Tuesday , May 28 2024

FirstEnergy Considering Name Change to WorstEnergy

FirstEnergy may or may not have been the cause of the last week’s largest blackout in U.S. history – its officials continue to insist on their innocence, pointing accusatory fingers toward the east – but it doesn’t look good for the company regardless.

The Cleveland Plain Dealer reports FirstEnergy is nearing a perfect storm of problems:

    Last week’s disastrous power failure sucker-punched FirstEnergy Corp.’s ailing finances at a time when the Akron utility is under mounting pressure to reduce its debt and tackle costly operational problems.

    Now, bad publicity and potential regulatory and legal issues surrounding the blackout could make it even harder for the company to climb back onto stronger financial ground.

    ….Primarily, FirstEnergy has been under mounting pressure to shed some of its debt, which is at least $13 billion, much of it taken on with the 2001 purchase of New Jersey utility GPU Inc.

    ….Also straining FirstEnergy’s finances has been the cost of the unexpected idling of its Davis-Besse nuclear power plant, shut 18 months ago after workers found a corrosion hole in the reactor’s lid. To date, the idling of Davis-Besse has cost FirstEnergy a total of $500 million and costs at least another $25 million each month it remains down.

    Last month, instead of allowing an increase, regulators in New Jersey ordered the company to lower rates, in part because of a big outage over the July 4 weekend. FirstEnergy promised some $60 million in upgrades.

    Early this month, a federal judge ruled the company violated the Clean Air Act by not installing pollution-control equipment at an Ohio coal plant. And the company stunned Wall Street by announcing it lost money in the second quarter, would restate earnings for the last five quarters and would reduce projected earnings through 2005 because of recommended accounting changes.

    If the utility is found to be a key contributor to the blackout, it might have to pay an additional $375 million to upgrade Ohio transmission lines

Coincidentally, the earnings restatement came yesterday:

    FirstEnergy Corp. restated earnings for the past three years late yesterday, resulting in lowered net income for the most recent quarter and for 2002.

    The restatement lowered the company’s first-quarter earnings by $22.5 million, or 8 cents a share, to $218.5 million, or 74 cents a share.

    For 2002, the restatement shaved 12 percent, or 26 cents per share, from 2002 net income. The company now says it earned $552.8 million, or $1.89 a share.

    ….In a filing with Securities and Exchange Commission, the company said it faces five separate shareholder lawsuits alleging it violated securities laws in connection with the restated earnings. The plaintiffs are seeking class-action status, the company said. [Cleveland.com]

Ooh, class-action suits as well. When it rains, break out the ark.

And the hits just keep on coming – according to Cleveland’s WKYC TV:

    FirstEnergy warned government officials around Northeast Ohio that rolling blackouts could be initiated Wednesday afternoon and possibly Thursday. The blackout could last for up to two hours.

    According to WKYC-TV, FirstEnergy says the measure will help prevent another massive blackout.

    The company suggests that businesses and households conserve as much electricity as possible. FirstEnergy urges reducing the temperature setting on air conditioners and avoiding use of other energy-sucking devices.

Excuse me, I wasn’t paying attention – did they just say something about an energy company sucking?

An AP report from this afternoon on U.S. Energy Secretary Spencer Abraham’s wanderings between Columbus, Ohio and Detroit regarding the blackout investigation doesn’t sound good for FirstEnergy either:

    Experts studying the outage have pointed to a series of small failures on the northeast Ohio power grid owned by FirstEnergy Corp. that may have combined to unleash a huge wave of destructive electricity.

    ….FirstEnergy has been criticized for power outages in the past. Earlier this year, the Cleveland suburb of Solon lodged a complaint with the Ohio Public Utilities Commission over outages in May and June that were blamed on outdated equipment and inefficient tree-trimming.

    City officials filed the complaint after three meetings between the utility and city council failed to end the outages, said David Kovass, an attorney representing Solon.

    “We heard reports of tree branches falling on the lines,” Kovass said. “They had surges and dimming. On Memorial Day weekend, they had power outages that would last four to five hours at a time.”

    In an appearance with Abraham Wednesday, Gov. Bob Taft told reporters he insisted in talks Monday on full cooperation from Akron-based FirstEnergy in federal and state investigations.

    “I expect FirstEnergy to do everything in their power to assess the liability of their systems to identify the possible cause of the failure and work with federal and state authorities,” Taft said.

First Energy’s finger may be pointing east, but Gov. Taft’s finger is clearly pointing north.

And more:

    Four otherwise innocuous events occurred Thursday afternoon on the FirstEnergy grid. They include unexplained voltage swings that the company said brought down a coal-fired generator, a pair of power line outages — one caused by a tree — and the failure of an automated warning system.

    “In order to have a big problem, you have to have three or four bad things happen all at the same time,” said Hoff Stauffer, a power transmission consultant with Cambridge Energy Research Associates.

    None of the individual glitches would be enough to kill a city’s lights on a normal day, and the grid is designed to work around one or two failures, but not more, Stauffer said.

    The big questions that need answering, Stauffer said, are the reasons behind intra-grid failures that allowed the blackout to spread like a computer virus from FirstEnergy’s lines around Cleveland into the neighboring utility network in Michigan.

    After darkening a large swath from Detroit to Lansing, the plague spread into Ontario, darkening Toronto, and then south into New York state, where it finally toppled the grid that feeds New York City.

    Amid such debacles, many things worked as they should have, Stauffer said. Power networks that lock into FirstEnergy — including those operated by PJM Interconnection and American Electric Power — did seal themselves off, saving Boston, Philadelphia, Pittsburgh, Columbus, Ohio, and other cities from the same fate.

    “Why didn’t Michigan separate itself from FirstEnergy, like PJM and AEP?” Stauffer asked. “If they’d have done that Detroit would have been all right. Ontario would’ve been all right. And New York would’ve been all right.”

Doesn’t sound like much doubt about where the fun began, does it?

This all places an interesting spin on the FirstEnergy ad campaign with Indians’ broadcasts and elsewhere, where linemen hang out in customer’s homes being ever so helpful. It now appears had the employees been back at the plant where they belong instead of putting together toy trains and assisting women with nail polish, they might have averted this disaster. Oh, but it’s just a metaphor you say.

About Eric Olsen

Career media professional and serial entrepreneur Eric Olsen flung himself into the paranormal world in 2012, creating the America's Most Haunted brand and co-authoring the award-winning America's Most Haunted book, published by Berkley/Penguin in Sept, 2014. Olsen is co-host of the nationally syndicated broadcast and Internet radio talk show After Hours AM; his entertaining and informative America's Most Haunted website and social media outlets are must-reads: Twitter@amhaunted, Facebook.com/amhaunted, Pinterest America's Most Haunted. Olsen is also guitarist/singer for popular and wildly eclectic Cleveland cover band The Props.

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