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FAIR VALUE MEASUREMENTS
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
The disclosures in this note apply to both Registrants, unless indicated otherwise.

RECURRING FAIR VALUE MEASUREMENTS

Authoritative accounting guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy gives the highest priority to Level 1 measurements and the lowest priority to Level 3 measurements. The three levels of the fair value hierarchy and a description of the valuation techniques are as follows:
Level 1-Quoted prices for identical instruments in active market.
Level 2-Quoted prices for similar instruments in active market.
-Quoted prices for identical or similar instruments in markets that are not active.
-Model-derived valuations for which all significant inputs are observable market data.
Models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures.
Level 3-Valuation inputs are unobservable and significant to the fair value measurement.
FirstEnergy produces a long-term power and capacity price forecast annually with periodic updates as market conditions change. When underlying prices are not observable, prices from the long-term price forecast are used to measure fair value.

FTRs are financial instruments that entitle the holder to a stream of revenues (or charges) based on the hourly day-ahead congestion price differences across transmission paths. FTRs are acquired by FirstEnergy in the annual, monthly and long-term PJM auctions and are initially recorded using the auction clearing price less cost. After initial recognition, FTRs’ carrying values are periodically adjusted to fair value using a mark-to-model methodology, which approximates market. The primary inputs into the model, which are generally less observable than objective sources, are the most recent PJM auction clearing prices and the FTRs’ remaining hours. The model calculates the fair value by multiplying the most recent auction clearing price by the remaining FTR hours less the prorated FTR cost. Significant increases or decreases in inputs in isolation may have resulted in a higher or lower fair value measurement.

The Registrants primarily apply the market approach for recurring fair value measurements using the best information available. Accordingly, the Registrants, maximize the use of observable inputs and minimizes the use of unobservable inputs. There were no changes in valuation methodologies used as of March 31, 2025, from those used as of December 31, 2024. The determination of the fair value measures takes into consideration various factors, including but not limited to, nonperformance risk, counterparty credit risk and the impact of credit enhancements (such as cash deposits, LOCs and priority interests). The impact of these forms of risk was not significant to the fair value measurements.

The following table sets forth the recurring assets and liabilities that are accounted for at fair value by level within the fair value hierarchy:
March 31, 2025December 31, 2024
FirstEnergyLevel 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets(In millions)
Derivative assets FTRs(1)
$— $— $1 $1 $— $— $7 $7 
Equity securities2 — — 2 2 — — 2 
 Debt securities(2)
— 272 — 272 — 276 — 276 
Cash, cash equivalents and restricted cash(3)
163 — — 163 154 — — 154 
Other(4)
— 52 — 52 — 45 — 45 
Total assets$165 $324 $1 $490 $156 $321 $7 $484 
Liabilities
Derivative liabilities FTRs(1)
$— $— $(1)$(1)$— $— $— $— 
Total liabilities$— $— $(1)$(1)$— $— $— $— 
Net assets$165 $324 $— $489 $156 $321 $7 $484 
(1) Contracts are subject to regulatory accounting treatment and changes in market values do not impact earnings.
(2) Related to JCP&L’s investments held in the spent nuclear fuel disposal trusts, see below.
(2) Restricted cash of $31 million and $43 million as of March 31, 2025, and December 31, 2024, respectively, primarily relates to cash collected from MP, PE and the Ohio Companies’ customers that is specifically used to service debt of their respective securitization or funding companies.
(4) Primarily consists of short-term investments, of which $11 million and $6 million as of March 31, 2025, and December 31, 2024, respectively, are held by JCP&L.

INVESTMENTS

All temporary cash investments purchased with an initial maturity of three months or less are reported as “Cash equivalents” on the Consolidated Balance Sheets at cost, which approximates their fair market value. Investments other than cash and cash equivalents include AFS debt securities and other investments. The Registrants have no debt securities held for trading purposes.

Generally, unrealized gains and losses on equity securities are recognized in income whereas unrealized gains and losses on AFS debt securities are recognized in AOCI. However, the JCP&L spent nuclear fuel disposal trusts are subject to regulatory accounting with all gains and losses on equity and AFS debt securities offset against regulatory assets.
Spent Nuclear Fuel Disposal Trusts

JCP&L holds debt securities within the spent nuclear fuel disposal trust, which are classified as AFS securities, recognized at fair market value. The trust is intended for funding spent nuclear fuel disposal fees to the DOE associated with the previously owned Oyster Creek and Three Mile Island Unit 1 nuclear power plants.

