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Stock Strategist

FirstEnergy Refocuses on Regulated Operations

Several years of depressed power prices have challenged its deregulated businesses.


Our fair value estimate for  FirstEnergy (FE) is unchanged following the company's filing of a settlement agreement with the Public Utilities Commission of Ohio for the Powering Ohio's Progress plan originally proposed in August. The proposed settlement has 15 signatories, including the city of Akron, Ohio Energy Group, business groups, and universities. Changes from the original proposal included $23 million in economic development and energy efficiency grants and $7 million to help low-income customers pay their electric bills. The agreement does not change our narrow Morningstar Economic Moat Rating.

The POP plan provides for FirstEnergy's three regulated utilities to enter into a 15-year power purchase agreement with FirstEnergy Solutions for output from the Davis-Besse nuclear plant and the W.H. Sammis coal-fired power plant as well as a portion of the power from the partially owned Kyger and Clifty Creek plants. The utilities would then sell the power into the wholesale markets. Customers would receive rate credits if the power sold was greater than the purchase price. FirstEnergy has estimated that residential customer savings would be approximately $2 billion.

Charles Fishman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.