Akron-based FirstEnergy Corp. said yesterday that its first-quarter earnings fell 20 percent because of continuing costs of repairing the Davis-Besse nuclear power plant, buying replacement electricity, and customers who shopped elsewhere for power.
The company's chief executive, Anthony Alexander, said he hopes a pending rate plan is approved soon by state regulators, because it would improve FirstEnergy's earnings by 12 cents a share for the next nine months of the year.
Overall, the parent of Toledo Edison said it expects to meet its 2004 earnings projections of $2.70 to $2.85 per share and continue to reduce its debt by $1.3 billion this year.
The utility reported a profit of $174 million, or 53 cents a share, for the quarter, down from $218.5 million, or 74 cents a share, for the same period a year ago. Revenues fell to $3.18 billion from $3.22 billion a year earlier.
Nevertheless, in a conference call to Wall Street analysts, company officials expressed optimism that it is turning things around, beginning with the March 8 restart of its Davis-Besse plant near Oak Harbor. The power plant had
been out of service for two years due to a corroded reactor chamber cover.
Costs to replace power from Davis-Besse and related expenses totaled $65 million, which cut into profits by $38.3 million, or 12 cents a share, in the quarter, the company said. FirstEnergy supplies power to 4.4 million homes and businesses in Ohio, Pennsylvania, and New Jersey.
"With Davis-Besse's return to service, continued debt reduction, and improved operational performance, we believe that we'll be in a strong position to regain our investment-grade rating for unsecured holding company debt from Standard & Poor's later this year," said Richard Marsh, the firm's chief financial officer.
Mr. Alexander, the CEO, said FirstEnergy is about to upgrade its computer systems in the Ohio and Pennsylvania control centers to avoid similar problems that led to the nation's biggest-ever blackout in August. Key causes of the Aug. 14 outage that knocked out power to about 50 million people in the United States and Canada were inadequate tree trimming by FirstEnergy and a control-room computer malfunction, a U.S.-Canadian task force determined.
FirstEnergy has been cutting down trees near its lines throughout its territory, and the computer upgrades are supposed to let the company communicate and coordinate with regional groups monitoring the nation's electric grid.