On March 11, FirstEnergy's stock hit an all-time closing high of
$38.64. Yet by Tuesday, only eight days later, shares had tumbled to
$32.25 to close at a six-month low. Shares closed Friday at
That is because bad news will send investors fleeing. And the bad
news at FirstEnergy: Corrosion had been discovered in the lid of an
atomic reactor at the company's Davis-Besse Nuclear Power Station
near Toledo. Davis-Besse accounts for about 7 percent of the power
that FirstEnergy can produce. The plant is now shut down, at least
until the end of June, and maybe the whole year.
FirstEnergy estimates it will spend $10 million to $15 million a
month buying electricity on the open market while Davis-Besse is
down. Fortunately for FirstEnergy, though, the company reported a
healthy profit last year of $655 million. Earnings for this year
were revised downward as a result of Davis-Besse, which is why the
``This is just another issue we're dealing with,'' said company
spokesman Ralph DiNicola. ``We will deal with it. This issue is in
the millions of dollars. Others have been in the billions.''
True enough. Issues such as electric deregulation had the
potential to be financially devastating for FirstEnergy.
Yet in the case of Davis-Besse, it's not just money on the line.
It's public trust.
Today, nuclear power plants are widely viewed as safe, in no
small part because of the enormous safety mechanisms required. Yet
there are still risks. ``A well-engineered nuclear reactor is not a
threat,'' commented physicist Lawrence Krauss of Case Western
Reserve University. ``The question is almost always one of cutting
Setting a standard
In many ways, the Davis-Besse situation offers reassurance. There
was a 6-inch-deep hole on a 150-ton lid -- and it was discovered. A
protective layer of stainless steel stopped the corrosion from
spreading. And finally, the federal Nuclear Regulatory Commission
rushed in with a team of inspectors to assess the extent of the
problem and how to fix it. In the meantime, inspections revealed a
second spot of corrosion.
The NRC's Chicago spokesman, Jan Strasma, described the problem
at Davis-Besse as a ``major degradation.'' He also noted that
FirstEnergy discovered the first hole in doing repairs while the
plant was shut down -- not while it was active.
In early April, the NRC will issue a report on Davis-Besse that
addresses what must be done. Strasma said the report will also
include an assessment of whether FirstEnergy should have found the
FirstEnergy has been one of the bright spots of business in
Northeast Ohio. And it's not just because the company is growing and
has performed well financially. In addition, the company's chief
executive, H. Peter Burg, has set a tone for integrity in
leadership. Burg advocates an adherence to high values in the
workplace. He engages the nonprofit Heart to Heart Communications to
lead seminars on this subject inside FirstEnergy.
In the tough world of business, speaking out for values means you
take whatever financial hit is necessary when it comes to assuring
public safety. And you don't just do the minimum. You go the extra
``A well-run plant will not stop at meeting minimum
regulations,'' said the NRC's Strasma.
Burg has set the standard. Now he is in a position to demonstrate
how a corporation ought to behave, even with financial fortunes on
Diane Evans' column appears every Sunday,
Wednesday and Friday. She can be reached at 330-996-3587.