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FirstEnergy's Unit Working on $15M Power Upgrade Projects

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FirstEnergy Corporation’s (FE - Free Report) subsidiary Penn Power recently announced that it is currently concluding work on power line and substation projects worth $15 million to reduce the number and duration of power outages in the company's service area.

The projects are part of Penn Power's 2016-2020 Long-Term Infrastructure Improvement Plan (LTIIP) approved by the Pennsylvania Public Utility Commission. Notably, the company expects to invest $62 million through 2020 under this project, with an aim to improve infrastructure and distribution lines across the service area.

Details of the LTIIP Projects

Notably, LTIIP projects will involve building new substations as well as distribution lines near Jackson Center and New Castle, with investments worth $3.1 million and $2.6 million respectively. Another line will be constructed between Pymatuning Central and Jamestown for an investment worth $1.2 million. Once the substations are connected, these are anticipated to ensure redundancy across Penn Power’s service area along with providing additional options for routing power on the local system. It will also reduce the frequency and length of power outages.

Additionally, an investment of $0.6 million is anticipated toward replacement of an underground conductor in Sewickley, to improve system reliability. Remote-controlled switches worth $0.5 million will be installed to enable faster power restoration.

Our View

Penn Power currently serves approximately 160,000 customers across its service area. As witnessed previously, FirstEnergy has been active in pursuing its “Energizing the Future” plan through subsidiaries. This plan was initiated to primarily upgrade and expand the company’s regulated transmission capabilities across its area of operations. Under the initiative, the company has mapped out plans to invest nearly $1 billion in 2017 and $4.2 to $5.8 billion over the 2017–2021 time period.

Recently, the company’s Metropolitan Edison Company (Met-Ed) unit announced the completion of project equipment upgradation worth $3 million at a substation in Reading, PA. (Read more: FirstEnergy's Met-Ed Revamps Project to Boost Reliability)

First Energy’s initiatives to enhance reliability will not only aid customers avail the improved power and electricity services, but also help expand the company’s regulated base by growing transmission lines that are anticipated to boostits performance.

Despite Utility being a regulated market, it is highly competitive. Upgrading and modernizing the existing infrastructure base is of utmost importance to ensure steady and uninterrupted supply of electricity and power for the customers. Consequently, other utilities like NextEra Energy, Inc. (NEE - Free Report) , American Electric Power Company, Inc. (AEP - Free Report) and Duke Energy Corporation (DUK - Free Report) are also currently undertaking steps to strengthen their existing infrastructure while replacing older ones. These initiatives are in a bid to retain their existing clients and staying in competition in the highly competitive wholesale and retail electric market.

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