has some dim news for investors.
The Ohio utility, largely blamed for last year's record blackout, is fielding new questions from federal investigators. The company said on Monday that the
Securities and Exchange Commission
has asked for "information and documents" related to the extended outage of its Davis-Besse Nuclear Power Station. It continues to describe the SEC probe, originally launched in September, as informal in nature.
FirstEnergy actually received the SEC's letter on Thursday -- the same day it announced a major reorganization of its nuclear power division. The company is now in the first stage of a three-step process that is intended to improve the performance of the nuclear department.
"Ultimately, when the new organization is fully operational in mid-August, our company will operate more efficiently and effectively and continue the progress we have already made toward improving the performance at each of our nuclear plants," Gary Leidich, president of the nuclear division, said last week. "In creating this new organization, our goal was to put the right people with the right skills in the right jobs at all levels throughout the fleet."
The restructuring comes three months after FirstEnergy finally restarted its Davis-Besse power plant and began running it at full throttle. The plant had remained idle for two years as the company worked to address a potentially serious health threat. Reactor coolant, which is meant to protect against a devastating leak, had eaten nearly all the way through a vessel lid at Davis-Besse before the company first detected a problem in 2002.
First Energy originally tried, but failed, to win approval to restart the plant late last year. Merrill Lynch analyst Steve Fleishman cited "operational issues and declines in safety culture results" for the continued outage at the time. He also estimated that the ongoing delays were costing FirstEnergy 3 cents a share every month.
The plant just became fully operational again in early April.
"This is the first time the plant has operated at 100% in about two years," FirstEnergy announced then. "The performance of the generating equipment
is nearly flawless, indicating plant equipment is in good condition and ready to support safe, reliable operations."
The company's stock, up 9 cents to $37.49 on Monday, has jumped from the $35 level it saw during last December's delays.
Fleishman, for one, was recommending the stock even during the setbacks. He explained that the "core story" behind FirstEnergy -- including a possible earnings jump two years down the road -- remained intact.
FirstEnergy itself celebrated its recent progress when announcing first-quarter results last month.
"With the restart of Davis-Besse behind us and what we believe to be a strong case for the approval of our Ohio Rate Stabilization Plan," CEO Anthony Alexander stated, "we're better positioned to achieve continued success in 2004 and in the years ahead."
FirstEnergy officially filed a petition this month seeking permission from Ohio regulators to recover costs for "record high" fuel prices and to defer expenses associated with distribution reliability improvements. The company has already secured approval for other parts of a new rate plan.