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FirstEnergy stock falls as market gains

10/16/02

John Funk and John Mangels
Plain Dealer Reporters

FirstEnergy Corp., owner of the Davis-Besse nuclear power plant, saw its stock price fall about 4 percent yesterday despite strong overall gains in the market and a slight upswing in a major utility index.

Akron-based FirstEnergy ended the day at $28.21, down $1.27, on a trade volume of nearly 2.1 million shares.

The decline came as Merrill Lynch analyst Steven Fleishman lowered his estimate of FirstEnergy's 2003 earnings by 5 cents, to $3.35 per share, because of possible new boric acid leaks in the reactor - this time on the bottom - which could require additional expensive repairs. Fleishman did not return a phone call yesterday.

"It's something I am going to keep my eye on," said Paul Ridzon of McDonald Investments. Ridzon estimates that the company will earn $3.55 per share next year. A FirstEnergy spokesman said it was impossible to say whether the news of more potential leaks, coupled with the Merrill report, were responsible for yesterday's performance, because the market has been so volatile.

"Certainly Davis-Besse has had an impact," said Ralph DiNicola. "But can anybody in the country explain the swing in the price of a stock? We have had days when there was a $2 increase."

The company reported last week that inspectors had found what appeared to be a film of rust and boric acid on the sides and bottom of the reactor - indicating either a leak in tubes, called nozzles, that pass through the vessel's base, or runoff from power washing of the lid in past years. A lab is analyzing the residue to determine where it came from.

Davis-Besse has been shut down since Feb. 16. Inspectors in March found that nozzles in the reactor's lid had cracked and leaked coolant, which contains boron. The boric acid that remained when the water evaporated ate a hole through the 6-inch-thick steel lid, leaving only a thin stainless steel cladding to hold back the pressurized coolant.

The company is installing a replacement lid and making extensive repairs throughout the containment building that houses the reactor.

Total cost, including the cost of buying replacement power, could run as much as $400 million - if the company can convince the Nuclear Regulatory Commission that the plant is safe to restart by early next year.

If repairs to the bottom of the reactor are necessary, the start-up could be delayed.

The company is planning to release its third-quarter earnings report tomorrow.

To reach these Plain Dealer reporters:

jfunk@plaind.com, 216-999-4138

jmangels@plaind.com, 216-999-4842


2002 The Plain Dealer. Used with permission.
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