FirstEnergy Corp. FE recently announced that its subsidiaries — GPU Nuclear, Inc., Metropolitan Edison Company Jersey Central Power & Light Company and Pennsylvania Electric Company — signed a transfer agreement with the EnergySolutions’ subsidiary, TMI-2 Solutions, LLC.
Per the agreement, the company’s Pennsylvania-based Three Mile Island Nuclear Generating Station Unit 2(TMI-2) plant, property, nuclear decommissioning trust fund, plant licenses and responsibility of decommissioning will be transferred to TMI-2 Solutions, LLC. If approved, the expected transaction will be closed in the second half of 2020.
Reasons for the Transfer
As the trend of transition continues in the U.S utility electric industry, many companies are shifting focus to cleaner sources for electricity generation. Considering this factor, FirstEnergy has decided to handover all its responsibilities related to nuclear energy.
The nuclear industry has generally struggled to compete with cheaper sources of generation like natural gas and renewables. Moreover, the TMI-2 has been in a non-operating status, since the Three Mile Island accident in March 1979. The company was liable to ensure adequate funds to decommission this retired nuclear facility under NRC regulations, as GPU Nuclear retained the license for TMI-2. As of Jun 30, 2019, the liabilities related to the facility total approximately $900 million.
In March 2018, the company announced the shutdown of two Ohio-based nuclear power stations — the Perry Nuclear Generating Station and Davis–Besse Nuclear Power Station. The company also closed operations in the Pennsylvania-based Beaver Valley Nuclear power station.
Focus on Lowering Emission
In 2015, the company set a goal to reduce emissions from generating fleet by at least 90% by 2045 from 2005 levels. At the end of December 2018, FirstEnergy achieved 62% reduction in CO2 emission.
Per Energy Information Administration (EIA), energy-related carbon emission in the United States is expected to decline 2.4% in 2019 and another 1.7% in 2020. Other than FirstEnergy, electric utility companies that have increased focus toward cleaner power generation and lower carbon-emission volumes are Xcel Energy Inc XEL, Dominion Energy, Inc D and NRG Energy Inc NRG.
Zacks Rank & Price Performance
FirstEnergy carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of FirstEnergy have rallied 25.5% compared with the industry’s 12.3% rise in the past 12 months.
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