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FirstEnergy's (FE) Infrastructure Upgrade to Cut Outages

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FirstEnergy Corporation’s (FE - Free Report) unit, Penelec, is upgrading its transmission and distribution infrastructure in Millcreek Township, Erie County, to reduce outages and service disruptions. The work includes replacing underground electric cables, transformers and other equipment that have been worn down by water erosion and corrosive soil, which can lead to reliability concerns and potential service interruptions.

The infrastructure upgrade is part of Penelec's Long Term Infrastructure Improvement Plans (LTIIP II), a $200-million plan to invest in five years. As part of the plan, FirstEnergy will install new electric transmission wires encased in a PVC conduit, which is expected to last for decades and help better protect equipment from power loads. Also, it will be easier for line crews to repair underground cables in conduits, resulting in shorter service outages and enhancing service reliability for 585,000 existing customers.

In addition, FE will install 21 new transformers and equipment that divide the cable into smaller sections to isolate the damage and reduce service disruptions for a large section of population. The project is expected to be complete this summer, enhancing service reliability for more than 400 customers in Millcreek Township.

Need for Infrastructure Upgrade

Electricity generation, transmission and distribution facilities maintained by utilities have the possibility of an equipment breakdown or failure due to aged infrastructure. To lessen the frequency and length of power outages, utilities modernize the transmission and distribution system by replacing the outdated infrastructure with the new cutting-edge technology and equipment.

FirstEnergy is working consistently on maintaining its infrastructure to serve its six million customers more efficiently. Per the ‘Energizing the Future’ plan, FE aims to invest $3.3 billion in 2022, 15% higher compared with the 2021 investments, to strengthen the grid and lead a clean energy transition. FirstEnergy expects to invest $17 billion in the 2021-2025 period and is also exploring more than $20 billion future investment opportunities to further strengthen its transmission operations.

FirstEnergy also conducts the yearly inspection and maintenance of its transmission system. This proactive yearly inspection ensures that FirstEnergy’s transmission lines operate properly during the summer season and efficiently transfer high-voltage power from generation units to designated locations.

Zacks Rank & Price Performance

Currently, FirstEnergy carries a Zacks Rank #4 (Sell). In the past year, shares of FE have rallied 2.4% compared with the industry’s growth of 5.8%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Utilities’ Focus on Infrastructure

To provide a 24X7 electricity supply for consumers, utilities are investing heavily in strengthening their infrastructure. They are replacing old transmission and distribution lines, undergrounding distribution lines and adopting technological upgrades to increase the resiliency of infrastructure for withstanding the impact of extreme weather conditions. To name a few are Xcel Energy (XEL - Free Report) , NiSource (NI - Free Report) and Pinnacle West Capital (PNW - Free Report) .

Xcel Energy continues to invest substantially in its utility assets and aims to strengthen and expand its transmission, distribution, electric generation and renewable projects. XEL aims to spend $26 billion during the 2022-2026 period, which includes $1.5 to $2.5 billion in incremental opportunities.

NiSource is working on a long-term utility infrastructure modernization program and made capital investments worth $1.9 billion in 2021 and plans to invest in the range of $2.4-$2.7 billion in 2022. NI estimated $40-billion long-term natural gas and electric infrastructure investment opportunities, which are expected to drive earnings beyond 2024.

To efficiently serve its expanding customer base, Pinnacle West Capital has systematic investment plans to increase generation and strengthen its transmission and distribution lines. After investing $1.5 billion in 2021, it aims at investing $1.53 billion in 2022. Pinnacle West Capital also plans to invest $4.7 billion during the 2022-2024 period.