FirstEnergy
Generation Corp. (FGCO) is a wholly owned subsidiary of FirstEnergy Solutions
Corp. (FES). FES, a wholly owned subsidiary of FirstEnergy Corp., provides
energy-related products and services, and through FGCO, owns or leases and
operates FirstEnergy’s non-nuclear generating facilities.
On
August 26, 2005,
FGCO entered into an agreement with Bechtel Power Corporation (Bechtel),
under
which Bechtel will engineer, procure and construct air quality control systems
for the reduction of sulfur dioxide emissions at the W.H. Sammis Plant
(Agreement). Under the Agreement, work is to be performed as a series of
subprojects corresponding to specified generating units at the W.H. Sammis
Plant.
During
the
development phase of the project, FGCO and Bechtel determined the target
construction cost, project scope (including work to be performed, performance
guarantees and testing protocols) and project schedule, which establishes
guaranteed final completion dates. In connection with those determinations
and
the issuance of a notice to proceed with full construction of the project,
FGCO
and Bechtel entered into an amendment to the Agreement on September 14, 2007
(Amendment). The Amendment does not materially change FirstEnergy's total
estimate of capital expenditures necessary to complete requirements of the
Sammis New Source Review Litigation settlement agreement. Among other things,
the Amendment provides for the following:
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Certain
project equipment vendors will contract directly with
FGCO;
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Bechtel
may
assign certain subcontracts to FGCO in the event the Agreement
is
cancelled;
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Reduction
of
liquidated damages for delay in completing a subproject
caused
by Bechtel in return for their agreement to an expedited construction
schedule;
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Bechtel’s
right to seek an extension of the project schedule if a force majeure
event for unavailability of labor is recognized by the New Source
Review
consent
decree
plaintiffs;
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Additional
financial incentives to Bechtel to reduce overall project costs;
and
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The
clarification or refinement of certain contract
issues.
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The
foregoing
description of the Amendment does not purport to be complete and is qualified
in
its entirety by reference to the complete text of the Amendment.
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 typically contain,
but are not limited to, the terms “anticipate,” “potential,” “expect,”
“believe,” “estimate” and similar words. Actual results may differ materially
due to the speed and nature of increased competition and deregulation in
the
electric utility industry, economic or weather conditions affecting future
sales
and margins, changes in markets for energy services, changing energy and
commodity market prices, replacement power costs being higher than anticipated
or inadequately hedged, the continued ability of FirstEnergy’s regulated
utilities to collect transition and other charges or to recover increased
transmission costs, maintenance costs being higher than anticipated, legislative
and regulatory changes (including revised environmental requirements), and
the
legal and regulatory changes resulting from the implementation of the Energy
Policy Act of 2005 (including, but not limited to, the repeal of the Public
Utility Holding Company Act of 1935), the uncertainty of the timing and amounts
of the capital expenditures needed to, among other things, implement the
Air
Quality Compliance Plan (including that such amounts could be higher than
anticipated) or levels of emission reductions related to the Consent Decree
resolving the New Source Review litigation, adverse regulatory or legal
decisions and outcomes (including, but not limited to, the revocation of
necessary licenses or operating permits and oversight) by the Nuclear Regulatory
Commission (including, but not limited to, the Demand for Information issued
to
FENOC on May 14, 2007) as disclosed in FirstEnergy’s SEC filings, the
timing and outcome of various proceedings before the Public Utilities Commission
of Ohio (including, but not limited to, the distribution rate cases and the
generation supply plan filing for the Ohio Companies and the successful
resolution of the issues remanded to the PUCO by the Ohio Supreme Court
regarding the Rate Stabilization Plan and the Rate Certainty Plan, including
the
deferral of fuel costs) and the Pennsylvania Public Utility Commission
(including Penn’s default service plan filing), the resolution of the Petitions
for Review filed with the Commonwealth Court of Pennsylvania with respect
to the
transition rate plan filing for Met-Ed and Penelec, the continuing availability
and operation of generating units, the ability of generating units to continue
to operate at, or near full capacity, the inability to accomplish or realize
anticipated benefits from strategic goals (including employee workforce
initiatives), the anticipated benefits from voluntary pension plan
contributions, the ability to improve electric commodity margins and to
experience growth in the distribution business, the ability to access the
public
securities and other capital markets and the cost of such capital, the outcome,
cost and other effects of present and potential legal and administrative
proceedings and claims related to the August 14, 2003 regional power
outage, any final adjustment in the purchase price per share under the
accelerated share repurchase program announced March 2, 2007, the risks and
other factors discussed from time to time in the registrants’ SEC filings, and
other similar factors. The registrants expressly disclaim any current
intention to update any forward-looking statements contained herein as a
result
of new information, future events, or otherwise.