10-KPeriod: FY2012

FIRSTENERGY CORP Annual Report, Year Ended Dec 31, 2012

Filed February 25, 2013For Securities:FE

Summary

FirstEnergy Corp.'s 2013 10-K filing details a complex operational and regulatory landscape. The company operates a diversified portfolio of electric utility and competitive energy services across six states, serving approximately 13.4 million people. Key to its operations are its numerous utility subsidiaries, which are subject to stringent state and federal regulations governing rates, services, and environmental compliance. The company's competitive segment, FirstEnergy Solutions (FES), participates in deregulated energy markets. The report highlights significant capital expenditures planned for 2013, primarily for transmission reliability and environmental compliance, indicating ongoing investment in infrastructure and regulatory adherence. FirstEnergy also navigates a challenging regulatory environment with various pending matters before FERC and state commissions, impacting everything from rate structures to environmental standards. The company's financial performance is influenced by economic conditions, commodity prices, and regulatory outcomes, underscoring the inherent risks in the utility sector.

Financial Highlights

47 data points
Beta

Revenue

$15.26B

Net Income

$770.00M

5.0% Net Margin

EPS (Diluted)

$1.84

Total Assets

$50.49B

Cash & Equivalents

$172.00M

Free Cash Flow

$2.32B

Financial Statements
Beta
Revenue$15.26B
Operating Expenses$13.12B
Operating Income$2.13B
Interest Expense$1.00B
Net Income$770.00M
EPS (Basic)$1.85
EPS (Diluted)$1.84
Shares Outstanding (Basic)418.00M
Shares Outstanding (Diluted)419.00M

Key Highlights

  • 1FirstEnergy operates a geographically diverse utility and competitive energy services business across six states, serving approximately 13.4 million customers.
  • 2The company's capital expenditures for 2013 are projected to be $2.4 billion (excluding nuclear fuel), focusing on reliability, operations, and environmental compliance.
  • 3FirstEnergy is subject to extensive regulation by federal agencies like FERC and the NRC, as well as numerous state regulatory bodies, impacting rates, services, and environmental practices.
  • 4The company's competitive energy services segment (FES) faces market risks from fluctuating commodity prices, regulatory changes (like MATS), and competition.
  • 5Significant legal and regulatory matters are ongoing, including environmental compliance under the Clean Air Act, nuclear plant licensing and operations, and various rate cases and proceedings in different states.
  • 6Hurricane Sandy significantly impacted operations, particularly for JCP&L in New Jersey, leading to substantial restoration costs and an updated revenue request.
  • 7The company's financial position shows total assets of $50.4 billion and total equity of $13.1 billion as of December 31, 2012.

Frequently Asked Questions

FirstEnergy operates under three reportable segments: Regulated Distribution, Regulated Transmission, and Competitive Energy Services. The Regulated Distribution segment handles the delivery of electricity to end-customers, while Regulated Transmission focuses on transmitting electricity through owned and operated transmission facilities. The Competitive Energy Services segment, primarily through FirstEnergy Solutions (FES) and AE Supply, generates and sells electricity and energy-related services in competitive markets.

For the year ended December 31, 2012, FirstEnergy reported earnings available to common shareholders of $770 million, or $1.85 per basic share ($1.84 diluted), compared to $885 million, or $2.22 per basic share ($2.21 diluted) in 2011. Total revenues were $15.3 billion in 2012, a decrease from $16.1 billion in 2011. Total assets stood at $50.4 billion as of December 31, 2012.

FirstEnergy faces significant regulatory challenges including ongoing proceedings before the FERC and various state regulatory commissions concerning rates, cost recovery, and transmission rate design. The company is also subject to extensive environmental regulations, including compliance with the Clean Air Act and potential new regulations for greenhouse gas emissions, which could require substantial capital expenditures. Furthermore, the nuclear operations are subject to strict NRC regulations, including license renewals and safety enhancements following the Fukushima incident.

Hurricane Sandy caused significant damage to FirstEnergy's service territories, particularly affecting JCP&L in New Jersey. The company incurred restoration costs of approximately $860 million in 2012, with $629 million attributed to JCP&L. These costs included capital expenditures, asset removal, and other operating expenses, with a portion of the costs deferred for future recovery from customers. JCP&L subsequently updated its rate case filing to request recovery of $603 million in distribution-related restoration costs.