Revenues by transmission asset owner are shown in the following table: For the Years Ended December 31, Revenues by Transmission Asset Owner 2022 2021 Increase (In millions) ATSI $ 912 $ 801 $ 111 TrAIL 275 240 35 MAIT 340 289 51 JCP&L 203 164 39 MP, PE and WP 138 124 14 Total Revenues $ 1,868 $ 1,618 $ 250 Operating Expenses — Total operating expenses increased $263 million in 2022, as compared to 2021, primarily due to the reclassification of certain transmission capital assets to operating expenses as a results of the FERC Audit, as further discussed below, higher operating and maintenance expenses and a charge resulting from the filed settlement with FERC in January 2023, partially offset by a charge in the third quarter of 2021 resulting from the filed ATSI settlement. Other than the customer refunds and write-off of nonrecoverable transmission assets, nearly all operating expenses are recovered through formula rates, resulting in no material impact on current period earnings. Other Expense — Total other expense increased $18 million in 2022, as compared to 2021, primarily due to a $46 million change in the pension and OPEB mark-to-market adjustment, partially offset by lower interest on long-term debt and borrowings under the revolving credit facilities, higher unregulated money pool interest income at ATSI, MAIT and TrAIL, and higher capitalized financing cost. Income Taxes — Regulated Transmission’s effective tax rate was 21.8% and 23.7% for 2022 and 2021, respectively. Corporate/Other — 2022 Compared with 2021 Financial results from Corporate/Other and reconciling adjustments resulted in a $499 million increase in net loss for 2022 compared to 2021, primarily due to higher income tax expense resulting from an income tax charge of $752 million in 2022 representing the deferred tax liability associated with the deferred tax gain on the 19.9% sale of FET membership interests to Brookfield that closed in May 2022, as well as expenses associated with the FE debt redemptions. These were partially offset by the absence of the $230 million DPA monetary penalty, higher net investment income on certain equity method and other investments and the change in pension and OPEB mark-to-market adjustments. For the year ended December 31, 2021, FirstEnergy recorded a gain from discontinued operations, net of tax, of $44 million. The gain was primarily due to income tax benefits from the final true-up to the worthless stock deduction and a final federal NOL allocation between the FES Debtors and FirstEnergy resulting from the filing of the 2020 FirstEnergy federal income tax return during 2021. REGULATORY ASSETS AND LIABILITIES Regulatory assets represent incurred costs that have been deferred because of their probable future recovery from customers through regulated rates. Regulatory liabilities represent amounts that are expected to be credited to customers through future regulated rates or amounts collected from customers for costs not yet incurred. FirstEnergy, the Utilities and the Transmission Companies net their regulatory assets and liabilities based on federal and state jurisdictions. Management assesses the probability of recovery of regulatory assets, and settlement of regulatory liabilities, at each balance sheet date and whenever new events occur. Factors that may affect probability relate to changes in the regulatory environment, issuance of a regulatory commission order or passage of new legislation. Upon material changes to these factors, where applicable, FirstEnergy will record new regulatory assets and liabilities and will assess whether it is probable that currently recorded regulatory assets and liabilities will be recovered or settled in future rates. 41
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