Summary
FirstEnergy Corp. (FE) disclosed in an August 13, 2010, 8-K filing that its subsidiary, FirstEnergy Generation Corp., plans operational changes at several smaller coal-fired generating units. These changes are a direct response to the ongoing weak economic conditions, reduced electricity demand, and significant uncertainty surrounding proposed new federal environmental regulations. The company anticipates these operational changes will lead to an impairment charge of up to $287 million, which could negatively impact its third-quarter 2010 earnings by as much as $0.59 per share. While this impairment charge will reduce reported earnings, management has indicated that no future cash expenditures are expected to be associated with this specific charge. Investors should note that this filing also includes extensive forward-looking statements detailing various risks and uncertainties that could materially affect FirstEnergy's future performance, including regulatory changes, economic conditions, and market dynamics.
Key Highlights
- 1FirstEnergy Generation Corp. plans operational changes at smaller coal-fired generating units (Bay Shore, Eastlake, Lake Shore, Ashtabula Plants).
- 2These changes are driven by a slow economy, lower electricity demand, and uncertainty over new federal environmental regulations.
- 3An impairment charge of up to $287 million is anticipated for the third quarter of 2010.
- 4The impairment charge could reduce third-quarter 2010 earnings per share by up to $0.59.
- 5No future cash expenditures are expected in connection with the impairment charge.
- 6The company issued a press release on August 12, 2010, announcing these plans.