American Electric Power Q2 2025 Earnings Report

American Electric Power EPS Results

• Actual EPS: $1.43
• Consensus EPS: $1.27
• Beat/Miss: Beat by +$0.16
• One Year Ago EPS: $1.25

American Electric Power Revenue Results

• Actual Revenue: $5.09 billion
• Expected Revenue: $4.85 billion
• Beat/Miss: Beat by +$233.75 million
• YoY Revenue Growth: +11.10%

American Electric Power Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 9:00AM ET

American Electric Power (NASDAQ:AEP) (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. The company also manages long-distance transmission lines and local distribution systems, and offers customer-facing programs such as demand response, energy efficiency initiatives and commercial and industrial solutions designed to support reliability and cost-effective service delivery.

With a corporate history that extends more than a century, American Electric Power has evolved through mergers and infrastructure investments into a vertically integrated utility with a focus on modernizing the grid. The company is active in transmission expansion and grid resilience projects and has stated strategic priorities around integrating cleaner generation and upgrading networks to support distributed energy resources. AEP is publicly traded under the ticker AEP and operates principally across a broad swath of the central and eastern United States, with headquarters and executive offices in Columbus.

American Electric Power Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: AEP reported record second quarter operating earnings of $1.43 per share, up 14% year-over-year, and reaffirmed 2025 guidance to the upper half of the $5.75–$5.95 range.
• Positive Sentiment: AEP increased its five-year capital plan to approximately $70 billion, allocating roughly 50% to transmission, 40% to generation, and 10% to distribution, supporting unprecedented growth across its 11-state footprint.
• Positive Sentiment: AEP has secured 24 GW of incremental load through signed agreements (up from 21 GW) and is managing a further 190 GW of interconnection requests, driven by data centers, reshoring, and manufacturing.
• Positive Sentiment: AEP achieved key regulatory and legislative outcomes—including Ohio’s data center tariff, Texas’s House Bill 5247 unified tracker, Oklahoma’s SB 998, and FERC approval of NOLC treatment—enhancing cost recovery and reducing regulatory lag.
• Neutral Sentiment: AEP is advancing early site permit work for small modular reactors in Indiana and Virginia and pursuing Bloom fuel cells to support rapid customer connections, while emphasizing prudent capital allocation and balance sheet protection.

Presentation

[Operator]

Thank for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's American Electric Power Second Quarter 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Once again, star one. If you'd like to withdraw your question, simply press star one again. Thank you. I would now like to turn the call over to Darcy Reese, Vice President of Investor Relations. Darcy?

[Darcy Reese, VP of Investor Relations at American Electric Power]

Good morning and welcome to American Electric Power Second Quarter 2025 Earnings Call. A live webcast of this teleconference and slide presentation are available on our website under the Events and Presentations section. Joining me today are Bill Fehrman, President and Chief Executive Officer, and Trevor Mihalik, Executive Vice President and Chief Financial Officer. In addition, we have other members of our management team in the room to answer questions if needed, including Kate Sturgess, Senior Vice President and Chief Accounting Officer. We will be making forward-looking statements during the call. Actual results may differ materially from those projected in any forward-looking statement we make today. Factors that could cause our actual results to differ materially are discussed in the company's most recent SEC filings. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. We will take your questions following opening remarks.

[Darcy Reese, VP of Investor Relations at American Electric Power]

Please turn to slide four and let me hand the call over to Bill.

[Bill Fehrman, President and CEO at American Electric Power]

Thank you, Darcy. Good morning and welcome to American Electric Power's Second Quarter 2025 Earnings Call. I'm extremely proud of the effort and dedication that our team has put forward, resulting in significant progress on our strategic objectives of delivering reliable and affordable service to our 5.6 million customers. Before we begin, I'd like to first recognize three seasoned executives who have recently joined and solidified our leadership ranks. In May, Doug Cannon was named President of AEP Transmission to lead all aspects of our best-in-class, largest-in-the-nation transmission business, which contributes 55% of AEP's total operating earnings. Doug comes to AEP after being CEO of Berkshire Hathaway Energy's NV Energy. He understands the pace of play and disciplined leadership I want as we grow this segment of our company.

[Bill Fehrman, President and CEO at American Electric Power]

We look forward to benefiting from Doug's deep industry experience and strong leadership as we prepare the business for significant growth and meeting the future demands of our customers. This month, Rob Bernstein was named General Counsel. Rob comes to AEP after serving as General Counsel at Xcel Energy, but before that, he worked with me at Berkshire Hathaway Energy for many years. He understands the direction I want to head and how we need to get there. This is a pivotal time for AEP and Rob's legal expertise, deep business and utility background, coupled with his disciplined leadership and commitment to excellence, will serve us well as we continue to navigate complex operational, financial, and regulatory landscapes. Finally, Johannes Eckert was named Chief Information and Technology Officer.

[Bill Fehrman, President and CEO at American Electric Power]

He joins us after a very successful career at Cox Communications, where he led an expansive team that was incredibly focused on the customer, both internal and external. Johannes will lead our continuing efforts to build an efficient, innovative organization that supports the right technology to meet the ever-changing needs of both our customers and the business. We are proud to welcome these leaders who will report directly to me and support the execution of our long term strategy. Today, I'd like to discuss the ways in which we have advanced on our commitments to grow financial strength, drive operational excellence, and deliver constructive regulatory and legislative outcomes. Each is a key priority that our team and I are laser-focused on. We have continued to leverage our size and scale to ensure AEP is extremely well-positioned for unprecedented growth and value creation.

[Bill Fehrman, President and CEO at American Electric Power]

I'll begin with the key financial highlights for the quarter, cover the low growth opportunities ahead, and provide additional insight into both federal and state level regulatory and legislative successes that we have delivered since the last earnings call. Trevor will walk us through second quarter performance drivers and provide additional details surrounding AEP's financial position. Please refer to slide five of our presentation for a summary of today's remarks. Starting with our financial results, AEP delivered the strongest ever second quarter operating earnings in our 100-year history. This team delivered operating earnings of $1.43 per share for $766 million. I am seeing significant improvement in execution, discipline, and regulatory outcomes that is fueling this performance. With added strength to the management team, as previously discussed, I fully expect us to continue building on these levels of results. My confidence in this management team and workforce across AEP is incredibly strong.

