By John Stang
FirstEnergy Corp. plans to pay $225 million in cash this year to the creditors of soon-to-be-former subsidiary FirstEnergy Solutions.
FirstEnergy Chief Financial Officer Steve Strah mentioned that cash payment in a Friday morning teleconference with analysts to discuss the Akron, Ohio-based corporation’s 2019 annual and fourth quarter financial picture. He did not elaborate on that matter, and the company’s nuclear power operations were not discussed further during the teleconference.
FirstEnergy Solutions is on the brink of emerging from bankruptcy to soon become an independent, renamed company that will be owned by its creditors.
For the fourth quarter of 2019, FirstEnergy Corp. reported a net loss of $111 million, minus $0.20 per share, on $2.7 billion in revenue. Management blamed mild temperatures for the loss of electricity-related income.
By comparison, FirstEnergy posted $128 million in net income in the fourth quarter of 2018 on $2.7 billion in revenue, translating to $0.25 per share, according to a press release.
For the year, FirstEnergy reported $908 million in net. Income — $1.70 per share — on $11 billion in revenue. By comparison, the company in 2018 tallied net income of $981 million — $1.99 per share — on $11.3 billion in revenue.
Management’s earnings guidance for 2020, on a generally accepted accounting principles basis, is $900 million to $1.41 billion, or $1.66 to $2.60 per share. Operating earnings are projected at $2.40 to $2.60 per share.
Subsidiaries FirstEnergy Solutions and FirstEnergy Nuclear Operating Co. declared Chapter 11 bankruptcy in March 2018 and have received approval for their restructuring plan from the U.S. Bankruptcy Court for the Northern District of Ohio.
The companies will re-emerge from bankruptcy as a separate entity from FirstEnergy Corp., under the Energy Harbor banner.
FirstEnergy Solutions owns three nuclear power plants: Davis-Besse and Perry in Ohio and Beaver Valley in Pennsylvania. The company announced plans last year to close all three by October 2021 unless the states stepped in with financial aid. The Ohio Legislature passed a $150 million annual nuclear bailout in 2019, after which FirstEnergy Solutions said it would not retire its two plants in that state. The law survived an effort to place a repeal referendum on the November 2020 state election ballot.
Pennsylvania lawmakers have to date resisted passage of any similar legislation to sustain the Beaver Valley facility.
Last December, the Nuclear Regulatory Commission transferred the licenses for the three reactor sites — containing four reactors — from FES to Energy Harbor.
The agency is still considering the application for a license transfer that is necessary for FirstEnergy Corp. to sell its reactor at the Three Mile Island nuclear power plant in Pennsylvania – the one that partly melted down in 1979 — to EnergySolutions. If the deal goes through, the Salt Lake City-based nuclear services firm would decommission the reactor through a subsidiary, TMI-2 Solutions.
