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FirstEnergy's (FE) Arm is Revamping Facilities to Cut Outages

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FirstEnergy Corp.’s (FE - Free Report) arm Penn Power is making efforts to upgrade infrastructure and install technology to modernize its electric system in western Pennsylvania. These initiatives are part of the utility’s four-year plan, which is Penn Power's second phase Long-Term Infrastructure Improvement Plan.

Workers already started enhancing electrical equipment at two substations in Lawrence and Butler counties earlier this January, which are likely to be completed by August. The company will install new, automated equipment and technology in distribution substations and along power lines to maintain safe and constant voltage levels even on the days of high demand for electricity.

Remarkably, these investments successfully reduced the number and length of outages by 20% in areas where work is over.

Need for Maintenance

FirstEnergy is working consistently on maintaining its infrastructure. Every year, the company employs tree contractors who work round the year to ensure proper vegetation management in the company’s electric lines. The utility anticipates investing $17.6 billion in strengthening its transmission and distribution network during the 2018-2023 time frame and fortifying infrastructure.

With the reopening of business activities, commercial and industrial demand is slowly returning to pre-COVID levels. Also, improvement in residential demand is likely to continue.

Hence, to cater to this likely hike in demand, the company needs to undergo some renovation. Effective maintenance will ensure uninterrupted power supply to the company’s customers that it serves in different states and increase the reliability of its service.

Utilities Focus on Infrastructure

To provide 24X7 supply of electricity to consumers, utilities are investing heavily in strengthening infrastructure. They are replacing old transmission and distribution lines, undergrounding distribution lines, adopting technological upgrade to increase the resilience of infrastructure for withstanding the impact of hurricanes, storms and other natural calamities.

Utilities like Xcel Energy (XEL - Free Report) increased its investment plans to $24.3 billion from $23.5 billion in the 2021-2025 time period to reflect new investment worth $750 million in wind project. NextEra Energy (NEE - Free Report) has well chalked-out plans to invest in the range of $50-$55 billion in different projects during the 2019-2022 time period to modernize and strengthen its existing infrastructure. DTE Energy (DTE - Free Report) currently expects to make capital investments of $14 billion over the 2021-2025 period, which include $5 billion for capital replacements and other projects, $7 billion for distribution infrastructure and another $2 billion for new generation.

Zacks Rank & Price Performance

In the past six months, shares of this currently Zacks Rank #3 (Hold) company have gained 16.6%, outperforming the industry’s rise of 4.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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