47.39 0.00 (0.00%)
After hours: 5:09PM EDT
|Bid||47.48 x 3000|
|Ask||47.78 x 1100|
|Day's Range||47.26 - 48.15|
|52 Week Range||35.33 - 48.27|
|Beta (3Y Monthly)||0.25|
|PE Ratio (TTM)||102.58|
|Forward Dividend & Yield||1.52 (3.16%)|
|1y Target Est||N/A|
Today we'll look at FirstEnergy Corp. (NYSE:FE) and reflect on its potential as an investment. To be precise, we'll...
(Bloomberg Opinion) -- An entity dubbing itself “Ohioans For Energy Security” has a warning for the good people of the Buckeye State:The Chinese government is quietly invading our American electric grid; intertwining themselves financially in our energy infrastructure.Before we get into the details of the one-minute ad in which a suitably ominous voice intones those words over much footage of President Xi Jinping, some context: Ohio recently passed legislation to subsidize struggling nuclear and coal-fired power plants, while also weakening incentives for renewable power and energy efficiency. The law benefits several incumbent power companies, especially FirstEnergy Solutions Corp., the bankrupt merchant-generation arm of utility FirstEnergy Corp. In response, opponents are busy gathering signatures for a petition to put a referendum aimed at scrapping the law on the November 2020 ballot.The ad warns Ohioans about such people approaching them to sign. And while the ad doesn’t go on to say this, I think I am duty-bound to point out that those clipboard carriers will not necessarily be sporting identifying markers like Chinese-flag lapel pins or tee-shirts proclaiming “XI LOVES YOU!”As my Bloomberg News colleague Will Wade reports, Carlo LoParo, a spokesperson for OFES, explained that state-controlled Industrial and Commercial Bank of China Ltd. has loaned money to several natural-gas-fired power projects in Ohio. Therefore, as those plants gain market share, so Beijing could gain undue influence over the state’s power system.Having rejected “compelling,” I’m struggling to find a word that adequately captures the class of logic on display there. Suffice it to say that loans made to power plants by a bank, state-owned or otherwise, do not actually grant that bank or its shareholders ownership of said plants, let alone influence over the grid they supply. Finance and power-market oversight just doesn’t work that way.LoParo runs a local public relations firm and previously worked on behalf of a group funded by FirstEnergy Solutions that promulgated the bailout legislation(1). He says the ad was “produced in a way to get your attention,” and I can only agree with him on that. When asked how exactly a bank loan would translate to undue influence over the grid, things got a little fuzzier, and he said we just don’t know the terms of the financing. Not knowing would seem like a good reason to hold off airing inflammatory insinuations — especially as loans don’t grant equity-like control — but maybe that’s just me. I also asked LoParo how OFES feels about Industrial and Commercial Bank of China’s role as a lender to none other than FirstEnergy itself. An amended agreement from last October attached to the parent company’s last 10-K filing with the Securities and Exchange Commission lists the Chinese bank as part of a 23-strong syndicate providing a $2.5 billion credit line to FirstEnergy and several of its subsidiaries.Here’s the thing: That also doesn’t give ICBC any control of FirstEnergy’s operations in Ohio’s power market. But by the comically tortured logic of the OFES ad, surely having a Chinese bank provide credit to the actual owner of the grid presents a similarly sinister challenge? LoParo actually said he would “prefer” FirstEnergy not to take such funding. (A spokesperson told me the company isn’t associated with OFES and doesn’t plan on changing its lending banks.)Indeed, in response to a broader question, he said he would prefer any public or quasi-public Ohio infrastructure project not to take funding from banks