FirstEnergy (NYSE:FE) continues its efforts involving its proposed Mid-Atlantic Interstate Transmission (MAIT) subsidiary, as well as its “Energizing the Future” transmission investment program, FirstEnergy President and CEO Charles Jones said on April 27 during the company’s 1Q16 earnings call.
MAIT, which would hold the transmission assets of Metropolitan Edison (Met-Ed), Penelec and Jersey Central Power & Light (JCP&L), as well as facilitate new investments that can improve service reliability for those customers, received FERC approval in late February, Jones said.
Earlier this month, he said, administrative law judges with the Pennsylvania Public Utility Commission (PUC) issued an initial decision in the matter involving MAIT, approving a settlement filed by the parties resolving all issues in the case. FirstEnergy anticipates final approval from the Pennsylvania PUC by mid-year, Jones said.
“[L]ast week, we made a supplemental filing in New Jersey seeking to transfer certain JCP&L distribution assets into MAIT, which we believe should satisfy the concerns regarding public utility status that were addressed by the [New Jersey Board of Public Utilities (BPU)] in February,” he said. “We will continue to work with the BPU because we believe transferring these assets to MAIT is the right thing to do for our New Jersey customers.”
As the company mentioned in February, he said, FirstEnergy has passed the halfway point of the first phase of its “Energizing the Future” transmission investment program, with $2.4bn invested through 2015 on projects that are designed to make the system more robust, secure and resistant to extreme weather events.
“This program remains on track and we continue to view the transmission business as our primary growth platform for many years to come,” Jones said.
Noting that FirstEnergy has been focused on removing regulatory uncertainty and positioning its regulated businesses for growth, Jones said that the company plans to file rate cases this week for JCP&L and its four Pennsylvania utilities that are consistent with the company’s goals of enhancing customer service and reliability, strengthening the distribution system, improving security, and adding resiliency and operating flexibility to its infrastructure, while providing stability and growth for the company.
In Pennsylvania, FirstEnergy’s four utilities will file rate plans with the PUC aimed at extending the service reliability improvement efforts that have yielded significant results for more than two million customers. He noted that since 2011, the number of power outages impacting FirstEnergy’s Pennsylvania customers has decreased by an average of about 27%, while restoration times have improved by an average of about 14% in that same period.
“In total, our request would result in an expected revenue increase totaling $439m across four Pennsylvania utilities,” he said, adding that pending PUC approval, FirstEnergy anticipates that the new rates will take effect in January 2017.
“The new base rates at the Pennsylvania utilities would also include recovery of cost associated with our long-term infrastructure improvement plans, which include a projected increase in capital investments of $245m over five years to help strengthen, upgrade and modernize our Pennsylvania distribution systems,” Jones said. “We expect to begin recovering the cost of those programs in July through the distribution system improvement charges that are currently pending Pennsylvania PUC approval.”
The company also plans to file a rate plan with the BPU that supports and builds on the significant service reliability improvements made by JCP&L in recent years, he said.
“The planned $142m rate request seeks to improve service and benefit customers by supporting equipment maintenance, vegetation management and inspections of lines, poles and substations, while also compensating for other business and operating expenses,” he said.
The JCP&L plan is designed to extend the service reliability improvements that helped the utility achieve its best service reliability record in more than a decade last year, he noted. While JCP&L’s rates have remained stable, and even declined, over the past decade, its operating expenses have continued to increase, he said, adding that since July 2012, JCP&L has invested $612m in service-related enhancement projects.
“[E]ven with the proposed 6% overall rate increase for the average residential customer, JCP&L would continue to offer the lowest residential electric rates among the four regulated electric distribution companies in New Jersey,” Jones said.
The company will request that its new rates go into effect in January 2017, he said.
FirstEnergy on April 26 reported 1Q16 operating (non-GAAP) earnings of 80 cents per basic share of common stock. Those results exclude the impact of certain special items and compare to 1Q15 operating (non-GAAP) earnings of 62 cents per basic share of common stock, the company said.
On a GAAP basis, the company reported 1Q16 net income of $328m, or 78 cents per basic share of common stock (77 cents diluted), on revenue of $3.9bn. FirstEnergy also said that in 1Q15, GAAP net income was $222m, or 53 cents per basic and diluted share of common stock, on revenue of $3.9bn.