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34.37 - 0.40
7/25/03 4:00:00 PM ET

TEXT-S&P comments on FirstEnergy Corp. rating
Reuters, 07.25.03, 4:45 PM ET


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(The following statement was released by the rating agency)

NEW YORK, July 25 - Standard & Poor's Ratings Services today noted FirstEnergy Corp.'s (nyse: FE - news - people) (BBB/Negative/--) announcement of the latest extension of the Davis Besse nuclear plant outage and the New Jersey Board of Public Utilities (BPU) decision on subsidiary Jersey Central Power & Light Co.'s rate case. With replacement power costs at about $90 million to $95 million in first-half 2003 and higher operating & maintenance costs, now projected at $80 million, FirstEnergy's free cash flows will be lower than expected. The BPU's decision on the base rate, which adopted most, but not all, of the BPU staff's recommendations, and the ruling on recovery of deferred energy costs will also negatively affect FirstEnergy's deleveraging plans and cash-protection measures. Cash flows will also be adversely affected from additional capital investments to improve reliability in the New Jersey shore communities.

Standard & Poor's estimates FirstEnergy's free cash flow in 2003 at about $575 million. In the absence of material asset sales or equity issuance, lower free cash will affect FirstEnergy's ability to delever and achieve year-end 2003 targets. Standard & Poor's will continue to assess the company's plans to determine if projected financial measures are adequate for the current rating.

Copyright 2003, Reuters News Service

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