FirstEnergy's $95M Grid Fix: Does the Light Stay On for Customers or Just the Stock?

The project's promise is starting to show in the real world. In Morris and Monmouth counties, the numbers are hard to ignore: nearly 16,500 customers saw more than an 80% drop in outages in 2025 compared to the year before. That's not just a report card; it's a tangible improvement for a specific group of people who likely noticed fewer blackouts and faster restorations. The company credits targeted fixes like strengthening poles and wires and undergrounding lines, which are the kind of physical upgrades that should make the system hold up better during storms.

The project is now in its final stretch, which means these benefits are still concentrated. Work is moving ahead in Hunterdon, Ocean, and Warren counties, with upgrades scheduled to finish by year-end. These upcoming projects aim to bring similar improvements to nearly 10,000 customers. So the "light staying on" is a localized win, not a statewide one. For now, the reliability gains are a direct result of concrete, observable fixes on the ground-tougher poles, buried wires, smarter switches.

The bottom line is that the project is delivering on its immediate promise for a defined area. The question for investors and customers alike is whether this is a durable fix or a temporary reprieve. The upgrades are meant to last, but the real test will be how they hold up during the next major storm. For the customers in those specific counties, the lights are staying on more often. That's the ground truth.

What This Means for the Customer: Real World Utility

For the people in Morris and Monmouth counties, the project is already translating into real-world utility. The nearly 16,500 customers who saw outages drop by more than 80% last year are the ones who likely noticed the difference most. Fewer blackouts mean fewer disrupted dinners, less spoiled food, and more reliable Wi-Fi for remote work. When power does go out, the faster restoration promised by smarter switches and rerouting equipment means the lights come back on quicker, reducing the anxiety and inconvenience of being in the dark.

The practical benefits extend to local businesses too. A reliable power supply is fundamental for operations, from keeping refrigeration running in a grocery store to maintaining production lines. The upgrades, like undergrounding lines and strengthening poles, are designed to make the system hold up better during storms. That's a direct hit to the bottom line for any business that depends on uninterrupted electricity.

Yet, this tangible improvement arrives alongside a significant cost for customers. Starting in June, New Jersey residents faced a significant increase in electricity costs, as much as 20% in some regions. This creates a clear tension. Customers are being asked to pay more for their power just as they are getting a more reliable service in certain areas. That dynamic could fuel political pressure and make future rate cases for reliability investments more contentious. The utility is already seeking relief for its customers, which shows the financial strain is being felt.

It's also important to remember this is just a piece of a much larger puzzle. The $95 million project is part of FirstEnergy's $28 billion investment program stretching through 2029. The localized fixes in Morris and Monmouth are a down payment on a statewide modernization effort. For now, the practical benefit is a measurable improvement in reliability for a specific group. The broader promise for all 1.1 million New Jersey customers is still years away.

The Stock's Common Sense Check: Is the Price Right?

The market is clearly paying attention to the reliability story. Over the past year, FirstEnergy shares have climbed 23.17%, trading near $47. That kind of return suggests investors are betting the company's massive $28 billion investment plan is translating into a more valuable, durable business. The stock's steady momentum, with a 30-day return of 4.79%, shows this isn't a fleeting pop but a sustained build-up of confidence.

A key signal of that confidence is the board's move to raise the quarterly dividend by 4.5%. The company is now targeting a full-year payout of $1.86 per share, up from $1.78 in 2025. For a utility, a dividend hike is a powerful vote of confidence. It signals management believes the cash flow from its regulated operations is strong enough not just to fund the grid upgrades, but to return more to shareholders. That's the common-sense test: if the business is truly generating more value, the dividend should follow.

Analysts see some room to run. The consensus price target sits at $50.23, which would mean the stock is still about 6% below a widely-followed fair value. That gap implies the market sees more upside from the ongoing modernization. The narrative is straightforward: hardening the grid improves reliability, which supports rate base growth, leading to higher returns and earnings.

Yet, the numbers tell a more nuanced story. Another analysis, using a discounted cash flow model, arrives at a starkly different fair value of roughly $29. That view sees the stock as expensive, not cheap, pointing to the heavy capital spend and regulatory overhang as real risks that could challenge the optimistic earnings path. This isn't just about the dividend or the recent rally. It's about whether the market is pricing in a smooth, trouble-free execution of a decade-long plan, or if it's overlooking the friction and uncertainty that often come with such scale.

The bottom line is that the stock's performance reflects the promise of the project, but not the guarantee. The 23% gain and the dividend increase are real-world signals of momentum. The analyst target suggests more upside. But the deep skepticism from a cash-flow model is a reminder to keep it simple: the stock's price will ultimately depend on whether the lights stay on for customers-and for the company's bottom line-when the next big storm hits.

What to Watch Next: Practical Takeaways

The project is now in its final stretch, and the real test begins. The initial success in Morris and Monmouth counties is a promising start, but the key signal for both customers and shareholders will be whether that improvement holds across all targeted circuits by year-end. The company is upgrading 18 circuits in total, with work wrapping up in Hunterdon, Ocean, and Warren counties. The bottom line is simple: if outage reductions are replicated across these final projects, it proves the fixes are durable and scalable. If not, it raises questions about execution or the specific conditions that made the first area so successful.

At the same time, watch for any regulatory pushback. The project's cost is being passed on to customers, and New Jersey residents already faced a significant increase in electricity costs, as much as 20% in some regions earlier this year. If customer bills rise sharply again as the company seeks to recover the full $95 million, it could spark political pressure and delay the rate case process. The utility's own move to seek relief from the New Jersey Board of Public Utilities shows the financial strain is being felt. Any regulatory friction here would directly challenge the project's financial model and the stock's optimistic trajectory.

Finally, keep an eye on the dividend and capital plan. The board just raised the payout by 4.5%, signaling confidence in cash flow. But with the $28 billion investment program stretching through 2029, the company must balance reliability spending with returning capital. Any shift in guidance-whether it's a slowdown in capex or a pause in dividend growth-would be a practical signal that the heavy investment is starting to squeeze returns. For now, the dividend hike is a vote of confidence. The next move will show if that confidence is sustainable.