Companies | Article published October 18, 2002|
Utility again works on plant sales
BLADE BUSINESS WRITER
FirstEnergy Corp. hopes to have a deal to sell
its suburban Toledo Bay Shore power plant and three other coal-fired
plants in December, just a few months after it cancelled a $1.5
billion deal because the then-buyer couldn't pay for it.
utility, which owns Toledo Edison, said it would use proceeds from
the sale to reduce its heavy debt. News that the sale of the Bay
Shore plant in Oregon, which has 185 employees, may be close came
amid a conference call yesterday with analysts learning of
FirstEnergy's financial situation in the third quarter.
company reported a flat profit per-share of $1.06 for the quarter
ending Sept. 30, compared with $1.07 for the same period a year ago.
It said its latest profit was $310 million, up from $234 million a
year ago, which was prior to its takeover of GPU, Inc., an energy
company. FirstEnergy's revenues were $3.6 billion in the latest
quarter, up from $3.3 billion a year ago.
The planned sale of
the coal-fired plants is based on interest from unnamed parties, and
could be completed by late next year, FirstEnergy said. The
cancellation of the earlier deal with NRG Energy, Inc., meant the
Ohio utility didn't receive about $1 billion it planned to have to
pay off its debts.
Richard Marsh, FirstEnergy's chief financial
officer, said the company will seek bids from buyers in November and
could strike a tentative deal ''if the bids are
In another key development revealed yesterday,
Tom Navin, company treasurer, said FirstEnergy has achieved the
required level of its customers who chose another energy supplier to
permit it to continue billing all homeowners and renters in its
service territory a surcharge to recoup its $8.8 billion in debts.
That surcharge was permitted for five years by the Public Utilities
Commission of Ohio if FirstEnergy met certain conditions when the
electric industry was deregulated in 2000 in Ohio. There are three
years left on that surcharge.
If FirstEnergy did not get 20
percent of the residential customers in its territory to switch to
another supplier by 2005, it would have had to forfeit $500 million
of that surcharge amount.
Much of the call with Wall Street
analysts focused on the company's earnings and expenses with respect
to the ongoing problems at the company's troubled Davis-Besse
nuclear plant near Oak Harbor, Ohio.
Gary Leidich, executive
vice president of the firm's nuclear operating unit, said the
company plans to receive approval from the Nuclear Regulatory
Commission by early in 2003 to restart the plant, which was shut
down in February after severe corrosion was found on its reactor
vessel head. About 60 percent of the repairs are completed, he
The company's earnings lost 20 cents a share in the
quarter due to the negative impact of Davis-Besse, which required
$50 million to $70 million in repairs and forced the utility to buy
power to offset the loss of generation by the nuclear plant, said
Mr. Marsh, the financial officer.
FirstEnergy also had two
one-time charges on its balance sheet that hurt earnings, including
an 11 cents per share charge relating to a court ruling in
Pennsylvania stopping its subsidiaries from deferring some energy
costs related to deregulation, and a 2 cents per share charge
related to company staff cuts.
The losses were partially
offset by high demand for power this summer, Mr. Marsh said.
Residential demand jumped 13 percent.
The news yesterday was
received favorably by investors. The company's stock closed up $1.85
a share at $28.15 on the New York Stock Exchange. The firm also
declared a quarterly dividend of 37.5 cents per share, payable Dec.
1 to shareholders of record Nov. 7.
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