[Bill Fehrman, President and CEO at American Electric Power]

I see the culture changing to one of accountability, performance, and trust in each other, and we are fortunate to also have exceptional support from our board of directors. Our future is very bright, and with strong results halfway through the year, we are now guiding to the upper half of our $5.75-$5.95 per share operating earnings range. Additionally, with the robust capital plan, we are seeing a continued path and are reaffirming our long term operating earnings growth rate of 6%-8%. My confidence in our ability to execute is very high. This is critically important as we look to the future and the growth that is in front of us. Specifically, we are executing on our $54 billion capital plan and expect to announce a new five-year capital plan this fall of approximately $70 billion.

[Bill Fehrman, President and CEO at American Electric Power]

The incremental capital can be allocated with approximately 50% to transmission, 40% to generation, and 10% to distribution. As we have previously highlighted, there have been several announcements on some 765 kV transmission projects that we will incorporate into our third quarter capital plan update and look forward to providing a robust outlook later this year to support our incredible growth. Moving on to AEP's significant expansion opportunities, we are experiencing transformative load growth across our sizable 11-state footprint. We are excited about the substantial customer interest in AEP service territory, and our team is taking a very disciplined approach when thinking about this new load. We have increased our firm customer commitments and now expect to have 24 GW of incremental load by the end of the decade, up from our previously reported 21 GW, driven primarily by data centers, reshoring to manufacturing, and further economic development.

[Bill Fehrman, President and CEO at American Electric Power]

I want to emphasize these 24 GW are all backed by signed customer agreements, protecting us from changes in usage-driven volatility. We believe this amount of committed capacity is differential compared to almost any other utility, and we are well prepared to deliver on this for our customers and our states. Beyond the 24 GW, customers are also actively seeking to connect approximately 190 GW of additional load to our system. This is five times our current system size of 37 GW. Potential customers are drawn to AEP's footprint because of our advanced transmission network capable of delivering consistent, large-load power. Recall that we own and operate more ultra-high voltage 765 kV lines than all other utilities combined, uniquely positioning us with the largest electric transmission system in the country. Please turn to the next slide.

[Bill Fehrman, President and CEO at American Electric Power]

There is a long list of accomplishments we have achieved this quarter outlined on this page, and to be very clear, we are aligning our business with the goals of our state and federal regulators, legislators, and policymakers. As previously noted, we see significant opportunities to invest in generation, transmission, and distribution across our footprint and beyond. In connection with these investments, customer affordability remains top of mind as we consider how to fairly allocate costs related to critically needed infrastructure. Let's walk through a couple of noteworthy accomplishments. First, Ohio has become a recognized hub for data centers, and we are actively participating in this growing economic development opportunity. Earlier this month, the Ohio Commission established enhanced financial obligations that data centers will need to undertake to fund necessary infrastructure.

[Bill Fehrman, President and CEO at American Electric Power]

This approved data center tariff provides assurances that there will be reliable electric grid infrastructure to deliver the power we all count on while keeping costs as low as possible for all customers. This approval joins other large load tariffs previously secured in Indiana, West Virginia, and Kentucky. AEP has been at the forefront of securing these tariffs that bring down system average costs as we add data center customers, promote certainty around build out while providing customer protections, and are a powerful risk mitigation tool for us. Moving on to Oklahoma, following commission approval in June, PSO purchased the Green Country Power Plant, a 795 MW natural gas fire generation facility located in Jenks, Oklahoma. As customer energy demands rise in the region, this facility will play an important role in delivering reliable power while ensuring grid stability for the communities we serve and supporting the state's economic growth.

[Bill Fehrman, President and CEO at American Electric Power]

This plant has been successfully integrated into PSO's operations and is performing well, showing AEP's strength of execution. Finally, we continue to explore innovative ways to bring tailored power solutions to our customers during this period of massively growing power demand. At AEP, we are at the forefront of innovation, and small modular reactors, or SMRs, are just one option we are considering to provide our customers with safe, reliable, and clean base load energy. We have already shared our plans with you to begin the early site permit process for two potential SMR locations, one in Indiana and the other in Virginia, to support significant load growth in our service territory. While this represents an exciting opportunity for us, we will continue to be extremely prudent in our capital allocation, protection of our balance sheet, and credit metric strength.

[Bill Fehrman, President and CEO at American Electric Power]

We are also continuing to pursue deployment of Bloom fuel cells. This is a low risk approach to bridging data center load from first power to ultimate grid connection. We are excited about this innovative solution and are in discussions with various customers about this energy supply option. Demand for power is growing at a pace I have not seen in my 45-year energy career. This was reinforced just last week with PJM capacity prices clearing above the $325 per megawatt day price cap as we continue to see the need for capacity and energy materially rise. With AEP's generation requirements increasing to support capacity, this gives us confidence in our growing capital plan. A fundamental and core priority of mine is to continually demonstrate to our regulators and customers that we will be highly focused on safety, service, reliability, and deliver balanced and constructive regulatory outcomes.

[Bill Fehrman, President and CEO at American Electric Power]

I'm proud to say we've made great strides on this front. For example, AEP Texas was recently granted an ERCOT Permian Basin 765 kV transmission project, opening the door for future 765 kV projects. In addition, system resiliency plans at AEP Texas and SWEPCO Texas received the green light. AEP Ohio secured approval for its phase three GridSmart rider. Kentucky was authorized recovery of advanced metering infrastructure. As previously mentioned, AEP Ohio received the data center tariff approval while PSO was granted authority to purchase the Green Country natural gas facility in Oklahoma. These important developments reflect collaborative efforts with our regulators as we find solutions that support existing and future customers. Additionally, in the second quarter, FERC issued orders agreeing with AEP's proposed treatment of NOLCs within its transmission formula rates, which Trevor will go into more detail shortly.

[Bill Fehrman, President and CEO at American Electric Power]

A couple of our operating companies recently filed new base rate applications, including SWEPCO Arkansas in March and AEP Ohio in May. We look forward to working with all stakeholders in both of these cases to achieve constructive and balanced outcomes that benefit both our customers and investors. In West Virginia, late last year, APCo filed a base case and offered the option for securitization of up to $2.4 billion as a means to help mitigate rate impacts on the proposed base rate increase. We expect a commission order in the third quarter and appreciate the stakeholder feedback we have received during this process as we all continue to focus on customer needs and affordability. Turning now to AEP's legislative efforts, we have also been working diligently with federal policymakers and state legislators to deploy large amounts of capital while reducing regulatory lag.

