FirstEnergy Corp., which is working to end a major statewide scandal, also continues to work to keep the lights on in five states while making itself more attractive to equity investors and in bonds.

Managing Director Steven Strah has said he is focusing on the development of Akron’s public service, not just the ongoing consequences of the $ 61 racketeering and corruption scandal. millions of dollars.

Following: CEO of FirstEnergy: “There were fundamental things that had to be corrected” after the scandal

Strah, who was appointed interim CEO in October 2020 and officially got the full-time job in March, gave an interview last week to the Beacon Journal and explained how FirstEnergy is evolving as a business as well as investigations. and the current review. linked to the statewide scandal.

Akron returns to office in 2022

He also said the utility was continuing to review when its Akron employees could return to work in their downtown office building. At the moment, the end of February appears to be the first opportunity, depending on the progress of the COVID-19 pandemic. Strah said FirstEnergy, which has around 12,000 employees in five states, could end up with a hybrid desktop and remote work model.

Strah said he spent the majority of his time building a user-friendly electric utility in five states and rebuilding trust in the company in the eyes of its stakeholders.

Over the past year, Strah said that he and others at FirstEnergy have “done very hard work to do what it takes to put the past behind us and pave a very bright and very fruitful path. And I think we’ve made great strides. by doing this.”

“We also have a very sustainable and very stable business plan with FirstEnergy,” said Strah. “This business plan revolves around the fact of being now a pure transmission and distribution company. This simplifies our business model and fits perfectly into the core competency of the company and its employees. “

Utility transmission lines carry electricity long distances from power plants, while distribution lines are intended for short distances, the type of wiring that runs through neighborhoods.

3.4 billion dollars in “transformative” agreements

FirstEnergy announced in November what Strah said were two transformative actions:

• A sale of a 19.9% ​​minority stake in its regulated transport business, FET, to Brookfield for $ 2.4 billion in cash, with the deal slated to close next year.

• A $ 1 billion share sale to Blackstone Group which will also allow Blackstone to secure a seat on the board of FirstEnergy.

“We think the $ 3.4 billion total is truly transformative for our business in a number of different ways,” Strah said. “Firstly, it gives us the opportunity to make a few different capital investments, gradually, on the [transmission and distribution] system. It also gives us an excellent opportunity to strengthen our financial situation. “

FirstEnergy was not in a bad position prior to these actions, Strah said. But the company needed to strengthen itself financially, especially with regard to its level of debt, he said. The infusions will strengthen the bottom line of FirstEnergy.

The Brookfield and Blackstone agreements, coupled with Ohio’s recent deal to reimburse $ 306 million to state clients and the Department of Justice’s $ 230 million deferred prosecution agreement reached earlier this year , help create certainty in the minds of FirstEnergy stakeholders, including investors, Strah said. .

$ 17 billion in spending to modernize technology

FirstEnergy plans to use $ 2.2 billion of the next $ 3.4 billion to increase capital spending to $ 17 billion by 2025, including $ 10 billion for investments in sustainable energy .

FirstEnergy will invest billions of dollars in the coming years to make its transmission and distribution systems more reliable, Strah said.

The money will be spent on things like providing 700,000 smart meters to customers and installing over 200,000 line circuits that will help reduce the impact of blackouts, he said. Money will also be spent to help keep line voltage within good bandwidths, he said.

FirstEnergy’s goal is to become a carbon neutral utility by 2050, Strah said. It does this by aligning itself with producers of solar, wind and other non-fossil energy suppliers in its five states.

Renewable energies considered as the future source of energy

FirstEnergy is preparing for an energy transition from natural gas and coal to renewable energy sources such as wind and solar farms, Strah said.

While FirstEnergy markets itself as a pure regulated transmission and distribution company, its West Virginia subsidiary still owns two coal-fired power plants. The utility plans to keep coal-fired power plants running while working to make them cleaner, Strah said. Factories provide jobs and are an important part of West Virginia’s economy, Strah said.

The company divested its generation subsidiary, FirstEnergy Solutions, in a Chapter 11 bankruptcy filing. The subsidiary emerged from bankruptcy in 2020 as Akron-based Energy Harbor.

Soon after, FirstEnergy found itself embroiled in what is Ohio’s biggest corruption scandal, a scandal of its own, linked to bribing officials to help create and pass the bill. 6 which provided more than $ 1 billion in grants to two former FirstEnergy nuclear power plants now owned and operated by Energy Harbor.

The share price is picking up

The FirstEnergy share price has been hit hard by both the pandemic and ongoing scandal investigations, wiping out billions of dollars in the value of the company known as market cap – the share price multiplied by the number of actions.

The utility’s stock price has risen in 2021 since Strah took over as CEO at the end of October 2020. The stock price bottomed at $ 27.77 on November 27, 2020 and closed Friday at $ 38.84. Friday’s closing price puts FirstEnergy’s market cap at nearly $ 21.2 billion.

The company has done well financially this year. In October, FirstEnergy reported profit of $ 463 million on revenue of $ 3.1 billion for its third quarter, higher than a year ago and exceeding analysts’ expectations. It also raised its financial forecasts for the whole year.

But the price per share remains significantly lower than the pre-pandemic and household scandal peak of $ 52.23 in March 2020.

The scandal and the drop in stock prices allowed billionaire activist investor and corporate raider Carl Icahn to become one of the largest shareholders of FirstEnergy and negotiate to place two representatives on the board of FirstEnergy.

Strah said he has a good, productive and constructive relationship with the two board members associated with Icahn, which owns an almost 3.5% stake in the public service with nearly 19 million shares. This makes Icahn investment firm FirstEnergy the fourth institutional shareholder in Icahn, according to the latest available documents.

Community engagement remains

FirstEnergy will remain involved in its communities, including sponsorships, employee volunteers and corporate contributions, Strah said.

“All the other issues are there and are real. We are dealing with them right,” Strah said. “Do I get updates from our legal team every now and then? Yes. I need to stay on top of our progress. But the majority of my job is to keep the business running and getting on with it. before.”

Over the past year, Strah said that he and others at FirstEnergy have “done very hard work to do what it takes to put the past behind us and pave a very bright and very fruitful path. And I think we’ve made great strides. by doing this.”

Beacon Journal reporter Jim Mackinnon can be reached at 330-996-3544 or [email protected] Follow him @JimMackinnonABJ on Twitter or www.facebook.com/JimMackinnonABJ.