05/01/03

The Davis-Besse nuclear power plant will not be ready to resume making electricity until July or later, a top FirstEnergy Corp. executive conceded yesterday during an earnings conference with financial analysts.

The company plans to conduct a crucial pressure test of the reactor in four to six weeks to make certain there are no leaks in its bottom, said Gary Leidich, executive vice president of FirstEnergy's nuclear operating division.

The completion of other projects - including an assessment by federal regulators that the company has improved the plant's "safety culture" - will take another four to six weeks, said Leidich.

Although the Nuclear Regulatory Commission has no regulations governing safety culture, it is mandating safety culture improvements before it will allow the reactor to restart.

The company has made significant strides fostering a new safety culture, said Leidich, as revealed in a recent employee survey as well as an independent assessment by an industrial psychologist.

But even as Leidich spoke, U.S. Rep. Dennis Kucinich was questioning that progress and the NRC's ability to measure it.

In a letter to NRC Chairman Nils Diaz, the Cleveland Democrat yesterday asked for detailed information about how the agency's special safety culture inspection team is doing its job and how it will reach its conclusions. The team's five NRC staffers and two consultants have been spending time at the plant since early last month, and will be there several more weeks.

The team is not independently evaluating Davis-Besse's safety culture. Instead, it is reviewing efforts by FirstEnergy and the company's own consultant over the last several months to gauge employee attitudes, address safety concerns and make improvements.

Kucinich is worried about the NRC's lack of safety culture experience and standards.

He wants to hear directly from each team member about how they will be able to make objective decisions.

The NRC will respond to the congressman's letter, spokeswoman Viktoria Mitlyng said.

Davis-Besse cost the company $88 million, or 18 cents per share, during the first three months of the year - including $36 million for repairs and $52 million for replacement power.

Despite that financial burden, FirstEnergy earned slightly more money in the first three months of the year than it did during the same period in 2002, said Chief Financial Officer Richard Marsh.

The Akron-based utility reported first-quarter earnings of $138.8 million, or 47 cents per share, on total revenues of slightly more than $3.2 billion.

That's an increase of more than $22 million over the 2002 first-quarter earnings of $116.5 million, or 40 cents per share, on total revenues of $2.85 billion.

The company cited a 9.4 percent increase in electricity sales and distribution, improved profits from its sale of natural gas because of lower wholesale gas costs and lower financing costs because of refinancing and debt reduction.

In addition to Davis-Besse's drag on the bottom line, costs in pension and other employee benefits jumped by $50 million.

The company earlier bought replacement power through the summer and beyond to cover Davis-Besse's extended outage, said Marsh, as "risk management strategy."

"We definitely think we are seeing the light at the end of the tunnel," Marsh said of Davis-Besse.

More important than getting restarted exactly on schedule is that "we get the job done right the first time."

Though analysts peppered Marsh, Leidich and other top company officials with questions about when Davis-Besse would be back on line, the company's stock was largely unaffected, finishing the day down 7 cents at $33.73.

"At this point investors are more concerned that the plant is running in '04 and that '04 earnings remain intact," said Paul Ridzon, an analyst with McDonald Investments.

And compared to many other utilities, FirstEnergy is still doing well, said James Halloran, an analyst with National City Bank.

"Their underlying operations are still very good," he said. "They have had this problem as a headache at a time when for them nothing else has gone wrong."

Plain Dealer reporter John Mangels contributed to this article.

To reach this Plain Dealer reporter:

jfunk@plaind.com, 216-999-4138