[Bill Fehrman, President and CEO at American Electric Power]

Our team has been actively engaged throughout the legislative process leading into the federal budget reconciliation bill signed into law on July 4th. The bill contains several tax provisions impacting utilities, primarily centered around tax credits for generation assets. To be very clear, the legislation currently supports 100% of AEP's $9.9 billion, five-year capital plan for wind and solar generation, maintaining the required criteria to capture the full tax credits. We are also closely monitoring the July 7th executive order to assess potential impacts on tax qualification. Even if the U.S. Department of the Treasury issues new guidance under the order that redefines the beginning of construction criteria, we currently expect that only a few projects at the back end of the plan may need to be reassessed for tax credit eligibility.

[Bill Fehrman, President and CEO at American Electric Power]

Keep in mind that while our generation mix may vary, the load growth remains robust, and we will need future generation to service the forecasted demand. Any impacted capital would just be reassigned to alternative forms of generation assets at the back end of the plan. Texas House Bill 5247, which became law in June, is an incredibly constructive piece of legislation for AEP Texas. This unified tracker mechanism allows utilities that meet certain criteria to submit a single filing each year instead of multiple filings for distribution and transmission investment, essentially eliminating lag, further streamlining the regulatory process, and substantially improving the earned ROEs. This is highly supportive of increasing our capital allocation to Texas as we participate in the massive infrastructure build out needed to drive the economic growth in the state.

[Bill Fehrman, President and CEO at American Electric Power]

With Ohio House Bill 15 taking effect in August, the new legislation eliminates electric security plans, or ESPs, and introduces a multi-year forward-looking test year with a true-up mechanism, which promotes timely and efficient recovery of investments. AEP Ohio's transition from ESPs to this new construct in 2028 will proceed seamlessly without any gap in timing since the current ESP expires concurrently when the forward-looking test year rate case will take effect. This is very positive for AEP Ohio. For Oklahoma and Senate Bill 998, PSO views the impacts of this legislation also as very constructive. The ability to defer 90% of all distribution and general plant that goes in service between rate cases as a regulatory asset is intended to encourage investment, reduce regulatory lag, and increase earnings recognition. This legislation is also effective beginning in August.

[Bill Fehrman, President and CEO at American Electric Power]

I'll close by emphasizing how proud I am of all we have accomplished over the past 12 months. This tremendous progress would not be possible without the unwavering dedication of the entire AEP team and our board of directors. We continue to push our strategic priorities forward and deliver for all of our customers and other stakeholders every day at a dramatically increased pace of play. This is only the beginning, and I believe we are just getting started. We will continue to work at a fast pace on our commitments while remaining focused on customer service, operational excellence, financial discipline, sound execution, and driving value for our shareholders. I'll now turn the call over to Trevor, who will walk us through the second quarter performance drivers and other financial information.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Thanks, Bill. And good morning to everyone.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Today, I'll review our financial results for the second quarter, build on Bill's comments regarding our exceptional load growth, and then finish with comments on our commitment to the financial strength of the company. Let's start with slide seven, which details our quarterly operating earnings performance by segment. For your reference, there is a detailed reconciliation of GAAP to operating earnings for the quarter on slide 24 of today's presentation. Operating earnings for the first quarter total $1.43 per share compared to $1.25 per share in 2024. This was an increase of $0.18 per share, or about 14% year-over-year, highlighting the solid momentum we have heading into the second half of 2025. This momentum, coupled with our proven ability to execute, gives us the confidence to guide our operating earnings per share to the upper half of the 2025 range of $5.75-$5.95.

[Trevor Mihalik, EVP and CFO at American Electric Power]

As Bill briefly indicated, we have been working with each of the various regulators in our service territories to align our rate-making for the tax net operating losses with the rulings we received from the IRS last year. This quarter, we received a final decision from FERC affirming the appropriate treatment of NOLCs to our transmission formula rates, resulting in a $480 million, or $0.90 per share, increase to GAAP earnings. The tax benefit related to prior years has been excluded from operating earnings. With the resolution of this issue by FERC, we have now transitioned substantially all of our rate-making to the required regulatory approach. Looking at the drivers by segment, operating earnings for the vertically integrated utilities were $0.56 per share, up $0.10 from a year earlier.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Positive drivers included rate changes across multiple jurisdictions and increasing load from data centers, which I'll get to in more detail shortly. These items were partially offset by the variance from last year's extremely favorable weather in the quarter and higher depreciation in the current year, driven by increased capital investment. The transmission and distribution utility segment earned $0.42 per share, up $0.01 from last year. Favorable drivers in this segment include rate changes driven by rider recovery of distribution investments in Ohio and the base rate case in Texas, as well as continued gains in retail sales from large loads. These items were partially offset by increased year-over-year O&M, primarily driven from system improvements and spending on storm-related expenses. As Bill mentioned, we had an incredibly impactful legislative session in Texas, most notably the passage of House Bill 5247, also known as the Unified Tracker Mechanism, or UTM.

[Trevor Mihalik, EVP and CFO at American Electric Power]

This bill applies to AEP Texas, given its inclusion in the Permian Plan, participation in ERCOT, and the significant amount of capital we anticipate spending throughout the state over the next decade. The UTM basically eliminates regulatory lag and supports increased capital investment in AEP Texas in response to the legislature's goal of developing the electric infrastructure necessary to harden the grid, which is driven by the state's incredible economic growth. In late June, AEP Texas made a notification filing with the commission that they intend to use the UTM process going forward. The AEP transmission whole cost segment contributed $0.42 per share, up $0.03 from last year. Our continued investments in transmission assets, as new loads are added onto the system, remain the key driver in this segment. Generation and marketing produced $0.17 per share, up $0.05 from last year.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Favorable energy margins were partially offset by lower distributed generation margins due to the sale of the onsite partner's business back in September of 2024. Finally, corporate and other was relatively flat over last year, demonstrating our focus on overall cost controls. Moving on to slide eight, I'd like to speak to some of the significant increases in load that we continue to see across the system. The numbers you see here are the basis behind our existing $54 billion five-year capital plan. Keeping in mind, we expect to increase the capital plan to a new five-year spend of up to $70 billion. We're seeing great clarity into this capital growth, and we will be ready to lay out the details of our revised capital and financing plans on the third quarter earnings call. The chart to the left depicts how our load story is impacting the second quarter growth.

