FirstEnergy Corporation’s FE long-term capital expenditure plans, infrastructure advancement and technology enhancement will boost its performance.

However, the company faces strict regulations due to coal-fired generation plants. Unfavorable weather conditions also act as headwinds.

Tailwinds

The company aims to invest more than $26 billion between 2024 and 2028, to install advanced equipment and technologies that will strengthen and modernize its transmission and distribution infrastructure. Strengthening the transmission and renewable generation assets will allow the transmission of electricity even during adverse weather conditions. It also expects investments worth $4.3 billion in 2024.

The company witnessed a file settlement in April 2024 of its new four-year Grid Modernization II program with the Ohio Commission. With a four-year investment of $421 million, FE aims to expand the deployment of Grid Modernization technologies and reduce the frequency of power outages. This investment also includes the deployment of 1.4 million smart meters to deliver safe, reliable power and promote modern experiences for customers.

The company is focused on lowering emission levels. In 2015, it aimed to reduce CO2 emissions by at least 90% from 2005 levels by 2045. In November 2020, it updated its target to become 100% carbon neutral by 2050, with a mid-term goal of a 30% reduction in greenhouse gases from the 2019 level by 2030.

Headwinds

FE’s coal-fired generating plants are liable to incur more costs due to compliance with federal, state and local environmental statutes for rules and regulations relating to air emissions, including GHGs and CCR disposal. These legal requirements and any future initiatives will likely impose substantial additional costs, which will affect profitability.

Demand for electricity in the service territories historically peaks during the summer and winter months. Mild weather conditions are likely to result in lower power sales, which will lead to decreased revenues, earnings and cash flow.

Utilities Focus on Infrastructure Upgrade

Along with FirstEnergy, some other companies like Ameren Corporation AEE, Evergy, Inc. EVRG and NiSource Inc. NI are also investing in infrastructure to further improve its operations.

Ameren aims to invest more than $55 billion during the 2024-2033 period. These investments will support its overall system reliability and environmental compliance, along with modernizing its electric and natural gas transmission as well as distribution grid.
 
The 10-year capital expenditure plan also includes notable investments to expand its renewable generation portfolio.

Evergy’s long-term investment plans are focused on transmission, distribution infrastructure upgrades and customer-facing platforms to improve reliability. The company aims to invest more than $12.5 billion by 2028.
 
The planned capital expenditures of Evergy are in sync with its new Integrated Resource Plan, which intends to achieve net-zero emissions by 2045, with an interim goal of 70% reduction in carbon dioxide emissions by 2030.

NiSource is working on a long-term utility infrastructure modernization program. The company aims to invest in the range of $3.3-$3.5 billion during 2024. It also projects an investment of $16.4 billion during 2024-2028. Its planned regulated investments will improve the reliability and safety of its services.

The company is set to retire its 100% coal-generating sources between 2026 and 2028 and replace the production volumes with reliable and cleaner options at lower costs.