- According to The (Cleveland) Plain Dealer, ratings agency Standard & Poor's has downgraded ratings of FirstEnergy Solutions bonds over fears the company is nearing bankruptcy.
- At the same time, the outlook on parent company FirstEnergy Corp. was upgraded from negative to stable on the belief that it will sell some of its subsidiary's assets.
- FirstEnergy has struggled to keep afloat as cheap natural gas and renewables have hurt the bottom line of older coal and nuclear plants owned by its competitive generation unit.
FirstEnergy CEO Chuck Jones told analysts and reporters at the end of last month that he will be engaged in discussions with creditors to discuss the future of FirstEnergy Solutions (FES).
The parent company last month reported second quarter GAAP earnings of $174 million or $0.39/basic share.
Jones said FirstEnergy and FES each have a "fully engaged team of financial and legal advisers to ensure that both entities are well prepared, as FirstEnergy exits the commodity-exposed generation business."
FirstEnergy Solutions was also reportedly involved in lobbying President Trump to use emergency powers under the Federal Power Act to launch a moratorium on new coal closures. The White House declined to take that step.
FES, the competitive subsidiary of FirstEnergy, has been flirting with bankruptcy for months. In April, a judge determined shutting down plants to comply with the Mercury and Air Toxic Standards rule would not let the company off the hook for railway transportation contracts it had signed.
FirstEnergy has been fighting in Ohio to collect additional revenues to support the plants. An initial proposal included power purchase agreements that covered the Davis-Besse Nuclear Power Station in Oak Harbor, the W.H. Sammis coal-fired plant in Stratton, and a portion of the output of Ohio Valley Electric Corporation (OVEC) units owned by FirstEnergy Solutions. In total, the PPA covered 3,300 MW.
The Federal Energy Regulatory Commission subsequently blocked those agreements, leading FirstEnergy to file a separate proposal for regulatory support that did not include PPAs, but instead added monthly surcharges to customer bills as part of its rate plan.
Earlier this month, the Ohio Public Utilities Commission rejected challenges to the $204 million annual subsidy it ultimately approved.