AEP Expands Capital Plan to $100 Billion as Third-Quarter Profit Rises
Key Facts
American Electric Power (AEP) announced an expanded five-year capital plan worth $100 billion through 2031, after operating earnings rose in the third quarter of 2026 to $1.216 billion, or $2.23 per share, from $963 million and $1.80 per share a year earlier. The company said revenue increased to $6.832 billion in the quarter ended September 30, compared with $6.011 billion in the same period of 2025. Earnings under generally accepted accounting principles totaled $1.187 billion, or $2.18 per share, against $972 million and $1.82 per share a year earlier. Total operating earnings thus rose $253 million, while GAAP earnings increased $215 million year over year. AEP tied the plan to rising electricity demand and large-load commitments, and expects its asset base to reach $162 billion by 2031.
Planned investment is split across about $37 billion for transmission assets, $36 billion for generation resources and about $22 billion for distribution. The company said its transmission asset base will approach $70 billion by 2031, nearly double its current level. The figures direct most of the announced spending toward the grid and generation, alongside expected growth in the overall asset base. Chief Executive Bill Fehrman described the expanded plan as a response to growth opportunities and the company’s ability to execute at scale. He said the plan reflects “the significant opportunities ahead and our ability to execute at scale.” Fehrman added that the company is entering “our next phase of growth from a position of strength,” according to an AEP statement.
AEP said it signed new load commitments of 15 gigawatts during the third quarter and expects additional contracted load to reach 84 gigawatts by 2031. The company’s calculation includes loads supported by fully executed electric service agreements or fully executed letters of agreement, according to its statement. It said fully executed service agreements with large customers could generate fixed-cost reimbursements of up to $21 billion for existing residential customers over the life of the contracts, up from a previous estimate of $16 billion. The estimate places protection for residential customers from some fixed costs alongside the expansion of contracted demand in the plan’s details. In its second-quarter results, the company had cited expected reimbursements of up to $16 billion and savings of about $1.4 billion for customers through federal loan guarantees and grants.
The company expects annual operating earnings per share growth of between 9% and 11% during 2027–2031, and compound growth of more than 10% through 2031 compared with the midpoint of its original 2026 guidance of $6.30 per share. It also expects compound growth in its asset base of more than 13% through 2031. AEP issued operating earnings per share guidance of between $6.75 and $7.05 for 2027, and between $7.40 and $7.70 for 2028. For 2026, it said it expects results at or above the upper end of its previous range of $6.25 to $6.55 per share. It raised that range in July from $6.15 to $6.45, alongside the announcement of a five-year capital plan worth $78 billion; the new plan totals $100 billion.
Results for the first nine months show a divergence between the two profitability measures: operating earnings rose to $2.849 billion from $2.552 billion in the comparable period, while GAAP earnings fell to $2.774 billion from $2.998 billion. That differs from the growth in both measures in the third quarter alone, highlighting the importance of distinguishing between the operating earnings the company uses in its guidance and earnings under accounting principles. In the second quarter, operating earnings fell to $742 million, or $1.36 per share, from $766 million and $1.43 per share a year earlier. Second-quarter GAAP earnings fell to $713 million, or $1.31 per share, compared with $1.226 billion and $2.29 per share a year earlier. AEP shares closed at $130.3 on October 27, according to EL7 data.