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FirstEnergy Corp. Reports Operating Results (10-K)

February 28, 2012 | About:
10qk

10qk

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FirstEnergy Corp. (FE) filed Annual Report for the period ended 2011-12-31.

Firstenergy Cp has a market cap of $18.43 billion; its shares were traded at around $43.81 with a P/E ratio of 13.1 and P/S ratio of 1.4. The dividend yield of Firstenergy Cp stocks is 5%. Firstenergy Cp had an annual average earning growth of 3.5% over the past 10 years. GuruFocus rated Firstenergy Cp the business predictability rank of 3.5-star.

Highlight of Business Operations:

NDT funds have been established to satisfy NGC s nuclear decommissioning obligations. Included in FES s NDT are fixed income, equities and short-term investments carried at market values of approximately $1,025 million, $124 million and $132 million, respectively, as of December 31, 2011, excluding ($58) million of net receivables, payables and accrued income. A hypothetical 10% decrease in prices quoted by stock exchanges would result in a $12 million reduction in fair value as of December 31, 2011. NGC recognized in earnings the unrealized losses on available-for-sale securities held in their NDT as OTTI. A decline in the value of FES s NDT or a significant escalation in estimated decommissioning costs could result in additional funding requirements.

Retail generation revenues decreased by $277 million primarily due to a decrease in MWH sales from increased customer shopping and lower average prices in all customer classes. Retail generation obligations are attributable to non-shopping customers and are satisfied by generation procured through full-requirements auctions. OE and Penn defer the difference between retail generation revenues and purchased power costs, resulting in no material effect to current period earnings. Lower MWH sales were primarily the result of increased customer shopping in 2011. The increases in shopping by residential, commercial and industrial customers were 18%, 11% and 7%, respectively, in 2011 compared with 2010.

Retail generation revenues decreased $79 million in 2011 compared to 2010, primarily due to lower MWH sales from increased customer shopping and lower unit prices to all customer classes. The increases in shopping for residential, commercial and industrial customers were 13%, 9%, and 4%, respectively, in 2011 compared with 2010. Retail generation obligations are attributable to non-shopping customers and are satisfied by generation procured through full-requirements auctions. TE defers the difference between retail generation revenues and purchased power costs, resulting in no material effect to current period earnings.

NDT funds have been established to satisfy nuclear decommissioning obligations. Included in TE s NDT are fixed income, equities and short-term investments carried at market values of approximately $53 million, $27 million and $3 million, respectively, as of December 31, 2011. A hypothetical 10% decrease in prices quoted by stock exchanges would result in a $3 million reduction in fair value as of December 31, 2011. TE recognizes in earnings the unrealized losses on available-for-sale securities held in their NDT as OTTI. A decline in the value of TE s NDT or a significant escalation in estimated decommissioning costs could result in additional funding requirements. During 2011, approximately $1 million was contributed to TE's NDT to comply with requirements under certain sale-leaseback transactions in which TE continues as a lessee.

Retail generation revenues decreased by $301 million due to lower generation MWH sales in all customer classes primarily due to an increase in customer shopping. The increases in shopping for residential, commercial and industrial customers were 10%, 9% and 5%, respectively, in 2011 compared with 2010. Retail generation obligations are attributable to non-shopping customers and are satisfied by generation procured through full-requirements auctions. JCP&L defers the difference between retail generation revenues and purchased power costs, resulting in no material effect to earnings.

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