FirstEnergy Corporation’s (FE - Analyst Report) business wing, Cleveland Electric Illuminating Company plans to invest $152.0 million in 2013 for the purpose of upgrading its electrical systems to ensure greater reliability of service to its customers in northeast Ohio.
The modernization plan includes rebuilding substations, constructing distribution circuits, examining and replacing utility poles, continuing work on the transmission lines and speeding up the pace of existing vegetation management programs.
Under the plan, FirstEnergy will reconstitute a major portion of the Northfield substation for which it will shell out $10.0 million. A further $10.0 million will be spent on evaluating and replacing the distribution and sub-transmission poles in Ohio. The pole examining process commenced in Jan 2013 and the replacement activity will be carried on throughout the year.
In addition, the company will be engaged in the installation of new sub-transmission circuits, which is a part of a program aimed for managing future load growth. FirstEnergy is looking to complete the 138 Kilovolt (kV) transmission line and a substation in Geauga County. These initiatives are aimed at handling load and increasing reliability for which a total of $22.0 million has been set aside.
Other plans include capital spending of $13.0 million for FirstEnergy’s vegetation management works like trimming trees to prevent infrastructural damages from storm and a $4.0 million for the repositioning of switching equipments from the Wickliffe substation to another station of Cleveland Electric.
A sizeable $20.0 million will be allocated for the company’s Energy Smart Grid venture in Geauga County. This includes placement of additional smart meters and creating technologies to restore outages in remote areas.
Earlier, FirstEnergy’s business division, Jersey Central Power & Light announced spending $200.0 million in 2013 for the development and modernization of its existing infrastructures in New Jersey as well as to fund the ongoing restoration works in areas affected by Hurricane Sandy.
Although the company is likely to incur higher costs for these programs, the mix of infrastructure and midstream asset development initiatives will support its broad growth objectives. Moreover, significant rise in customer count and the approval of its Electric Security Plan will further boost FirstEnergy's returns in the near term.
However, the recent outage at the company’s Perry Nuclear Plant could have an adverse impact on its operations. The company currently carries a Zacks Rank #3 (Hold).
Other utility stocks well worth a look are Zacks Rank #1 (Strong Buy) Otter Tail Corporation (OTTR - Snapshot Report), Brookfield Infrastructures Partners L.P. (BIP - Snapshot Report) and Pike Electric Corporation (PIKE - Snapshot Report).
Headquartered in Akron, OH, FirstEnergy engages in the generation, transmission, and distribution of electricity in the United States. At present it has a market capitalization of $17.35 billion.