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FirstEnergy Generation Files For Bankruptcy Just Before Midnight

FirstEnergy Solutions, the competitive subsidiary of FirstEnergy, along with all FES subsidiaries and FirstEnergy Nuclear Operating Company, made a voluntary filing under Chapter 11 of the United States Bankruptcy Code in order to facilitate an orderly financial restructuring just before midnight on Saturday, March 31.

This decision was made by FES' board of directors. The filing does not involve FirstEnergy or its distribution, transmission, regulated generation and Allegheny Energy Supply subsidiaries.

FirstEnergy Solutions earlier filed a deactivation notice with the PJM Interconnection for 3 nuclear power plants in Ohio and Pennsylvania, including the Beaver Valley Plant in Shippingport.

They then asked the U.S. Department of Energy for an emergency order directing the PJM Interconnection to immediately begin negotiations to secure the long-term capacity of certain nuclear and coal-fired plants in the region citing fuel security and diversity issues.

The PJM Interconnection was quoted by the Washington Examiner as saying, “This is not an issue of reliability. There is no immediate emergency. Diversity of the fuel supply is important, but the PJM system has adequate power supplies and healthy reserves in operation today, and resources are more diverse than they have ever been. Nothing we have seen to date indicates that an emergency would result from the generator retirements."

"FirstEnergy and its other subsidiaries are not part of this Chapter 11 filing," said Charles E. Jones, president and chief executive officer of FirstEnergy. "The six million customers of our regulated utilities will continue to receive the same reliable service, while our regulated generation facilities will continue normal operations, with the same longstanding commitment to safety and the environment.

"FirstEnergy will remain focused on creating long-term value for its customers, employees and shareholders," Jones said. "Becoming a fully regulated utility company should give FirstEnergy a stronger balance sheet, solid cash flows and more predictable earnings. Simply put, we will be better positioned to deliver on the tremendous opportunities for customer-focused growth," he said.

FirstEnergy's management team is being advised by its Restructuring Working Group, which has been engaged in substantive negotiations with a steering committee of FES noteholders. These discussions are expected to continue over the next several weeks.

Additionally, the parties have joined an agreement filed with the U.S. Bankruptcy Court, Northern District of Ohio, for approval to advance an efficient discovery and settlement process. As of March 31, 2018, FES, all of its subsidiaries, and FENOC will be deconsolidated from FirstEnergy's financial reporting.

Earlier this year, FirstEnergy announced plans for more than $10 billion in capital investments in its regulated businesses through 2021.

This includes the company's 10 electric distribution utilities, which serve six million customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York and together form one of the nation's largest investor-owned electric systems, as well as its transmission operations, which include approximately 24,000 miles of lines and two regional transmission operation centers.

FirstEnergy's 3,779 megawatt (MW) regulated electric generation fleet includes four plants in West Virginia, Virginia and New Jersey. These are the 1,098 MW coal-fired Fort Martin Plant in Maidsville, W.Va.; the 1,984 MW coal-fired Harrison Plant in Haywood, W.Va.; 487 MW of regulated generation at the Bath County Hydro facility in Warm Springs, Va.; and 210 MW of hydro generation at the Yards Creek facility in Blairstown, N.J.

In late 2016, FirstEnergy announced that it would explore a variety of strategic alternatives for its commodity-exposed generation business, with a goal of exiting the business by mid-2018.

In the past year, the company's competitive subsidiaries have sold assets, announced plans to deactivate generating units, and worked for federal and state support for generating assets.

At this time, the company's AE Supply subsidiary owns two competitive generation assets: the 1,300 MW Pleasants Plant in Willow Island, W.Va., and 713 MW of competitive generation at Bath County Hydro.

The company has announced plans to sell or deactivate Pleasants by the end of 2018, and the previously announced sale of Bath is on course to close in the first half of the year.

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