12/05/02

There are limits to how many millions FirstEnergy Corp. is willing to spend to repair the Davis-Besse nuclear power plant before the company "considers the alternatives," Chief Executive Officer Peter Burg said yesterday.

"We are not going to allow Davis-Besse to become a black hole for FirstEnergy," Burg told financial analysts in New York City.

Idle since February for extensive repairs, including a new reactor lid, Davis-Besse will have cost the Akron-based corporation nearly $400 million for repairs and replacement power by year's end. And while the company still believes it will have the reactor ready to restart in February or March and expressed confidence yesterday in the progress of the repair, federal regulators have the final say, meaning the plant could remain down for additional months.

Burg concedes that Davis-Besse has had a "significant impact on our company." But he said, "This situation cannot go on indefinitely. If we are not convinced that the plant can return to service safely, reliably and profitably, we will consider the alternatives."

Burg did not say what those alternatives might be, but corporate spokeswoman Kristen Baird said they would include closing, selling or leasing the plant.

Baird and Davis-Besse spokesman Todd Schneider could not say what the limits to spending might be, nor did Burg in his remarks to the analysts.

"I don't believe [sale or closure] is going to happen, but I think it is important for us to make that point to you here," Burg said. "In fact we are confident in terms of the progress we are making at that facility."

Schneider echoed that confidence. "We are making good progress," he said. "And we expect to return Davis-Besse to safe and reliable operations."

Meanwhile, the federal criminal probe into whether FirstEnergy Corp. tried to mislead the Nuclear Regulatory Commission last fall about the condition of the Davis-Besse nuclear power plant is nearly over, said another top FirstEnergy executive.

"It is our understanding that the investigation will be wrapped up early next year," Gary Leidich, executive vice president of FirstEnergy's nuclear operating division, told the analysts.

Leidich said the company wants the criminal investigation by the NRC completed before it asks the NRC for permission to restart Davis-Besse.

The company has insisted it did not break the law when it presented a more rosy than real picture of the reactor's condition last November to persuade the NRC to allow the plant to operate six weeks beyond an inspection deadline.

Leidich said what happened at Davis-Besse has sparked a reform of the FirstEnergy's entire nuclear operating division in an effort to change the culture of the workplace not only at Davis-Besse but also at sister plants in Perry, Ohio, and Shippingport, Pa.

FirstEnergy's stock closed yesterday at $30 a share, down $1.13. After the market closed Tuesday, the company revised downward its 2003 earnings projection to a range of $3.35 to $3.55 from a range of $3.70 to $3.90 a share.

To reach these Plain Dealer reporters:

jfunk@plaind.com, 216-999-4138

jmangels@plaind.com, 216-999-4842