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FirstEnergy Solutions seeking court approval to sell its customer contracts

August 27, 2018

FirstEnergy Solutions seeking court approval to sell its customer contracts

CLEVELAND, Ohio -- Entire communities across Ohio and Illinois that signed contracts with FirstEnergy Solutions for power at discounted prices should have a new supplier this fall.

Constellation NewEnergy, an affiliate of Exelon Corp., is on track to become that supplier if Judge Alan Koschik of the United States Bankruptcy Court for the Northern District of Ohio approves a negotiated deal following a Sept. 21 hearing.

The sale, one approved, of FES contracts to Exelon means that 263 Ohio communities and cities, including Akron, Youngstown, Ashland, Aurora, Barberton and Bay Village, Silver Lake, Streetsboro and Stow will automatically become Constellation NewEnergy customers.

FES announced in a filing with the court Friday evening that it had cancelled a tentative Sept. 6 auction for its retail customer contracts after no qualified bidders other than Exelon met a Thursday deadline to submit a bid.

Exelon’s plan to purchase all of the contracts in one deal means that FES will not have to seek the court’s permission to reject or cancel them in bankruptcy court, an exercise that could have taken additional time and left some commercial and industrial customers opposing the move in court while looking for new suppliers.

Exelon was among six potential bidders that began talking to FES in March about purchasing the retail contracts. FES filed for bankruptcy protection on March 31 and in July asked Koschik to approve a complicated bid process.

At the same time, Exelon announced in an SEC filing and during a financial conference with analysts that it had signed a tentative deal to buy the FES customers contracts, including those in government aggregation contracts, for $140 million. 

Because Exelon is buying all of the FES contracts at once, the company is expected to honor the terms of all of the contracts, including rates, which appear to be among the lowest in Ohio, when compared with rates for individual customers offered on the state’s Apples to Apples website.

FES has about 1 million retail customers in Ohio and five other deregulated states which allow independent power suppliers to compete for customers with traditional utilities.

FES filed the details of is proposed Exelon deal with the court, under seal.  The plan was to test the deal with the early September auction open to other bidders.

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