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FirstEnergy (FE) Arm Manages Vegetation Using Aerial Saws

In order to enhance the reliability of its services, FirstEnergy Corp.’s FE subsidiary Mon Power is working consistently on vegetation management. Recently, it began using two helicopters with aerial saws to cut trees and maintain electrical clearances along 187 miles of eight high-voltage transmission lines in West Virginia.

The aerial saw will help pruning trees in areas that are inaccessible to bucket trucks and other vehicles along with eliminating the risk of injury to workers. The work is expected to be complete by September. Better upkeep of the trees along with proper maintenance of electric facilities is likely to reduce the frequency and duration of power outages related to vegetation and changing weather conditions.

As part of the $70-million vegetation management program, the subsidiary plans to clear vegetation along 5,700 miles of distribution and transmission power lines in West Virginia during the ongoing year. The total customer outage minutes even during severe storms in the utility's 34-county service territory, declined more than 40% from the first year level of its existing tree-trimming program in 2015.

Need for Maintenance

With the reopening of business activities, commercial and industrial demand is gradually returning to pre-COVID levels. Residential demand is likely to be stable as few people continue to work from home. To cater to this expected hike in demand, the company needs to undergo some renovation. Effective maintenance will ensure uninterrupted power supply to the company’s customers that it serves in different states and increase the reliability of its services.

The National Oceanic and Atmospheric Administration’s (NOAA) climate prediction center forecasts another above-normal Atlantic hurricane season for 2021. Per NOAA, there is a 60% chance of an above-normal season, 30% chance of a near-normal one and a 10% chance of a below-normal season this year. Vegetation management also lowers the possibility of vegetation-related outages during inclement weather.

Company’s CAPEX Plans

FirstEnergy is working consistently on maintaining its infrastructure. Annually, the company employs tree contractors who work round the year to ensure proper vegetation management in its service territories. Earlier this year, the utility invested $97 million in automation and infrastructure-reliability projects to reduce the impacts of severe weather.

Per its ‘Energizing the Future’ plan, it decided to invest $1.1-$1.45 billion, annually, through 2023 in enhancing and expanding its regulated transmission capabilities. In 2021, it expects to spend up to $2.9 billion while in 2022, it estimates to invest up to $2.9-$3.2 billion. It provided the CAPEX guidance for 2023 in the range of $2.7-$3.1 billion.

Utilities Focus on Infrastructure

To provide 24X7 supply of electricity to consumers, utilities are investing heavily in strengthening their infrastructure. They are replacing old transmission and distribution lines, undergrounding distribution lines and adopting technological upgrade to increase the resilience of infrastructure for withstanding the impact of hurricanes, storms and other natural calamities.

Utilities like Xcel Energy XEL increased its investment plans to $24.3 billion from $23.5 billion in the 2021-2025 time period. NextEra Energy NEE chalked out plans to invest in the $50-$55 billion band in different projects during the 2019-2022 time frame to modernize and reinforce its existing infrastructure. DTE Energy DTE currently expects to make capital investments of $14 billion over the 2021-2025 forecast period to bolster its existing infrastructure.

Zacks Rank & Price Performance

In the past six months, shares of this currently Zacks Rank #3 (Hold) company have gained 20.3%, outperforming the industry’s rise of 2.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Six Months Price Performance

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