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Posted on Sun, Mar. 09, 2003 story:PUB_DESC
FirstEnergy's spark still there
Akron utility bright spot for shareholders, despite Davis-Besse

Beacon Journal business writer

While anyone reading about FirstEnergy Corp.'s troubled Davis-Besse nuclear power plant could get the impression the Akron utility is on life support, nothing could be further from the truth.

Excluding the estimated $375 million in one-time costs associated with repairingDavis-Besse and buying replacement electricity, ``it really was a very solid year (2002) for the company,'' said Richard Marsh, senior vice president and chief financial officer. The company says Davis-Besse should be ready to restart in April, pending federal approval.

One industry ranking placed FirstEnergy ninth in total shareholder return among utilities for the past three years as of Dec. 31, with an average annual return of 18.9 percent compared with an average of 4.2 percent by industry members in the Edison Electric Institute.

Davis-Besse troubles aside, FirstEnergy is doing well, analysts say.

``This is a very well run company,'' said Warwick Busfield, analyst with Fahnestock & Co. in New York. He doesn't own stock in FirstEnergy, and his firm does not have a banking relationship with the utility.

FirstEnergy is a shell company for seven regulated utilities with a solid, undervalued stock that pays a good dividend, Busfield said.

FirstEnergy just about doubled in size in November 2001 after completing the acquisition of GPU Inc. in New Jersey. It now has about 4.3 million customers in Ohio, Pennsylvania and New Jersey.

Busfield sees FirstEnergy making similar GPU-type acquisitions in upcoming years, targeting businesses that distribute -- not generate -- electricity.

FirstEnergy is valued at about $9 billion. Including one-time costs associated with Davis-Besse, FirstEnergy reported earning $629.3 million on $12.2 billion in revenue in 2002. The company estimates it will earn $3.35 to $3.55 per share in 2003.


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