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Economy and Business


FirstEnergy hurt by Sandy but sunny days may be ahead
Utility says shale oil and gas could provide an industrial boost
by WKSU's MARK URYCKI


Reporter
Mark Urycki
 
FirstEnergy has 10 electric companies
Courtesy of FirstEnergy
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In The Region:
Akron-based FirstEnergy lost money last year. The parent company of Ohio Edison and the Illuminating Company owns electric companies from Toledo to the New Jersey shore. That left it exposed to losses from Hurricane Sandy. But as WKSU's Mark Urycki reports, it also puts the utility in a good position for growth. 
FirstEnergy see a boon in manufacturing

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Revenues for 2012 were down 10 percent, and a $99 million profit in 2011 turned into a $148 million loss last year.

One big factor was a $600 million payment toward its employee pension fund. And in a conference call with reporters and analysts, Executive Vice President Leila Vespoli noted FirstEnergy incurred another $630 million in extra costs for Hurricane Sandy, “including $345 million for capital expenditures incurred while restoring service, as well as $256 million that we propose to recover over a six-year period.”

All of FirstEnergy’s subsidiaries suffered from that storm, but its Jersey Central Power and Light utility took the brunt of it.  Some 10,000 FirstEnergy employees worked on storm restoration in October and November.

Old coal, new nuclear
Before then, the company’s focus was on deactivating seven old coal-fired power plants last year.  It plans to shut down a couple more in 2015. FirstEnergy CEO Tony Alexander says the company has lowered its carbon footprint beyond what anyone expected.

“We’ve done a lot, investing in the nuclear fleet to produce more out of that side of the house and improved significantly and reduced significantly the amount of CO2 (carbon dioxide) that our fleet produces.”

The company is under pressure from stricter environmental rules – especially on the release of mercury and other toxins.

“We all know that there’s no technology today that’s commercially available to address this issue in a major coal-fired facility. So there has to be a transition period.”

Other alternatives
FirstEnergy is selling off its hydro-powered electric generators. A sale planned for 2015 will be moved up to this year so the company can reduce debt. It plans to refinance long-term debt at a time when interest rates are historically low.

Some cold weather helped FirstEnergy boost residential sales in the fourth quarter and for the year residential sales were up 5 percent, back to pre-recession levels.  But company Chief Financial Officer Jim Pierson says that business with its other customers were stagnant. Commercial deliveries were largely flat while industrial deliveries were down 3 percent compared to the fourth quarter 2011.

Manufacturing reborn
While FirstEnergy may have suffered from exposure to Hurricane Sandy, Alexander says it’s operating area is a pretty enviable spot otherwise. 

“I think this area is poised to grow at rates that are potentially far greater than what we’ve seen in the past. The area of Pennsylvania, West Virginia, Ohio basically sits under our service territory. There’s a lot of expectation in terms of a manufacturing renaissance taking advantage of the location for energy.”

And Alexander says if industry picks up, then commercial and residential demands will follow. He says the company has already seen one local impact. FirstEnergy built its new Black River substation in Lorain to support an expansion there by Republic Steel, so that it can manufacture parts for the gas industry.  

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