FE
#I don't think it references a February 24th decision.
It says that, that's the end of the initial phase of the hearing on whether or not ---+ where the liability's going to fall.
Following that, the arbitration panel has time yet to then make their decision on liability and then following that, there would be additional time if there is liability to determine what that liability would be.
We're several months at least away from knowing any damages, if there are to be damages, and a while away from knowing what the arbitrators decide on liability.
As a result of our last rate case that settled, it was a black box, so there was no ROE.
Morning.
Let's take the $400 million off to the side here for a second.
There is an obligation under our agreements with the Nuclear Regulatory Commission to maintain $400 million of liquidity.
That can be accomplished by liquidity or by a parental guarantee that we would backstop that liquidity.
That is what we're working on.
That would only ever be exercised in the event of an extraordinary set of conditions resulting in all four of our nuclear reactors being offline for an extended period of time.
Other than that, it's an insurance policy to the Nuclear Regulatory Commission, but there is not an opportunity for FES to draw down on that and we're talking about three nuclear plants that are excellent operating nuclear plants, at least two that are at the high end and one that ---+ they are run very, very well.
The likelihood of all three sites and all four units being off for an extended period of time is very, very unlikely.
But there is a requirement that we ensure that there is liquidity available under our agreements with the Nuclear Regulatory Commission.
The $500 million you know about already and then what was the ---+
The $200 million.
That was the guarantee on the surety bonds.
Those two are both additive.
Yes, <UNK>, that makes up about $169 million of the $200 million.
That's right.
At the time that, that would occur, the nuclear decommissioning trust would be funded at an appropriate level and as long as those assets continue to run, would continue to get funded through the useful life of the plants.
Ultimately, where that ends up, I believe, and I'm going to ask Laila to help me here, will be determined through a bankruptcy process, if there's a bankruptcy.
Just to add a little bit more detail, it's the licensee owner that would be responsible.
In our case, that's our nuclear gen co.
Right now the NDTs, given the license duration is fully funded, but ---+ so FirstEnergy right now is not responsible as the licensed owner.
In the context of the environment that we are operating in, that's not a question for FirstEnergy to answer.
We've begun the process of separating FES and FirstEnergy when we put in place a separate Board for FES and that's a decision that the FES Board is going to have to wrestle with as that date approaches.
<UNK>, I would say the commitment to FES is a $500 million secured credit facility and that's secured by first mortgage bonds, as well as a $200 million surety bond, which is also secured.
Now, we have stated that FirstEnergy Corp.
guarantees the entire amount of the pension and executive deferred compensation benefit plans which we consider that, and always have considered that, an FE Corp.
responsibility.
That would with in the range of about $1 billion.
That will change as the discount rates change, as well as we make future contributions to the pension plan and as <UNK> said, we do not have any requirements to make any pension contributions in 2017.
However, the period 2018 through 2021 we have about $1.8 billion of required pension contributions and about $700 million years thereafter.
Aside from that, <UNK>, I think we've been very clear that we do not intend to support that business from FirstEnergy any longer.
Well, I can't speak for prospective new owners of these four nuclear units, but I can tell you this.
Running nuclear reactors isn't something that just anybody can do.
There is a significant amount of capital risk associated with that business, depending on how these assets, if there's a restructuring or a bankruptcy, where they ultimately go and who ultimately owns them.
I'm not sure people are going to be willing to take on the risk of even the next refueling outage, which is very expensive.
I don't think there's any guarantee, absent some other support for these units, that they're going to keep running far into the future.
I think you should think about it this way.
I said earlier, these assets are now valued at somewhere around $1.5 billion and that includes the nuclear fuel that they own.
The debt is significantly higher than that.
Absent something to raise the value of these units and make them attractive to a buyer, there's only one way for us to exit this business.
Any benefit of unwinding those forward contracts would flow through.
I think the key component is, is it reduces the amount of collateral that we were required to have outstanding, so that impacts our cash and from the end of the year until where we are right, now we've reduced our collateral requirements by about $70 million.
I would be in our cash flow.
Any gains or losses associated with unwinding that would flow through to EBITDA but that was not anything that would be material.
Just the return of the cash would be part of our cash flow.
Good morning.
The way I would think about that, <UNK>, is we've got a little over $300 million in interest expense and losing that 35% deductibility is about $100 million and you divide it by your shares outstanding.
That's how you get to the number we were talking about there.
We did not try to quantify anything else at that point.
That's purely the interest component associated with that.
That's correct.
<UNK>, over the last couple years I have resisted trying to guess about what the future might be and I think this whole tax reform issue's getting a lot of attention.
Obviously, all of my other peers have commented on it.
Whether or not it even happens in my mind is a question and what version happens.
There's a different version that the be President has than what the House has than what the Senate has and we haven't even started to run all those issues the to ground.
I'll tell you this.
I've been attending EEI CEO meetings since 2001 and our industry coalesced around what the right answer for our industry is with regard to this quicker on this issue than I have ever seen it happen.
Several of my peers who I have a tremendous amount of respect for have already been to Washington, DC, to talk about the impact on our industry and how ---+ what they're trying to do with tax reform is inject money into the economy from a supply side to jump start this economy.
Capital formation in our industry is not a problem and this would actually have the inverse effect on our industry of what they're trying to accomplish.
I think our representatives felt like they had meaningful discussions and so I don't think there's any reason for us to be playing dooms day at this point with regard to FirstEnergy or anyone else in this industry.
