Ohio utility FirstEnergy shows a 2Q turnaround

Firm blamed for outage gets plants back on line

July 29, 2004|By BLOOMBERG NEWS

AKRON, Ohio - FirstEnergy Corp., the fourth-largest U.S. utility owner, reported yesterday a second-quarter profit of $204 million, thanks in part to a damaged nuclear power plant in Ohio returning to service.

Per-share income was 62 cents, compared with a loss of $57.9 million, or 20 cents a share, in the second quarter last year. Sales rose 10 percent to $3.15 billion, from $2.85 billion.

Chief executive Anthony J. Alexander accepted tighter scrutiny of the Davis-Besse nuclear power station in Oak Harbor, Ohio, so it could open in March after a two-year shutdown.

Alexander also settled shareholder lawsuits over the shutdown, and handled financial restatements and the company's role in a record North American blackout last year, all at a second-quarter cost of $10.5 million.

"This is a different company with its nuclear plants running. ... They had more power to sell and sold it on the spot market at higher prices," said Barry M. Abramson, who helps manage $28 billion, including 400,000 FirstEnergy shares, at Gabelli Asset Management in Rye, N.Y.

"Also, the nuclear-outage cost they had borne for the past seven or eight quarters was not there," Abramson said.

Excluding the legal settlements and a loss on the sale of a partial stake in an oil and natural-gas drilling company, profit was 67 cents a share, First- Energy said. That was 3 cents higher than the average estimate from nine analysts surveyed by Thomson Financial.

Electricity sales rose 11 percent to $2.65 billion, increasing profit from the segment by $50 million from a year earlier as output and average wholesale prices rose about 15 percent, the company said.

Power production rose 21 percent as the Davis-Besse and other nuclear plants that were idled during last year's second quarter resumed operations. Nuclear power output doubled, Chief Financial Officer Richard H. Marsh said in a conference call with analysts and investors.

Shares of FirstEnergy rose 28 cents to close at $38.20 on the New York Stock Exchange. The stock has climbed 8.5 percent this year.

The second-quarter loss last year resulted from $210.8 million in one-time expenses, including $93.5 million that New Jersey regulators refused to pass on to customers, $68.2 million in losses from discontinued operations, $37.2 million for repairs at Davis-Besse and power purchases to replace its output.

Lapses by FirstEnergy, including failure to trim trees under high-voltage lines, helped trigger the Aug. 14 blackout that knocked out power in Detroit, New York, Toronto and other cities at a cost of as much as $10 billion, a U.S.-Canadian task force concluded in April. FirstEnergy said other weaknesses in the power system contributed to the failure.

FirstEnergy's utilities supply power in Ohio, Pennsylvania and New Jersey.

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