnergyFirstEnergy Corp., together with its consolidated subsidiaries
Global HoldingGlobal Mining Holding Company, LLC, a joint venture between FEV, WMB Marketing Ventures, LLC and Pinesdale LLC
Global RailGlobal Rail Group, LLC, a subsidiary of Global Holding that owns coal transportation operations near Roundup, Montana
GPUGPU, Inc., former parent of JCP&L, ME and PN, that merged with FE on November 7, 2001
JCP&LJersey Central Power & Light Company, a New Jersey electric utility operating subsidiary
MAITMid-Atlantic Interstate Transmission, LLC, a subsidiary of FET, which owns and operates transmission facilities
MEMetropolitan Edison Company, a Pennsylvania electric utility operating subsidiary
MPMonongahela Power Company, a West Virginia electric utility operating subsidiary
NGFirstEnergy Nuclear Generation, LLC, a wholly owned subsidiary of FES, which owns nuclear generating facilities
OEOhio Edison Company, an Ohio electric utility operating subsidiary
Ohio CompaniesCEI, OE and TE
PATHPotomac-Appalachian Transmission Highline, LLC, a joint venture between FE and a subsidiary of AEP
PATH-AlleghenyPATH Allegheny Transmission Company, LLC
PATH-WVPATH West Virginia Transmission Company, LLC
PEThe Potomac Edison Company, a Maryland and West Virginia electric utility operating subsidiary
PennPennsylvania Power Company, a Pennsylvania electric utility operating subsidiary of OE
Pennsylvania CompaniesME, PN, Penn and WP
PNPennsylvania Electric Company, a Pennsylvania electric utility operating subsidiary
Signal PeakSignal Peak Energy, LLC, an indirect subsidiary of Global Holding that owns mining operations near Roundup, Montana
TEThe Toledo Edison Company, an Ohio electric utility operating subsidiary
TrAILTrans-Allegheny Interstate Line Company, a subsidiary of FET, which owns and operates transmission facilities
Transmission CompaniesATSI, MAIT and TrAIL
UtilitiesOE, CEI, TE, Penn, JCP&L, ME, PN, MP, PE and WP
WPWest Penn Power Company, a Pennsylvania electric utility operating subsidiary

iii

The following abbreviations and acronyms are used to identify frequently used terms in this report:
AYE DCDAllegheny Energy, Inc. Amended and Restated Revised Plan for Deferral of Compensation of DirectorsMGPManufactured Gas Plants
AYE Director's PlanAllegheny Energy, Inc. Non-Employee Director Stock PlanMATSMercury and Air Toxics Standards
ACEAffordable Clean EnergyMISOMidcontinent Independent System Operator, Inc.
ADITAccumulated Deferred Income TaxesmmBTUOne Million British Thermal Units
AEPAmerican Electric Power Company, Inc.Moody’sMoody’s Investors Service, Inc.
AFSAvailable-for-saleMVPMulti-Value Project
AFUDCAllowance for Funds Used During ConstructionMWMegawatt
ALJAdministrative Law JudgeMWDMegawatt-day
AMTAlternative Minimum TaxMWHMegawatt-hour
ANIAmerican Nuclear InsurersNAAQSNational Ambient Air Quality Standards
AOCIAccumulated Other Comprehensive IncomeNDTNuclear Decommissioning Trust
Apple®Apple®, iPad® and iPhone® are registered trademarks of Apple Inc.NEILNuclear Electric Insurance Limited
AROAsset Retirement ObligationNERCNorth American Electric Reliability Corporation
ARPAlternative Revenue ProgramNGONon-Governmental Organization
ARRAuction Revenue RightNinth CircuitUnited States Court of Appeals for the Ninth Circuit
ASCAccounting Standard CodificationNJBPUNew Jersey Board of Public Utilities
ASLBAtomic Safety and Licensing BoardNMBNon-Market Based
AspenAspen Generating, LLC, a wholly-owned subsidiary of LS Power Equity Partners III, LPNOACNorthwest Ohio Aggregation Coalition
ASUAccounting Standards UpdateNOLNet Operating Loss
Bankruptcy CourtU.S. Bankruptcy Court in the Northern District of Ohio in AkronNOPRNotice of Proposed Rulemaking
Bath CountyBath County Pumped Storage Hydro-Power StationNOxNitrogen Oxide
BGSBasic Generation ServiceNPDESNational Pollutant Discharge Elimination System
bpsBasis pointsNPNSNormal Purchases and Normal Sales
BNSFBNSF Railway CompanyNRCNuclear Regulatory Commission
BRAPJM RPM Base Residual AuctionNRGNRG Energy, Inc.
BV-2Beaver Valley Unit 2NSRNew Source Review
CAAClean Air ActNUGNon-Utility Generation
CBACollective Bargaining AgreementNYISONew York Independent System Operator
CCRCoal Combustion ResidualsNYPSCNew York State Public Service Commission
CDWRCalifornia Department of Water ResourcesOCAOffice of Consumer Advocate
CERCLAComprehensive Environmental Response, Compensation, and Liability Act of 1980OCCOhio Consumers' Counsel
CFLCompact Fluorescent LightOEPAOhio Environmental Protection Agency
CFRCode of Federal RegulationsOSHAOccupational Safety and Health Administration
CO2Carbon DioxideOMAEGOhio Manufacturers' Association Energy Group
CONECost-of-New-EntryOPEBOther Post-Employment Benefits
CPPEPA's Clean Power PlanOPEIUOffice and Professional Employees International Union
CSAPRCross-State Air Pollution RuleOPICOther Paid-in Capital
CSXCSX Transportation, Inc.OTTIOther-Than-Temporary Impairments
CTAConsolidated Tax AdjustmentOVECOhio Valley Electric Corporation
CWAClean Water ActPA DEPPennsylvania Department of Environmental Protection