controlled by foreign governments. That sounds like a great way to increase the cost of just about everything for Ohioans. One wonders if OFES plans on also going after the federal government over the small issue of who owns all those U.S. Treasuries. As an abattoir of reason, the ad at least comports with the spirit of this bailout. Consider representative William Seitz, a co-sponsor of the law, who declared years ago that when it comes to renewable energy, Ohio’s legislature wouldn’t continue its “march up state mandate mountain.” But now that the mountain happens to be made of coal and uranium, he has scrabbled up with gusto.In its vilification of sinister outside forces, the ad displays a certain despicable cunning. It recasts local energy supply as being about other, national hot-button issues promulgated by President Donald Trump, who carried the state in 2016. We have seen this already, of course, not least in Energy Secretary Rick Perry’s attempt to force through subsidies for coal and nuclear plants on national-security grounds. The Chinese link, tenuous as it is, stokes fear and attempts to connect the prior decade’s decline in manufacturing employment — not confined to Ohio by any means — to the job losses that result from unprofitable old power plants closing. This use of labor issues is an extension of Trump’s pledge to coal miners and seems likely to be weaponized more and more as our energy system changes. Faced with implacable forces of falling costs for newer technologies and rising concern about climate change, rallying support for struggling incumbents on the basis of protecting jobs can be a potent populist tactic.On this front, there is a grim irony to be found in the fact that FirstEnergy Solutions’ emergence from chapter 11 has been delayed due to a dispute with unions about honoring existing collective bargaining agreements. Just as Trump’s love for coal miners has done little to revive their sector, the Ohio state legislature’s subsidies for struggling older plants represent a losing strategy (except for the asset owners). Plus, like OFES’s seeming preference for financial autarky, such subsidies raise costs for everyone, including manufacturers. If folks are worried about interference in Ohio’s grid, they should forget Beijing and start with Columbus.With assistance from Margaret Newkirk(1) He told Wade he has had no interaction with that group on this campaign.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Thanks in no small measure to Vanguard founder Jack Bogle, it's easy buy a low cost index fund, which should provide...
FirstEnergy Solutions Corp. announced Friday that it would be shutting down its coal-powered plant in Beaver County ahead of schedule. The Bruce Mansfield Power Plant will be shut down on Nov. 7 of this year, FirstEnergy said in a press release. The plant, which is located in Shippingport, was originally set to be deactivated on June 1, 2021.
Luminus Management was founded in 2002 by Paul Segal, who was the fund’s Management’s President and Portfolio Manager until 2011, when Jonathan Dan Barrett took over the positions. Jonathan Barrett graduated in Accounting from University of Witwatersrand. He started off working in real estate investment, and later he held a position of Director of Merger […]
Evergy's (EVRG) Q2 earnings are lower than expected due to unfavorable weather. The company reiterates its 2019 earnings per share guidance.
Duke Energy (DUK) posts better-than-expected results in the second quarter of 2019. Both the metrics also increase on a year-over-year basis.
Sempra Energy's (SRE) earnings and revenues miss estimates in second-quarter 2019. However, the top line increases on a year-over-year basis.
Edison International (EIX) reports mixed second-quarter 2019 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same.
FirstEnergy is working on a deal that will see Pennsylvania’s infamous Three Mile Island dismantled and sold.
