Archive photo: Columbus, Ohio’s skyline, including the AEP Building. Electric cat/Wikimedia Commons, CC BY-SA 3.0 (cropped; image adaptation under the same license)
American Electric Power announced a $100 billion capital spending plan for 2027 through 2031 Wednesday, including major investments in transmission, generation and distribution as the utility prepares for rising electricity demand.
The planned spending includes approximately $37 billion for transmission assets, $36 billion for generation resources and about $22 billion for distribution, AEP said in its third-quarter earnings announcement.
Large-load contracts underpin expansion
AEP said it signed 15 gigawatts of new load commitments during the third quarter and expects its incremental contracted load to reach 84 gigawatts by 2031. The company includes projects in that figure only when backed by fully executed electric service agreements or letters of agreement.
The company expects the capital plan to support annual compound growth of more than 13% in its rate base through 2031, reaching $162 billion. AEP expects its transmission rate base to approach $70 billion by then.
AEP said fully executed take-or-pay service agreements in its vertically integrated states could generate up to $21 billion in fixed-cost offsets for existing residential customers over the life of the contracts, up from its previous estimate of $16 billion. That is a company forecast, not an announced across-the-board reduction in household bills.
Quarterly profit rises
Third-quarter net earnings under generally accepted accounting principles rose to $1.187 billion, or $2.18 a share, from $972 million, or $1.82 a share, a year earlier.
Operating earnings, AEP’s non-GAAP measure excluding specified items, were $1.216 billion, or $2.23 a share, compared with $963 million, or $1.80 a share. Revenue increased to $6.832 billion from $6.011 billion.
Higher earnings outlook
AEP expects 2026 operating earnings per share to be at or above $6.55, the high end of its $6.25-to-$6.55 guidance range.
It introduced operating earnings guidance of $6.75 to $7.05 a share for 2027 and $7.40 to $7.70 for 2028, alongside expected annual operating earnings-per-share growth of 9% to 11% from 2027 through 2031.
The spending and growth figures are forward-looking plans and forecasts. AEP identified regulatory approvals, construction costs, access to financing and the possibility that data-center demand may develop at a different pace or scale among the risks to those projections.
AEP serves 5.6 million customers in 11 states and operates approximately 40,000 miles of transmission lines and more than 253,000 miles of distribution lines.
JBizNews Desk | Columbus
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