American Electric Power (AEP) Q4 FY25 earnings call: guidance and Q&A

Will the 56 GW contracted load lead to upward pressure on the 7-9% EPS CAGR and trigger an earlier CapEx plan update?

Trevor Mihalik stated the $72B capital plan is conservative and doesn't include the new 28 GW load. The $5-8B incremental projects will be detailed in Q1, while the full impact of the 56 GW load on the capital plan and CAGR will likely be updated in Q3, though significant chunks might be addressed earlier. He noted that the 180 GW queue provides line of sight beyond 2030.

“the $72 billion 5-year capital plan does not include this incremental load growth of 28 gigawatts and we really try to articulate that we think the $72 billion is somewhat conservative.”

asked by Shar Pourreza · answered by Trevor Mihalik

How confident is AEP in the 56 GW contracted load, especially with some data centers pulling out of projects elsewhere?

Trevor Mihalik expressed high confidence, citing the 180 GW queue backing firm ESAs, the financial security of counterparties, take-or-pay components, and large load tariffs protecting existing customers. Bill Fehrman added that AEP's rural footprint fosters good community relations for economic development, mitigating local pushback.

“what gives us a great deal of confidence is that 180 gigs that are backing any of those firm ESAs that are in the load right now. But we do actually a pretty good job of really just stilling down those loads on our system to ensure that they're backed by financially secure and very committed counterparties.”

asked by Shar Pourreza · answered by Trevor Mihalik

What is the risk that ERCOT LOAs are just options, despite commitments, given the SB6 queue?

Trevor Mihalik noted that over 50% of the ERCOT load is from hyperscalers, who are significantly committed and putting dollars at risk. He also stated that the large backlog (180 GW) means any walkaways could be quickly backfilled, giving confidence in the 56 GW.

“more than 50% of that load is now hyperscaler load. And so these are counterparties that are significantly committed to their place in the queue and putting dollars at risk and so we feel very good about that.”

asked by Steven Fleishman · answered by Trevor Mihalik

Can AEP provide more information on the $5-8 billion incremental transmission projects, specifically the H1 projects?

Trevor Mihalik broke down the ~$4.7 billion in transmission projects: ~$2.7 billion in SPP, ~$1.5 billion in PJM, and ~$0.5 billion in MISO. This, combined with the $2.7 billion Bloom fuel cell project, totals ~$7.4 billion. Most of these projects are within the 2026-2030 window. Bill Fehrman highlighted AEP's competitive advantage in 765 kV transmission.

“roughly, there's, call it, almost $5 billion associated with those projects is about $2.7 billion of transmission projects in SPP, about $1.5 billion in PJM and about $0.5 billion in MISO.”

asked by Steven Fleishman · answered by Trevor Mihalik

How does AEP view contracted generation, such as the Bloom project, as an adjacent business segment to backstop the 56 GW load, especially with PJM reevaluating its construct?

Bill Fehrman stated it's about serving customers by offering faster connection solutions (e.g., Bloom Energy, batteries) when grid connection is delayed. Trevor Mihalik added that the Bloom deal is a long-term agreement with a creditworthy counterparty, providing contracted cash flows similar to a regulated return without frequent rate cases.

“it's really about serving our customers and arriving at solutions for them to get them connected as quickly as we possibly can. And in many of these cases, where the Grid Connect could be out for a couple of years. We've been able to offer to them the capabilities of bringing the data centers online significantly faster through deals like the Bloom Energy deal”

asked by Julien Dumoulin-Smith · answered by William Fehrman

Given the magnitude of the 56 GW load, will there be sufficient generation available to serve it, even if AEP executes on infrastructure?

Bill Fehrman acknowledged this is a key focus. For T&D companies, RTOs are responsible for generation, and PJM/ERCOT are taking steps (reliability backstop, SB6). AEP supports accelerating new generation and transmission modernization, emphasizing proper cost allocation so residential customers don't bear the burden. For its VIUs, AEP believes it has sufficient resources, having secured over 10 GW of gas-fired generation.

“Clearly, we support efforts to accelerate new generation development and we also fully support modernization of the transmission and interconnection process so that we can get customers connected to load faster and get the new resources built much more quickly and at a lower cost.”

asked by Anthony Crowdell · answered by William Fehrman