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Firstenergy Corp.
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About Firstenergy Corp.

FirstEnergy's first goal is to generate and deliver power, but its second goal is to stay profitable in a market undergoing deregulation. Its ten utilities provide electricity to 6 million customers in the Midwest and the Mid-Atlantic. The company's domestic power plants have a total generating capacity of more than 16,000 MW, an amount expected to diminish as the company winds down its deregulated business. Subsidiary FirstEnergy Solutions trades energy commodities in deregulated US markets. FirstEnergy's other nonregulated operations include electrical and mechanical contracting and energy planning and procurement.

Operations

FirstEnergy has three primary operating segments: Regulated Distribution, Regulated Transmission, and Competitive Energy Services (CES). About 65% of total revenue comes from Regulated Distribution, roughly 25% from Competitive Energy Services, and the rest from Regulated Transmission. 

The Regulated Distribution segment distributes electricity through FirstEnergy's ten utilities which serve 6 million customers in a service area with a total population of 13.3 million. It has a controlling interest in 3,800 MWs of generation capacity in West Virginia, Virginia, and New Jersey. It fulfills the additional electricity needs of its customers through power purchase agreements.

The Competitive Energy Services segment, through its subsidiaries FES and AE Supply, supplies electricity through retail and wholesale arrangements, including competitive retail sale to customers primarily in Ohio, Pennsylvania, Illinois, Michigan, New Jersey and Maryland. It controls some 12,300 MW of capacity.

The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by American Transmission Systems, Trans-Allegheny Interstate Line Company, and a number of FirstEnergy's utilities. Transmission operations include approximately 24,500 miles of lines and two regional transmission operation centers.

Geographic Reach

FirstEnergy operates and serves customers in a service area of 65,000 square miles in Maryland, New Jersey, New York, Ohio, Pennsylvania, and West Virginia.

Its power generating assets are located in Pennsylvania, Ohio, West Virginia, New Jersey, and Maryland.

Sales and Marketing

The Regulated Distribution segment sells roughly equal amounts of electricity to its residential and industrial customers, and slightly less to its commercial customers. Generally, there is no competition for electric distribution service in its service territories in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey and New York.

FirstEnergy's CES segment participates in deregulated energy markets in Ohio, Pennsylvania, Maryland, Michigan, New Jersey and Illinois, through FES and AE Supply. CES competes to provide retail generation service directly to end users, to provide wholesale generation service to utilities, municipalities and co-operatives, which, in turn, resell to end users, and in the electricity wholesale market.

Financial Performance

Until 2016, the company’s financial performance was steady through trending slightly downward. Revenue peaked at $16.1 billion in 2011 and since slid to below $15 billion in 2016. Net income slipped from $885 million in 2011 to below $300 million in 2014, before an upward tick in 2015, which preceded a massive fall in 2016.

In 2017, revenue decreased 4% to $14 billion, mostly coming from CES ($1 billion less), which saw a 10 million MWH decline in contract sales at lower prices, as well as lower capacity auction prices, offset by better performance from Transmission and Distribution segments. 

The company posted a loss of $1.7 billion for 2017, a marked improvement from some $6.2 billion in losses the year before, due to $8.3 billion reduction in impairment charges related to its exit from commodity-exposed generation at CES. In 2017, $2 billion in impairments came from nuclear generating assets. 

It has $590 million in cash holdings. Operations generated $3.8 billion, offset by $2.7 billion in investing cash outflow and a further $700 million going towards financing activities. 

 

Strategy

The overriding long-term objective for FirstEnergy is to transition its business model from being a holding company of competitive energy wholesaler subsidiaries into one that holds solely regulated utilities. As an energy wholesaler, the CES subsidiary is tossed about by the volatile pricing of energy products (oil, coal, etc.) and therefore carries a high risk with volatile financial results. The move to wind down CES and focus on regulated utilities brings with it a much lower risk profile and predictable, steady cash flows.

Part of its plan includes divestitures. In 2017, FirstEnergy's CES segment agreed to sell four natural gas generating plants in Pennsylvania, its ownership interests in a Virginia hydroelectric power station, and gas/oil-fired facility to a subsidiary of LS Power Equity Partners III, LP, for $925 million. In total, it is selling off more than 1,600 MW of generation capacity. Additionally, it plans to retire by 2020 720 MW of capacity at its Sammis Plant and 136 MW at its Bay Shore plant, both in Ohio.

Meanwhile, First Energy continues to invest in its regulated companies. To date, it's installed 550,000 smart meters across its Pennsylvania market and plans to replace them for all 2 million of the state's customers by 2019. It is working with Ohio regulator agencies to pursue a similar grid modernization effort in that state. In total, it plans to spend roughly $1 billion/year on its utilities companies between 2017 and 2020.

Firstenergy Corp.

76 S MAIN ST
Akron, OH 44308-1817
Phone: 1 (800) 736-3402

Stats

Employer Type: Publicly Owned
Stock Symbol: FE
Stock Exchange: , NYSE
President, CEO, and Director: Charles E. Jones
EVP and CFO: James F. Pearson
Chairman: George M. Smart
Employees (This Location): 1,618
Employees (All Locations): 12,494

Major Office Locations

Akron, OH

Other Locations

Beebe, AR
Washington, DC
Hagerstown, MD
Luke, MD
Blairstown, NJ
Boonton, NJ
Dover, NJ
Flemington, NJ
Landing, NJ
Morristown, NJ
Toms River, NJ
Union Beach, NJ
Washington, NJ
Akron, OH
Ashtabula, OH
Brecksville, OH
Cleveland, OH
Elyria, OH
Fairlawn, OH
Holland, OH
Mansfield, OH
Marion, OH
Massillon, OH
Oak Harbor, OH
Oregon, OH
Painesville, OH
Put In Bay, OH
Sandusky, OH
Shadyside, OH
Springfield, OH
Stratton, OH
Wadsworth, OH
Willoughby, OH
Youngstown, OH
Altoona, PA
Butler, PA
Clearfield, PA
Connellsville, PA
Easton, PA
Erie, PA
Harrisburg, PA
Indiana, PA
Irwin, PA
Johnstown, PA
Lebanon, PA
Lewistown, PA
Montrose, PA
Oil City, PA
Philadelphia, PA
Reading, PA
Reinholds, PA
Shippingport, PA
Springdale, PA
Warren, PA
York, PA
Gleason, TN
Norfolk, VA
Belmont, WV
Elkins, WV
Haywood, WV
Maidsville, WV
Ronceverte, WV
Sistersville, WV
Weston, WV
Willow Island, WV