AEP capital spending plan surges 33%, to $72B, in utility ‘super-cycle’

Capital Expenditure and Earnings - American Electric Power (AEP) has announced a $72 billion capital expenditure plan, which is a 33% increase from its previous five-year capex plan, driven in part by 765-kV transmission projects in Texas and the PJM Interconnection region [1] - Year-to-date operating earnings reached $2.6 billion, reflecting a 13% increase from the previous year, partly due to rate increases [3] - AEP expects an annual earnings per share growth rate of 7% to 9%, up from the previous estimate of 6% to 8%, with the stock price rising 6% to $122.11 per share [4] Load Growth and Demand Projections - AEP anticipates a peak load of 65 GW by 2030, which is a 76% increase from its current summer peak, driven by 28 GW in data center and other large load agreements [2][7] - In the last 12 months, AEP's utilities sold 6% more electricity compared to the previous year, with residential sales up 2.3% and commercial sales up 7.9% [6] - About half of the anticipated 28 GW demand growth is expected to come from the Electric Reliability Council of Texas market, with significant contributions from hyperscalers like Google, AWS, and Meta [8] Rate Hikes and Customer Impact - AEP expects its customers to face annual residential rate hikes of approximately 3.5% over the next five years [5] - The company is experiencing surging loads, with 2 GW of data centers coming online in the third quarter [6] Infrastructure and Competitive Advantage - AEP owns about 2,100 miles of 765-kV transmission lines across six states, representing 90% of all 765-kV infrastructure in the U.S., providing a competitive advantage in connecting data center loads [9] - The company emphasizes the need for generation diversity to meet the growing electricity demand and ensure reliability [10]