Source: Institute for Energy Economics and Financial Analysis
The U.S. Department of Justice fired a warning shot this week across the bow of FirstEnergy Solutions and its path toward restructuring itself free of past debt and other obligations. The warning did not leave out parent company FirstEnergy, which negotiated a deal with FES and creditors last summer and has since insisted it has no financial responsibility for FES and its many problems.
The federal and state authorities don’t agree with that and filed an objection in bankruptcy court making sure the companies, its creditors, and the court understand that. In an eight-page court brief, lawyers for the Justice Department and Ohio and Pennsylvania attorneys general noted that they believe FirstEnergy has “significant independent liability.” They added that FES itself is also on the hook to pay for cleanup left behind by coal power plants and the long-term decommissioning cost of its nuclear plants.
“The Non-Debtor Affiliates (FirstEnergy) have numerous liabilities to the Governments under environmental laws for their ownership and/or operation of (and/or disposal at) some of the same facilities for decades even before the Debtors [FES] became the owners/operators,” they argue.
The brief reads that FES has for months repeatedly put off negotiating its liabilities for cleaning up power plant environmental damage while simultaneously cutting deals with its creditors and winning extra time from the court to independently restructure itself, free of past debt.
“Counsel requested that the Governments be included early on in the negotiations [with creditors] and not be the only ones left out and then presented with a fait accompli that everybody else had negotiated,” the attorneys wrote.
Yet, in the latest request to the court for a third time extension to continue to develop its restructuring plan without having to deal with competing plans, FES made no mention of its obligations to deal with the government, the brief to the court said. The FES request for a third extension of time was “silent with respect to the Governments’ concerns and makes no provision for any allocation or trust relating to environmental liabilities,” the government noted.