By Rory D. Sweeney
FirstEnergy has reached what CEO Charles Jones called a “big milestone” in its process of unwinding from FirstEnergy Solutions, the bankrupt merchant generator that was until recently a subsidiary.
The FES bankruptcy settlement is now “definitive, comprehensive” and includes FES, its subsidiaries, FirstEnergy Nuclear Operating Co. and a committee for unsecured creditors, Jones said Wednesday. It builds on agreements FirstEnergy announced in April while reporting its performance for the first quarter. (See FirstEnergy Announces Mixed Earnings, Plan for FES Bankruptcy.)
“This definitive, comprehensive settlement defines and quantifies all of FirstEnergy’s obligations with respect to FES and FENOC,” Jones said.
The Aug. 1 announcement came as part of FirstEnergy’s review of its second-quarter performance, which exceeded both revenue and earnings expectations. The company reported quarterly adjusted earnings of 62 cents/share, which beat expectations by 9 cents, and revenue of $2.7 billion, which was $130 million over projections. Revenue increased $100 million compared to the same quarter last year, while earnings were up 18 cents/share year over year.
The settlement credits FES for nine months of its shared services costs with FirstEnergy and entitles the former subsidiary to continue purchasing the services through June 2020. FirstEnergy also agreed to increase its cash payment and cover costs for some FES employee benefits, which represent $218.5 million in additional costs incurred by FirstEnergy. FES is expected to file the agreement by the end of August as part of its bankruptcy case and to receive approval in September.
While FirstEnergy no longer has any merchant generation assets, Jones maintained his strong advocacy for financial supports for nuclear and coal units, saying that “the market policies in our country have severe flaws” and that he will “continue to be a loud advocate” for changes. Shuttering large-scale plants “is not going to be a good thing for the 6 million customers that I look out for,” he said. Jones said he remains “hopeful” that the U.S. Department of Energy “will eventually step forward to do something to stabilize” those plants.