[Trevor Mihalik, EVP and CFO at American Electric Power]

On a weather normalized basis, we've added more than 4 GW of incremental peak demand since this time last year, growing from 33.5 GW to 37.6 GW. This increase is largely due to new data centers and other industrial customers coming online in Indiana, Ohio, and Texas, resulting in a roughly $200 million year-over-year increase in revenues. This slide highlights the strong relationship between peak demand and revenue. That's because our C&I customer bills are based more on peak demand than megawatt-hour sales. Higher peak demand, coupled with the contractual minimums built into the latest tariff provisions, predominantly in Indiana, are driving up revenues. These demand minimums for large load customers are helping to more than fully offset revenue impacts from energy efficiencies among our residential customers.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Turning to the graphic on the right and looking beyond the current quarter, our $54 billion five-year capital plan is supported by 24 GW of contracts that have already signed firm commitments for incremental load through the end of the decade. We will be taking this into consideration as we update our full forecast later this year. These contracts are a combination of letters of agreement, or LOAs, and long term electric service agreements, or ESAs, depending on tariff provisions in the jurisdictions in which they're located. To put a fine point on this, we are really one of the only investor-owned utilities that not only has incremental load of 24 GW backed by signed LOAs or ESAs, but also has an incremental 190 GW in the interconnection queue actively looking to connect to our system.

[Trevor Mihalik, EVP and CFO at American Electric Power]

This represents an unprecedented growth opportunity that is largely unique to AEP given the size and technological profile of our transmission system. This 190 GW queue consists of requests at varying stages of development and is indicative of the fact that we have substantial unsigned load that is looking to connect. While we continue to see a lot of public speculation about data center load, we have developed detailed internal processes for executing on a firm pipeline of actual growth that we are already seeing come to fruition. Earlier, you heard Bill mention a few of our regulatory successes, and several revolved around strengthening and lengthening those tariff provisions. Just this year, we've had large load tariffs approved in Indiana, Ohio, West Virginia, and Kentucky that provide financial protections for our existing customers as we invest to serve those new large loads.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Relying on these signed contracts as opposed to more speculative forecasting methods differentiates AEP and gives us confidence that these loads will materialize on our system. Again, now that we have some of the new tariff provisions in place, particularly in Indiana and Ohio, we are working towards getting more of those requests converted into signed agreements that can eventually be incorporated into the load forecast that we will be communicating later this year. Let's move on to slide 9. On the left of this slide, you can see our liquidity summary, which remains very strong at above $5.6 billion and is supported by $6 billion of credit facilities. Our balance sheet is also healthy, reinforced by the recent closing of the $2.82 billion minority transmission transaction in early June and our proactive $2.3 billion forward equity offering in the first quarter.

[Trevor Mihalik, EVP and CFO at American Electric Power]

As a result, S&P moved AEP's outlook to stable and reaffirmed our BBB flat credit rating. We remain committed to continued credit quality, and I want to reiterate that we have fulfilled our equity needs that support our $54 billion capital plan from 2025 through 2029. As previously mentioned, we expect to increase this $54 billion capital plan to a new five-year investment plan of up to $70 billion. We are evaluating upcoming incremental capital spend opportunities and efficiently matching them with optimal financing strategies, including items like growth equity and hybrids in support of this capital expansion. We do not have immediate equity needs and maintain near-term flexibility as we evaluate all options to efficiently finance our growth. We're also encouraged by favorable legislative developments, constructive regulatory outcomes, and our continued focus on disciplined cost management.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Together, these factors support operating cash flow growth and provide a solid foundation to fund incremental capital investment. On the top right table, S&P's FFO to debt metric stands at 14.8% for the 12 months ended June 30, and Moody's FFO to debt metric stands at 13.2% for the same period using their recently revised methodology. Finally, let's move to slide 10 before we take your questions. I'll briefly summarize what you heard from Bill and me today. First, you heard how we delivered strong financial performance in the second quarter, substantially growing earnings at 14% quarter over quarter. We're guiding to the upper half of our 2025 operating earnings range of $5.75-$5.95 per share, which is driven by strong year-to-date results and confidence in our ability to execute for the remainder of the year. Second, you heard that we continue to achieve constructive regulatory and legislative outcomes.

[Trevor Mihalik, EVP and CFO at American Electric Power]

This was highlighted by positive developments like House Bill 5247 in Texas and Senate Bill 998 in Oklahoma, alongside solid regulatory execution on several key filings like the approval to build a new 765 kV transmission line in Texas, the acquisition of the Green Country Power Plant in Oklahoma, and the approval of large load tariffs across several jurisdictions. Third, you heard how we've strengthened our balance sheet through the closing of the $2.8 billion minority interest transmission transaction on top of the $2.3 billion forward equity offering completed late in the first quarter. Fourth, you heard how our remarkable load growth story continues to evolve and contribute to earnings, how our commitment to obtaining signed contracts and our sizable interconnection queue gives us great confidence that these projects will come to fruition. Also, you heard how those same contracts provide financial protection for our investors and other customers.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Lastly, you heard about our continued commitment to execute on our capital plan, and we expect to increase our capital plan to a new five-year investment plan of up to $70 billion. As we mentioned earlier, we are looking forward to sharing our plan and the associated financing on the third quarter call later this year. It's an exciting time to be in the electric industry, and I believe we are extremely well positioned to drive exceptional operational and financial results and deliver value to our customers and shareholders. I'm now going to ask the operator to open the call so we can take some of your questions.

[Operator]

Thank you. At this time, I would like to remind everyone that in order to ask a question, press star, then the number one on your telephone keypad. Once again, star one.

[Operator]

We will pause just a moment to compile the Q&A roster. All right. Looks like our first question today comes from the line of Ross Fowler with Bank of America. Ross, please go ahead.

[Ross Fowler, Managing Director and Head of North America Power and Utilities Equity Research at Bank of America]

Good morning, Trevor. Congrats on a great quarter. Just a couple of questions for me this morning. So first, Trevor, on the indicative CapEx increase to the $70 billion from the $54 billion in that five-year window that you're thinking about for Q3, how do you or can you give us some color on the financing needs and the options for that incremental $16 billion?

[Ross Fowler, Managing Director and Head of North America Power and Utilities Equity Research at Bank of America]

And then in addition to that, given that you've got an Ohio forward test year hopefully coming through the rate case, you've got the universal tracker in Texas, how do you see the impact of this higher CapEx on your growth rate given more real-time recovery, even if the capital is back end loaded, back of the envelope math would suggest kind of 100 basis points upside, but how do you think about it?

[Trevor Mihalik, EVP and CFO at American Electric Power]

Yes, Ross, thanks for those questions. Appreciate it. On the financing on the capital plan, let me just start by saying we have been really proactive in financing the existing $54 billion capital plan.

