AEP Raises Capital Plan 30% to $100B, With $37B for Transmission

American Electric Power raised its five-year capital plan 30% to $100 billion through 2031, up from $78 billion, and put its contracted load at 84 GW, the company said with third-quarter results on Oct. 28.

Utility Dive reported that the plan includes about $37 billion for transmission, up from $33 billion in the previous plan, and $20 billion for gas-fired generation, up from $13 billion. AEP's own release counts $36 billion for generation overall and about $22 billion for distribution. Utility Dive added that the utilities plan another $8 billion for renewable projects. AEP expects rate base to grow 13% a year, up from 11% in the previous plan. The release puts rate base at $162 billion by 2031, with transmission rate base nearly doubling to about $70 billion.

Data centers set the size of the plan

AEP said it signed 15 GW of new load commitments in the third quarter, taking contracted load to 84 GW by 2031, up 22% from 69 GW a quarter earlier. Only projects backed by executed service agreements or letters of agreement count. Utility Dive reported that most of the jump came from a 10.4-GW data center campus in Ohio being developed by SB Energy, a point the company's chief financial officer, Trevor Mihalik, made on the earnings call. Utility Dive also reported 14.4 GW of active generation requests across AEP's utilities.

For grid planners the useful number is the pace. Contracted demand is growing faster than the existing fleet's output, Mihalik said, and the gas-fired line in the plan rose from $13 billion to $20 billion. AEP's utilities are preparing to add about 9 GW of gas-fired generation through 2032, according to the company's presentation as reported by Utility Dive.

A 765-kV build paid for by the customer

The largest transmission item is the Piketon project in Ohio, which Utility Dive described as roughly $5 billion. Chief executive Bill Fehrman said construction is expected to start early next year. Three 765-kV lines would each carry about 3.2 GW to the campus, with targeted in-service dates of Dec. 31 in 2028, 2029 and 2030, according to AEP's SEC filing as cited by Utility Dive.

The campus's first 800 MW is expected to be served from existing transmission capacity and needs no further regulatory approval, AEP said. The line itself still needs approvals from PJM Interconnection, the Public Utilities Commission of Ohio and the Federal Energy Regulatory Commission. SoftBank and its affiliates are to pay for it, with an 11.35% base return on equity that can range from 10.71% to 11.99% depending on final cost and in-service dates.

That structure answers a question regulators keep asking about who funds grid upgrades for large loads. AEP said take-or-pay contracts in its vertically integrated states are now expected to produce up to $21 billion in fixed-cost offsets for existing residential customers over the life of the contracts, up from $16 billion. As Voltgrid reported, PJM told FERC that 3,900 MW of data center load switched to backup power in July, and MISO has picked an Ameren-led group for a 187-mile Iowa 765-kV line, two more signs that 765-kV lines are being planned around large loads.

Generation outside the wires

Fehrman also pointed to a roughly $4 billion fuel cell project in Wyoming. AEP plans to use Bloom Energy fuel cells for the 702-MW project, backed by a 20-year power purchase agreement with Google, with operation expected in 2028. AEP is also weighing separate generating companies to house future gas plants in states such as West Virginia and Indiana, if a state structure allows it. Separately, AEP is studying new nuclear, as Voltgrid reported on the Indiana Xe-100 plan with Amazon.

Financially, AEP reported third-quarter net income of $1.2 billion on $6.8 billion of revenue, against $972 million on $6 billion a year earlier. Retail sales rose 11% in the quarter, which the filing attributes mainly to data center growth.

What is not confirmed yet

The Piketon lines have not cleared PJM, the Ohio commission or FERC, and the in-service dates are targets. The 84 GW is contracted load, not energy delivered, and Fehrman said large-load customers should bear the incremental system costs they create. The genco structure is still only under consideration, and Fehrman said it would matter only if a state offers a viable path.