QUOTE AND NEWS
Benzinga  Dec 16  Comment 
FirstEnergy Corp. (NYSE: FE) announced today that its Board of Directors has elected Anthony J. Alexander, 63, executive chairman of the company, effective January 1, 2015. He will be succeeded as president and chief executive officer by Charles...
Benzinga  Nov 17  Comment 
FirstEnergy Corp. (NYSE: FE) announced that a competitive bidding process will be conducted by its Ohio utilities – Ohio Edison, Cleveland Electric Illuminating and Toledo Edison – to procure full-requirements electric generation service for...
OilVoice  Nov 5  Comment 
FirstEnergy Corp. NYSE FE announce third quarter 2014 basic operating nonGAAP earnings of 0.89 per share of common stock. These results exclude the impact of the special items listed below. Th
Wall Street Journal  Nov 4  Comment 
FirstEnergy said its operating earnings fell in the third quarter, as lower distribution deliveries and a higher interest expense offset a lower tax rate.
newratings.com  Nov 4  Comment 
WASHINGTON (dpa-AFX) - FirstEnergy Corp. (FE) reported that its third-quarter 2014 earnings of $333 million and $0.79 per share up from $218 million and $0.52 per share in the third quarter of 2013. On a non-GAAP basis, basic operating earnings...
TheStreet.com  Nov 3  Comment 
NEW YORK (TheStreet) -- FirstEnergy Corp. is scheduled to release its 2014 third quarter earnings results before the market open on Tuesday, and analysts are expecting the diversified energy company to report an increase in earnings per share...
Forbes  Oct 31  Comment 
Expectations have dropped for FirstEnergy's third quarter results in the month leading up to the company's earnings announcement slated for Tuesday, November 4, 2014. The consensus analyst estimate has dropped from 93 cents a share to the current...
TheStreet.com  Oct 29  Comment 
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. aTheStreet Ratings quantitative algorithm...
New York Times  Oct 27  Comment 
The private equity firm said the final amount raised for the fund was $1 billion higher than the initial goal, indicating robust interest in the energy sector among investors.




 

FirstEnergy (NYSE: FE) is a electric utility holding company. FirstEnergy holds directly or indirectly eight electric utility operating subsidiaries and other energy companies located primarily in Ohio, Pennsylvania, and New Jersey.[1] FirstEnergy generates its revenues from the electric services provided by its subsidiaries. Its operations are divided into the energy delivery services and competitive energy services.[2] The Company is in transitioning all of its holdings to a market-rate price structure, which further exposes its subsidiaries to volatile commodity prices for coal and natural gas.

Business Growth

FirstEnergy earned $784 million in net income on revenues of $13.3 billion in 2010, versus net income of $1 billion on revenues of $12.6 billion in 2009.[3] The key determine for revenue growth is the demand for electric energy and overall energy prices. FirstEnergy has also grown its customer base by 35% through the acquisition of Allegheny Energy.[4]



Trends and Forces

FirstEnergy's new price structure increases its exposure to commodity prices

FirstEnergy plans to move all of its holdings to a market-rate structure, which has the potential of increasing its exposure to volatile commodity prices for power, coal and natural gas.[5] Traditionally, approximately 20% of FirstEnergy's generation business was exposed to market prices.[6] After completing its price structure transition, all of FirstEnergy's generation business will be exposed to power market prices. As a result, the company's profitability depends on the relationship between coal and gas prices as well as the demand for power.[7] Volatile commodity prices have the potential of straining the Company's profits as well as its cash flows.[8]



Deregulation in offers opportunity for higher revenues and increased competition

Like all utility companies, FirstEnergy is subject to regulatory and legislative risks that have the potential of raising costs and capping returns. Traditionally, the price that utility companies could charge consumers for electricity generation has been capped by state regulators.[9] However, many states have started deregulating their energy industries with the intent of lowering prices by letting retail customers "shop" for the company that generates their electricity.[10] New Jersey and Pennsylvania both have market-rate generation prices and Ohio has recently taken legislative steps in the same direction.[11]

In most states, however, utilities rates have actually increased in the short term following the removal of rate caps as companies move to align their prices with their costs. If electric prices in Ohio react as they have in other states, FirstEnergy will be able to charge more for its services in a competitive environment. FirstEnergy's low cost nuclear and coal-powered electrical facilities have the potential of giving the company a competitive advantage and lead to a rise in returns from these facilities. However, the Company has had to readjust its business model from a capped rate price structure to a market-rate price structure. Also as a result of deregulation, FirstEnergy faces increased competition, which has the potential of leading to lower prices.[12]

Competitors

FirstEnergy's distribution services are regulated by state governments and have a service monopoly over their areas.[13] In generation industry, FirstEnergy competes with numerous energy companies operating in the Midwest and East Coast.[14] Many industries have engaged in cost-cutting initiatives in order to combat lower demand and costlier feedstocks. In a manner similar to FirstEnergy, many utility companies have switched to a market-price structure in order to adapt to volatile commodity prices.[15]

In the generation space, FirstEnergy competes with the following:


References

  1. Reuters.com: FirstEnergy Profile
  2. Google Finance: FirstEnergy Profile
  3. FirstEnergy 2010 Annual Report
  4. FirstEnergy 2010 Annual Report
  5. First Energy Press Releases FirstEnergy Solutions Offering New Low Price on Electric Generation to Penelec Residential Customers
  6. IstockAnalyst: Our Outlook for Utilities Stock 3/30/2011
  7. IstockAnalyst: Our Outlook for Utilities Stock 3/30/2011
  8. IstockAnalyst: Our Outlook for Utilities Stock 3/30/2011
  9. Forbes.com:Electric Deregulation Finally Takes Off
  10. Forbes.com:Electric Deregulation Finally Takes Off
  11. Cleveland.com: Energy deregulation in Ohio: Utilities
  12. Forbes.com:Electric Deregulation Finally Takes Off
  13. FirstEnergy 2010 Annual Report
  14. FirstEnergy 2010 Annual Report
  15. Yahoo! finance: Competitors for FirstEnergy
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