iv

D.C. CircuitUnited States Court of Appeals for the District of Columbia CircuitPCRBPollution Control Revenue Bond
DCPDDeferred Compensation Plan for Outside DirectorsPJMPJM Interconnection, L.L.C.
DCRDelivery Capital RecoveryPJM RegionThe aggregate of the zones within PJM
DMRDistribution Modernization RiderPJM TariffPJM Open Access Transmission Tariff
DPMDistribution Platform ModernizationPMParticulate Matter
DSICDistribution System Improvement ChargePOLRProvider of Last Resort
DSPDefault Service PlanPORPurchase of Receivables
DTADeferred Tax AssetPPAPurchase Power Agreement
E&PEarnings and ProfitsPPBParts per Billion
EDCElectric Distribution CompanyPPUCPennsylvania Public Utility Commission
EDCPExecutive Deferred Compensation PlanPSDPrevention of Significant Deterioration
EDISElectric Distribution Investment SurchargePTCPrice-to-Compare
EE&CEnergy Efficiency and ConservationPUCOPublic Utilities Commission of Ohio
EGSElectric Generation SupplierPURPAPublic Utility Regulatory Policies Act of 1978
EGUElectric Generation UnitsR&DResearch and Development
ELPCEnvironmental Law & Policy CenterRCRAResource Conservation and Recovery Act
EMAACEastern Mid-Atlantic Area Council of PJMRECRenewable Energy Credit
EmPOWER MarylandEmPOWER Maryland Energy Efficiency ActRegulation FDRegulation Fair Disclosure promulgated by the SEC
ENECExpanded Net Energy CostRFCReliabilityFirst Corporation
EPAUnited States Environmental Protection AgencyRFPRequest for Proposal
EPRIElectric Power Research InstituteRGGIRegional Greenhouse Gas Initiative
EPSEarnings per ShareRMRReliability Must-Run
ERISAEmployee Retirement Income Security Act of 1974ROEReturn on Equity
EROElectric Reliability OrganizationRPMReliability Pricing Model
ESOPEmployee Stock Ownership PlanRSSRich Site Summary
ESP IVElectric Security Plan IVRSURestricted Stock Unit
ESTIPExecutive Short-Term Incentive ProgramRTEPRegional Transmission Expansion Plan
Facebook®Facebook is a registered trademark of Facebook, Inc.RTORegional Transmission Organization
FASBFinancial Accounting Standards BoardRWGRestructuring Working Group
FERCFederal Energy Regulatory CommissionS&PStandard & Poor’s Ratings Service
FE TomorrowFirstEnergy's initiative launched in late 2016 to identify its optimal organizational structure and properly align corporate costs and systems to efficiently support a fully regulated company going forwardSAIDISystem Average Interruption Duration Index
FES BankruptcyFES Debtors' voluntary petitions for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code with the Bankruptcy CourtSAIFISystem Average Interruption Frequency Index
FitchFitch RatingsSB221Amended Substitute Senate Bill No. 221
FMBFirst Mortgage BondSBCSocietal Benefits Charge
FPAFederal Power ActSECUnited States Securities and Exchange Commission
FTRFinancial Transmission RightSERTPSoutheastern Regional Transmission Planning
GAAPAccounting Principles Generally Accepted in the United States of AmericaSeventh CircuitUnited States Court of Appeals for the Seventh Circuit
GHGGreenhouse GasesSF6Sulfur Hexafluoride
GWHGigawatt-hourSIPState Implementation Plan(s) Under the Clean Air Act
IBEWInternational Brotherhood of Electrical WorkersSO2Sulfur Dioxide
ICEIntercontinental Exchange, Inc.SOSStandard Offer Service
ICP 2007FirstEnergy Corp. 2007 Incentive PlanSPESpecial Purpose Entity
ICP 2015FirstEnergy Corp. 2015 Incentive Compensation PlanSRCStorm Recovery Charge

v

IIPInfrastructure Investment ProgramSRECSolar Renewable Energy Credit
IRSInternal Revenue ServiceSSASocial Security Administration
ISOIndependent System OperatorSSOStandard Service Offer
JCP&L Reliability PlusJCP&L Reliability Plus IIPSVCStatic Var Compensator
kVKilovoltTax ActTax Cuts and Jobs Act adopted December 22, 2017
kWKilowattTDSTotal Dissolved Solid
KWHKilowatt-hourTMDLTotal Maximum Daily Load
KPIKey Performance IndicatorTMI-2Three Mile Island Unit 2
LBRLittle Blue RunTOTransmission Owner
LCAPPLong-Term Capacity Agreement Pilot ProgramTTSTemporary Transaction Surcharge
LEDLight Emitting DiodeTwitter®Twitter is a registered trademark of Twitter, Inc.
LIBORLondon Interbank Offered RateUCCOfficial committee of unsecured creditors appointed in connection with the FES Bankruptcy
LMPLocational Marginal PriceUWUAUtility Workers Union of America
LOCLetter of CreditVEPCOVirginia Electric and Power Company
LS PowerLS Power Equity Partners III, LPVIEVariable Interest Entity
LSELoad Serving EntityVRRVariable Resource Requirement
LTIIPsLong-Term Infrastructure Improvement PlansVSCCVirginia State Corporation Commission
MAACMid-Atlantic Area Council of PJMWVDEPWest Virginia Department of Environmental Protection
MATSMercury and Air Toxics StandardsWVPSCPublic Service Commission of West Virginia
MDPSCMaryland Public Service Commission

vi

PART I

Next: Item 1. BUSINESS