FirstEnergy (NYSE:FE) President and CEO Charles E. Jones said April 27 that contracts for FirstEnergy utilities that were recently approved by the Public Utilities Commission of Ohio (PUCO) should also pass muster with the Federal Energy Regulatory Commission (FERC).
Jones and other FirstEnergy officials discussed various issues during a quarterly earnings call with financial analysts. PUCO approved FirstEnergy’s Electric Security Plan (ESP) with modifications on March 31.
Challenges to the contract arrangement for incumbent power plants, including coal and nuclear, operated by FirstEnergy utilities, have been filed at FERC by parties such as the Electric Power Supply Association (EPSA).
“There is a lot of rhetoric going on,” Jones said. But the power purchase agreements approved by PUCO will have no impact on the PJM Interconnection (PJM) market, Jones said.
The FirstEnergy CEO is also hoping for a quick resolution of the challenges to the Ohio contracts. “I don’t expect that this is going to drag on for a long time,” Jones said.
FirstEnergy officials also told financial analysts that they don’t expect the recent U.S. Supreme Court decision that struck down the Maryland Public Service Commission “contract for differences” will undercut the Ohio contract dispute.
Once FERC rules upon the ESP, FirstEnergy will be able to give analysts a much clearer view of how the FirstEnergy bottom line will be affected, Jones said.
Also during the call, FirstEnergy officials noted that the Mansfield coal plant was offline for maintenance during much of February and March. It was also noted in the company’s quarterly materials that the 908-MW Davis Besse nuclear plant began a scheduled refueling outage on March 26. Two of the units’ our reactor coolant pump motors are being replaced during the outage.
During the call, FirstEnergy officials noted that the company sees itself as more of a regulated utility in the future. “We are a regulated utility” in that most of FirstEnergy assets are regulated, Jones said.
FirstEnergy is replacing decades-old equipment with new equipment that will be covered by long-term warranties and that will benefit the company economically in the long run, Jones said. He was responding to a question on operations and maintenance.
FirstEnergy reported first quarter 2016 operating (non-GAAP) earnings of 80 cents per basic share of common stock. These results exclude the impact of the special items listed below and compare to first quarter 2015 operating (non-GAAP) earnings of 62 cents per basic share of common stock.
On a GAAP basis, the company reported first quarter 2016 net income of $328m, or 78 cents per basic share of common stock (77 cents diluted), on revenue of $3.9bn. In the first quarter of 2015, GAAP net income was $222m, or $53 cents per basic and diluted share of common stock, on revenue of $3.9bn.
The increase in first quarter 2016 operating (non-GAAP) earnings primarily reflect higher commodity margin at the competitive business, the net impact of rate cases resolved in 2015, and increased transmission earnings. These factors were partially offset by the impact of mild temperatures on distribution deliveries and higher net financing costs, the company said.