As I said, if you can tell me where it's going to end up, then we can tell you how we will react to it, but I'm not going to speculate about where it's going to end up or the impact it's going to have on what we do.
I do think obviously if the House plan got accepted exactly as it's been promulgated so far, it would be a difficult issue for our industry to wrestle with.
<UNK>, this is <UNK>.
As you know, we're not a federal cash taxpayer today.
The federal NOL as of the end of the year was $5 billion, so we don't anticipate being a federal taxpayer for some time into 2021, 2022.
With respect to bonus, we've been dealing with some form of bonus depreciation for the last 5 to 10 years and it's just something that we'll have to continue to look at.
No.
We are committed to investment grade credit metrics at FE Corp.
I would say, <UNK>, that what we're talking about is an average annual growth for T&D of 4% to 6% per year.
It would be ramped up a little bit in the earlier years because of the $200 million that we're receiving in Ohio, but obviously that goes away at some point in tim.
The way I think about it is this.
We have numerous investment mechanisms through riders on the distribution side of our Company in Ohio and Pennsylvania in particular.
We have formula rates so far with ATSI and TrAILCo and eventually when we get another FERC commissioner we'll have one for MAIT and JCP&L.
We have the ability to move those funds around quite a bit between T&D and from state to state, et cetera, et cetera and that gives us a lot of flexibility to address some of the reliability challenges that we see on our wire side of the Company and hopefully at some point some of the load growth that we're going to see on the wire side of our Company.
I think you should think about it in terms of the combination of the two because we're going to move money around.
I think probably in the very near future, we're going to start having dialogue with the Ohio Commission on their grid modernization ideas.
To the extent we move forward there, that has the same return on equity as a transmission formula rate, so that might move some money around there, too.
There's so many moving parts, I don't want to commit that it's going to be this for transmission and this for distribution.
I'd rather just tell you, you can count on 4% to 6%.
As I said in my remarks, as we move a little bit farther down the tracks, we're going to look at ways to ramp that up over the next few years.
Here's what I would say.
We finally got a settlement on a rate case in New Jersey for the first time in the 15 years that we've owned JCP&L.
That was a tremendous accomplishment on our part.
We've had lots of issues over there with four horrific storms, with some reliability issues early on in our ownership of JCP&L, with some union issues early on in our ownership of JCP&L.
I think the settlement on this case was a big step forward for us in terms of our relationship in New Jersey.
We would not have been able to get that accomplished if we didn't have solid relationships with our local elected officials that are much better than they ever were with the BPU and if we weren't performing over there.
So that's all a good place to be.
The paint isn't even dry on that settlement yet.
It just went into effect last month.
I think now is the time that over time we'll start having discussions with the BPU about what types of investments do they want to see and what mechanisms would they be interested in considering to do it.
More to come on that, but we're not having any right now.
<UNK>, it's <UNK> <UNK>.
It also takes into consideration the OPEB, which actually has a positive balance so it nets out to about $700 million with respect to the pension and OPEB and then there is some other guarantees that <UNK> had mentioned, specific to the executive deferred comp as well as some other small guarantees that add up to about $1 billion.
I don't see any possibility that they're going to be rate based in the time frame that I've committed to you that we're going to exit this competitive generation, so I don't even think we should even be talking about that.
We are going to work hard on this ZEC legislation, because I believe it's the right thing to do for the state of Ohio.
I believe it's the right thing to do for these assets, I believe it's the right thing to do for our employees that work at these facilities, and I think it's the right thing to do for those communities that these big, huge manufacturing facilities are resident in.
We're going to do it for all the right reasons, even though it's not going to ultimately, I don't think, have any impact to the shareholder value of FirstEnergy over the long haul.
Those are assets that were former GPU assets.
They are those manufactured gas plants, so they don't really pertain to any of the other segments.
That's why we've decided to keep them there.
In fact, last year we had a similar charge but it was not in the fourth quarter, so we've just been recording it in that segment.
Okay, <UNK>n.
<UNK>, no, this is <UNK>.
No, that range was based on having those rates go into effect January 1st.
At a time that we find out that something may be different than that, then we'll update that guidance, but what you're looking at it assuming that both MAIT and JCP&L go into effect at the beginning of the year.
I would add onto that, though, that inside a company that's as big as ours with 10 regulated distribution companies and the transmission footprint that we have, we have the ability in the interim until we have certainty on how we're going to get our returns through MAIT to move some of our capital plan around into other formula rates and I am not excusing our energy delivery leader from meeting his earnings targets this year, just because that's been delayed.
<UNK>, this is <UNK>.
One point of clarification.
Staff does now have some delegated authority and if they so chose to do so, they could use that delegated authority and put the rates into effect January 1st, February 1st, subject to refund.
You don't need the third commissioner in order for that to happen, is my point.
Correct.
They're within staff domain at this point.
Yes, it's <UNK>.
We are in the process of doing that and we expect by the end of the first quarter to have FES, its subsidiaries and FENOC operating under their own separate money pool and so we expect to have that in place shortly.
Can you repeat your question, please.
The 2019 term loan was refinanced in December of 2016, in line with the restructuring of our credit facilities.
That is correct.
I can't talk about what we're looking at there because, again, I think that is going to be the responsibility of the FES Board to look at it.
But I think what I said is other than West Lorain and Buchanan, I don't think you should expect any announcements in the near future.
Okay.
I'll take over for <UNK> and just like to thank you all for your continued support of FirstEnergy, your questions.
Look forward to seeing many of you in Boston next week and then <UNK> will see some of you in New York next week.
Thank you.
