FirstEnergy looks to sell merchant gas, hydro generation in $900M deal
- FirstEnergy Corp. has filed a Form 8-K with the U.S. Securities and Exchange Commission revealing its merchant subsidiary is currently negotiating the sale of several generating assets.
- Last month in its third-quarter earnings call, the company revealed it was considering selling more than a dozen struggling power plants, including several nuclear plants. The company is also seeking to have power markets in Ohio re-regulated in order to support its generation.
- SNL Energy reports the generation, for sale by FirstEnergy unit Allegheny Energy Supply Co., has a book value of almost $1.2 billion.
FirstEnergy is moving ahead with a plant to divest struggling power plants, informing regulators that AE Supply has entered into a non-binding letter of intent with an exclusivity provision to sell its Springdale, Chambersburg, Gans and Hunlock gas facilities, along with the company's interest in the Bath hydroelectric facility.
According to the 8-K, FirstEnergy expects a purchase price for the assets of $885 million, including more than $300 million in debt that would be assumed by the buyer. FirstEnergy also revealed it had secured a new $6.9 billion credit facility, replacing $7.2 billion in debt set to expire in the first quarter of 2019, according to SNL.
In its filing, the company also said it continues to explore "all alternatives for the remaining generation assets at (FirstEnergy Supply) and AE Supply, including, but not limited to, legislative efforts to convert generation from competitive operations to a regulated or regulated-like construct."
In November, FirstEnergy said it would work with American Electric Power's Ohio utility to push for the state's power markets to be re-regulated. The two utilities previously won support from state regulators for struggling coal and nuclear generation, but federal regulators subsequently blocked the deals, leading to talk of plant sales and re-regulation.
FirstEnergy President and CEO Chuck Jones said during a conference call with analysts and journalists last month that the company wants to "convert competitive generation to a regulated or regulated-light construct in Ohio, while seeking a solution for nuclear units in Ohio and Pennsylvania that recognizes the environmental benefits of these established baseload-generating resources."
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