AKRON — FirstEnergy Corp., the owner of Toledo Edison, is undertaking a “strategic review” of its competitive generation business that could lead to selling off as many as 13 power plants, including its three nuclear plants, where nearly 3,000 people work, its chief executive officer said Friday.
“The fact is, competitive generation is weighing down the rest of the company,” Charles “Chuck” Jones, FirstEnergy’s CEO and president, said in a conference call with analysts. “We do not think competitive generation is a good fit.”
While the Akron utility said it showed a profit for its third quarter, FirstEnergy said it has lost $381 million on revenue of $11.2 billion or the first nine months of 2016 and expects to end the year with a loss as well.
The “strategic options” will be implemented over the next 12 to 18 months, Mr. Jones said. The company intends to act quickly, he said.
It’s possible that FirstEnergy could sell off all, or most, of its coal, nuclear, hydro, gas and oil power plants that make up its FirstEnergy Solutions unit, Mr. Jones said in an interview afterward.
That would be a total of 13 power plants; six powered by natural gas; four fossil-fuel coal plants, including Sammis and Bruce Mansfield; and its Davis-Besse, Perry, and Beaver Valley nuclear plants. A part interest in a hydroelectric plant could also be sold off. Some units could be closed if buyers are not found, Mr. Jones said.
Those facilities employ 2,967 people, according to the utility.
“It’s still too early to tell where this will end,” Mr. Jones said. He said it does not appear to make sense to spin off FirstEnergy Solutions as a separate company.
“We are at a crossroads,” Jones said. “We have to make some tough decisions.”
The utility needs to act quickly, in large part because FirstEnergy Solutions has $515 million in debt coming due in 2018, he said. Without a financial restructuring, the affiliated company will be unable to pay its obligations.
One option is to move its power plants in Ohio, West Virginia, and Pennsylvania from a competitive market into a regulated entity, Mr. Jones said.
After 12 to 18 months, FirstEnergy will be a fully regulated utility company, he said. That means returning to a business where government, not market forces, control utility prices.
A top goal will be to keep as many of its power plants operating as it can, Mr. Jones said.
It’s possible that the FirstEnergy Solutions competitive generation unit could file for Chapter 11 bankruptcy protection and reorganize.
It’s “way too early on how we approach that,” Mr. Jones said.
He noted that FirstEnergy’s strategic review follows Duke Energy’s sale of all of its Ohio power plant assets. In addition, American Electric Power, which provides electricity to parts of northwest Ohio, is looking at getting out of the competitive generation market in Ohio as well.
Ohio policy makers need to look at this and make decisions regarding electric utilities in the state, Mr. Jones said. About 40 percent of the electricity used in Ohio comes from other states, he said, and policy makers need to ask if they want that percentage to increase.
First Published November 5, 2016, 4:00 a.m.
