summary
FirstEnergy is a diversified energy company headquartered in Akron, Ohio. It is one of the largest investor-owned electrical systems in the country, with 10 organized subsidiaries. The company has a small structured generation capacity, less than 4000MW. The focus of the FE is on transmission and distribution; However, the company was selling parts of its haulage business. The company serves 6 million customers, including 2.3 million in Ohio, 1.8 million in Pennsylvania, and another 2 million in other mid-Atlantic states. At the moment, organized distribution accounts for about 85% of revenue. FE has no natural gas operations and regulated electricity distribution usually accounts for about 70% of operating profit. The generation mix in FE is as follows: carbon neutral nuclear power (53%), refined base load coal (35%), natural gas and oil (4%), pumped storage hydro and other renewables (8%). We believe the company is at a disadvantage to its peers given its heavy reliance on coal generation. FE has pledged to cut greenhouse gas emissions by 30% (from a 2019 baseline) by 2030 and become carbon-neutral by 2050. The company was embroiled in a bribery scandal in 2020 that resulted in a $230 million penalty. It was also found liable for incorrect customer fees, which led to a $306 million settlement with regulators in Ohio. Although insurance could mitigate some of the expenses, FE will be responsible for significant customer credits and settlement payments over the next three years.
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