The following table summarizes the amortized cost basis, unrealized gains, unrealized losses and fair values of investments held in spent nuclear fuel disposal trusts as of March 31, 2025, and December 31, 2024:
March 31, 2025(1)
December 31, 2024(2)
Cost BasisUnrealized GainsUnrealized LossesFair ValueCost BasisUnrealized GainsUnrealized LossesFair Value
(In millions)
Debt securities$295 $— $(23)$272 $299 $— $(23)$276 
(1) Excludes short-term cash investments of $11 million as of March 31, 2025.
(2) Excludes short-term cash investments of $6 million as of December 31, 2024.    

Proceeds from the sale of investments in AFS debt securities, realized gains and losses on those sales and interest and dividend income for the three months ended March 31, 2025 and 2024, were as follows for the Registrants:
For the Three Months Ended March 31,
20252024
(In millions)
Sale proceeds$27 13 
Realized gains— — 
Realized losses(2)(1)
Interest and dividend income3 3 

Other Investments

Other investments include employee benefit trusts, which are primarily invested in corporate-owned life insurance policies, and equity method investments. Earnings and losses associated with corporate-owned life insurance policies and equity method investments are reflected in “Miscellaneous Income, net” line on FirstEnergy’s Consolidated Statements of Income. Other investments were $374 million and $370 million as of March 31, 2025, and December 31, 2024, respectively, and are excluded from the amounts reported above. See Note 1, "Organization and Basis of Presentation," of the Combined Notes to Financial Statements of the Registrants for additional information on FirstEnergy's equity method investments.

For the three months ended March 31, 2025 and 2024, pre-tax income related to corporate-owned life insurance policies was $2 million and $9 million, respectively. Corporate-owned life insurance policies are valued using the cash surrender value and any changes in value during the period are recognized as income or expense.

LONG-TERM DEBT AND OTHER LONG-TERM OBLIGATIONS

All borrowings with initial maturities of less than one year are defined as short-term financial instruments under GAAP and are reported as “Short-term borrowings” on the Consolidated Balance Sheets at cost. Since these borrowings are short-term in nature, the Registrants believe that their costs approximate their fair market value. The following table provides the approximate fair value and related carrying amounts of long-term debt, which excludes finance lease obligations and net unamortized debt issuance costs, unamortized fair value adjustments, premiums and discounts as of March 31, 2025, and December 31, 2024:

FirstEnergy March 31, 2025December 31, 2024
(In millions)
Carrying value$23,270 $23,594 
Fair value$22,097 $22,128 

JCP&LMarch 31, 2025December 31, 2024
(In millions)
Carrying value$2,350 2,350 
Fair value$2,308 2,284 
The fair values of long-term debt and other long-term obligations reflect the present value of the cash outflows relating to those securities based on the current call price, the yield to maturity or the yield to call, as deemed appropriate at the end of each respective period. The yields assumed were based on securities with similar characteristics offered by corporations with credit ratings similar to those of the Registrants. The Registrants classified short-term borrowings, long-term debt and other long-term obligations as Level 2 in the fair value hierarchy as of March 31, 2025, and December 31, 2024.

FirstEnergy had the following issuances and redemptions during the three months ended March 31, 2025 (JCP&L had no issuances or redemptions):

CompanyTypeRedemption / Issuance DateInterest RateMaturity
Amount
(In millions)
Description
Redemptions
FEUnsecured NotesMarch, 20252.050%2025$300FE redeemed unsecured notes that became due.

On April 16, 2025, TrAIL issued $600 million of senior notes due 2031 at 5.00%. Proceeds are expected to be used to redeem senior notes that will be coming due in 2025 and repay short-term borrowings, as well as to fund capital investments, working capital and other corporate purposes.

On December 5, 2024, JCP&L issued $700 million of unsecured senior notes due in 2035 in a private offering that included a registration rights agreement in which JCP&L agreed to conduct an exchange offer of these senior notes for like principal amounts registered under the Securities Act. On April 1, 2025, JCP&L filed a registration statement on Form S-4 with the SEC, which became effective on April 11, 2025.