FirstEnergy's decision to behave more like a traditional regulated utility by spending to improve its wires and delivery system where profits are guaranteed has put the company back on the road to profitability.
View full sizeFirstEnergy is spending more money on projects like this substation than on competitive sales in an effort to stabilize profits. AKRON, Ohio -- FirstEnergy Corp.'s strategy to walk away from competitive power sales, close power plants and embark on a program to spend billions upgrading and expanding its wires -- where profits are guaranteed -- is paying off.
The company on Tuesday morning said it made $333 million or 79 cents per share, on sales of $3.9 billion in the three months ending Sept. 30.
That compares to net income or profits of $218 million, or 52 cents per share, on sales of more than $4 billion in the same three-month period a year ago.
The big turnaround is good news for investors but spells future delivery rate increases for consumers who under state and federal rules pay for improvements in the delivery system.
The strategy is also good news for competitors who no longer have to deal with the cut-rate prices that FirstEnergy Solutions, the company's unregulated and competitive subsidiary had used to dominate the market. FES is no longer seeking new residential or commercial customers.
"Throughout the third quarter, we continued to build positive momentum by implementing our transmission investment program and working through rate cases for our utilities," said Anthony Alexander, president and CEO, in a statement accompanying the financial report.
"At the same time, we are moving forward with our efforts to reduce risk in our competitive business, and our advocacy for a competitive market construct that supports price stability and reliability is beginning to produce results," he said, an apparent reference to the company's mounting conflict with grid manager PJM Interconnection about how power prices are set.
Things are looking so good for the company, said Alexander, that it is re-affirming its guidance that on a before-expenses basis, it will report operating earnings for the year of $2.40 to $2.60 per share.
Alexander and other top executives will take questions from investors and analysts during a public teleconference scheduled for 1 p.m. today and available on the company's website live and later as a recoding.
To access the teleconference, click here.