[Trevor Mihalik, EVP and CFO at American Electric Power]

And as I said in my prepared remarks, since January, we've issued that $2.3 billion of equity under a forward and then closed on the $2.82 billion minority interest transmission transaction, which essentially took care of all of our current five-year equity funding needs. So by doing this, we really don't have near term equity needs, even for an increasing capital plan in the near term. This gives me a great level of flexibility as we evaluate all options to efficiently finance this plan. Basically, said another way, Ross, we've essentially prefunded five years of equity needs in the first six months for the $54 billion. That gives me some level of flexibility.

[Trevor Mihalik, EVP and CFO at American Electric Power]

When I look at this incremental capital, I'm going to continue to prioritize the balance sheet strength as we explore the multiple options around capital structure, including hybrids, growth equity, and then again, the strong continuing cash flow from operations, especially given the favorable legislative developments that we've seen that reduces this regulatory lag. That will increase FFO, and also we are focusing on cost management. Together with these factors, I think we will come out in the third quarter with our revised financing strategy. What it really does is gives me a level of leeway in the near term here to do things in the most efficient way. Then to the long term growth rate. You raise a good point here. We're seeing, again, robust growth from the $54 billion to this up to $70 billion.

[Trevor Mihalik, EVP and CFO at American Electric Power]

But remember, last year, we raised our growth rate when we were six to seven, and we raised it to Six to eight. And we really believe this incremental load with capital investments and the financing strategy and this positive regulatory and legislative developments really position us well within the 6-8% range. I want to see continued progress on operational and financial performance coupled with near-term impacts on expanding capital plans before we make any upward revisions to the long term growth rate. I'm really looking to be disciplined as we balance stakeholder interests, including strengthening the balance sheet and driving long term growth. These areas, I think, are critically important, Ross, and we really are ensuring we're not trying to prioritize one over the other. The great news is we're seeing so much opportunity for positive financial results given this once-in-a-generational growth.

[Trevor Mihalik, EVP and CFO at American Electric Power]

But we're going to be disciplined in how we roll out messaging and how we roll out the financing.

[Ross Fowler, Managing Director and Head of North America Power and Utilities Equity Research at Bank of America]

That's perfect, Trevor. Thank you. And then one more, if I may. Flipping over to slide 12 and just looking at that ROE trajectory on the left-hand side up to the 9.3%. Let's see, AEP Texas, is it at 8.6%, PSO is at 8.3%, but given we're going to go to a forward test year, hopefully in Ohio, we're moving to the universal tracker in Texas. As that lag reduces, you would expect those two to move higher. That's a pretty significant proportion of your rate base. So the overall trajectory on the ROE trend from that 9.3% should push higher as well, if I think about that correctly.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Yes, I think there's no doubt you will see, I think, an increasing ROE.

[Trevor Mihalik, EVP and CFO at American Electric Power]

We've kind of been public about the fact that with the UTM in Texas, the objective there is the state is really trying to attract as much capital as possible to this growing needs in the state. And this, we've said, is going to probably increase our ROEs in AEP Texas by 50 to 100 basis points.

[Ross Fowler, Managing Director and Head of North America Power and Utilities Equity Research at Bank of America]

That's fantastic, Trevor. Thank you for the detailed answers. I'll jump back into the queue.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Thanks, Ross.

[Operator]

Thank you, Ross. And our next question comes from the line of Steve Fleishman with Wolfe Research. Steve, please go ahead.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research]

Yes. Hi, good morning, thanks. So just, I guess first, Bill, you mentioned kind of the SMRs. Maybe you could give a little more color on kind of that plans there. And just. How you're looking at kind of protecting the risk on that?

[Bill Fehrman, President and CEO at American Electric Power]

Sure. And good morning, Steve. Thanks for calling in.

[Bill Fehrman, President and CEO at American Electric Power]

Our focus right now on SMRs is really on the early site permit work. We've got very strong regulatory support, particularly in Virginia, where we're allowed to invest up to $125 million with recovery there to move forward on the site work. We're continuing to go down that path and have the government there be in a very supportive position for us. Similarly, in Indiana, there's a positive regulatory environment there for early site investment. That's really our focus right now, preparing ourselves for the potential down the road.

[Bill Fehrman, President and CEO at American Electric Power]

Clearly, if there's an opportunity to do something on behalf of our customers and in partnership with our customers, as I've said many times before, we will make sure that there is extremely strong capital investment protections and that we've got safeguards on our balance sheet and credit ratings, and that there's very clear regulatory and government support for anything that would go beyond the early site permit process for us. Very excited about where we're at on our partnership with Virginia, in particular, Governor Youngkin has been incredibly supportive of looking at sites in preparation for what might come. For now, the focus for us is on looking at basically at ground and the availability of potential locations and doing that through the government and the state regulatory environment.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research]

Okay. Great. And then Trevor, on the NOLC that you mentioned.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research]

Is there any ongoing earnings impact from that change? I know you mentioned the one time.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Yes. The one time is the piece we recorded in this quarter. There is an impact that we will see later this year. It's not going to be material, but I'll let Kate kind of address some of this as well.

[Kate Sturgess, Senior VP and Chief Accounting Officer at American Electric Power]

Yes. The one-time item was primarily to do with remeasuring the balance sheet. We've said before that we would expect the ongoing impact to be around three pennies, and that's still how we see that flowing through operating earnings from an annual basis.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research]

Okay. Great. I guess maybe just be good to get an update on the West Virginia case.

[Bill Fehrman, President and CEO at American Electric Power]

The West Virginia case has gone through the regulatory process. We've had extremely good engagement with all of the parties.

[Bill Fehrman, President and CEO at American Electric Power]

As you know, we did offer up the alternative for securitization in that case. That was seemingly well received throughout the discussions with the stakeholders. All of the work is essentially complete, and we're awaiting an order, which is expected to come out late August or early September.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research]

Okay. Great.Great. Thanks for the update.

[Bill Fehrman, President and CEO at American Electric Power]

Thanks, Steve.

[Operator]

Thanks, Steve. And our next question comes from the line of David Arcaro with Morgan Stanley. David, please go ahead.

[David Arcaro, Executive Director and Equity Research Analyst at Morgan Stanley]

Hey, thanks so much. Good morning. Reflecting on the CapEx increase that you're signaling here. This is the second one, I guess, just eight, nine months ago, you also increased your CapEx plan by 30%. At that time, here, you've got another kind of 30% increase coming. I guess I'm just wondering, as we look ahead, is this the new normal? Is there a limit.

