FirstEnergy Solutions failure appears inevitable says FE CEO
CLEVELAND, Ohio — FirstEnergy’s top executive Charles “Chuck” Jones confirmed today what analysts have been whispering for months, that time is running out for the company’s power plant subsidiary, FirstEnergy Solutions.
Jones told analysts during a public teleconference that FirstEnergy Solutions has been operating independently since early last year and that FES will no longer have access to FirstEnergy’s internal bank by the end of March, cutting the last ties with the parent company.
But before March 31, Jones said he expected FirstEnergy Solutions to borrow up to $100 million from the internal bank. Those borrowed funds would make FirstEnergy a creditor if the subsidiary files for Chapter 11 bankruptcy protection.
“While I cannot speak for the unregulated business, I would be shocked if they go beyond the end of March without some type of filing,” Jones said.
FirstEnergy Solutions has a payment to bond holders of about $100 million due in early April and speculation has been that the company will seek Chapter 11 bankruptcy protection before that. Moody’s has lowered the subsidiary’s rating from below investment grade to likely to default.
At that point of a Chapter 11 filing, the fate of the company’s power plants, including Perry nuclear plant in Lake County east of Cleveland and Davis-Besse in Ottawa County near Toledo will most likely be up to a federal bankruptcy judge.
The company has lobbied both Ohio lawmakers and the Trump administration without success to intervene and create special subsidies to keep the nuclear plants alive.
The company has argued that the plants are essential for grid stability — and “resiliency,” or the ability to bounce back from failures or attacks — but that the regional wholesale markets overseen by PJM Interconnection are set up to favor cheaper gas power plants and wind farms.
“I am personally disappointed that these endeavors haven’t resulted in any meaningful legislative or regulatory support, given the importance of these plants to grid resiliency, reliable and affordable power and the region’s economy,” Jones said.