8-KRegulation FD

FIRSTENERGY CORP 8-K Report, Regulation FD Disclosure (Jul 21, 2015)

Filed July 21, 2015For Securities:FE

Summary

FirstEnergy Corp.'s subsidiary, American Transmission Systems, Incorporated (ATSI), has entered into a comprehensive settlement agreement with key stakeholders, including Buckeye Power, Inc., Industrial Energy Users-Ohio, and American Municipal Power, Inc. This agreement resolves all outstanding issues related to ATSI's October 2014 rate filing with the Federal Energy Regulatory Commission (FERC). The settlement, which is unopposed and awaits FERC approval, maintains ATSI's proposed "forward looking" rate structure while addressing formula rate templates and protocols. A significant aspect for investors is the phased reduction in ATSI's Return on Equity (ROE). The ROE will decrease from the current 12.38% to 11.06% for the remainder of 2015, and further to 10.38% starting January 1, 2016. This lower ROE is expected to remain in effect until at least January 1, 2018, unless changed through specific regulatory processes. This development is crucial for understanding future revenue streams and profitability for ATSI and, by extension, FirstEnergy.

Key Highlights

  • 1ATSI, a FirstEnergy subsidiary, reached a comprehensive settlement on its FERC rate filing.
  • 2The settlement resolves all outstanding issues from ATSI's October 2014 rate filing.
  • 3The agreement maintains ATSI's proposed "forward looking" rate approach.
  • 4ATSI's Return on Equity (ROE) will be reduced in phases.
  • 5ROE will decrease to 11.06% for July 1, 2015 - December 31, 2015.
  • 6ROE will further decrease to 10.38% starting January 1, 2016.
  • 7The 10.38% ROE is expected to remain in effect until at least January 1, 2018, subject to regulatory changes.

Frequently Asked Questions

This 8-K filing announces that ATSI, a subsidiary of FirstEnergy, has entered into a settlement agreement with key stakeholders to resolve issues related to its rate filing with the Federal Energy Regulatory Commission (FERC). It also details the impact on ATSI's Return on Equity (ROE).

The settlement includes a phased reduction in ATSI's ROE. It will be 12.38% for the first half of 2015, then 11.06% for the second half of 2015, and will decrease to 10.38% starting January 1, 2016. This 10.38% rate is expected to be in place until at least January 1, 2018.

Yes, the settlement agreement is subject to approval by the Federal Energy Regulatory Commission (FERC). The filing notes that the settlement is unopposed and an order from FERC is anticipated later in 2015.

The settlement maintains the 'forward looking' approach proposed by ATSI in its rate filing, which contrasts with a previous 'historical looking' approach. This means that future rates will be based more on anticipated costs and revenues rather than past performance, and it addresses formula rate templates and protocols.