[David Arcaro, Executive Director and Equity Research Analyst at Morgan Stanley]

In terms of what you're seeing around CapEx opportunities? Could we continue to see further escalation in these five-year CapEx plans as you roll them out?

[Trevor Mihalik, EVP and CFO at American Electric Power]

Yes, David, again, what we're seeing is just tremendous growth on the system. I want to really kind of emphasize. Where you take a look at our overall peak summer load is 37 GW. We've also announced that we have an incremental 24 GW that is signed up to connect to our system under either LOAs or ESAs. That takes us north of 60 GW on our system size. Then there's another 190 GW behind that in various stages of development. We know not all of that is going to come online, but even a fraction of that is significant. From that perspective, we continue to see opportunity to continue to invest. We're going to be disciplined.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Even raising our capital plan from $54 billion to up to $70 billion is a sizable growth. We want to ensure we're digesting that in a way that is disciplined and ensuring we're also protecting our balance sheet as we're continuing to grow this business. The big thing that I want you to take away here is across our 11-state footprint, we've got a large footprint and a lot of economic and other type of activity looking to connect. A lot of positive.

[David Arcaro, Executive Director and Equity Research Analyst at Morgan Stanley]

Yes, absolutely. I appreciate that color. As you look at the pipeline of data center activity, wondering if you could just give a little color as to where you're seeing it. Which states? How does that split out among your states and service territories? Just curious, I mean, with such a rush of activity, what is the wait time?

[David Arcaro, Executive Director and Equity Research Analyst at Morgan Stanley]

How long does it take at this point to connect new data center load into your system?

[Bill Fehrman, President and CEO at American Electric Power]

Yeah. We'll start at sort of a global view of data centers in general. Our area is extremely attractive for data centers. We have ample fiber capacity. We have good supply of water, of course, with having the largest transmission system in the country and the 765 kV backbone, we're incredibly well positioned to attract the data centers and couple that with our level of operational excellence and our ability to come up with creative solutions to bridge these data centers over from perhaps early use of fuel cells into grid connect is also very attractive to these customers. We have put in very strong protections for our customers through the use of the data center tariffs, which I noted in my comments we have in a number of states.

[Bill Fehrman, President and CEO at American Electric Power]

Even with those, we still have an incredible attraction of new data centers wanting to come into the territory. As we look at this, we've got an incredible backlog of these data centers. Of course, depending on what state we're in will determine what their wait times are. Again, as we work with them, we're trying to give them innovative solutions so that they can come online quicker. For instance, in Ohio, we've got the two customers, Amazon Web Service and Cologix, that we've done fuel cells with while we work through the interconnection agreements with them, which is probably five to seven years. I'll say that's not unusual in many of our locations as we work through this. We also have areas of our system that still have available transmission, and those sites, obviously, are being discussed with the customers to allow quicker connections.

[Bill Fehrman, President and CEO at American Electric Power]

While a lot of our focus is on data centers, we have a lot of other activity going on in our states. We have a lot of reshoring of manufacturing, and we have an incredible amount of economic development of existing businesses that continue to grow that we're dealing with. Just overall, we're in a tremendously positive place. We've got exceptional opportunities to continue to attract these customers, and we're going to do everything in our power to execute on these agreements that we have and get them interconnected as quickly as possible.

[David Arcaro, Executive Director and Equity Research Analyst at Morgan Stanley]

Great. Thanks so much. Appreciate it.

[Operator]

Great. Thank you, David.

[Operator]

Our next question comes from the line of Jeremy Tonet with JPMorgan. Jeremy, please go ahead.

[Jeremy Tonet, Executive Director and Senior Equity Research Analyst at JPMorgan]

Hi. Good morning.

[Bill Fehrman, President and CEO at American Electric Power]

Good morning.

[Jeremy Tonet, Executive Director and Senior Equity Research Analyst at JPMorgan]

Just wanted to pick up on the capital plan, possibly increasing notably here.

[Jeremy Tonet, Executive Director and Senior Equity Research Analyst at JPMorgan]

Talked a bit about funding, but wanted to talk a little bit more if we could there. Just wondering as far as how you might prioritize funding or how you see asset sales potentially fitting into, I guess, the pecking order there, particularly with regards to the previous moves to sell Kentucky Power in the past. Just wondering how asset sales fit together versus other funding sources.

[Bill Fehrman, President and CEO at American Electric Power]

Yes. Appreciate the question. Again, the additional capital for us is incredibly exciting for us. To maybe give you a little bit of a breakdown on that, it's about $2 billion in the I&M for generation, about $3 billion in PSO for generation, about $7 billion in AEP Texas for transmission, and then another couple of billion for distribution across the APCos, and then a couple of billion across miscellaneous projects. As we think about that, our focus is really on growth.

[Bill Fehrman, President and CEO at American Electric Power]

I'm not really one to want to sell assets as a strategy. Obviously, we'll look at all alternatives and do what's in our best interest of shareholders. My focus right now is really looking at the opportunity in front of us and growing this company as best we can.

[Jeremy Tonet, Executive Director and Senior Equity Research Analyst at JPMorgan]

Got it. Understood. Thanks for that. Within the transmission plans, just wondering if you could expand a little bit on how maybe gets and reconductoring could factor in and help for speed to market solutions here, given data center needs here, particularly given your prior experience with the ACCC conductor and what that brought to the system.

[Bill Fehrman, President and CEO at American Electric Power]

Our transmission team is acting in a forward-looking mode, looking at various reconductoring projects. We've actually worked with the government and received a number of grants to support reconductoring of our system.

[Bill Fehrman, President and CEO at American Electric Power]

Again, that, I would say, adds small incremental capacity to the system. What we really need to be looking at is a dramatic 765 kV backbone addition across our service territory. I was very excited to see Texas come out with their proposed plan to use 765 across the Permian area to really enhance the strength and resiliency of that system. My view would be that we need a lot more of that into our grid and into particularly PJM, SPP, and MISO. The reconductoring ideas and some of the more innovative products that are out there are interesting and intriguing. But with the size and scale that we have in front of us, we have to think much, much bigger and get moving on these projects.

[Jeremy Tonet, Executive Director and Senior Equity Research Analyst at JPMorgan]

Got it. Thank you for that. Just one last question, if I could.

[Jeremy Tonet, Executive Director and Senior Equity Research Analyst at JPMorgan]

In conversation that you presented so far, nuclear focus seems like more on SMRs versus[AP1000s. Just wondering if you could provide any thoughts, I guess, on one versus the other. What drives preference?

