Infrastructure Upgrades to Drive FirstEnergy's Future Performance

FirstEnergy Corporation’s FE strong transmission and distribution operations, along with its ongoing investments, should enhance grid reliability and enable the company to serve its customers efficiently. This should boost FE’s overall performance. 

However, the company faces risks related to delays in the base rate request approval and seasonal factors.

Factors Acting in Favor of FE

FirstEnergy is benefiting from better economic conditions and increased demand from commercial and industrial organizations. Strengthening of transmission and renewable generation assets will enable the company to transmit electricity even during adverse weather conditions and provide customers with emission-free electricity. The company expects its 2025 capital investment to be $5 billion, representing an 11.1% increase from the prior-year level.

FE’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 $28 billion between 2025 and 2029, FE is set to install advanced equipment and technologies that will strengthen and modernize its transmission and distribution infrastructure.

FirstEnergy is set for data center development across its footprint. The company’s 2025-2029 plan includes nearly 2.7 GW of active or contracted demand, with more in the pipeline that would be incremental to its base investment plan.

Challenges Faced by FE

FirstEnergy cannot guarantee the approval of any base rate request, whether in whole or in part. Any denial of or delay in approving the base rate request could restrict the company from fully recovering its service costs, which might adversely impact its operations, cash flows, and financial condition.

The sale of electric power is generally a seasonal business, and weather patterns can have a material impact on FirstEnergy’s Regulated Distribution operating results. Demand for electricity in the service territories historically peaks during the summer and winter months. Mild weather conditions may result in reduced power sales and, consequently, lower revenues, earnings and cash flow.

Investing in Infrastructure: A Necessity

In addition to increasing electricity demand, rising temperatures put electric infrastructure at risk of overheating, equipment failures, and fires. Expenditures and upkeep are essential for preserving service reliability and ensuring customer satisfaction. Along with FE, other utilities are also focused on improving infrastructure.

Entergy Corporation ETR: During the second quarter of 2025, the company invested $114 million in distribution construction to expand the resilience of its distribution system. In January 2025, the Public Utility Commission of Texas approved Entergy Texas’s $335.1 million Phase I Texas Future Ready Resiliency Plan, which focuses on strengthening and modernizing distribution and transmission systems and implementing vegetation management to reduce wildfire risks.

ETR plans to invest $40 billion during 2025-2028. Of this, $16 billion represents investments in transmission and distribution to enhance the company’s reliability and resilience as a utility provider, while also supporting the expansion of renewables and customer growth. 

Exelon Corporation’s EXC strategic investments will strengthen its transmission and distribution infrastructure. Exelon's initiative in grid modernization will enable it to provide more reliable services.

Exelon invests substantially in infrastructure projects and plans to invest nearly $38 billion from 2025 to 2028 in regulated utility operations. Courtesy of its ongoing infrastructure strengthening, Exelon will be able to maintain its high-quality services.

Dominion Energy D has a well-chalked-out long-term capital expenditure plan to strengthen and expand its infrastructure. After spending $6 billion in the 2018-2022 period, the company plans to invest $12.1 billion in 2025 and $52.3 billion in the 2025-2029 period to further strengthen its infrastructure.

Dominion Energy plans to upgrade its electric infrastructure by installing smart meters and grid devices, and to enhance customer services through its customer information platform.

 

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This article originally published on Zacks Investment Research (zacks.com).

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