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FirstEnergy Makes Substation Expansion to Boost Service Reliability

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FirstEnergy Corporation (FE - Free Report) announced that its subsidiary, American Transmission Systems, Inc. (“ATSI”), is expanding and upgrading a high-voltage substation in Sylvania Township, Lucas County.

The project is expected to be completed and go into service in early 2025.

Benefits of the Project

As a result of this development, more than 20,000 Toledo Edison customers in northwest Ohio are expected to benefit from improved electric service reliability. The project will involve the installation of new automated machinery and technology.

The substation on company-owned land will be expanded from 17,000 square feet to 49,900 by ATSI. The substation's configuration will be altered to help prevent or minimize future power outages. The new setup will have separate sections to help isolate issues and prevent service interruptions by allowing the power flow to be rerouted when equipment in the facility need maintenance.

As part of a nearly $15 million project, ATSI is adding enhanced equipment that will help identify potential issues and address them in a timely manner.

Investment in Infrastructure is a Must

A rise in temperature not only increases the demand for electricity but also poses a threat to electric infrastructure due to overheating, increasing the risk of equipment failures and fires. These inspections and maintenance tasks are crucial to maintaining service reliability and ensuring customer satisfaction.

The new project 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.

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 - Free Report) , Exelon Corporation (EXC - Free Report) and Entergy Corporation (ETR - Free Report) , are also taking initiatives to strengthen their existing infrastructure.

Dominion has plans to upgrade electric infrastructure by installing smart meters and grid devices. It is also working on a project of strategic undergrounding of 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 will increase the resilience of its operation and enable it to serve the expanding customer base more efficiently.

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 growth of 2.9%.

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 7.3%. The Zacks Consensus Estimate for 2024 EPS implies a year-over-year increase of 6.7%.

FE’s Stock Price Performance

In the past six months, shares of FirstEnergy have risen 16.7% compared with the industry’s 16.9% growth.

 

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FE’s 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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