Exelon Generation Company on July 9 entered into an asset purchase agreement with FirstEnergy Solutions under which FirstEnergy Solutions will assign all of its retail electricity and wholesale load serving contracts and certain other related commodity contracts to Exelon Generation for an all-cash purchase price of $140 million.
In late March, FirstEnergy Solutions, its subsidiaries and FirstEnergy Nuclear Operating Company (FENOC) filed voluntary petitions under Chapter 11 of the Federal Bankruptcy Code with the U.S. Bankruptcy Court in the Northern District of Ohio in Akron.
FirstEnergy Solutions, a competitive generation subsidiary of investor-owned FirstEnergy Corporation, said the move was made in order to “facilitate an orderly financial restructuring.”
Under the agreement, Exelon Generation “has agreed to use its commercially reasonable efforts to replace the guarantees and other credit support currently being provided” by FirstEnergy Solutions in support of the ongoing competitive retail businesses and to reimburse FirstEnergy Solutions for any payments arising “pursuant to such arrangements continuing for any post-closing period,” Exelon Generation and its parent company Exelon Corporation said in a filing made at the Securities and Exchange Commission. The filing was made on July 10.
The closing of the transaction is subject to certain conditions, including Exelon Generation being the winning bidder after a court-supervised bankruptcy auction, the approval of the purchase agreement by the United States Bankruptcy Court for the Northern District of Ohio following the auction and expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Either party may terminate the purchase agreement if the transaction has not been consummated by Dec. 31, 2018.
The transaction is expected to close in the fourth quarter of 2018.
FirstEnergy Solutions and FENOC own and operate two coal-fired plants, one dual fuel gas/oil plant, one pet-coke fired plant and three nuclear power plants in the competitive, or non-regulated, power-generation industry.
FirstEnergy Solutions on March 29 asked Energy Secretary Rick Perry to issue an emergency order directing the PJM Interconnection to immediately begin negotiations to secure the long-term capacity of certain nuclear and coal-fired plants in the region and to compensate their owners "for the full benefits they provide to energy markets and the public at large, including fuel security and diversity."
President Donald Trump on June 1 directed Perry to take steps aimed at keeping “fuel-secure” power facilities -- coal-fired generation and nuclear power plants -- operational.