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Posted on Thu, May. 01, 2003 story:PUB_DESC
FirstEnergy juiced by power sales
Davis-Besse shutdown cuts into profit; restart unlikely till July

Beacon Journal business writer

Higher electricity sales helped propel FirstEnergy Corp.'s first-quarter income to $241 million, or 82 cents a share, compared with $116.5 million, or 40 cents a share, a year earlier, the Akron utility reported Wednesday.

An accounting change was also a major contributor to the strong quarterly results, company executives said. Not including the accounting change,FirstEnergy had first-quarter net income of $138.8 million, or 47 cents a share.

The company reported revenue of $3.2 billion, up 10.3 percent from $2.9 billion in the first quarter of 2002. Electricity sales increased by 31 percent over the year-earlier period, the company reported.

Shares in FirstEnergy fell 7 cents Wednesday to $33.73.

The closed Davis-Besse nuclear power plant continued to hurt the company's finances, costing FirstEnergy $88 million, or 18 cents a share, in the quarter. FirstEnergy had to spend $52 million to buy replacement electricity, and $36 million on repairs and operating expenses.

Company officials said the power plant probably will not be ready to restart until July, after the completion of repairs and tests. The 883-megawatt Oak Harbor facility was shut down after severe corrosion was found on top of the reactor in March 2002. The Nuclear Regulatory Commission has final say on when the power plant can restart.

The company expects to pay $15 million a month in April, May and June to buy replacement power while Davis-Besse remains shut down, and as much as $25 million a month in July and August, said Gary Leidich, executive vice president ofFirstEnergy's nuclear operating company subsidiary.

Paul Ridzon, an analyst with McDonald Investments in Cleveland who follows First-Energy, said he found no surprises in the utility's earnings report and a conference call with analysts. The lack of significant movement in the company's stock price Wednesday seems to indicate that investors are not surprised to see the Davis-Besse restart date pushed back, Ridzon said.

Also in the first quarter,FirstEnergy announced it divested its ownership in the Argentine distribution company Emdersa and will take a one-time noncash charge of $63 million in the second quarter this year.

Standard & Poor's reaffirmed its credit rating for FirstEnergy, while upgrading its ``business position'' rating in the quarter, the company announced.

Also, FirstEnergy expects ``long term'' ownership of four Lake Erie-shoreline, coal-fired plants that it had been trying to sell, Senior Vice President and Chief Financial Officer Richard Marsh said in the conference call. FirstEnergy has not found qualified buyers for the plants after an earlier sales agreement fell through. The plants are being used in a way that helps First-Energy's largest baseload plants run more efficiently, Marsh said.


Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com
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