OCC Requests PUCO Require FirstEnergy Solutions Send Retail Customers Notices Regarding Potential Bankruptcy

"In light of recent statements by the corporate parent of FirstEnergy Solutions ('FES') that FES likely will file for bankruptcy at some point, the Public Utilities Commission of Ohio ('PUCO') should address in advance how FES's consumers will be protected if or when a bankruptcy filing is made," the Office of the Ohio Consumers' Counsel urged in a letter to PUCO

"The potential for customer confusion should be minimized, among other things," OCC said

"As background, FirstEnergy Corp., in its October 26, 2017 quarterly report to the Securities and Exchange Commission ('SEC'), stated that FES may be required to 'restructure debt and other financial obligations with its creditors and/or seek protection under U.S. bankruptcy laws,'" OCC said

"Additionally, in its report to the SEC, FirstEnergy Corp. expressed concerns about whether FES could continue as a going concern: 'Although management is exploring capital and other cost reductions, asset sales, and other options to improve cash flow as well as continuing with efforts to explore legislative or regulatory solutions, these obligations and their impact to liquidity raise substantial doubt about FES's ability to meet its obligations as they come due over the next twelve months and, as such, its ability to continue as a going concern,'" OCC said

"The PUCO should be proactive to protect consumers and potential consumers with regard to a possible bankruptcy by FES. The PUCO should require FES to immediately file a plan with proposals for measures to protect existing consumers. The plan should include proposed messages for FES to send its consumers, before and after a bankruptcy filing, with information about options in the event FES defaults. The information about options should include reference to the availability of the utilities' standard offers. In addition to protections for existing consumers, FES's plan should include proposals for informing potential consumers (whose business FES is soliciting) about the potential bankruptcy and possible impacts on service terms and conditions," OCC said

"Upon review of FES's proposals and after input from other interested parties, the PUCO should order FES to send appropriate information to consumers for their protection," OCC said

"Furthermore, the PUCO should review FES's posted collateral (financial guarantee) to ascertain whether it is adequate to protect consumers and governmental aggregators, who are currently under contract to receive service from FES, in the event of a default," OCC said