PUC Denies FirstEnergy Solutions Request To Maintain Lower Level Of Security, Citing Bankruptcy
The Pennsylvania PUC, via Secretarial letter, has denied a request from FirstEnergy Solutions to renew its Electric Generation Supplier financial security at the reduced level of 5% of its most recent four quarters of revenue.
FES had, on March 9, 2018, filed the petition to renew the reduced 5% security level pursuant to the Commission’s Order entered July 24, 2014, at Docket No. M-2013-2393141.
The PUC's Secretarial letter noted, "On April 2, 2018, FES filed notice with the Commission of its, March 31, 2018, voluntary petition in the United States Court for the Northern District of Ohio for relief pursuant to Chapter 11 of Title 11 of the United States Code (Bankruptcy Proceeding). Subsequently, the Moody’s Investors Service (Moody) downgraded FES’s rating outlook from stable to negative."
"The financial security is designed 'to ensure the financial responsibility of the electricity generation supplier and the supply of electricity at retail in accordance with contracts, agreements or arrangements1.' Because of Moody’s downgrade of FES’s rating outlook, we find considerable uncertainty regarding FES’s ability to fulfil [sic] its future annual obligations under Section 2809. In particular, we have concerns regarding FES’s ability to fulfil [sic] its obligations related to gross receipts taxes, Alternate Energy Portfolio Standards (AEPS) and the Commission’s Annual Fee levied on EGSs. Because of these uncertainties, we believe that it is prudent to return FES’s financial security level to 10% of its most recent four quarters of revenue. Therefore, for the reasons stated above, FES’s petition for a bond reduction is hereby denied," the PUC's Secretarial letter said