FirstEnergy increases profit with boost in industrial use
Growing electricity demand from shale drilling is boosting the transmission business at FirstEnergy Corp., which announced plans to pour money into new distribution plants and upgrade transmission lines.
“Clearly, shale-related activity remains a bright spot,” Chuck Jones, president of FirstEnergy Utilities, said during a call Tuesday to discuss the latest earnings.
The Akron-based company reported earnings of $333 million, or 79 cents a share, in the July-September quarter, up from $218 million, or 52 cents a share, in the same period a year ago.
The increase was buoyed by a boost in industrial energy use. Industrial sales increased by 3 percent, partially offsetting a 6 percent decline in residential sales. Total revenue during the quarter dropped to nearly $3.9 billion from $4 billion.
The transmission business, which includes lines that carry power from a generating plant to substations, is expected to be the company’s primary growth platform and will benefit from the shale gas industry, Jones said.
The shale industry needs large amounts of power to run its processing and drilling operations.
The company says it will invest $4.2 billion in transmission and other systems improvements from 2014 to 2017 to avoid power outages. It is on track to complete $1.3 billion in investments in 1,100 projects this year, Jones said.
An expansion project in West Virginia at Mon Power, one of 10 utilities FirstEnergy owns, will bring online 280 megawatts of power, or enough for 280,000 homes, in December.
“The investments we’re making in transmission infrastructure … will boost electricity reliability across the system,” Jones said.
On the power generation side, the company has been preparing its coal-fired and nuclear plants to meet upcoming winter power demand in response to last year’s polar vortex, which put strains on the grid, said Tony Alexander, president and CEO.
“We have been working to support changes that can prevent similar or more disastrous stress on the electric grid in the future,” he said.
FirstEnergy owns the West Penn Power, Penelec, Met-Ed and Penn Power utilities in Western Pennsylvania.
It is asking the state Public Utility Commission to approve a total $415 million rate increase, which would impact 2 million customers. Hearings in the case are scheduled throughout November. The company expects a decision in May.
The company serves 6 million customers in six states and announced this year it was exiting the electricity retail market to focus on its generation and utility business. It operates the Beaver Valley nuclear plant and Bruce Mansfield coal-fired plant in Beaver County.
Katelyn Ferral is a staff writer for Trib Total Media. She can be reached at 412-380-5627 or [email protected].