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FirstEnergy has powerful past

January 24, 2011|By JULIE E. GREENE | julieg@herald-mail.com
  • Power lines cross over Air View Road in Hagerstown.
By Joe Crocetta/Staff Photographer

With one major regulatory hurdle standing between the merger of FirstEnergy and local energy supplier Allegheny Energy, just what is FirstEnergy?

The Akron, Ohio-based company that could buy out Allegheny by the end of March has more diverse power-generating sources and more than three times as many employees as Allegheny. It serves 4.5 million customers in Ohio, Pennsylvania, New Jersey and New York, according to company information found at www.firstenergycorp.com, and in U.S. Securities and Exchange Commission filings.

The company also has been made it into some major energy news stories in recent years, including the largest power blackout in North American history on Aug. 14, 2003, and a record fine by the U.S. Nuclear Regulatory Commission after corrosion ate a football-sized hole into the reactor vessel head at one of its nuclear power plants, according to government documents.

Getting bigger

FirstEnergy was formed as the result of a 1997 merger of Ohio Edison Co. and its subsidiary, Pennsylvania Power Co., with Centerior Energy Corp. and its subsidiaries, Cleveland Electric Illuminating Co. and Toledo Edison Co., according to a company history at www.firstenergycorp.com.

The company merged again in 2001, with New Jersey-based GPU Inc., which provided power in Pennsylvania and New Jersey through Metropolitan Edison Co., Pennsylvania Electric Co. and Jersey Central Power & Light Co., the website states.

As of October, FirstEnergy’s total generating capacity was almost 14,000 megawatts, according to the website.

Almost 4,000 megawatts, or 29 percent of that capacity, comes from FirstEnergy’s three nuclear plants — two in Ohio and one near Pittsburgh — according to the website and FirstEnergy spokeswoman Ellen Raines.

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FirstEnergy has no current plans to build another nuclear power plant, Raines said.

Other sources for the utility’s power capacity include coal operations (54 percent of its capacity); natural gas or oil (8 percent); hydro (4 percent); and contracts with third-party wind suppliers (3 percent).

Coal and more

FirstEnergy and Allegheny officials said the production diversity that will result from the merger will help mitigate Allegheny’s risk as the Environmental Protection Agency looks into enacting new regulations for coal production.

About 95 percent of Allegheny’s generation comes from coal, according to the utility’s 2009 annual report.

The EPA held several hearings last year about a proposal to regulate the disposal and management of coal ash from coal-fired power plants, according to an Aug. 19, 2010, EPA news release.

“With less dependence on coal, your investment will be less exposed to the risk of carbon legislation or onerous environmental regulations” as a result of a merger with FirstEnergy, states a March 16, 2010, letter to stockholders from Allegheny Energy Chairman, President and Chief Executive Officer Paul J. Evanson. A copy of the letter is included in Allegheny’s 2009 annual report.

Generation of electricity in Ohio, Pennsylvania and New Jersey is unregulated, enabling FirstEnergy to sell electricity at competitive rates to individual customers, including residences, Raines said.

FirstEnergy Solutions Corp. is the company subsidiary that sells power.

In the news

FirstEnergy has had some unfavorable headlines in the past decade, including those related to the North American outage and the hole at the nuclear facility.

On March 5, 2002, maintenance workers discovered corrosion resulted in a football-sized hole in the reactor vessel head of the Davis-Besse nuclear power plant in Oak Harbor, Ohio, according to a U.S. Nuclear Regulatory Commission fact sheet on the incident.

The commission kept the plant shut down until March 2004, and imposed its largest fine, more than $5 million, against FirstEnergy for actions that led to the damage, according to the NRC fact sheet.

FirstEnergy paid another $28 million in fines through a settlement with the U.S. Department of Justice, according to the NRC fact sheet.

Seventeen months after the hole was found, a blackout affected an area with an estimated 50 million people and left some parts of the United States without power for up to four days, according to an international report on the August 2003 blackout.

The U.S.-Canada Power System Outage Task Force’s final report, issued by Natural Resources Canada and the U.S. Department of Energy, cited four groups of causes for the blackout.

They included FirstEnergy’s failure to adequately manage tree growth near transmission lines, and the utility not recognizing or understanding the deteriorating condition of its system, according to the report.

FirstEnergy, the Midwest Independent Transmission System Operator and the Pennsylvania-New Jersey-Maryland Interconnection Regional Transmission Organization were directed to complete remedial actions by June 30, 2004, to correct deficiencies that contributed to the blackout, the report states.

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