AEP Lifts Five-Year Capital Plan 30% to $100B

American Electric Power raised its five-year capital spending plan to $100 billion, up 30% from the earlier $78 billion. Executives announced the change on a Wednesday earnings call, citing expected spending on generation and transmission.

The company plans to put $20 billion into gas-fired generation and $37 billion into transmission through 2031. The previous plan had $13 billion and $33 billion for those categories. AEP's utilities are also expected to spend $8 billion on renewable energy over the five years.

Contracted large loads jumped 22% to 84 GW. Officials said the main driver was a 10.4-GW data center in Ohio being developed by SB Energy.

Ohio transmission and a Wyoming fuel cell project

Chairman and CEO William Fehrman pointed to two projects in the new plan. One is a roughly $5 billion, 765-kV transmission project in Ohio. The other is a $4 billion fuel cell project in Wyoming.

The Wyoming project is backed by a 20-year power purchase agreement with Google. AEP plans to use Bloom Energy fuel cells for the 702-MW installation, which it expects to bring online in 2028. "Construction is well underway," Fehrman said.

In Ohio, AEP expects to begin building the Piketon transmission project early next year. Its three 765-kV lines will each carry about 3.2 GW for the data center campus. Targeted in-service dates are Dec. 31 of 2028, 2029 and 2030, according to AEP's quarterly filing.

The data center's first 800 MW is expected to be served by existing transmission capacity and needs no extra regulatory approvals. SoftBank and its affiliates will pay for the line, with an 11.35% base return on equity that could rise to 11.99% or fall to 10.71% depending on final costs and in-service dates. The project still needs approval from PJM, the Public Utilities Commission of Ohio and the Federal Energy Regulatory Commission.

More gas, and a possible genco

CFO Trevor Mihalik said customer demand is growing faster than the output of the existing fleet, creating a need for new baseload dispatchable generation. AEP utilities are preparing to add about 9 GW of gas-fired generation through 2032.

The company is still weighing "gencos," or generating companies, to serve large loads. Fehrman said that if such a structure becomes viable in a state, particularly West Virginia or Indiana, AEP could house part of the plan or future gas plants in it.

Third-quarter net income rose to $1.2 billion on $6.8 billion in revenue, from $972 million and $6 billion a year earlier, driven by data center sales and warmer weather, according to the SEC filing. Total retail electric sales climbed 11% in the quarter and 8.7% over the first nine months, mainly on data center development.

AEP's utilities have about 5.6 million customers in Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia.

Source: Utility Dive