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FirstEnergy's Unit Provides Update on $4.7M Upgrade Program

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FirstEnergy Corp.’s (FE - Free Report) subsidiary,Jersey Central Power & Light (“JCP&L”) recently provided an update regarding its $4.7 million program on the upgrades completed during the year 2017. In fact, this is part of the company’s mission of enhancing service reliability.

Notably, the unit has upgraded over 80 major circuits during the year for nearly 175,000 customers. The subsidiary undertook upgradation work in nearly 150 communities in northern and central New Jersey.

The upgradation work mainly included the installation of 750 parts of high technology equipment for automatic service restoration. Additionally, it placed 250 animal guard devices on poles to minimize outages caused by critters. Further, it attached 390 lightning arrestors on electrical equipment to help protect the system against stormy weather. The unit also replaced around 50 poles, 330 cross-arms and approximately 18,000 feet of wire.

JCP&L’s current investment will benefit nearly 175,000 customers in about 150 communities in northern and central New Jersey. FirstEnergy is currently planning to undertake investments worth $600 million in transmission projects through 2018.

Upgradation is A Necessity

Upgrade and modernization of the existing infrastructure is almost a necessity for utilities for ensuring a steady and uninterrupted supply of electricity and power to the customers.

Consequently, other utilities like American Electric Power Company, Inc. (AEP - Free Report) and Duke Energy Corporation (DUK - Free Report) are also currently undertaking steps to strengthen infrastructure while replacing old ones. These initiatives are in a bid to retain existing clients and staying in competition in the highly competitive wholesale and retail electric market.

FirstEnergy’s Mission

FirstEnergy has been active in fulfilling its “Energizing the Future” plan through subsidiaries. This plan was initiated to upgrade and expand the company’s regulated transmission capabilities across its area of operations. Toward this, it has incorporated new, smart technology and introduced substations upgrades. In line with this, the company has made investments worth almost $1 billion in 2017 and further aims to invest $4.2-$5.8 billion over 2017-2021.

What to Expect Going Ahead?

We anticipate the initiatives undertaken by FirstEnergy and its subsidiaries to aid in retaining existing customers. Further, the improved quality of power and electricity services will help expand its regulated base with the improvement of transmission lines that will boost performance.

In addition, the company has been taking initiatives to convert itself into a fully regulated company and is gradually exiting from non-regulated operations. As a consequence of which we have also noticed a 42% year-over-year drop in FirstEnergy’s competitive business customers at the end of the third quarter. The company is expected to become a fully regulated company by mid-2018, which is likely to give much more earnings visibility going forward.

Price Movement                           

Shares of FirstEnergy have returned 6.7%, outperforming the industry’s growth of 3% in the last six months.

Zacks Rank

FirstEnergy currently carries a Zacks Rank #3 (Hold). A better-ranked stock from the same space is IDACORP, Inc. (IDA - Free Report) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

IDACORP delivered an average surprise of 6.97% in the trailing four quarters. Its 2017 Zacks Consensus Estimate has risen to $4.08 per share from $4.00 per share in the last 60 days.

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