[Bill Fehrman, President and CEO at American Electric Power]

For us, again, as I said, our fundamental focus right now is on just the sites and working within our regulatory environments and what our states want us to pursue at the moment. As I think about SMR technologies and the AP1000, all of those are really something that, even if we started today, would not be available until early to mid-next decade.

[Bill Fehrman, President and CEO at American Electric Power]

I think from a customer perspective, as we have had discussions with our customers, I think that there is, I would say, a leaning more towards SMRs only because of the diversity that they offer and that if you have four of those supplying service to a data center and you need to shut one down to refuel, you still have three versus just having the risk of one big unit there. Really, for us at this stage, we are focused on sites. We are focused on staying within the regulated environment. We are working with our customers to determine what they would like to do and how they would like to do it. Again, I think it is really mid to mid-next decade before any of these types of things are going to be commercially available in this country.

[Jeremy Tonet, Executive Director and Senior Equity Research Analyst at JPMorgan]

Got it. Thank you very much.

[Operator]

Thanks, Jeremy.

[Operator]

Our next question comes from the line of Nicholas Campanella with Barclays. Nick, please go ahead.

[Nicholas Campanella, Senior Equity Research Analyst at Barclays]

Hey, good morning, everyone. Thanks for all the updates.

[Bill Fehrman, President and CEO at American Electric Power]

Good morning

[Nicholas Campanella, Senior Equity Research Analyst at Barclays]

I just wanted to ask just this morning, just to put one quick follow-up on financing, and I apologize. Just does not sound like there is anything near-term for equity in either plan that you need right now and the credit is back to stable, to your point. Just for funding the $16 billion, is there just a percentage of equity that is required that we should be thinking about, whether it is 20% or 40%, or I will just stop there. Thanks.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Yes, Nick. I think we have talked a little bit about this, that generally, I think in the industry, you are hearing people talking in the 30%-40% of potential equity as you look at CapEx growth.

[Trevor Mihalik, EVP and CFO at American Electric Power]

I think that is within the range of what we would contemplate here. Again, that needs to be refined over the coming months before we roll out the formal plan and the associated financing, given that we have other tools that we will use. I mentioned that a little bit in my remarks where we have potentially. Hybrids that we can issue. And then we also want to see what the near term FFO to debt is with these really positive legislative results. We always want to be really judicious with any kind of growth equity issuance. Again, I think growth equity, when you have this type of robust plan, is not something we should shy away from, but it is always something that we will be very judicious with in issuing shareholder equity.

[Nicholas Campanella, Senior Equity Research Analyst at Barclays]

Understood. Very clear.

[Nicholas Campanella, Senior Equity Research Analyst at Barclays]

Just quickly on the sales growth for this year, I know you guys kind of combined C&I now. Can you just kind of talk about what's driving the shift on the combined view and then thoughts on fiscal 2025 overall, which I think was just updated lower? Thanks.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Yes, absolutely. You did pick up on that. We did combine in the earnings slides that we presented today, the C&I load combined together. There are several reasons for this. One, I think it's more in line with how others in the industry present the load on a C&I basis. Also, I think it's more reflective of our business that there is a growing convergence between how some commercial and industrial customers are classifying themselves. That is particularly true also between some of the crypto versus the data centers. Also, the financial protections in the contracts for the data centers.

[Trevor Mihalik, EVP and CFO at American Electric Power]

We kind of believe that commercial load associated with that is more akin to an industrial load. From that perspective, I think it makes more sense and it's better presentation for our investors to see it as one combined load. Overall, what you're seeing is load increasing overall on the entire system on a throughput basis. Very positive in that regard across the whole retail load.

[Nicholas Campanella, Senior Equity Research Analyst at Barclays]

Okay. Just 2025, I think, was lower. Is that still coming from that segment? I know that there's a ton of growth in the future, but just the 2025, I believe, Chris, correct me if I'm wrong, is lower. I was just hoping you could address that as well.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Yes.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Again, what we're seeing is one of the things I want to emphasize here is the financial protections in the commercial load and whether or not they actually take the minimums they're paying for, what they've signed up for, that capacity, because they're still ramping up their data center loads in the various locations, but they want to ensure that they have connectivity to our system. From that perspective, it does not really matter to us financially whether that load is actually coming on or not. We do see some volatility as this load ramps up. Again, from our perspective, we are protected financially.

[Nicholas Campanella, Senior Equity Research Analyst at Barclays]

Understood. Thank you.

[Operator]

Thanks, Nick. Our next question comes from the line of Julien Dumoulin-Smith with Jefferies. Julien, please go ahead.

[Julien Dumoulin-Smith, Managing Director and Senior Equity Research Analyst at Jefferies]

Hey, good morning, team. Nicely done. Really, truly remarkable across the board here. Great stuff. In fact, Bill, if I can pick it up—oh, absolutely.

[Julien Dumoulin-Smith, Managing Director and Senior Equity Research Analyst at Jefferies]

If I can pick it up here, I mean, 20% increase in contracted load here just in one quarter up to 24 gigs is remarkable. Can you provide a little bit more color on just the composition? I know you mentioned this a little bit earlier. What portion of that is hyperscalers, for instance, if you can speak to that? And then if you can speak to it, what percentage of these have progressed beyond LOAs to fully executed ESAs? I mean, just give us a little bit more color behind the 24. If I can take that and just add a subpoint to it, how do you think about your earned ROEs? I see the load growth profile per Nick's question. How do you think about it given that you are targeting a 9.3% here this year? Obviously, a lot going into that.

[Julien Dumoulin-Smith, Managing Director and Senior Equity Research Analyst at Jefferies]

The scope of what is possible on earned ROE as you think about this load growth now hitting over the next couple of years versus earlier long term guide?

[Bill Fehrman, President and CEO at American Electric Power]

Yes. Thanks, Julien. To give you a breakdown of the 24 GW, about 2.5 of that is in the SPP, about 9 of that is in PJM, and about 13 of that is in ERCOT. We continue to work with our customers. We are getting significant inbounds on the desire to sign up to our system. We have had great success in getting the contracts put in place. We are continuing to push forward with the designs and the interconnections for these customers. Interestingly enough, in the SPP, of the 2.5 GW, about 2.1 of that is data centers and about 0.3 GW of that is crypto. In PJM, that is split across AEP Ohio, I&M, and APCo.

