Fitch shifts FirstEnergy view to negative

Fitch Ratings said it changed the outlook to negative from stable and affirmed the ratings of FirstEnergy Corp. and affirmed the company’s subsidiary ratings. Also, Fitch revised FE’s subsidiaries’ outlooks to negative from stable, except for Monongahela Power Co., Allegheny Generating Co. and Potomac Edison Co., reflecting parent-subsidiary rating linkage considerations. The outlook for these three companies is stable.

“The rating actions reflect credit concerns regarding potential illicit activity at FE in connection with an ongoing federal bribery/racketeering investigation,” Fitch said in a press release.

Criminal charges were filed against Larry Householder, the Ohio Assembly speaker, four associates and a non-profit organization, Generation Now. The affidavit alleges Householder and his associates engaged in bribery and other illegal actions designed to ensure House Bill (HB) 6 was enacted and remained in effect.

“While the indictment does not explicitly name FE or its affiliates, pseudonyms referred to in the affidavit are widely-believed to refer to FE, its corporate services subsidiary, FirstEnergy Service Co. (FESC), and a former subsidiary, Energy Harbor,” Fitch said.

FE plans to cooperate with the Justice Department investigation, the agency said. Former FE subsidiary FirstEnergy Solutions emerged from bankruptcy as a separate entity in February and was renamed Energy Harbor.

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