AEP Expands Capital Plan To $100 Billion And Lifts Its Long-Term Earnings Growth Target
The utility also raised its 2026 outlook, set 2027 and 2028 guidance, and now expects up to $21 billion in fixed-cost offsets for residential customers.
American Electric Power, a utility holding company serving parts of 11 states, unveiled a $100 billion five-year capital plan through 2031 on Wednesday and introduced a 9% to 11% annual operating earnings growth outlook for 2027 through 2031. It also reported third-quarter operating earnings of $2.23 per share, up from $1.80 a year earlier.
A $100 billion build-out
The plan is expected to support rate base growth of 13% or more a year through 2031, taking rate base to $162 billion. Rate base is the asset value on which a regulated utility earns its allowed return.
About $37 billion goes to transmission, $36 billion to generation and roughly $22 billion to distribution. AEP expects its transmission rate base to nearly double and approach $70 billion by 2031. The generation spending is backed by long-term customer contracts, the company said.
Demand is driving it. AEP signed 15 gigawatts of new load commitments in the third quarter, and it expects incremental contracted load to reach 84 GW by 2031. Only projects backed by fully executed service agreements or letters of agreement count toward that figure.
Quarter and guidance
Third-quarter operating earnings rose to $1,216 million, or $2.23 per share, from $963 million, or $1.80. Earnings under standard accounting were $1,187 million, or $2.18 per share, against $972 million, or $1.82, a year earlier. Revenue was $6,832 million, up from $6,011 million.
For the first nine months, operating earnings were $2,849 million, or $5.24 per share, versus $2,552 million, or $4.78. Standard-accounting earnings fell to $2,774 million, or $5.10 per share, from $2,998 million, or $5.61.
AEP now expects 2026 operating earnings at or above the high end of its $6.25 to $6.55 per share range. It set 2027 guidance at $6.75 to $7.05 and 2028 at $7.40 to $7.70. The long-term growth rate is above 10% a year through 2031, measured from the original 2026 guidance midpoint of $6.30.
Large customers and residential bills
AEP now expects fully executed take-or-pay agreements in its vertically integrated states to generate up to $21 billion in fixed-cost offsets for existing residential customers over the life of the contracts, up from $16 billion. The company cited a second proposed rate reduction in Indiana as an example.
"As electricity demand accelerates, AEP is committed to having new large-load customers bear the incremental system costs they create and fund the investments required to serve them," Chairman, President and CEO Bill Fehrman said.
The company's forward-looking statements caution that projected data-center demand may not materialize as expected or may arrive at a different pace or scale.
AEP management discussed the results with analysts and investors on a webcast at 9 a.m. Eastern on Wednesday.
