AKRON - FirstEnergy Corp., parent of Toledo Edison, said yesterday that a change in Ohio's tax laws caused its second-quarter profit to drop 13 percent from a year ago.
But a strong first half prompted the firm to boost is profit forecast for the year to $2.85 to $3 a share from $2.70 to $2.85.
The utility said its quarterly profit was $178 million, or 54 cents a share, down from $204 million, or 62 cents a share. Sales dropped 3.3 percent to $2.9 billion because the company changed the way it accounts for wholesale transactions.
The company said its profit would have been $233 million, or 71 cents a share, but the tax-law change wiped out expected benefits and a gain for a rate settlement in New Jersey. The average profit prediction of 10 analysts surveyed by Thomson Financial was 68 cents a share.
Company spokesman Keith Hancock said replacement of Ohio's corporate income tax, which allowed deferred benefits, with a commercial activity tax similar to a gross receipts tax meant a one-time adjustment.
The issue, he said, is not related to the utility's pending request to be allowed to charge about 0.25 cent more in hourly electricity costs starting Jan. 1.
The company sought the increase because of higher taxes, even though it has a rate plan approved by state regulators that otherwise would freeze rates from 2006 through 2008. Regulators granted some exceptions, such as taxes, and allowed the firm to collect $3 billion from customers for a fee equivalent to one it charges now to repay some debts.
The revised annual profit forecast was prompted by reduced operating expenses, lower pension and other benefits costs, and having Davis-Besse nuclear power plant and other generators operating at peak level, the spokesman said.
Also contributing, he said, are the huge amounts of electricity the firm has been delivering because of the demand for air conditioning in the recent steamy weather.
The utility set a record Monday when it delivered 13,467 megawatts to its customers in three states, beating the 13,299 megawatts of August, 2002.