Company to take $43 million charge as a result
Dec. 20, 2002 — FirstEnergy Corp. announced Friday that it will retain ownership of its four coal-fired power plants located along Lake Erie in Ohio after reviewing bids it received from parties interested in purchasing the plants.
Bids for the 376-MW Ashtabula Plant in Ashtabula, 648-MW Bay Shore Plant in Oregon, 1,262-MW Eastlake Plant in Eastlake, and 249-MW Lake Shore Plant in Cleveland were due to FirstEnergy by December 2, 2002.
Because the company has decided to retain ownership, it has taken an after-tax charge of $43 million, or $0.15 per share of common stock — $33 million in non-cash depreciation charges that were not recorded while the plants were pending sale, and $10 million in transaction-related fees.
“Based on the bids we received, retaining the plants to serve our customers makes more sense than selling them,” said FirstEnergy President and Chief Operating Officer Anthony J. Alexander.
While details of the bids remain confidential, the offers fell short of the $1.5 billion agreement that was previously reached to sell the plants to Minneapolis, Minnesota-based NRG Energy, Inc. That agreement, announced November 29, 2001, was canceled by FirstEnergy on August 8, 2002, because of the anticipatory breach of certain obligations in the agreement by NRG’s affiliate, NRG Able Acquisition LLC. FirstEnergy has reserved the right to pursue legal action against NRG, its NRG Able Acquisition LLC affiliate, and its parent Xcel Energy.
FirstEnergy also said that its recently updated 2003 earnings guidance is unaffected by the decision to retain ownership of the plants.
Supplemental information is included in a December 20, 2002, letter addressed to the investment community that is posted on the Investor Information home page at FirstEnergy’s Internet site: www.firstenergycorp.com/ir .
FirstEnergy is a registered public utility holding company headquartered in Akron, Ohio. Its electric utility subsidiaries comprise the nation’s fourth largest investor-owned electric system, based on serving 4.3 million customers. Its subsidiaries and affiliates are involved with the generation, transmission and distribution of electricity; exploration and production of oil and natural gas; transmission and marketing of natural gas; and energy management and other energy-related services.