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FirstEnergy (FE) Units Work on Infrastructure to Cut Outages

FirstEnergy's (FE) arms are investing continuously in infrastructure to enhance reliability of services and ensure uninterrupted power supply to its c...

This story originally appeared on Zacks

Subsidiaries of FirstEnergy Corp. FE are working consistently to upgrade and maintain infrastructure to enhance the reliability of its services. These activities will help the utility serve growing demand along with providing greater flexibility to restore power during the times of power outages.

Its unit Penn Power began constructing a new distribution substation in Lawrence County, which is likely to be operational by the end of this year. The project will include installation of automated equipment and technology within the new substation. Penn Power's project is part of its second phase Long Term Infrastructure Improvement Plan (LTIIP II) to enhance the quality of its services. These investments have successfully reduced the frequency and duration of outages by 20% since 2016.

Another arm Potomac Edison completed its electrical system upgrade in Grant County during July 2021, the work of which began last year. The work included splitting a 286-mile circuit of power lines into two circuits, one 175-mile and the other 112-mile. With this project completion, the unit will be able to manage demand more efficiently alongside reducing the number of customers impacted by outages.

FirstEnergy is working consistently on maintaining its infrastructure. Annually, the company employs tree contractors who work round the year to ensure proper vegetation management in its service territories. Per its ‘Energizing the Future’ plan, it aims to invest up to $1.1 billion in 2021, $1.165-$1.45 billion in 2022 and $1.1-$1.45 billion in 2023 in enhancing and expanding its regulated transmission capabilities. In 2021, it expects to spend up to $2.9 billion while in 2022, it estimates to invest up to $2.9-$3.2 billion. Also, it provided the CAPEX guidance for 2023 in the range of $2.7-$3.1 billion.

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Need for Maintenance

With the reopening of business activities, commercial and industrial demand is gradually returning to pre-COVID levels. Residential demand is likely to be stable as few people still opt to work from home. Effective maintenance and additions of assets will ensure uninterrupted power supply to customers along with increasing the reliability of services.

The National Oceanic and Atmospheric Administration’s (NOAA) climate prediction center forecasts another above-normal Atlantic hurricane season for 2021. Per NOAA, there is 65% chance of an above-normal season. This makes maintenance and upgrade of electricity transmission and distribution network all the more important for the companies to be ready for the hurricane season.

Utilities Focus on Infrastructure

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

Utilities like PNM Resources PNM plan to invest $293 million in strengthening its transmission and distribution line in 2021. NextEra Energy NEE chalked out plans to invest in the $60-billion band in different projects during the 2019-2022 time frame to modernize and reinforce its existing infrastructure. DTE Energy DTE currently expects to make capital investments worth $14 billion over the 2021-2025 forecast period to bolster its existing infrastructure.

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 13.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Six Months Price Performance

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NextEra Energy, Inc. (NEE): Free Stock Analysis Report


FirstEnergy Corporation (FE): Free Stock Analysis Report


DTE Energy Company (DTE): Free Stock Analysis Report


PNM Resources, Inc. (PNM): Free Stock Analysis Report


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