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FirstEnergy (FE) to Close Three-Year Grid Modernization Project

Zacks Equity Research
·4-min read

FirstEnergy Corporation’s FE unit, Toledo Edison, recently announced that it is about to complete the grid modernization project in Lucas County, which began in 2020. The infrastructure upgrade will assist in preventing or shortening the duration of service interruptions and outages, especially during extreme weather.

The project involves installing modern, automated equipment and technology in power lines and substations. FirstEnergy is completing electrical equipment upgrades in seven substations in the greater Toledo region as part of the project and also updating 31 power lines that provide electricity for more than 59,000 consumers in Toledo, Holland, Maumee and nearby areas.

The installation of 134 new automated reclosing devices in substations will act like a circuit breaker that automatically restores the service to customers in lieu of sending a crew to investigate. This smart technology will locate the interruption immediately and open the door to a more reliable power system with cutting-edge technology to support various energy sources in the future.

Finally, more than 140 capacitor banks were built to ensure the continued safe and dependable power distribution to all customers served by a single power line. Since 2020, Toledo Edison has deployed approximately 130,000 smart meters for customers in Lucas County, allowing them to better manage their energy use and reduce projected readings.

Need for Infrastructure Upgrade

Electricity generation, transmission and distribution facilities maintained by utilities have the possibility of an equipment breakdown or failure due to aging infrastructure and extreme weather conditions. To lessen the frequency and length of power outages, utilities modernize the transmission and distribution system by replacing the outdated infrastructure with new cutting-edge technology and equipment.

On Jul 15, 2022, FE filed the new four-year Grid Mod II program with the Ohio commission, proposing a $626-million capital investment to expand the deployment of Grid Mod technologies and help reduce the frequency of power outages. The Ohio Grid Mod II plan expands on the Grid Mod I plan, which was implemented in 2019 and was effective in decreasing numerous power outages.

FirstEnergy is taking adequate measures to maintain its infrastructure and provide high-quality services for its six million customers. Since 2014, FirstEnergy has upgraded or replaced existing power lines, incorporated smart technology into the grid and upgraded dozens of substations with new equipment and enhanced security features.

Zacks Rank & Price Performance

Currently, FirstEnergy carries a Zacks Rank #3 (Hold). In the past year, shares of FE have rallied 6.7% compared with the industry’s growth of 10.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Utilities’ Focus on Infrastructure

To provide a 24X7 electricity supply for consumers, utilities are investing heavily in strengthening their infrastructure. They are replacing old transmission and distribution lines and adopting technological upgrades to increase the resiliency of infrastructure for withstanding the impact of extreme weather conditions. To name a few are Xcel Energy XEL, NiSource NI and Pinnacle West Capital PNW.

Xcel Energy continues to invest substantially in its utility assets and aims to strengthen and expand its transmission, distribution, electric generation and renewable projects. XEL aims to spend $26 billion during the 2022-2026 period, which includes $1.5 to $2.5 billion in incremental opportunities.

NiSource is working on a long-term utility infrastructure modernization program and made capital investments worth $1.9 billion in 2021 and plans to invest in the range of $2.4-$2.7 billion in 2022. NI estimated $40-billion long-term natural gas and electric infrastructure investment opportunities, which are expected to drive earnings beyond 2024.

To efficiently serve its expanding customer base, Pinnacle West Capital has systematic investment plans to increase generation and strengthen its transmission and distribution lines. After investing $1.5 billion in 2021, it aims at investing $1.53 billion in 2022. PNW also plans to invest $4.7 billion during the 2022-2024 period.


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NiSource, Inc (NI) : Free Stock Analysis Report
 
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