American Electric Power (AEP) Q2 FY26 earnings call: guidance and Q&A

Asked about potential opportunities to serve hyperscalers in West Virginia using a Genco structure or alternative financing to bypass CPCN processes, given the governor's goals for new gas generation.

Bill Fehrman confirmed AEP is actively analyzing the Genco structure as intriguing and sees significant advantages. He highlighted strong alignment with West Virginia stakeholders and anticipated significant opportunities in the coming months, referencing a previously announced 1.2 GW project.

“And we are clearly looking into the Genco structure. We're finding it very intriguing, and I think it will obviously be something we're closely analyzing and at a broader point with regards to West Virginia, really love where we're at in that state.”

asked by Shahriar Pourreza · answered by William Fehrman

Inquired if AEP would enhance disclosures beyond the 7-9% long-term growth rate, given the Batch Zero and 195 GW figures, to provide more visibility beyond 2030.

Trevor Mihalik stated that AEP is looking forward to laying out the 2027-2031 plan and that the 195 GW in the queue indicates a long runway for outsized CapEx growth into the next decade. He reaffirmed commitment to the >9% growth rate over the 5-year period and mentioned contemplating further line of sight beyond that in the Q3 update.

“But as you say, we've got that 195 gigs of folks trying to actively interconnect to the queue. And I think what this really does is it shows that we have a pretty long runway of continued outsized CapEx growth well into the next decade.”

asked by Shahriar Pourreza · answered by Trevor Mihalik

Asked how the 45 GW in ERCOT Batch Zero aligns with the current capital plan's expected growth for AEP Texas, noting the current plan was based on 13 GW.

Trevor Mihalik clarified that the 45 GW is a multiple of the 13 GW previously assumed, indicating a prospectively 3x bigger CapEx plan for Texas. He emphasized that while not a dollar-for-dollar increase, it provides line of sight to increasing capital and continued transmission build-out beyond the 5-year plan.

“Again, I would say, I would put that as a multiple of 13, so it's going to be 3x bigger on the CapEx plan prospectively. But we do think there is going to be some increased CapEx in Texas associated with this.”

asked by Steven Fleishman · answered by Trevor Mihalik

Asked about AEP's flexibility in PJM to help customers in a restructured geography, including engaging in non-utility avenues like behind-the-meter bridging or acquiring existing generation to rate base.

Bill Fehrman confirmed AEP's willingness to procure generation in regulated utilities and hunt for good quality assets. He highlighted the benefits of PJM's system for delivering power from various locations to rural hyperscaler sites, and confirmed active discussions on providing optionality to customers, including bridging strategies.

“And so I would say the customers we're talking with right now have been very pleased with the optionality we provided them, and we have a number of active discussions in progress. So super excited about what's happening in West Virginia.”

asked by Julien Dumoulin-Smith · answered by William Fehrman

Inquired if the Piketon transmission opportunity and Wyoming fuel cell project would be ready for inclusion in the base capital plan update in Q3, especially given the December date for the fuel cell project.

Trevor Mihalik expressed optimism for both projects. He expects executed documents for Piketon in Q3, allowing its inclusion. For Wyoming fuel cells, he hopes for positive movement by the Q3 call, noting the 2028 ITC deadline. He also mentioned that about half of the 13 GW incremental generation would roll into the revised 5-year plan.

“I think the Piketon project, in particular, we're advancing towards executing docs on that, and we anticipate that we would have executed docs in the third quarter. So I think that would then roll into the 5-year capital plan that we would roll out on the third quarter call.”

asked by Richard Sunderland · answered by Trevor Mihalik

Asked how the $16 billion in fixed cost offsets translates into annual bill mitigation for customers and when the most meaningful benefits would be seen.

Trevor Mihalik clarified the $16 billion is over the life of the contracts for Vertically Integrated Utilities. Kate Sturgess added that these benefits are already being realized through regulatory processes, citing rate reductions in Indiana and Ohio, and expect the trend to continue as the cycle progresses.

“The only thing I would add is we're starting to see that come through our regulatory process already, right? In Indiana, and we've been very public about the fact that we will be filing for a rate decrease -- you've seen us have a rate decrease on the residential side in Ohio.”

asked by Aidan Kelly · answered by Kate Sturgess