(The following statement was released by the ratings agency)
NEW YORK, Oct 8 - Standard & Poor's Ratings Services noted that
FirstEnergy Corp. (NYSE:FE - News; BBB/Negative/--)
announced a $115 million increase in operating and maintenance (O&M)
costs associated with the extended outage at the Davis Besse nuclear
facility, of which $50 million will be incurred in 2003 after the plant
restarts. Capital costs associated with replacing the reactor head are
unchanged and are expected to be between $55 million and $70 million.
The
company also announced that the restart will likely be delayed to early
2003. Standard & Poor's will monitor developments and wait for the NRC
to conclude its investigation to determine if the time frame of the
shutdown will be substantially longer. Standard & Poor's believes that
restarting the facility is important to FirstEnergy's credit profile.
Although FirstEnergy's credit is negatively affected due to the revised
O&M costs, funds from operations interest coverage is expected to be
only marginally lower at 2.65 times at year-end 2002. Standard &
Poor's is also monitoring the renewal of FirstEnergy's 364-day $1 billion
revolver in November 2002.
