American Electric Power (NASDAQ:AEP) raised its 2026 operating earnings guidance after reporting second-quarter operating earnings of $1.36 per share, or $742 million, as the utility highlighted rising contracted large-load demand, regulatory progress and an expanding pipeline of generation and transmission investments.
The company increased its full-year operating earnings outlook to $6.25 to $6.55 per share, from a prior range of $6.15 to $6.45 per share. Second-quarter operating earnings were down from $1.43 per share a year earlier, while year-to-date operating earnings rose to $3.01 per share from $2.98 per share in the prior-year period.
Load Commitments Continue to Rise
AEP said contracted load additions through 2030 reached 69 gigawatts, up 6 gigawatts from the prior quarter. The additions are supported by executed electric service agreements and letters of agreement, according to Mihalik.
Texas represents the largest portion of the opportunity, with 45 gigawatts of contracted load additions through 2030. Ohio accounts for 12 gigawatts, while Oklahoma, Indiana, Kentucky, Louisiana and Virginia comprise the remaining 12 gigawatts.
AEP Texas submitted 45 gigawatts of projects into ERCOT’s Batch Zero process, with expected timing between now and 2032. ERCOT was expected to determine eligibility for the Batch Zero study on Aug. 7. Mihalik said AEP had collected nearly $2 billion in cash or collateral supporting those commitments, representing the required credit support for the full 45 gigawatts in the filing.
The company said its current $78 billion capital plan does not assume load growth of that magnitude. Mihalik said project timing could be affected by ERCOT’s review process, generation availability and transmission development, but that delayed connections would extend the investment runway rather than eliminate it.
During the question-and-answer session, management said the existing capital plan had been based on approximately 13 gigawatts of Texas interconnections, rather than the 45 gigawatts submitted in Batch Zero. The company cautioned that higher load commitments should not be translated directly into a proportional increase in capital spending because project costs vary.
Capital Plan, Generation Pipeline and Financing
AEP’s 2026-2030 capital plan totals $78 billion and is expected to support nearly 11% rate base compound annual growth. The company reaffirmed annual operating earnings growth of 7% to 9% and an operating EPS compound annual growth rate above 9% through 2030, based on the midpoint of its 2025 guidance.
Fehrman said AEP has identified more than $10 billion of investment opportunities outside the base plan, including a Wyoming fuel-cell initiative, the Piketon transmission opportunity in Ohio and incremental generation.
The company said it amended terms with the offtaker for the Wyoming fuel-cell project to address requested timing accommodations. Under the remaining December 2026 milestone, the hyperscaler can elect to place the fuel cells at an alternative site if the Cheyenne, Wyoming, location does not proceed. Fehrman said AEP retains shareholder protections if the milestone is not achieved or if additional changes are sought.
AEP is also pursuing definitive agreements for the Piketon transmission project with prospective offtaker SP Energy. Mihalik said the company expects executed agreements could allow the project to be incorporated into the five-year plan it intends to release with third-quarter results.
The company secured an additional 3 gigawatts of gas turbine capacity during the quarter, bringing total secured turbine capacity to about 13 gigawatts for deployment through 2031. AEP also has access to options for up to 10 gigawatts of additional turbine capacity through 2035. Management said the additional capacity could help replace aging coal and gas plants in vertically integrated utilities.
AEP completed a $3 billion marketed equity transaction during the quarter, expected to settle under forward contracts by May 2028. Mihalik said the transaction addressed the company’s anticipated marketed equity needs for the $78 billion capital plan. AEP continues to target a funds-from-operations-to-debt ratio of 14% to 15%.
Affordability and Regulatory Progress
AEP said new large-load customers could create up to $16 billion of fixed-cost offsets for residential customers in its vertically integrated utilities over the life of take-or-pay service agreements. Management said rate reductions are already emerging in regulatory proceedings, including an Ohio order and a planned Indiana Michigan Power base-rate reduction filing later this summer.
The company also cited Department of Energy financing as a source of customer savings. AEP Texas secured a DOE loan guarantee of up to $3.3 billion for roughly 2,800 miles of transmission projects. AEP said the financing is expected to produce about $685 million in customer savings over the life of the loan. Across its portfolio, the company has secured about $5 billion in DOE loans and nearly $400 million in grants, representing expected customer benefits of nearly $1.4 billion.
Regulatory outcomes during the quarter included an Ohio distribution base-case settlement featuring a base-rate decrease and a 9.84% authorized return on equity, up from 9.7%. In Oklahoma, Public Service Company of Oklahoma filed a settlement that would reduce its authorized ROE to 9.375% from 9.5% but add an enhanced transmission cost rider that AEP expects to improve earned ROE.
AEP said its regulated earned ROE was 9.2% during the quarter and reiterated its expectation of reaching 9.5% by 2030 through regulatory execution and rate-making changes. The company also said it is evaluating a generation-company structure and other arrangements to serve large customers, while maintaining that any nuclear development would require customer commitments, financial protections and regulatory support.
About American Electric Power (NASDAQ:AEP)
American Electric Power (NASDAQ: AEP) is a major investor-owned electric utility headquartered in Columbus, Ohio. The company is primarily engaged in the generation, transmission and distribution of electricity, operating a diverse portfolio of power plants and an extensive high-voltage transmission network. AEP serves retail customers through its regulated utility subsidiaries and provides wholesale power and grid services across multiple regional markets in the United States.
Operations span the full utility value chain: AEP owns and operates generation assets that include fossil-fuel, natural gas, nuclear and hydropower facilities, and it has been adding renewable resources to its mix.
