FirstEnergy Corp. FOR IMMEDIATE RELEASE
76 South Main Street October 8, 1998
Akron, Ohio 44308
Media Contact:
Ellen S. Raines
(330) 384-5808
FirstEnergy Corp. Creates Transmission Subsidiary
FirstEnergy Corp. announced today that it will transfer its
transmission assets into a new subsidiary, called American
Transmission Systems, Inc., with the goal of ultimately becoming
part of a larger independent regional transmission company
(TransCo) - an entity that owns and operates transmission
systems. FirstEnergy plans to initially transfer the operating
authority of its transmission system to American Transmission
Systems, as soon as possible, while the asset transfer will be
finalized by early 1999.
The subsidiary will own and operate FirstEnergy's major, high-
voltage transmission facilities - approximately 5,200 miles of
transmission lines with voltages of generally 138 kilovolts and
higher and approximately 160 transmission substations - and will
have 35 interconnections with 8 regional utilities. These
facilities represent approximately $1 billion in assets. The
formation of the new subsidiary will not affect customers now
receiving transmission service from FirstEnergy. They will
continue to receive service from the new subsidiary under the
same provisions.
"We are convinced that a TransCo structure provides the best
means to improve transmission service going forward," said
FirstEnergy Vice President Stan Szwed. "The transmission
networks require investments for the future, and a TransCo, in
our view, will be the best vehicle for attracting the necessary
capital and technological innovation."
"As competitive markets continue to develop, transmission will
become the integral link in delivering electricity more
efficiently over wider geographic areas. In addition, we believe
this structure provides a better opportunity to assure non-
discriminatory access for all transmission users and maximizes
the value of our assets for shareholders. A TransCo will create
synergies that result in better service in the region," Szwed
said.
"Creating this subsidiary is the first step toward our goal of
establishing a truly independent transmission company. This
initial transaction gives us greater flexibility with respect to
our transmission assets, and positions us to readily join with
others to create a larger TransCo or consider options, such as
selling the assets," Szwed said. "The new subsidiary also
facilitates the company's continued evaluation of participation
in other regional transmission entities, in particular the
Transmission Alliance, as well as the PJM [Pennsylvania, New
Jersey, Maryland] Independent System Operator, and the Midwest
ISO."
FirstEnergy is an active participant in the Transmission
Alliance, a group of nine utilities that have been discussing the
formation of the regional transmission entity since earlier this
year. A TransCo structure has been one of the primary options
discussed. This subsidiary will more readily facilitate the
transition to an appropriate regional entity such as the
Alliance.
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A TransCo better addresses the Federal Energy Regulatory
Commission's stated goals of providing non-discriminatory
treatment of all transmission users; eliminating pancaked rates;
managing system congestion; eliminating inter-regional loop
flows; and managing short-term reliability. A TransCo also ties
together control, planning, maintenance and financial
responsibility, resulting in a truly independent, streamlined,
and cost-efficient operation.
FirstEnergy is a diversified energy services holding company with
2.2 million customers in northern and central Ohio and western
Pennsylvania. Its electric utility operating companies - Ohio
Edison and its subsidiary Pennsylvania Power, The Illuminating
Company and Toledo Edison - comprise the nation's 12th largest
investor-owned electric system. FirstEnergy has $18 billion in
assets, including ownership in 18 power plants.
(100898)
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