The basic story goes like this: Despite a big profit from the cold weather in January & February, company mismanagement frittered it away. The Plain Dealer provides a good summary of FirstEnergy's disappointing performance.
FirstEnergy lost two large power plants during January's arctic-like weather -- the 2,490-megawatt coal-burning Bruce Mansfield plant in Shippingport, Pennsylvania, and right next door, one of its 900-megawatt nuclear reactors at its Beaver Valley power plant.
And then the company found it could not buy natural gas for its 545-megawatt gas turbine plant in Lorain. The shutdowns and inability to buy gas forced the company to buy power on the regional grid -- just as wholesale market prices soared.
Power purchases during the 10 days of sub-zero January weather knocked down earnings by 13 cents per share, Leila Vespoli, chief legal officer and executive vice president of markets, told financial analysts during a public teleconference Tuesday and now available on the company's website.
She said power purchases over the entire quarter reduced earnings by a total of 23 cents per share.
Then extra charges levied by PJM Interconnection, the manager of the grid in Ohio and 12 other states, nicked another 10 cents per share out of gross profits, she said, though the company is planning on recovering about half of that from commercial and industrial customers.
FirstEnergy's competitive retail business continues to drag it down, despite an effort to reposition all its eggs in the regulated basket. It wasn't too long ago that FirstEnergy was all giddy over beating AEP on all the consumer "shopping" going on in the state of Ohio. Tony the Trickster bragged through previous earnings calls over the number of customers signed up. Yup, that quantity over quality race to the finish was really helpful over the long term. When FirstEnergy goes under, Tony can tell his investors that at least he beat AEP.
FirstEnergy now brags that it has filed a rate increase in West Virginia. The company requested an increase of approximately $96 million, or 9.3%, and an allowed ROE of 11%, an increase of .5% over current return. Never going to happen. FirstEnergy neglected to mention the looming General Investigation, or any other number of regulatory venues where it finds itself in hot water, and analysts were just too polite to bring up all that nastiness.
FirstEnergy also brags about its new scheme to "invest" in its transmission system, after years of neglect while chasing big, new build projects. Just like every other shiny object in FirstEnergy history, management's concentration on transmission blinds it to reality.
And Leila still hasn't learned to pronounce the word exacerbate.
Higher prices exasperated the earnings impact of our power purchases.