CLEVELAND — “FirstEnergy has decided to get out of the competitive electricity business, and will sell or close its big coal and nuclear power plants within 18 months unless Ohio and Pennsylvania return to regulating them and setting prices or create a regulation-like structure for them.
‘We are not going to wait on those states to decide what they want to do,’ Chuck Jones, FirstEnergy CEO, told financial analysts Tuesday at the annual financial conference of the Edison Electric Institute, a trade organization.
The problem, he explained, is that FirstEnergy Solutions and Allegheny Energy Supply, the corporation’s unregulated subsidiaries which own the power plants, cannot afford to operate them at today’s power prices.
Gas-fired power plants and wind farms have pushed prices down on regional wholesale markets in which the company’s power plants must compete.
Jones said FirstEnergy Solutions is expected to be in the black for the next two years, but faces issues with coal delivery contracts and debt re-financing that could affect its balance sheet sooner, forcing the subsidiary to sell the plants or even seek bankruptcy protection. FirstEnergy is determined to not allow the subsidiary’s problems to affect the parent company.
Bond rating agencies Moody’s and Standard & Poor’s on Friday downgraded FirstEnergy Solutions. Moody’s also downgraded Allegheny Energy Supply, said Jones. Lower ratings mean future loans will be more expensive.
Neither agency downgraded FirstEnergy itself. But it’s a worry.”
— John Funk, Cleveland Plain Dealer