FirstEnergy (FE) Completes Maintenance Work Ahead Of Winter

FirstEnergy Corp. (NYSE:FE) and subsidiaries recently completed inspection operations and maintenance services of its equipments, in a bid to ensure operational reliability in its service territory, before winter arrives next month in the United States.

Currently the company operates in six states — Ohio, Pennsylvania, New Jersey, New York, Maryland and West Virginia — wherein FirstEnergy undertook these maintenance initiatives.

Details of the Maintenance Work

Maintenance work was carried out by FirstEnergy’s subsidiaries — Ohio Edison (OE), Cleveland Electric Illuminating Company (CEI), Toledo Edison (TE), Penelec (PN), Met-Ed (ME), Penn Power (PP), West Penn Power (WP), Jersey Central Power & Light (JCP&L), Monongahela Power Company (MP) and The Potomac Edison Company (PE).

The company’s operations included the inspection of heating equipment for substation components. Additional inspection was carried out for batteries as well as motors of these equipments. An equipment survey was carried out to check overheating and malfunctioning in case the heaters get cranked up for higher usage.

Company bucket trucks and other vehicles are also checked to ensure safe operation during the winter, while a thorough tree trimming across the year has been FirstEnergy’s custom for maintaining proper clearances around electrical systems. This in turn offers protection against tree-related outages.

Notably, the company conducted helicopter patrols to lookout for damaged wire, broken cross arms, failed insulators and other hardware problems across the transmission lines located in its entire service area.

FirstEnergy’s Reliability Measures - Not New

To enhance service reliability, it has been a common practice for FirstEnergy to conduct maintenance work like the aforementioned one, each year before the winter season arrives. In fact, since 2014, FirstEnergy has been focusing on modernization efforts to upgrade or replace existing power lines, incorporate new, smart technology into the grid and substations upgrades; to serve customers more efficiently.

This led to the company’s ambitious “Energizing the Future” plan for upgrading and expanding regulated transmission capabilities. FirstEnergy plans to invest nearly $1 billion in 2017 and $4.2-$5.8 billion over 2017-2021, under the initiative.

Our View

Colder weather conditions increase the demand for electricity. However, heavy snow and winds can cause damage to wires and substations as well as transmission lines, thereby causing disruptions in electricity supply. Therefore, conducting inspections and maintenance of equipment before the onset of winter helps to minimize infrastructural damage and ensures better service.

Following this strategy, FirstEnergy is conducting maintenance work across its service territory. Additionally, FirstEnergy has plans to transform itself into a complete regulated utility by mid-2018. The aforementioned efforts and investments to prepare for winters in its regulated operations are anticipated to aid this transformation.

In line with this, we may expect other utilities like NextEra Energy, Inc. (NYSE:NEE) , American Electric Power Company, Inc. (NYSE:AEP) and Duke Energy Corporation (NYSE:DUK) to undertake similar steps to carry out maintenance and reliability operations.

Price Movement

Shares of FirstEnergy have returned 7.2% outperforming the industry’s rise of 4.0% in the last three months.

This was been driven by the company’s strong focus on upgrading its transmission lines and moderninzing its distribution network, through solid investments.

Zacks Rank

FirstEnergy carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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