- FirstEnergy said last week the company is considering selling more than a dozen power plants which are struggling, including several nuclear plants, and expects to be finished in the next year to 18 months, according to its third quarter earnings call.
- At the same time, the company said it will assist fellow utility American Electric Power (AEP) in its efforts to re-regulate, or partially re-regulate, the Ohio market in hopes of making the plants profitable.
- FirstEnergy reported earnings of $380 million in the third quarter, but for the full year, the company could lose more than $1 per share. The utility has lost $381 million in the first nine months of 2016.
FirstEnergy posted unexpectedly strong earnings last week, but the company is a long way from a true turnaround of its fortunes. The real news to come out of its quarterly update was the commitment to assist AEP with in its efforts to re-regulate Ohio power markets, and that it is considering the sale of 13 power plants.
AEP Ohio began work on regulation efforts earlier this year, but in the fall, indicated it would take a combined effort to push through such a change. The two utilities both won support for struggling coal and nuclear generation earlier this year when the Public Utilities Commission of Ohio unanimously approved the power purchase agreements they sought. But federal regulators subsequently blocked the deals, leading to talk of plant sales and re-regulation.
Following the election, FirstEnergy President and CEO Chuck Jones said the company plans to begin legislative and regulatory efforts "designed to preserve our remaining generation assets."
"We are looking 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," Jones said during a conference call with analysts and journalists.
The sales would take place in the next 12 to 18 months, Jones said. And efforts to re-regulate the Ohio markets will begin immediately.
"The fact is competitive generation is weighing down the rest of our company," he said.
Jones said said the strong third quarter earnings "exceeded our expectations" due to the impact of record summer temperatures on our distribution business, as well as solid business operations. But the company expects to lose 90 cents to $1.30 per basic share for the full year, reflecting asset impairment and plant exit costs from Q2.