Safety First for FirstEnergy
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| Symbol | Price | Change |
|---|---|---|
| FE | 37.75 | 0.00 |
In an effort to ensure safety and reliability, FirstEnergy Nuclear Operating Company, a unit of FirstEnergy Corporation (NYSE: FE - News), has decided to prepone the replacement of a reactor head at the company's Davis-Besse nuclear power station in Oak Harbor.
This reactor was shut down on February 28 for refueling and maintenance work and is likely to restart operations during July. During the outage period FirstEnergy has modified 24 of 69 control rod nozzles. The modified nozzles will be able to withstand water stress corrosion and cracking.
The existing head was installed in 2004 following the two-year outage that occurred after the plant's old reactor head was damaged due to corrosion. The replacement cost FirstEnergy about $600 million plus several million more in fines and other charges the company had to pay federal, state and local authorities and organizations for supplying incomplete and inaccurate information.
The existing head was brought in as a temporary replacement and is made of Alloy 600, a type of metal, which has a tendency to crack under prolonged heat and stress. The new reactor head will be made of Alloy 690, a more robust type of metal, which can withstand more heat and stress and is presently used in the nuclear industry.
The new reactor head has been manufactured by AREVA and is expected to arrive at Davis-Besse in the fall of 2010. The new reactor head will undergo a series of pre-service inspections before it is installed during fall next year. FirstEnergy had originally planned to replace the 908 megawatt (MW) plant reactor head in 2014. The new reactor head will ensure additional margins of safety and reliability for long-term plant operations.
During the first-quarter earnings call, FirstEnergy reiterated its operating earnings guidance in the range of $3.50 to $3.70 per share for 2010.
The positive catalysts for FirstEnergy are strong performance of its generation fleet, new regulatory assets, share repurchase programs, asset divestitures and an increased dividend. However, we remain concerned regarding the current lack of visibility at FirstEnergy Solutions and potential customer migration in Ohio, and hence maintain a Neutral outlook on the company.
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