(Bloomberg Opinion) -- Representative William Seitz declared several years ago the Ohio State Legislature was not prepared to continue its “march up state mandate mountain.” He was voicing opposition to renewable and energy efficiency standards he had described as Stalinist, which, even with the healing power of time, comes across as a tad overwrought.Guess what, though: It turns out Seitz isn’t against mandate mountains altogether. It’s just a question of which mountain he chooses to climb.Seitz co-sponsored House Bill 6, which passed Ohio’s august body and was swiftly signed by Governor Mike DeWine on Tuesday. Among other things, the bill will provide subsidies to nuclear power plants and two old coal-fired plants while weakening the state’s alternative-energy portfolio standard and energy-efficiency benchmarks. In short, it delivers substantial blows to the Stalinist scourge of encouraging wind and solar power and more efficient use of electricity in general, while providing a handout to struggling conventional generators.And struggling they are. The Davis-Basse and Perry nuclear plants, both on the shore of Lake Erie, are at risk of shutting down within a couple of years without support, according to their bankrupt owner, FirstEnergy Solutions. According to BloombergNEF’s model, the two plants tend to be loss-making and are projected to be $161 million in the red this year. So the support from HB6, worth up to $150 million a year from 2021 through 2027, looks very handy.The same goes for the two coal-fired plants – one of which is in Indiana – run by the Ohio Valley Electric Corporation. OVEC is co-owned by a number of power companies including FirstEnergy Corp., AES Corp. and American Electric Power Co. Inc. These two plants, constructed originally to power uranium enrichment for the Atomic Energy Commission, first switched on 64 years ago and their modeled margins look anything but sprightly.The new law’s language doesn’t make it easy to work out how big the subsidy to OVEC’s plants will be. However, Timothy Fox of ClearView Energy Partners LLC, a D.C.-based analysis firm, estimates it adds up to about $60 million a year between 2020 and 2030 – which compares quite nicely to the average annual $53 million loss from the two plants between 2012 and 2019, as modeled by BloombergNEF.FirstEnergy, headquartered in Akron, is a clear beneficiary of the law. Having made the spectacularly mistimed acquisition of coal-heavy Allegheny Energy Inc. in early 2011, FirstEnergy saw the economics of generation upended by flat-lining power demand, cheap shale gas and encroaching renewable energy, pushing its merchant-generation business, FirstEnergy Solutions, into bankruptcy. The Ohio Public Utility Commission has tried to help out with various measures, including my personal favorite, the “Distribution Modernization Rider,” which levied a fixed charge on the good ratepayers of Ohio under the rubric of spiffing up the grid – without actually requiring FirstEnergy to allocate the money to that. The state’s supreme court eventually overturned it, saying “something cannot be an incentive if it does not direct the utility toward a particular desired outcome,” which is tough to argue with, let’s face it.The new law has had an impact already: Moody’s Investors Service just upgraded the relatively low credit ratings of four of FirstEnergy’s utility subsidiaries.Its effects won’t end there, though. In drawing money away from renewable energy and efficiency mandates and directing it toward mandates for nuclear and coal plants, HB6 is like the inverse of renewable portfolio standards, using subsidies to extend the life of old technologies rather than encourage new ones. It’s possible to argue that, as a zero-carbon-emissions source of power, it makes sense to subsidize nuclear. But doing that in tandem with measures discouraging energy efficiency and new zero-carbon technologies (where, unlike with nuclear, costs are falling) and subsidize coal plants from the Eisenhower era rather shreds that line of reasoning.Instead, Ohio appears to be prioritizing both corporate interests and local economic and employment issues. As with towns left bereft by the closure of coal mines, so with power plants further down the supply chain shuttering. With any far-reaching technological disruption – especially one linked to the broad threat of climate change – there is an important role for public policy in alleviating the negative impact on communities dependent on the old paradigm. Yet Ohio’s approach is from the King Canute school of trying to hold back the tide. In the process, it will socialize corporate losses and pollution while stymieing incentives for new projects and energy businesses.Moreover, it’s an extreme example of a broader trend in the U.S. electricity sector; namely the erosion of wholesale power markets in favor of a panoply of directives that override price signals. “No one is speaking about the implications [of the law] for PJM,” says Fox, referring to the regional power market of which Ohio is a part. The more non-energy-related burdens are placed on power pricing, the tougher it is for those markets to function properly. Consider Energy Secretary Rick Perry’s attempts to subsidize nuclear and coal-fired plants on the spurious grounds of grid stability and national security While this might read as an argument against renewable portfolio standards, it isn’t. Remember, those are in place in lieu of a more transparent price signal to address the externalities of fossil fuels, such as a carbon tax. The latter could actually help nuclear power plants but would crush the tottering coal industry and the power plants it supplies. Which is why Ohio’s supposed market purists denouncing subsidized wind and solar power prefer instead to simply craft their own subsidies, swapping a vision of sunlit uplands for a mountain of coal.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Shares of PG&E are jumping after the power producer reached a settlement to cover the majority of the claims from the 2017 and 2018 wildfires in California. Yahoo Finance's Jared Blikre joins Brian Sozzi on 'The Ticker' to discuss.