8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 27, 2016
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Commission | | Registrant; State of Incorporation; | | I.R.S. Employer |
File Number | | Address; and Telephone Number | | Identification No. |
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333-21011 | | FIRSTENERGY CORP. | | 34-1843785 |
| | (An Ohio Corporation) | | |
| | 76 South Main Street | | |
| | Akron, OH 44308 | | |
| | Telephone (800)736-3402 | | |
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000-53742 | | FIRSTENERGY SOLUTIONS CORP. | | 31-1560186 |
| | (An Ohio Corporation) | | |
| | c/o FirstEnergy Corp. | | |
| | 76 South Main Street | | |
| | Akron, OH 44308 | | |
| | Telephone (800)736-3402 | | |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 8.01 Other Events
On April 27, 2016, the Federal Energy Regulatory Commission (FERC) issued an Order (FERC Order) in Docket No. EL16-34-000 that, among other things, rescinded its affiliate restrictions waiver as to that certain Unit Power Agreement (ESP IV PPA) dated as of April 1, 2016, by and between FirstEnergy Solutions Corp. (FES), and its affiliates Ohio Edison Company (OE), The Cleveland Electric Illuminating Company (CEI), and The Toledo Edison Company (TE and together with OE and CEI, the Ohio Companies), each of which are wholly owned subsidiaries of FirstEnergy Corp. (FirstEnergy). The ESP IV PPA was entered into immediately following the March 31, 2016 Opinion and Order of the Public Utilities Commission of Ohio (PUCO) adopting and approving, with modifications, the Ohio Companies’ stipulated Electric Security Plan IV (ESP IV), in Case No. 14-1297-EL-SSO. The affiliate waiver was previously granted by FERC in 2008, which authorized, among other things, FES to conduct certain transactions with the Ohio Companies.
The FERC Order requires FES to submit the ESP IV PPA to FERC for its review and approval prior to transacting with the Ohio Companies under the ESP IV PPA. Additionally, FES must submit a compliance filing that modifies its existing market-based rate tariff to clarify that the affiliate sales restrictions will apply to the ESP IV PPA, and not to any other transactions between FES and the Ohio Companies. Finally, FES must submit a notice of change in status to FERC addressing the ESP IV PPA and the associated non-bypassable charge (Rider RRS) and explain whether this change in status affects any other waivers FERC previously granted with respect to FERC's affiliate restrictions.
FirstEnergy, FES and the Ohio Companies are disappointed by the FERC Order and continue to believe that the ESP IV PPA benefits the customers of the Ohio Companies by protecting them against rising retail prices and volatility in future years. Furthermore, we believe the ongoing operation of the facilities subject to the ESP IV PPA, which include the 2,220 megawatt (MW) W. H. Sammis Plant (Sammis) and the 908 MW Davis-Besse Nuclear Power Station (Davis-Besse), will benefit the state of Ohio through the promotion of economic development, retaining thousands of jobs in Ohio, preserving millions of dollars in tax revenues for Ohio communities, and promoting manufacturing and other industries in Ohio. The ESP IV PPA also helps avoid up to $4.1 billion in additional charges to the customers of the Ohio Companies for new transmission projects.
In light of the FERC Order, FES will control and will be offering in Davis-Besse and Sammis for purposes of the May 2016 PJM capacity auction. FirstEnergy, FES and the Ohio Companies are evaluating their options, which could include seeking a rehearing of the FERC Order, as well as filing the ESP IV PPA for FERC’s review and approval. In addition, FirstEnergy will consider both short-term and long-term legislative and regulatory solutions in Ohio to preserve the benefits associated with the ESP IV PPA for the customers of the Ohio Companies.
