FirstEnergy Corp.'s (FE - Free Report) Ohio utilities recently proposed a redesigning and modernization plan with the Public Utilities Commission of Ohio (PUCO) for reducing the frequency and duration of power outages.
The initiative targets to invest $450 million investment in three years, to create a stronger distribution system for its customers at Ohio Edison, Cleveland Electric Illuminating and Toledo Edison subsidiaries.
Details of the Proposal
The project will encompass circuit ties, reconductoring, reclosers and data acquisition systems. These will prevent power outages, create multiple paths for better power flow to customers and increase distribution line's ability to withstand adverse weather conditions. Additionally, these are projected to restore power faster at times of outages. The proposed projects will also redesign the distribution lines across the company’s services areas in Ohio.
Notably, FirstEnergy anticipates the project to reduce outages by approximately 30% or more, on average. It is also projected to speed up restoration time for power lines by approximately 25%.
Estimated cost of this project will constitute about 2% of the typical residential customer's monthly bill.
FirstEnergy’s Modernization Drive
FirstEnergy has been taking steps to upgrade and replace its existing power lines, whenever necessary, since 2014. Further, it has incorporated new, smart technology into the grid and made substations upgrades; to serve customers more efficiently. In line with this, the company has made an investment plan worth almost $1 billion in 2017 and $4.2-$5.8 billion over 2017-2021, under its ambitious “Energizing the Future” initiative. Notably this initiative aims at upgrading and expanding its regulated transmission capabilities.
For ensuring better reliable services, the company recently conducted maintenance work across its service areas. Toward this, its subsidiaries concluded inspection and maintenance services in all six states where it operates in the month of November. (Read more: FirstEnergy Completes Maintenance Work Ahead of Winter)
Currently, FirstEnergy serves approximately 1 million customers in northeast and north central Ohio. Surely, the modernization drive across FirstEnergy’s Ohio service area is anticipated to improve the quality of services availed by its customers.
Considering the fact that transmission lines and grid systems are susceptible to damages, at times due to uncertain weather conditions, we may expect other utilities like NextEra Energy, Inc. (NEE - Free Report) , American Electric Power Company, Inc. (AEP - Free Report) and Duke Energy Corporation (DUK - Free Report) to carry out similar modernization and redesigning initiatives to ensure maintenance and reliability of their services.
Shares of FirstEnergy have returned 14.6% outperforming the industry’s growth of 4.6% in the last six months.
This has been driven by the company’s continued focus on upgrading transmission lines and modernizing efforts in its distribution network, through solid investments. FirstEnergy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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