Lower demand, higher taxes reduce FirstEnergy Q3 results - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Lower demand, higher taxes reduce FirstEnergy Q3 results

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Lower demand for power, higher tax rates and reduced margins in competitive operations contributed to lower FirstEnergy financial results in the third quarter of 2012.

Third quarter 2012 GAAP earnings were $1.02 per basic share of common stock, $1.01 diluted, on net income of $425 million and revenue of $4.3 billion, the company reported Nov. 8. That compares with third quarter 2011 GAAP earnings of $1.27 per basic and diluted share on net income of $530 million, with revenue of $4.7 billion.

Total power delivered was down 1.7 million megawatt-hours, or 4 percent, in the quarter. Residential deliveries declined by 4 percent, primarily due to milder weather compared with the third quarter of 2011.

Commercial deliveries were down 3 percent and industrial deliveries down 5 percent.

While the company's competitive FirstEnergy Solutions continues to expand its business and customer base, according to the report, commodity margin decreased compared to the third quarter of 2011 due to a third quarter 2011 benefit related to fuel contract restructuring and to lower capacity prices.

The company noted in its consolidated financial statement that restoration costs associated with the June 29 Derecho storm, which primarily affected West Virginia and Pennsylvania, amounted to $144 million.

Negative factors in the third quarter were offset by a reduction in operating costs, interest expense and depreciation expense, as well as by lower gross receipts taxes, the company said.

"We continue to be very pleased with the progress of our retail strategy and we remain confident that FirstEnergy will be well-positioned for growth when the economy eventually recovers," said FirstEnergy President and Chief Executive Officer Anthony J. Alexander.

"We are taking a number of actions to manage our expenses and ensure that we are operating as cost-effectively as possible in light of the continued weak sales environment and low market prices for power," Alexander said.

The company narrowed 2012 non-GAAP earnings guidance to $3.30 to $3.40 per share, which is the lower end of the previous range of $3.30 to $3.60 per share. The company also provided 2013 non-GAAP earnings guidance of $2.85 to $3.15 per share.