American Electric Power (NASDAQ:AEP) reported fourth-quarter 2025 operating earnings of $1.19 per share, bringing full-year 2025 operating earnings to $5.97 per share, which management said was above the top end of its guidance range. Chairman, President and CEO Bill Fehrman said the company is operating amid accelerating electrification and “AI-driven and industrial demand,” and positioned AEP as a large, regulated utility with significant transmission scale across an 11-state service territory.
Management reaffirmed its 2026 operating earnings guidance of $6.15 to $6.45 per share. AEP also reiterated a 7% to 9% long-term earnings growth rate for 2026 through 2030, with Fehrman citing an “expected 9% CAGR.” In October, AEP increased its quarterly dividend to $0.95 per share. Fehrman added that AEP’s total shareholder return for 2025 was 29%.
2025 results and key earnings drivers
Mihalik also highlighted what he described as meaningful performance in the generation and marketing segment, driven by favorable energy margins and contract optimization. In response to an analyst question, Senior Vice President and Chief Accounting Officer Kate Dixon said fourth-quarter generation and marketing results were driven by strong retail margins and wholesale contract optimization, and that AEP expected “that same level of performance” in 2026 as reflected in guidance provided previously.
Load growth outlook doubles to 56 GW of contracted additions
One of the central updates from the call was AEP’s revised view of customer demand. Management said it now has 56 gigawatts of firm, incremental contracted load additions by 2030, doubling the 28 GW disclosed previously. Fehrman said the additions are “not speculative,” emphasizing they are backed by signed customer agreements.
Mihalik said the increase reflects progress converting projects from the planning queue into binding commitments. He said the higher total is driven by growth in ERCOT, PJM, and SPP, including:
- PJM: contracted load increased by 4 GW, driven largely by activity in Ohio; Mihalik said about 90% of the incremental PJM load is supported by executed “take or pay” electric service agreements.
- SPP: contracted load increased by 1 GW, driven primarily by a commitment with a large aluminum smelting customer in Oklahoma.
- ERCOT (Texas): AEP Texas has signed letters of agreement for 36 GW within the 56 GW total, which Mihalik said is a 23 GW increase since October. He described the LOA structure as requiring customers to secure land, pay for interconnection studies, provide detailed forecasts, and fund construction costs.
Management also discussed its broader load pipeline, saying it has 180 GW-plus in the queue. Mihalik provided a regional breakdown, citing approximately 70 GW in ERCOT, 25 GW in AEP Ohio, about 30 GW each in PSO and APCo, and 16 GW in I&M.
Capital plan and incremental projects beyond the base forecast
AEP’s current $72 billion five-year capital plan remains a cornerstone of its growth narrative, with Fehrman calling it “large but conservative” and tied to a 10% rate base CAGR. Mihalik stressed that the $72 billion plan was built using the 28 GW load outlook shared last fall and does not include the newly disclosed incremental 28 GW. He said capital tied to the new load outlook would be additive.
Since the third-quarter call, management said it has also identified approximately $5 billion to $8 billion of confirmed or endorsed generation and transmission projects incremental to the base plan for 2026 through 2030. During the Q&A, Mihalik provided more detail, describing nearly $5 billion of transmission projects that were awarded or recommended across regions, and also referenced the previously announced fuel cell transaction.
Specifically, he cited roughly:
- $2.7 billion of transmission projects in SPP
- $1.5 billion of transmission projects in PJM
- ~$0.5 billion of transmission projects in MISO
Mihalik also referenced $2.7 billion associated with the Bloom fuel cell purchase AEP announced, which Fehrman described earlier as a plan to purchase $2.65 billion of fuel cells for a generation facility expected to be located near Cheyenne, Wyoming, supported by a 20-year offtake arrangement with an investment-grade customer.
Regulatory strategy, affordability focus, and balance sheet targets
Fehrman said AEP is focused on ensuring costs associated with large load growth are allocated fairly, pointing to data center and large-load tariff efforts designed to protect existing customers from grid upgrade costs. He said AEP previously secured approvals for data center tariffs in Ohio and large-load tariff modifications in Indiana, Kentucky, and West Virginia, and has pending tariff filings in Michigan, Oklahoma, Texas, and Virginia.
On regulatory outcomes, Fehrman said legislation reducing regulatory lag was approved in Ohio, Oklahoma, and Texas, and that base rate cases in Arkansas, Kentucky, and Ohio were approved or settled. He also noted new base rate cases filed in Oklahoma and Texas and said AEP continues working in West Virginia on returns and broader energy strategy issues. Management said it expects a decision “soon” on APCo’s reconsideration filing in West Virginia, noting there is no statutory timeline.
Mihalik said AEP is committed to maintaining a healthy balance sheet, citing an FFO-to-debt target of 14% to 15%. He said the company’s S&P FFO-to-debt metric was 15.2% at year-end, while Moody’s was “just under 14%.”
In Q&A, management also addressed questions about generation adequacy and interconnection timelines, noting that regional transmission organizations play a key role in generation and interconnection processes, while emphasizing AEP’s focus on execution, equipment procurement, and contractor availability. Fehrman said AEP has secured “over 10 gigawatts of gas-fired generation” in its plan for its vertically integrated utilities.
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.
