AKRON FirstEnergy stands behind its cash flow

The company says it's spending to reduce debt.
AKRON (AP) -- FirstEnergy Corp. is defending its cash-flow position in spite of analysts' concerns about the utility's finances.
The company went through $235.8 million from the end of March to the end of June, according to a recent financial-disclosure filing.
FirstEnergy's quarterly report to the Securities and Exchange Commission showed "cash and cash equivalents" June 30, the end of this year's second quarter, of $64.2 million. That's down $359.1 million from the company's total for the same point of 2002.
Paul Larson, an oil and gas analyst for Chicago-based Morningstar Inc., said he thinks the chance of a FirstEnergy bankruptcy is low.
"That's assuming cash flow does not continue to drop and they are able to turn things around," Larson said.
FirstEnergy spokesman Ralph DiNicola said the prospect of bankruptcy was ridiculous.
Under investigation
The Akron-based company is at the center of the investigation of the nation's largest power outage, which darkened homes and businesses in eight states and parts of Canada on Aug. 14. The blackout affected 50 million people, shut down more than 100 power plants and knocked Cleveland's water supply off line.
Investigators have pointed to three transmission lines in northern Ohio that shut down as one possible cause of the blackout.
DiNicola disputed that the cash-flow figures in the report filed Tuesday indicate a financial problem. He said comparing cash flow from one quarter with another does not necessarily paint an accurate picture because money can be used for such purposes as paying down debt.
"When you use cash flow to pay down debt, it doesn't mean you are in any worse shape if there is less on your credit card," he said.
He said FirstEnergy anticipates using $575 million for debt reduction in 2003. He said the figure was about $408 million in 2002. FirstEnergy has been under pressure to pay down its $15 billion in debt.
Credit rating
One week before the blackout, Standard & amp; Poor's held steady FirstEnergy's corporate credit rating of BBB, one notch above junk status, but only on the condition that the utility unload some of its debt. S & amp;P said it assumed FirstEnergy would sell stock or assets to do that.
Standard & amp; Poor's said Friday that it remained concerned about FirstEnergy. The New York credit firm said that besides debt reduction, the utility must overcome other obstacles, including reopening the damaged Davis-Besse nuclear plant and dealing with a recent federal ruling finding it guilty of pollution.
The blackout probe is another challenge, S & amp;P analyst Aneesh Prabhu wrote.
"Standard & amp; Poor's is concerned that the investigations will only magnify, irrespective of culpability, the challenges management already must resolve, not the least of which is repairing a heavily leveraged balance sheet," Prabhu wrote.
FirstEnergy on Aug. 5 reported a loss of $57.9 million, or 20 cents per share, compared with expected second-quarter 2002 restated earnings of $216 million, or 73 cents per share. Because of an accounting adjustment, it also restated past earnings.