8-KMaterial AgreementsOther Events

FIRSTENERGY CORP 8-K Report, Material Agreement (Aug 29, 2005)

Filed August 29, 2005For Securities:FE

Summary

On August 26, 2005, FirstEnergy Generation Corp. (FGCO), a subsidiary of FirstEnergy Corp., entered into a significant agreement with Bechtel Power Corporation. This agreement mandates Bechtel to engineer, procure, and construct essential air quality control systems at the W.H. Sammis Plant. The primary objective of these systems is to reduce sulfur dioxide emissions, a critical step towards complying with federal environmental regulations. This initiative is a direct result of a Consent Decree approved on July 11, 2005, between Ohio Edison Company (OE) and Pennsylvania Power Company (Penn) with the U.S. Environmental Protection Agency (EPA), the U.S. Department of Justice, and several states. The agreement with Bechtel represents an estimated expenditure of approximately $600 million for the period of 2005 through 2009, covering installation at the W.H. Sammis Plant, with potential extensions to other FGCO or affiliate-owned plants. Investors should note the substantial capital commitment and the company's ongoing efforts to meet stringent environmental standards.

Key Highlights

  • 1FirstEnergy Generation Corp. (FGCO) signed a material agreement with Bechtel Power Corporation for the engineering, procurement, and construction of air quality control systems.
  • 2The project targets sulfur dioxide emission reduction at the W.H. Sammis Plant.
  • 3This agreement stems from a Consent Decree approved in July 2005 concerning Clean Air Act litigation.
  • 4The estimated total expenditure for the W.H. Sammis Plant project is approximately $600 million, spanning from 2005 to 2009.
  • 5The scope of the Bechtel agreement may be expanded to include similar systems at other FGCO or affiliate-owned generating plants.
  • 6The fee structure with Bechtel includes provisions for cost reimbursement plus a fee, with the fee contingent on schedule and performance.
  • 7FGCO is a wholly owned subsidiary of FirstEnergy Solutions Corp. (FES), which in turn is a subsidiary of FirstEnergy Corp.

Frequently Asked Questions

The primary purpose of the agreement is for Bechtel to engineer, procure, and construct air quality control systems designed to reduce sulfur dioxide emissions at FirstEnergy's W.H. Sammis Plant. This is a critical step in complying with environmental regulations, specifically those arising from a Clean Air Act Consent Decree.

The estimated expenditure for installing these air quality control systems at the W.H. Sammis Plant is approximately $600 million, with the costs expected to be incurred between 2005 and 2009. This figure includes subcontracting expenses.

Yes, the agreement with Bechtel includes the possibility of extension to cover the installation of similar air quality control systems at other generating plants owned by FGCO or its affiliates. This indicates a broader strategy for environmental compliance across the company's assets.

FGCO leases, operates, and maintains the W.H. Sammis Plant under a Master Facility Lease. While OE, Penn, CEI, and TE own the plant, they are not direct parties to the agreement with Bechtel. FGCO is a subsidiary of FirstEnergy Solutions Corp., which is ultimately owned by FirstEnergy Corp.