FirstEnergy Solutions has tentative restructuring agreement, hopes to emerge from bankruptcy this fall

January 23, 2019

FirstEnergy Solutions has tentative restructuring agreement, hopes to emerge from bankruptcy this fall

CLEVELAND, Ohio -- FirstEnergy Solutions announced today that it has reached a “restructuring support agreement” with its creditors, and assuming the deal wins federal bankruptcy court approval, the company plans to emerge from bankruptcy protection in September or October.

But its new life as a debt-free power generating company would be short, FES said, unless it wins “sufficient legislative support and meaningful market reforms” to support its nuclear and coal-burning power plants.

FES wants state lawmakers to create a customer-paid subsidy for its nuclear power plants and several months ago hired a lobbying team to convince Ohio lawmakers that the Perry and Davis-Besse nuclear plants are essential to the state’s economy and “grid critical.”

Previously, parent company FirstEnergy tried and failed to convince lawmakers to create customer fees to support the company’s nuclear plants. Regional wholesale grid manager PJM Interconnection said the company’s nuclear plants were not critically needed. New gas turbine power plants and wind farms are adding generation capacity to the grid.

Still, a state bailout might be more feasible this year. Following his election as Speaker of the Ohio House earlier this month, Perry County Republican Larry Householder said he would create a standing legislative subcommittee on “energy generation.” Previously, proposed bills to support FE’s reactors never got out of committees in either the House or Senate.

The company also has previously appealed directly to the Trump administration for an order declaring that its nuclear fleet, as well as reactors owned by other companies, are essential for national security.

In its announcement of a tentative agreement with creditors, FES also noted that it had ended its deal to sell its retail customer accounts to Constellation New Energy, a subsidiary of the Exelon Corp., for $140 million.

The restructuring agreement, filed with the court Wednesday, includes a provision that creditors with unsecured claims will have a choice between receiving cash or newly issued equity (stock) in the re-organized company.

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