FirstEnergy Corporation FE and its transmission subsidiaries completed the necessary inspection and maintenance of its transmission system. The idea was to ensure that FE’s transmission lines could operate efficiently during the summer, and potentially severe weather and hurricanes that come with the season.
The National Oceanic and Atmospheric Administration has predicted an 85% chance of an above-normal hurricane season, with 17-25 named storms and eight to 13 hurricanes, including four to seven major hurricanes. FE’s unit Jersey Central Power & Light’s crews are prepared to respond in the event of severe weather or hurricanes that may affect the area this summer.
FirstEnergy uses thermovision cameras to take infrared pictures of electrical equipment, assisting in the identification of possible issues in power lines and substations. Utility workers complete more detailed inspections and make repairs in these areas to prevent potential power outages.
Need for Investments & Maintenance
The company’s strategic investment is focused on infrastructure upgrades that should help serve its customers more efficiently. FirstEnergy’s ‘Energize365’ is a multi-year grid evolution platform, focused on enhancing customer experience while maintaining its strong affordability position with rates at or below its in-state peers. With planned investments of $26 billion between 2024 and 2028, the company is set to install advanced equipment and technologies that will strengthen and modernize its transmission and distribution infrastructure.
A rise in temperature not only increases the demand for electricity but also poses a threat to electric infrastructure due to overheating, amplifying the risk of equipment failures and fires. These inspections and maintenance tasks are crucial to maintaining service reliability and ensuring customer satisfaction.
This spring, helicopter patrols inspected almost 6,170 miles of high-voltage power lines, in addition to routine visual inspections conducted from the ground. The purpose of the inspections is to search for equipment issues that are not apparent from the ground. Any potential reliability issues identified during the inspections are addressed as quickly as possible.
Since the beginning of the year, tree contractors have trimmed along 4,415 miles of power lines as part of FirstEnergy’s vegetation management program. Work remains on schedule to complete an additional 8,860 miles by the end of the year. Maintaining proper clearances around electrical equipment is critical to providing safe, reliable electric service. It can also help reduce the frequency and duration of tree-related power outages.
These initiatives should increase the possibility of providing uninterrupted electricity to customers even during storms and hurricanes, and generate more earnings for the company.
Utilities’ Focus on Infrastructure Upgrade
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 Xcel Energy, Inc. XEL, are adopting measures to strengthen their existing infrastructure.
In June 2024, D’s unit, Dominion Energy Virginia, completed burying 2,000 miles of overhead power lines, which is part of the company’s Strategic Underground Program. The shifting of power lines underground should lower storm-related outages and reduce the time for power restoration in outage-prone areas during the hurricane season.
D’s long-term (three to five years) earnings growth rate is 13.6%. 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 strengthen its operations.
EXC’s long-term earnings growth rate is 5.7%. The Zacks Consensus Estimate for 2024 EPS implies a year-over-year improvement of 1.7%.
Xcel Energy plans to invest nearly $22.1 billion in further strengthening its electric distribution and transmission operations in the 2024-2028 time period.
XEL’s long-term earnings growth rate is 6.4%. The Zacks Consensus Estimate for 2024 EPS implies a year-over-year improvement of 6.3%.
Price Performance
In the past six months, shares of FirstEnergy have risen 6.3% against the industry’s 2.3% decline.
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Zacks Rank
FirstEnergy currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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