FirstEnergy Corporation FE announced that it has received approval from the Pennsylvania Public Utility Commission (PaPUC) to implement phase three of its Long-Term Infrastructure Improvement Plans (LTIIP III) to ensure electric service reliability for more than two million Pennsylvania customers.
Over the next five years, FE PA aims to invest an additional $1.42 billion in capital projects throughout its service regions. These initiatives are expected to decrease the incidence of service outages and minimize their duration when they do occur. LTIIP III expands upon the more than $1 billion invested in the preceding two LTIIP rounds, which took place between 2016 and 2024. In regions where LTIIP work has been completed (since 2019), the number of disruptions has decreased 14% in a year.
FE PA expects to file additional LTIIPs in the future and is committed to a sound, cost-effective approach that will result in consistent, reliable performance.
Grid modernization projects involve adding safety devices like automated reclosers and fuses to power lines and constructing tie wires connecting power line sections. The idea is to isolate damage and promptly restore electric service from unaffected portions of the system.
Low-voltage power lines can be converted to standard voltages to improve voltage regulation and offer operational flexibility, which should shorten outage durations. New conduits, cables, transformers, vaults, manholes, and switches are being installed to update underground networks. Outdated substation equipment are also being replaced with electronic relays and breakers that provide better operating and monitoring capabilities.
The targeted distribution projects complement each utility’s annual tree trimming and vegetation management efforts, which work together to minimize service interruptions.
The expected 2025-2029 LTIIP III investments for each service area are — Penelec $538 million, Met-Ed $382 million, West Penn Power $368 million and Penn Power $133 million.
A rise in temperature not only increases the demand for electricity but also poses a threat to electric infrastructure due to overheating, raising the risk of equipment failures and fires. The investments and maintenance tasks are crucial to maintaining service reliability and ensuring customer satisfaction.
LTIIP III is part of ‘Energize365’, a multi-year grid development program. This program is focused on transmission and distribution investments to meet FirstEnergy’s existing consumer needs and handle future challenges. The program, with $26 billion in planned investments between 2024 and 2028, is expected to meet and exceed reliability goals and create a smarter, more secure grid that supports electric vehicles, electrification of homes and businesses, and the transition to clean energy.
In order to provide reliable services to customers, utilities make systematic investments to upgrade transmission and distribution lines and develop new substations. The objective is to warrant a proper supply of electricity to millions of customers across the United States.
Along with FirstEnergy, other electric power companies like Dominion Energy D, Exelon Corporation EXC and Entergy Corporation ETR are also taking initiatives to strengthen their infrastructure.
Dominion plans to upgrade its electric infrastructure by installing smart meters and grid devices. It is also working on a strategic undergrounding project for 4,000 miles of distribution lines. It has already completed undergrounding nearly 2,000 miles of outage-prone overhead power distribution lines in Virginia. These initiatives should increase the resilience of its operations and enable it to serve the expanding customer base more efficiently. It has plans to invest $43 billion in the 2025-2029 period to further strengthen its infrastructure.
D’s long-term (three to five years) earnings growth rate is 13.64%. The Zacks Consensus Estimate for 2024 earnings per share (EPS) implies a year-over-year improvement of 38.2%.
Exelon invests substantially in infrastructure projects and plans to invest nearly $34.5 billion during 2024-2027 in regulated utility operations. The company is set to invest $21 billion in electric distribution and $9.7 billion in electric transmission in the 2024-2027 time frame to further enhance customer reliability.
EXC’s long-term earnings growth rate is 5.71%. The Zacks Consensus Estimate for 2024 EPS implies year-over-year growth of 2.9%.
Entergy has been investing in grid hardening to make its transmission and distribution systems more resilient. ETR plans to invest $10.63 billion in transmission and distribution during 2024-2026. Also, in April 2024, the company got approval for the first phase of Entergy Louisiana’s resilience and grid-hardening plan. The plan includes 2,100 projects totaling $1.9 billion of investments over five years.
ETR’s long-term earnings growth rate is 8.44%. The Zacks Consensus Estimate for 2024 EPS implies a year-over-year increase of 21.8%.
In the past month, shares of FirstEnergy have lost 5.4% compared with the industry’s 6.3% decline.
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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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