By John Stang
FirstEnergy Corp.’s finances improved with the 2018 bankruptcy filing of subsidiary FirstEnergy Solutions (FES), but the proceeding still haunts the parent corporation.
This week, FirstEnergy Corp. reported $981 million in full-year 2018 earnings on a generally accepted accounting principles (GAAP) basis, on $11.3 billion in revenue. That equated to $1.99 per basic and diluted share.
The latest numbers compare to roughly $1.7 billion in losses in 2017, or $3.88 per share, on $10.9 billion in revenue.
For the fourth quarter, GAAP earnings landed at $128 million, $0.25 per basic and diluted share, on revenue of $2.7 billion. The numbers are a significant turnaround from a $2.5 billion GAAP loss in fourth-quarter 2017, $5.62 per basic and diluted share, on the same revenue.
FirstEnergy Corp. owns 10 power companies and is in the process of splitting from nuclear-focused FirstEnergy Solutions.
“Our 2018 results benefited from weather, solid execution of our growth strategy in the transmission and distribution businesses, and modest load growth in all three of our distribution customer classes,” FirstEnergy Corp. President and CEO Chuck Jones said Thursday during the company’s earnings teleconference with financial analysts. “We remain encouraged with the overall trends in our distribution business. Industrial sales have increased steadily for 2.5 years, while most of that growth is driven by the shale gas industry, we’re also seeing sustained improvement in the steel sector.”
FirstEnergy Solutions and two affiliates, FirstEnergy Nuclear Generation (NG) and FirstEnergy Nuclear Operating Co. (FENOC), filed for Chapter 11 bankruptcy protection on March 31 of last year. The parent company is not included in the bankruptcy filing, which led to a court-approved settlement in September.
Also last March, FES announced plans to close three nuclear power plants in Ohio and Pennsylvania in 2020 and 2021.
FirstEnergy Corp.’s most recent filing with the U.S. Securities and Exchange Commission said First Energy’s Solutions creditors might seek payments from companies owing money to the subsidiary. “We can provide no assurance that any such claims, if asserted, will be resolved in accordance with the FE Bankruptcy settlement agreement or a manner that is satisfactory to FirstEnergy,” the filing said.
It added: “Management of FirstEnergy has been and may continue to be required to spend a significant amount of time and effort dealing with the FES Bankruptcy instead of focusing on FirstEnergy’s business operations, which could have an adverse impact on our ability to execute our business plan and operations. Additionally, FirstEnergy’s relationship with its employees, suppliers, customers and other parties may be adversely impacted by negative or confusing publicity related to the FES Bankruptcy or otherwise and FirstEnergy’s operations could be materially and adversely affected. The FES Bankruptcy also may make it more difficult to retain, attract or replace management and other key personnel.”
In January, the Cleveland Plain Dealer reported the U.S. Department of Justice and the Ohio and Pennsylvania attorneys general filed a brief in federal bankruptcy court that voiced concerns about how FirstEnergy is setting up deals with its creditors, and called for federal and the state participation in those talks. The brief also voiced worries about FES possibly trying to dodge responsibility for environmental cleanup at its nuclear sites in Ohio and Pennsylvania, the newspaper reported.
“The upcoming restructuring plan approval process will play out before the bankruptcy court in the coming months. We expect that these environmental concerns will be appropriately considered,” FirstEnergy spokeswoman Jennifer Young told the Plain Dealer.
