FirstEnergy Corp. is quickly moving away from is embrace of unregulated competition, the very business over which it threatened to sue the state in 2008 when lawmakers were debating reforms to utility law.
AKRON, Ohio -- FirstEnergy Corp.'s move toward more predictable profits from its regulated companies continued during the second quarter.
The company on Tuesday reported that it earned a net profit of $64 million, or 16 cents per share, on sales of nearly $3.5 billion during the three months ending June 30.
That compares to a net loss of $164 million, or 39 cents per share, on revenues of more than $3.5 billion in the second quarter of 2013.
"Through the second quarter, our regulated distribution and transmission businesses have produced solid results that are in line with our expectations," said Anthony Alexander, president and CEO, in a statement accompanying the financial report.
"We are making steady progress with our plans to focus on growth through our regulated businesses," he said, adding that the company now expects it will meet its 2014 earnings expectations.
Tuesday's financial report also shows that for the first half of the year the company's net income was $272 million, or 65 cents per share, on sales revenues of nearly $7.7 billion. That compares to a net income of $32 million, or 8 cents per share, on revenues of $7.2 billion in the first six months of 2013.
The second quarter results come less than 24 hours after the company filed a new rate plan with state regulators. And it comes less than a week after a major investment company downgraded the company's stock and advised its clients to sell.
The rate plan, which if approved would not take effect until mid 2016, includes an unusual provision to allow the company's regulated Ohio distribution companies to buy all of the power -- on a cost basis -- generated by two of FirstEnergy's large Ohio-based power plants.
The Illuminating Co., Ohio Edison and Toledo Edison would sign 15-year power purchase agreements to buy all of the power that the Davis-Besse nuclear power plant and the W.H. Sammis power plant generate. Analysts expect that FirstEnergy will be required to upgrade the pollution-control equipment at Sammis to meet new federal emission standards. The company has already spent millions of dollars modernizing Davis-Besse.
The three traditional power companies, which no longer own their own power plants, would then sell that power into wholesale markets, with their customers either paying the difference or reaping the benefit between the cost of the power and whatever the wholesale price at the time of the sale.
The arrangement would insulate FirstEnergy Solutions, the company's unregulated division and owner of its power plants, from the risks of competitive markets, making parent company FirstEnergy Corp. appear a little more like an old-fashioned, regulated utility.
Even before announcing it would seek approval of the unusual rate plan, the company had been moving away from the risks --and unexpectedly poor profits -- of its unregulated side.
Alexander said FirstEnergy has been "taking actions to place our competitive business in a much stronger position by reducing our exposure to weather-sensitive retail loads, maintaining a more open position to take advantage of market upside opportunities, and reducing or delaying some capital expenditures at our generating fleet."
Last week, UBS financial services advised its clients to sell their FirstEnergy stock after concluding that its share price could tumble to as low as $26.
Alexander and his team of top executives will take questions from analysts at a 1 p.m. Tuesday teleconference available live on the company's website. Click here to listen to the call, which will be recorded as well for later listening.