8-KMaterial Agreements

FIRSTENERGY CORP 8-K Report, Material Agreement (Sep 18, 2007)

Filed September 18, 2007For Securities:FE

Summary

FIRSTENERGY CORP (FE) filed an 8-K on September 18, 2007, to report an amendment to a material definitive agreement. This amendment concerns an engineering, procurement, and construction contract between its subsidiary, FirstEnergy Generation Corp. (FGCO), and Bechtel Power Corporation (Bechtel) for air quality control systems at the W.H. Sammis Plant. The amendment, dated September 14, 2007, clarifies and refines certain aspects of the original agreement from August 2005, aiming to facilitate the project's progression. The key objective of this agreement is to reduce sulfur dioxide emissions at the W.H. Sammis Plant, as part of a settlement for New Source Review litigation. While the amendment introduces several changes to the contractual relationship, including direct vendor contracts with FGCO and adjustments to liquidated damages and financial incentives, it does not materially alter FirstEnergy's overall capital expenditure estimates for this project.

Key Highlights

  • 1Amendment to a material definitive agreement between FGCO (a FirstEnergy subsidiary) and Bechtel Power Corporation.
  • 2The agreement concerns the engineering, procurement, and construction of air quality control systems at the W.H. Sammis Plant to reduce sulfur dioxide emissions.
  • 3The amendment, dated September 14, 2007, aims to clarify and refine contract terms established in the August 2005 agreement.
  • 4Key changes include: direct vendor contracts with FGCO, potential assignment of subcontracts to FGCO, revised liquidated damages for delays, and additional financial incentives for Bechtel.
  • 5Bechtel gains the right to seek schedule extensions due to force majeure events recognized by consent decree plaintiffs.
  • 6The amendment does not materially change FirstEnergy's total estimated capital expenditures for the project.
  • 7The project is part of a settlement for New Source Review litigation, addressing environmental compliance.

Frequently Asked Questions

The primary purpose of the amendment is to clarify and refine the terms of the existing agreement between FirstEnergy Generation Corp. (FGCO) and Bechtel Power Corporation for the installation of air quality control systems at the W.H. Sammis Plant. These systems are intended to reduce sulfur dioxide emissions as part of a litigation settlement.

No, the filing explicitly states that the amendment does not materially change FirstEnergy's total estimate of capital expenditures necessary to complete the requirements of the Sammis New Source Review litigation settlement agreement.

The amendment includes several changes such as allowing certain project equipment vendors to contract directly with FGCO, enabling Bechtel to assign subcontracts to FGCO if the agreement is canceled, reducing liquidated damages for Bechtel-caused delays in exchange for an expedited schedule, and providing additional financial incentives to Bechtel for cost reductions. It also refines certain contract issues and allows Bechtel to seek schedule extensions under specific force majeure conditions.

The main parties are FirstEnergy Generation Corp. (FGCO), a wholly owned subsidiary of FirstEnergy Solutions Corp. (FES), which is itself a subsidiary of FirstEnergy Corp. (FE), and Bechtel Power Corporation.