Kucinich Calls for SEC Investigation of Potential Federal Securities Violations by FirstEnergy Corp.

Press Release

Provides Detailed Analysis of Discrepancies Which Could Constitute "Material Misrepresentations"

Washington D.C. (March 22, 2012) -- Congressman Dennis Kucinich (D-OH), the Ranking Member of the Regulatory Affairs Subcommittee, today requested that Securities and Exchange Commission (SEC) Chairman Mary Shapiro investigate whether FirstEnergy violated federal securities law by providing "material misrepresentations" to investors in a letter dated October 31, 2011.

FirstEnergy sent the letter to reassure investors about damage to the shield wall of the Davis-Besse nuclear power plant, but understated the extent and location of the damage as well as the importance of the shield wall to the overall safety of the plant.

"Davis-Besse is a major asset of FirstEnergy, and any reduction of the value of Davis-Besse would have a significant impact on the price of FirstEnergy stock," wrote Kucinich.

See a copy of Kucinich's letter and analysis of FirstEnergy's misrepresentations here.

Further, the Nuclear Regulatory Commission operating license for Davis-Besse expires in 2017 and FirstEnergy has applied for a 20 year extension of that license.

"Any problems with the integrity of the wall of the shield building could have an effect upon that license extension application. If that application were denied, it could have a major effect upon the value of FirstEnergy stock," wrote Kucinich.

Davis-Besse has had a long history of problems and many in the community have questioned whether FirstEnergy is more concerned with the public safety or their bottom line.

In 1977, when Davis-Besse first powered up its reactor, it experienced the same malfunction that ultimately caused the accident at Three Mile Island. In 1985, it experienced a loss of cooling water incident that has been described as "the worst accident since Three Mile Island." In 1998, when it received a direct hit by a tornado, one emergency generator failed to start and the other was declared inoperable.

In early 2002, it was discovered that boric acid corrosion had eaten away a large hole in the reactor head, and only the 3/16 inch stainless steel liner was left to prevent a leak of radiation. Instead of replacing the reactor head with one composed of an alloy that would resist such corrosion (as every other utility faced with this situation had done), Davis-Besse bought a used reactor head that was identical to the one that had just corroded. It lasted only 7 years before it too became corroded from the same boric acid leakage.

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