FE Stock: Is FirstEnergy a Buy? | Grid Monopoly Play

FirstEnergy is a turnaround utility tollbooth in the PJM corridor, owning 24,000 miles of transmission lines across Ohio, Pennsylvania, and West Virginia — rebuilding credibility after a corruption scandal while earning regulated returns on critical grid infrastructure investment.

Last updated: 2026-02-02 · Data: Yahoo Finance, SEC filings, company investor presentations

The Business

FirstEnergy operates one of the nation's largest electric utility systems, delivering power to 6 million customers across Ohio, Pennsylvania, West Virginia, and Maryland through its regulated distribution companies. The company owns and operates approximately 24,500 miles of transmission lines and 269,000 miles of distribution lines — a vast network of poles, wires, and substations that forms the backbone of the regional grid.

What makes FirstEnergy a compelling tollbooth is its regulated utility model combined with strategic positioning in the PJM Interconnection, the largest power market in North America. The company generates returns through rate-regulated infrastructure investments, earning state-approved returns on equity typically ranging from 9.5% to 11%. Every mile of wire, every transformer, every grid upgrade becomes a rate-based asset that earns regulated returns for decades.

After emerging from a corruption scandal and nuclear bailout controversy that dominated headlines through 2021, FirstEnergy has transformed into a pure-play regulated utility focused on grid modernization and reliability investments. The company divested its competitive generation assets and now operates exclusively in the regulated utility space where returns are more predictable and customer demand is essentially guaranteed.

By the Numbers

The Tollbooth Thesis

FirstEnergy sits at the center of America's grid rebuild story, particularly in the industrial heartland where aging infrastructure meets surging electricity demand from data centers and manufacturing reshoring. The company's service territories in Ohio and Pennsylvania are experiencing significant load growth as hyperscale data centers choose these regions for their low power costs and grid reliability.

The transmission angle is particularly compelling. FirstEnergy Transmission owns high-voltage lines that move power across state boundaries within PJM, earning FERC-regulated returns on invested capital. With PJM projecting massive transmission investment needs — potentially $300+ billion through 2040 — FirstEnergy is positioned to capture significant growth through both reliability upgrades and new interconnections for renewable generation.

Rate base growth is the engine that drives shareholder returns in this model. FirstEnergy has outlined plans to invest $26-30 billion in grid infrastructure through 2028, growing rate base from approximately $35 billion today to over $45 billion. This represents 6-8% annual rate base growth, translating directly into earnings growth as the company earns regulated returns on each incremental dollar invested. The beauty of the regulated utility model: customers ultimately pay for these investments through rate increases approved by state commissions.

The Risks

• Regulatory overhang: The Ohio nuclear bailout scandal still colors regulatory relationships, though new leadership has largely reset these dynamics

• High leverage: Debt-to-equity ratio near 200% limits financial flexibility and magnifies interest rate exposure

• Political pressure: Ohio's political environment remains challenging for utilities, with ongoing scrutiny of rate increases

• Execution risk: Large capital deployment programs carry project completion and cost overrun risks

• Load growth uncertainty: Data center and industrial demand projections may not materialize as expected

Income Angle

FirstEnergy's 3.8% dividend yield reflects the company's transition from a high-yield, high-risk profile to a more sustainable regulated utility model. The current 76% payout ratio provides reasonable coverage while leaving room for dividend growth as earnings expand with rate base investments. The company has maintained its dividend through the scandal and transformation, demonstrating commitment to shareholder income even during turbulent times.

For income-focused investors, FirstEnergy offers the appeal of a utility dividend backed by regulated cash flows and growing rate base. The dividend growth profile should track earnings growth, which is directly tied to capital investment programs. As rate base compounds at 6-8% annually, dividend growth in the 4-6% range becomes achievable, providing real income growth that keeps pace with inflation.

The Bottom Line

FirstEnergy represents a classic infrastructure tollbooth emerging from a corporate crisis stronger and more focused. The combination of essential grid infrastructure, regulated returns, and aggressive capital deployment in high-growth markets creates a compelling long-term thesis. However, the elevated debt levels and execution risks around the massive capital program require careful monitoring. This is a tollbooth worth owning for investors comfortable with utility-level leverage and confident in management's ability to execute the grid modernization playbook.

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Frequently Asked Questions

Is FirstEnergy (FE) a good investment after the scandal?

FirstEnergy has new leadership, resolved its Department of Justice investigation, and refocused on regulated T&D investment. The stock trades at a discount to peers, reflecting lingering reputational risk. For investors who believe the worst is behind the company, FE offers value upside as the discount narrows with consistent execution.

What was FirstEnergy's corruption scandal?

FirstEnergy admitted to a $60 million bribery scheme involving Ohio legislators to secure a $1.3 billion nuclear bailout (HB 6). The company paid $230 million in penalties, replaced senior leadership, and implemented new compliance programs. The scandal depressed the stock but didn't impair the underlying regulated utility assets.

How does FirstEnergy benefit from grid modernization?

FirstEnergy owns one of the largest transmission networks in the PJM region, serving areas with growing data center demand in Ohio and Pennsylvania. The company's $26 billion capital investment plan through 2028 focuses on transmission upgrades and grid hardening, driving rate base growth of 7-9% annually.

What is FirstEnergy's dividend yield?

FE yields approximately 4-4.5%, above the utility sector average. The company resumed dividend growth in 2023 after holding it flat during the scandal resolution period. Target dividend growth of 6% annually is supported by the regulated capital investment program.

This analysis is part of Energy Macro's Tollbooth Royalties research. For our complete infrastructure income framework, see The Blackout Fortune Playbook.

Last updated: February 1, 2026 | Data: Yahoo Finance, SEC filings, company investor presentations