AKRON -- FirstEnergy officials are confident the Davis-Besse
Nuclear Power Station will continue producing electricity.
But they are not so quick to commit to the long-range future of
the 25-year-old Carroll Township facility.
In an interview Tuesday in his spacious 18th-floor office at
FirstEnergy headquarters in Akron, Chief Financial Officer Richard
H. Marsh stopped short of saying the company is committed to a
20-year renewal of the beleaguered plant's license. The current
license expires in 2017.
"FirstEnergy is certainly looking for license renewal as an
option," Marsh said. "We continue to believe it will be a long-term
benefit for the (company's) portfolio."
He added, however, that the final decision will lie in the
dollars and cents of the issues when it comes times to finalize
plans, calling it a "business decision."
Company officials notified the federal agency that monitors
nuclear power -- the Nuclear Regulatory Commission -- in May 2001
that they plan to start the paperwork for the extension.
The application process to renew the 25-year-old plant's license
takes about three years to complete.
One year ago this week the Davis-Besse power plant shocked the
nuclear industry with the discovery of massive amounts of corrosion
on its reactor head -- a discovery that Marsh called "hurtful."
"For (Chief Executive Officer) Peter Burg, it was enormously
painful," he said. "We had much to be humble about last year."
The $12 billion-a-year company has been embroiled in turmoil
since the spotting the unprecedented amount of corrosion, from
Congressional inquiries to being the subject of internal fighting
within the NRC.
Since last March, the plant has been a bevy of activity, not only
replacing the reactor head with an unused one from Midland, Mich.,
but devising plans to counteract a suffering safety climate and
restructuring the entire nuclear operation to form an organization
to oversee all three of the company's nuclear plants.
Some of those plans have been questioned throughout the process
with lingering doubt and surveys that show workers still aren't
trusting of middle management to fix problems correctly and without
The future of the plant also was uncertain last November with the
vague words of Burg at an analyst meeting, during which he told
analysts Davis-Besse would not become the company's "black hole."
The comment set off a whirlwind of speculation about the point at
which FirstEnergy might decide the plant isn't worth the effort --
or the money. The energy conglomerate has now invested more than
$300 million in bringing the plant back on-line, and expects to pay
another $50 million this year in repairs and $10 million to $12
million to buy replacement power per month.
All told, the bill could top $400 million.
"What he was trying to say was we're not going to let this event
define the fate of our company," Marsh explained. "We're not going
to let this unit drag the rest of the company down."
He qualified that, however, by saying Burg was referring to such
plants as D.C. Cook in Benton Harbor, Mich., which experienced an
outage that lasted two-and-a-half years.
FirstEnergy spokesman Ralph DiNicola further clarified that at
the time, Burg and the rest of the company had no idea how extensive
the damage was and how many more problems could be found.
"What Pete always said is we'll know it when we see it," Marsh
said of how far the company would go before cutting the plant loose.
And while Marsh said he couldn't define the point, the company is
now seeing the "light at the end of the tunnel" with much of the
work at the plant expected to be finished by April.
Marsh said, too, that FirstEnergy has bought energy for
distribution and upped the amount purchased to compensate for the
lakefront facility. But management wants Davis-Besse back on-line to
produce that electricity more cheaply than what it costs to purchase
He credits the company's commitment to sticking with the plant
partially to the support seen from community members and local
Ottawa County commissioners and local economic development
leaders have responded to Congress members Marcy Kaptur and Dennis
Kucinich's calls for investigations and a potential shut down with
scathing letters and rebuffs.
In recent months, more officials from township, village, city and
county governments have stood up in support of the plant at monthly
meetings between the NRC and FirstEnergy.
"Without that local support, it would be very difficult for a
plant to get a foothold," he said.
He credits that support, too, for stable stock prices despite
shareholders taking a hit to the tune of about 47 cents per share.
"A look at the stock price shows it's performing very well
considering all that's gone on," Marsh said. The stock fluctuated
from a company high near $40 pre-Davis-Besse to between $28 and $35
in the past year. "We understand this is a one-time thing and I
think that's why they've been supportive."
Also, he said, analysts have deemed the problems at Davis-Besse
short term, which saved the stocks from diving like the parent
companies of other troubled plants.
Marsh added, though, that company officials realize neither
investors nor cheerleaders won't stick around for long if the
facility-wide issues of safety culture and management problems
persist in Davis-Besse or show up in other FirstEnergy-owned plants.
But he's convinced that efforts at the plant will change the way
Davis-Besse operates, for the better.
"It looks, tastes and feels like a different plant, and will
continue to be so in the next couple of months," Marsh noted.
Originally published Thursday, March 6, 2003