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FirstEnergy Corporation (FE - Analyst Report) is progressing with its modernization work and joining the drive is the company’s business wing Pennsylvania Electric Company (Penelec). Penelec announced its plan to invest roughly $105 million to develop and improve its existing electrical assets.  

Penelec provides power services to almost 600,000 consumers across 31 counties under its service area which stretches 17,000 square miles. The program list includes upgrading current distribution circuits or constructing new ones, scrutinizing and changing the poles, installation of automated devices as well as accelerating the vegetation programs. These initiatives are expected to boost the company’s electric system reliability and make them suitable for future load growth.

The modernization work includes upgrading the distribution circuit equipment which involves installing fuse and recloser devices to minimize power outages in Penelec’s service zone. The projected cost for this activity is set at $28 million.

Other installations include the fitting of radio controlled switches that can be exercised from the dispatch centers enabling operators to restore power in a speedy and efficient manner. Also, the company intends to place equipment that will help keep voltage at appropriate levels. This will especially benefit industrial and commercial consumers.

Inspection work has already commenced in Jan 2013 and the replacement jobs will be finished during the fall. FirstEnergy assigned $19 million for fast-tracking its vegetation projects in Penn state which comprises of pruning tree arms that disrupt electric service during storms.

Until now the company’s subsidiaries Ohio Edison, Cleveland Electric Illuminating Company, Toledo Edison, Jersey Central Power & Light and most recently Metropolitan Edison Company (Met-Ed) have all announced their utility asset modernization plans. Ohio Edison and Cleveland Electric will spend a respective $275 million and $152 million. Toledo Edison, Jersey Central and Met-Ed will shell out approximately $11 million, $200 million and $116 million, respectively.

We believe FirstEnergy’s concerted efforts towards upgrading its utility infrastructure will go a long way to enhance operational quality. This in turn will contribute to the delivery of uninterrupted services to its consumers and help retain their loyalty as well as attract non-Penelec customers.

Meanwhile, the company’s focus on development of transmission properties will further complement its broad growth objectives. FirstEnergy at present carries a Zacks Rank #3 (Hold).

Other stocks in the utility space performing favorably and worth a look are Zacks Ranked #1 (Strong Buy) Brookfield Infrastructures Partners L.P. (BIP - Snapshot Report), Pike Electric Corporation (PIKE - Snapshot Report) and Empresa Nacional Electricidad SA (EOC - Snapshot Report).

Based in Akron, Ohio, FirstEnergy engages in the generation, transmission and distribution of electricity in the United States.

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