Forward-Looking Statements: This Form 8-K includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” "forecast," "target," "will," "intend," “believe,” "project," “estimate," "plan" and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, which may include the following: the speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular; the ability to experience growth in the Regulated Distribution and Regulated Transmission segments and to successfully implement our sales strategy for the Competitive Energy Services segment; the accomplishment of our regulatory and operational goals in connection with our transmission investment plan, including, but not limited to, the proposed transmission asset transfer to Mid-Atlantic Interstate Transmission, LLC, and the effectiveness of our strategy to reflect a more regulated business profile; changes in assumptions regarding economic conditions within our territories, assessment of the reliability of our transmission system, or the availability of capital or other resources supporting identified transmission investment opportunities; the impact of the regulatory process on the matters at the federal level and in the various states in which we do business including, but not limited to, matters related to rates and the Electric Security Plan IV (ESP IV) in Ohio, specifically the order issued by the Federal Energy Regulatory Commission (FERC) that rescinds the waiver regarding the Electric Security Plan IV Purchase Power Agreement (ESP IV PPA) by and between FirstEnergy Solutions Corp. and The Cleveland Electric Illuminating Company, Ohio Edison Company, and The Toledo Edison Company, and other future complaints or challenges that could impact the ESP IV and the ESP IV PPA; the impact of the federal regulatory process on FERC-regulated entities and transactions, in particular FERC regulation of wholesale energy and capacity markets, including PJM Interconnection, L.L.C. (PJM) markets and FERC-jurisdictional wholesale transactions; FERC regulation of cost-of-service rates, including FERC Opinion No. 531's revised Return on Equity methodology for FERC-jurisdictional wholesale generation and transmission utility service; and FERC’s compliance and enforcement activity, including compliance and enforcement activity related to North American Electric Reliability Corporation’s mandatory reliability standards; the uncertainties of various cost recovery and cost allocation issues resulting from American Transmission Systems, Incorporated's realignment into PJM; economic or weather conditions affecting future sales and margins such as a polar vortex or other significant weather events, and all associated regulatory events or actions; changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil prices, and their availability and impact on margins and asset valuations; the continued ability of our regulated utilities to recover their costs; costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices; other legislative and regulatory changes, and revised environmental requirements, including, but not limited to, the effects of the United States Environmental Protection Agency's Clean Power Plan, Coal Combustion Residuals regulations, Cross-State Air Pollution Rule and Mercury and Air Toxics Standards programs, including our estimated costs of compliance, Clean Water Act (CWA) waste water effluent limitations for power plants, and CWA 316(b) water intake regulation; the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including New Source Review litigation, or potential regulatory initiatives or rulemakings (including that such initiatives or rulemakings could result in our decision to deactivate or idle certain generating units); the uncertainties associated with the deactivation of certain older regulated and competitive fossil units, including the impact on vendor commitments and as it relates to the reliability of the transmission grid, the timing thereof; the impact of other future changes to the operational status or availability of our generating units and any capacity performance charges associated with unit unavailability; adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to, the revocation or non-renewal of necessary licenses, approvals or operating permits by the Nuclear Regulatory Commission or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant); issues arising from the indications of cracking in the shield building at Davis-Besse; the risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments; the impact of labor disruptions by our unionized workforce; replacement power costs being higher than anticipated or not fully hedged; the ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates; changes in customers' demand for power, including, but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates; the ability to accomplish or realize anticipated benefits from strategic and financial goals, including, but not limited to, the ability to continue to reduce costs and to successfully execute our financial plans designed to improve our credit metrics and strengthen our balance sheet through, among other actions, our cash flow improvement plan and other proposed capital raising initiatives; our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins; changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our Nuclear Decommissioning Trusts, pension trusts and other trust funds, and cause us and/or our subsidiaries to make additional contributions sooner, or in amounts
that are larger than currently anticipated; the impact of changes to material accounting policies; the ability to access the public securities and other capital and credit markets in accordance with our financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries; actions that may be taken by credit rating agencies that could negatively affect us and/or our subsidiaries' access to financing, increase the costs thereof, and increase requirements to post additional collateral to support outstanding commodity positions, letters of credit and other financial guarantees; changes in national and regional economic conditions affecting us, our subsidiaries and/or our major industrial and commercial customers, and other counterparties with which we do business, including fuel suppliers; the impact of any changes in tax laws or regulations or adverse tax audit results or rulings; issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business; the risks associated with cyber-attacks and other disruptions to our information technology system that may compromise our generation, transmission and/or distribution services and data security breaches of sensitive data, intellectual property and proprietary or personally identifiable information regarding our business, employees, shareholders, customers, suppliers, business partners and other individuals in our data centers and on our networks; and the risks and other factors discussed from time to time in our United States Securities and Exchange Commission (SEC) filings, and other similar factors.
Dividends declared from time to time on FirstEnergy Corp.'s common stock during any period may in the aggregate vary from prior periods due to circumstances considered by FirstEnergy Corp.'s Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.
The foregoing factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements and risks that are included in our filings with the SEC, including but not limited to the most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly disclaims any current intention to update, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.
April 28, 2016
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| FIRSTENERGY CORP. |
| Registrant |
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| FIRSTENERGY SOLUTIONS CORP. |
| Registrant |
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By: | /s/ K. Jon Taylor |
| K. Jon Taylor Vice President, Controller and Chief Accounting Officer |