[Bill Fehrman, President and CEO at American Electric Power]

About 3.7 of that is data centers in Ohio, about 3.1 of that is data centers in I&M, and just a little bit of that is in APCo. ERCOT is probably the more interesting one, which is where we see about 2 GW on data centers, but about 5 GW on crypto. Texas is clearly becoming the crypto center for us, and we're making sure we have the appropriate procedures in place to get crypto signed up. As most of that as we can, with Texas, as I said, becoming sort of the center of crypto right now. Overall, we're continuing to work through the agreements with these customers. I expect all of them will move to the next level. They're very aggressively wanting to get contracts signed. My confidence level on this 24 GW is extremely high. I don't know, Trevor, anything to add?

[Trevor Mihalik, EVP and CFO at American Electric Power]

Yes, just one thing, Bill.

[Trevor Mihalik, EVP and CFO at American Electric Power]

And Julien, one of the things that we're excited about here is as we're looking to attract capital to Texas and Oklahoma, when you take a look at Texas, our authorized ROE, call it roughly 9.7%, 9.76%, and our earned ROE is roughly 8.6%. That's where we're saying 50-100 basis point increase with the UTM in Texas. That'll go a long way to adding to the 9.3% overall earned ROE. In Oklahoma, similarly, we've got 9.5%, and our earned ROE is 8.3%. With SB 998, that should be pretty beneficial as well. All very positive in that regard, and that's why we wanted to highlight both the regulatory and the legislative positive outcomes that we think are really driving policy in the states for the benefit of our customers, but it will also be beneficial to our shareholders.

[Julien Dumoulin-Smith, Managing Director and Senior Equity Research Analyst at Jefferies]

Got it. You think you can close the gap in Oklahoma?

[Julien Dumoulin-Smith, Managing Director and Senior Equity Research Analyst at Jefferies]

Just to clarify that last comment there, Trevor.

[Trevor Mihalik, EVP and CFO at American Electric Power]

I'm not saying we're going to close it, but I think it'll go a long way to improving the earned ROEs in Oklahoma.

[Julien Dumoulin-Smith, Managing Director and Senior Equity Research Analyst at Jefferies]

Yep. Absolutely. Thank you, guys. Nicely done. We'll speak soon.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Thanks, Julien.

[Bill Fehrman, President and CEO at American Electric Power]

Thanks, Julien.

[Operator]

Thanks, Julien. Our final question today comes from the line of Carly Davenport with Goldman Sachs. Carly, please go ahead.

[Carly Davenport, VP and Equity Research Analyst at Goldman Sachs]

Hey, good morning. Thanks so much for fitting me in. Just a quick follow-up on Nick's question earlier on the 2025 load growth. Should we think about that as just a timing impact in terms of the ramp of some of these larger facilities, or are there any read-throughs to 2026 and beyond?

[Trevor Mihalik, EVP and CFO at American Electric Power]

Yes, Carly, thanks for that.

[Trevor Mihalik, EVP and CFO at American Electric Power]

I think one of the things when you really look at the C&I load ramp, the big point that we're trying to highlight here is that C&I customers are mainly built based on peak demand. Higher peak demand, along with the demand minimums embedded in the tariff provisions, is driving the revenue stability and really mitigates that earnings volatility. More importantly, I'd say rising peak demand unlocks the valuable capital investment opportunities, which enables us to continue enhancing and expanding our system. There is no doubt that data centers are locating within our footprint due to the robust transmission infrastructure that Bill talked about and that we've got available capacity in a lot of our system, as well as the other critical resources needed, such as fiber and water and land areas.

[Trevor Mihalik, EVP and CFO at American Electric Power]

We will see the C&I load ramp continue, and we feel very confident in that 24 GW of incremental load coming on. Those are, again, backed by signed LOAs and ESAs.

[Carly Davenport, VP and Equity Research Analyst at Goldman Sachs]

Great. That's very clear. Thanks for the clarification on that. Just one other quick one. You mentioned on the back of the OBBA passing, you believe that the renewables plan should be unchanged through 2029. Just curious if there's any potential to pull any projects forward to secure the tax credits for customers, or is there anything embedded in that new potential $70 billion plan to reflect a pull-forward dynamic?

[Trevor Mihalik, EVP and CFO at American Electric Power]

Yes. Thanks, Carly. Look, I want to be really clear on this point. I would say right now, we have almost $10 billion of renewables in our capital plan, in our $54 billion five-year capital plan.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Right now, under what is in OBBA, we believe 100% of those projects will be eligible. Now, depending on what ultimately comes out of the EO and the Treasury department's guidelines, as we said on our prepared remarks, there's a couple of projects on the back end of that plan. I would say worst case scenario, we would see maybe a couple of billion dollars that we would reallocate from renewables to other sources of generation. Largely, I would say the OBBA does not impact our renewables generation as written right now, and all of our projects qualify.

[Carly Davenport, VP and Equity Research Analyst at Goldman Sachs]

Great. Thank you so much for the color.

[Trevor Mihalik, EVP and CFO at American Electric Power]

Thanks, Carly.

[Carly Davenport, VP and Equity Research Analyst at Goldman Sachs]

Thank you, Carly. That does conclude our Q&A session. I will now turn the call back over to Bill Fehrman.

[Bill Fehrman, President and CEO at American Electric Power]

Great. Thank you. We appreciate everyone joining today. I'd like to close with just a few summary remarks.

[Bill Fehrman, President and CEO at American Electric Power]

Exciting times obviously continue ahead, and I'm extremely proud of the entire AEP team and all of the strong support received from our board of directors. We're driving the business forward with our plan to deliver results for the benefit of our customers, our communities, and all other stakeholders. I'm very confident we can unlock the incredible value in this company by advancing our long term strategy and providing safe, affordable, and reliable service across our footprint. If there are any follow-up items, please reach out to our IR team with your questions. This concludes our call.

Participants

Executives

• Bill Fehrman, President and CEO
• Trevor Mihalik, EVP and CFO
• Darcy Reese, VP of Investor Relations
• Kate Sturgess, Senior VP and Chief Accounting Officer

Analysts

• Julien Dumoulin-Smith, Managing Director and Senior Equity Research Analyst at Jefferies
• Ross Fowler, Managing Director and Head of North America Power and Utilities Equity Research at Bank of America
• Jeremy Tonet, Executive Director and Senior Equity Research Analyst at JPMorgan
• David Arcaro, Executive Director and Equity Research Analyst at Morgan Stanley
• Carly Davenport, VP and Equity Research Analyst at Goldman Sachs
• Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research
• Nicholas Campanella, Senior Equity Research Analyst at Barclays