The hole in the Davis-Besse nuclear reactor burned a hole in
owner FirstEnergy Corp.'s earnings.
The Akron utility said Thursday that it lost $30.8 million, or 10
cents a share, for the fourth quarter ending Dec. 31, after it had
to pay $97 million in costs related to the troubled plant and had to
write down other assets.
But those were one-time costs, the company said Thursday.
Excluding those charges, FirstEnergy had a good quarter and fiscal
year overall, executives said in a conference call with
FirstEnergy now says it will be ready to restart Davis-Besse by
mid-April, pending approval by the Nuclear Regulatory Commission.
The company has previously said the nuclear plant, in Oak Harbor
along Lake Erie, would be ready to restart by April 1.
``I think April may be a little aggressive,'' said analyst Paul
Ridzon, an associate vice president for McDonald Investments in
Cleveland who covers First-Energy. But he thinks Davis-Besse
actually may restart by early summer, when the demand for
electricity begins to soar because of air conditioning needs.
Ridzon said he isn't allowed to trade energy-related stocks, but
McDonald Investments does conduct investment banking business with
The utility's stock has dropped in the last couple of weeks,
probably because investors feared a U.S. Senate subcommittee hearing
on Thursday morning would reveal bad news about Davis-Besse, Ridzon
But the hearing, led by Ohio Sen. George Voinovich and involving
the NRC, didn't have unexpected bad news. And there were no
surprises, good or bad, in a conference call between FirstEnergy and
analysts, Ridzon said.
As a result, FirstEnergy's shares rose $1.54 to $29.19 on
Thursday. The stock is down 11.5 percent this year, and about 22
percent from a year ago.
The 883-megawatt Davis-Besse plant shut down Feb. 16, 2002, for a
safety inspection and refueling. In early March, workers found a
large, boric acid-created cavity that stretched nearly all the way
through the steel vessel head on top of the reactor.
The utility hopes to begin loading nuclear fuel into the reactor
next week as part of a test to see if there are any coolant leaks
underneath the reactor.
FirstEnergy said it could spend $375 million in repairs and
replacement electricity. It already spent $235 million in repairs
and replacement power in 2002, plus another $65 million to buy and
install a replacement head on top of the reactor. Plus, the company
estimates it will spend another $50 million in repairs on top of the
$25 million to buy replacement power in the first quarter of this
In fiscal 2002, FirstEnergy reported it earned $1 billion, or
$3.42 a share, excluding one-time costs associated with Davis-Besse
and two accounting changes. Including those one-time items,
FirstEnergy had net income of $629.3 million, or $2.15 a share.
FirstEnergy had $12.2 billion in revenue for fiscal 2002, up 52.5
percent from fiscal 2001. Last year was the first full year since
FirstEnergy acquired New Jersey-based utility GPU, which essentially
doubled its customer base.
``We faced a number of challenges in 2002. However, we view the
most significant ones, including those associated with the extended
outage at Davis-Besse, primarily as short term,'' Richard Marsh,
senior vice president and chief financial officer, said in a
FirstEnergy's fourth quarter earnings included a
30-cent-per-share charge related to an accounting change because it
didn't sell Emdersa, an electric distribution company in Argentina
that it had expected to sell.
The company's earnings also were hurt because it wasn't able to
sell four coal-fired power plants along Lake Erie. An agreement to
sell the plants to NRG Energy Inc. for $1.5 billion fell through
FirstEnergy retired, refinanced or repriced long-term debt and
preferred stock by $2.6 billion, which the company said will save
$125 million a year.