FirstEnergy Corp. created a new transmission company to serve parts of PJM Interconnection's Allegheny Power Systems zone and filed to move its transmission assets in the region to forward-looking formula rates.

On the company's Nov. 2 earnings call, FirstEnergy management announced the creation of Keystone Appalachian Transmission Co. to accommodate the new construction in the Allegheny footprint, which includes portions of Pennsylvania, West Virginia, Maryland and Virginia. FirstEnergy plans to transfer certain transmission assets from subsidiaries West Penn Power Co. and Potomac Edison Co. to the newly created stand-alone entity by Jan. 1, 2022, subject to regulatory approval.

"[T]o continue our commitment to customer-focused transmission investments, we filed an application with [the Federal Energy Regulatory Commission] last week to move transmission assets in the Allegheny Power Systems zone to forward-looking formula rates," FirstEnergy President and acting CEO Steven Strah said on the call. Strah added that FirstEnergy also filed an application with FERC to move Keystone Appalachian Transmission to formula rates and sees "significant opportunity" for the new company.

FirstEnergy Senior Vice President and CFO Jon Taylor said the move to formula rates for the nearly $750 million in rate base in the Allegheny zone might not be meaningful initially from an earnings standpoint.

"But it is an area where investment is needed. It's an opportunity to improve the customer reliability in those service territories," Taylor said. "And I think you'll start to see some [capital expenditures] going in there and then it could be meaningful."

FirstEnergy plans to spend about $3 billion on its transmission and distribution system in 2021.