FES Worth Less than its Debt


On an investor call this week, FirstEnergy indicated that the company experienced a loss of $6.2 billion in 2016 on sales of $14.6 billion.  CEO Chuck Jones discussed the possibility of bankruptcy for FirstEnergy Solution(FES), the generation-owning subsidiary of the company. The company took a large write-down of its Ohio and Pennsylvania generating assets.  FES is now valued at $1.6 billion. It’s total long-term debt is $3 billion. The CEO said FirstEnergy aims to exit the generating business by 2018.  It will sell or close the plants, he indicated. Meanwhile, the company is seeking legislation that would provide very large customer-paid subsidies for its two Ohio nuclear plants.  Obviously, such subsidy mandates would make the plants more valuable to a purchaser.  Just as obviously, the subsidies would punish ratepayers with no benefit.  2/23/2017