FirstEnergy Secures Long-Term Fuel Supply With Investment in Montana Coal Field

Under an acquisition and development agreement, the joint venture will acquire 80 percent of the Bull Mountain mining operations, and 100 percent of the rail operations, with FirstEnergy owning a 45 percent interest and an affiliate of the Boich Companies owning a 55 percent interest. After 18 months, the joint venture will have the option to acquire the remaining 20 percent stake in the mining operations.

In a related transaction, FirstEnergy has entered into a 15-year agreement to purchase up to 10 million tons of bituminous western coal annually from the mine. FirstEnergy also reached tentative agreements with the rail carriers associated with transporting coal from the mine to its generating stations, and it expects to begin taking delivery of the coal in late 2009 or early 2010.

"This is a very attractive investment for our company because the assured supply of Bull Mountain coal will help us maximize the generation capacity of our existing fossil generation plants, with significant environmental advantages compared to standard eastern coal," said FirstEnergy President and Chief Executive Officer Anthony J. Alexander. "As a result, we expect this supply to help us meet our customers' growing electricity needs in an environmentally sound manner."

Compared to typical eastern coal, coal from Bull Mountain has approximately 50 percent lower sulfur and ash content. At the same time, it has lower mercury content and significantly higher heat value than sub-bituminous coal found in the nearbyPowder River Basin (PRB), meaning higher kilowatt-hour production with significantly lower carbon-dioxide emissions per megawatt.

While the delivered price is expected to be similar to PRB coal, the higher efficiency of Bull Mountain coal is expected to help FirstEnergy avoid fossil plant derates of approximately 170 to 200 megawatts that would have resulted from the continued use of PRB coal. This generating capacity would be available to help meet customers' electricity needs. Under its coal contract, FirstEnergy has the right to resell the tonage not used at its facilities.

Bull Mountain isMontana's only underground mine, and the last significant contiguous reserve in the continentalUnited States. The estimated total cost to develop the mine is $450 million, including mine expansion and equipment costs, a new coal preparation plant, and the costs associated with constructing a 35-mile rail spur to the Burlington Northern Santa Fe railway line.

FirstEnergy is a diversified energy company headquartered inAkron, Ohio. Its subsidiaries and affiliates are involved in the generation, transmission and distribution of electricity, as well as energy management and other energy-related services. Its seven electric utility operating companies comprise the nation's fifth largest investor-owned electric system, based on 4.5 million customers served within a 36,100-square-mile area ofOhio, Pennsylvania andNew Jersey; and its generation subsidiaries control more than 14,000 megawatts of capacity.

Forward-Looking Statements: This news release includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding our, or our management's, intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms "anticipate," "potential," "expect," "believe," "estimate" and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results may differ materially due to the speed and nature of increased competition in the electric utility industry and legislative and regulatory changes affecting how generation rates will be determined following the expiration of existing rate plans inOhio and Pennsylvania, 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, other legislative and regulatory changes including revised environmental requirements and possible greenhouse gas emissions regulation, 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 or other potential regulatory initiatives, 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 our SEC filings, the timing and outcome of various proceedings before the PUCO (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 Supreme Court ofOhio regarding the Rate Stabilization Plan and the Rate Certainty Plan, including the deferral of fuel costs) and Met-Ed and Penelec's transmission service charge filings with the PPUC (as well as the resolution of the Petitions for Review filed with the Commonwealth Court ofPennsylvania with respect to the transition rate plan for Met-Ed and Penelec), the continuing availability of generating units and their ability to continue to operate at or near full capacity, the ability to comply with applicable state and federal reliability standards, the ability to accomplish or realize anticipated benefits from strategic goals (including employee workforce initiatives), the ability to improve electric commodity margins and to experience growth in the distribution business, changing market conditions that could affect the value of assets held in our nuclear decommissioning trust fund, pension fund and other trust funds, the ability to access the public securities and other capital markets and the cost of such capital, the risks and other factors discussed from time to time in our SEC filings, and other similar factors. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for us to predict all such factors, nor can we assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. We expressly disclaim any current intention to update any forward-looking statements contained herein as a result of new information, future events, or otherwise.

SOURCE FirstEnergy Corp.

Copyright © 2008, PRNewswire
Copyright © 2008, NewsBlaze, Daily News

Tags: ,UTI,OIL,JVN,OH-FirstEnergy-coal

   _   _

         

Is your favorite bookmark site missing? Ask for it.