American Electric Power Company, Inc. (AEP)

American Electric Power reported third-quarter 2026 earnings of $1,187 million, or $2.18 per share, on 28 October, up from $972 million, or $1.82 per share, a year earlier 1. Operating earnings, the company's measure that leaves out one-off items, were $2.23 per share against $1.80 1.

With the results, the company announced a five-year capital plan of $100 billion through 2031, up from the $72 billion plan described in its annual report 13. It expects that plan to grow its rate base, the asset value on which regulators let it earn a return, by 13 percent or more a year 1.

The company said 15 gigawatts of new large-customer commitments were signed in the quarter, lifting contracted extra load to 84 gigawatts by 2031 1. Its quarterly report credits new data processing load for higher commercial and industrial sales 2.

The company expects 2026 operating earnings at or above the high end of its $6.25 to $6.55 per share range 1. Regulators still have to act on a 918 MW gas plant purchase in Indiana, with a final order expected in December 2026 2.

AEP was incorporated in New York in 1906 and reorganized in 1925 3. It is a holding company whose utility subsidiaries serve parts of 11 states, from Arkansas and Texas in the west to Virginia and West Virginia in the east 31.

For most of its history these utilities sold power on an integrated basis, meaning one company made, moved and delivered electricity under rates set by state regulators 3. Restructuring laws in Michigan, Ohio and the ERCOT area of Texas later split those rates into parts for customers there 3. Unbundling means generation, wires and supply are priced separately rather than in one bill 3.

In 2023 revenue was $18,982 million and net income was $2,213 million 3. That year AEP sold AEP Renewables, its developer of large wind and solar projects, in August 2023 3.

William Fehrman, who ran Berkshire Hathaway Energy from 2018 to 2023, became chief executive in August 2024 3. AEP sold AEP OnSite Partners, a distributed-energy business, in September 2024 3.

Revenue rose to $19,721 million in 2024 and net income to $2,976 million 3. The 2024 results carried costs that fell away the next year, including a revenue refund provision on the Turk Plant, higher coal ash costs and a voluntary severance program 3.

Revenue reached $21,876 million in 2025 and net income $3,696 million 3. The largest gains were in Vertically Integrated Utilities, up from $11,414 million to $12,556 million, and Generation & Marketing, up from $1,945 million to $2,697 million 3.

AEP explains the 2025 gain over 2024 mainly by investment in transmission assets, which raised revenues and income 3. A June 2025 order from the Federal Energy Regulatory Commission on net operating loss carryforwards, past tax losses that can lower future taxes, also helped 3.

In 2025 AEP spent $3,453 million buying generation plants, against $399 million in 2024, and $8,453 million on construction 3. It issued about $8.3 billion of long-term debt that year 3. Cash from operations was $6,944 million in 2025, against $6,804 million in 2024 3.

To help pay for it, AEP sold a 19.9 percent minority stake in Midwest Transmission Holdings, which owns its Ohio and Indiana transmission subsidiaries 3. The buyer, a vehicle controlled by KKR funds and Public Sector Pension Investment Board, agreed to pay $2.82 billion, and the deal closed in June 2025 3.

What AEP does

AEP is a holding company with no employees of its own; its subsidiaries had 17,581 employees on 31 December 2025 3. The company says it runs the nation's largest electric transmission system, about 40,000 line miles, plus more than 253,000 miles of distribution lines 1.

Those lines deliver energy to 5.6 million customers in 11 states 1. AEP also describes itself as one of the nation's largest electricity producers, with about 34,000 megawatts of owned and contracted generating capacity 1.

Vertically integrated utilities

This segment makes, moves and sells power under state-regulated rates through subsidiaries including Appalachian Power, Indiana Michigan Power and Southwestern Electric Power 3. It brought in $12,556 million of 2025 revenue, the largest of the four segments 3.

Its operating earnings in the third quarter were $721 million, against $573 million a year earlier 1. The segment owned about 25,400 megawatts of generation at the end of 2025 3.

By electricity generated in 2025, coal and lignite supplied 43 percent, natural gas 22 percent, nuclear 19 percent and renewables 16 percent 3. In 2026 the segment has added plants, with 1,859 MW of gas and wind purchases across Ohio, Virginia, West Virginia and Texas 2.

Notable plants include the 2,296 MW Cook nuclear plant owned by Indiana Michigan Power 3. Others are the 1,560 MW Mitchell coal plant shared by Kentucky Power and Wheeling Power, and two 1,310 MW Rockport coal units shared by AEGCo and Indiana Michigan Power 3.

Because these utilities hold franchises, they say sales are not subject to competition from other vertically integrated utilities 3. They do compete with self-generation and with other energy sources such as natural gas, fuel oil, renewables and coal 3.

Transmission and distribution utilities

This segment includes Ohio Power and AEP Texas, which deliver power over wires but are not generators in the bundled sense 1. It earned $284 million of operating earnings in the third quarter, against $259 million a year earlier 1.

It brought in $6,097 million of 2025 revenue 3. At AEP Texas, two retail electricity sellers, NRG Energy and Vistra Corp, accounted for 38 percent of 2025 revenue 3.

AEP Transmission Holdco

This segment holds the company's transmission-only subsidiaries and joint ventures, which earn regulated returns on the lines they build 1. Its operating earnings were $219 million in the third quarter, against $200 million a year earlier 1.

AEP's subsidiaries operate approximately 38,000 circuit miles of transmission lines, including approximately 2,000 circuit miles of 765 kV lines, the highest voltage in its system 3.

Generation and Marketing

This segment sells power in competitive markets, runs a wholesale trading and marketing business and includes the retail supplier AEP Energy 3. AEP Energy had approximately 922,342 customer accounts at the end of 2025 3.

The segment brought in $2,697 million of 2025 revenue and also holds rights to Cardinal Plant Unit 1 power through 2028 under a contract with an electric cooperative 3. Its third-quarter operating earnings were $101 million, against $49 million 31.

People

William Fehrman is chair, president and chief executive, in the job since August 2024 and chair since August 2025 3. Trevor Mihalik, who held senior roles at Sempra until January 2025, has been chief financial officer since January 2025 3.

Problems and open risks

A Texas rate decision led AEP to book a probable, partial disallowance of the Pirkey Plant, a coal plant, which lowered nine-month earnings in 2026 2. Higher interest expense from more debt also weighed on earnings 2.

The company's risk factors warn that failing to build contracted facilities on time or to close agreements with new data centers and other large customers could hurt net income and cash flows 3. It also says capacity market reforms in PJM, the grid operator for its eastern utilities, could materially affect its competitive results 3.

The umbrella, in words

AEP owns all of the common stock of AEP Texas, Appalachian Power, Indiana Michigan Power, Ohio Power, Public Service Company of Oklahoma and Southwestern Electric Power, and indirectly all of AEP Transmission Company 3. Kentucky Power, Kingsport Power and Wheeling Power are also among its utility subsidiaries 1.

In 2025 an outside investor group bought a 19.9 percent stake in Midwest Transmission Holdings, so AEP remains the majority owner of that unit; this is a stake others own in AEP's subsidiary 3. AEP owns 43.25 percent of Midcontinent Grid Solutions, a holding company formed with Transource Energy and an affiliate of Berkshire Hathaway Energy 3.

The 10-K lists the generating plants AEP's subsidiaries own, by state and fuel, in its properties section 3. The Mitchell, Rockport and Cook plants are described above; none of this is a stake in a separate listed company 3.

The company said on 28 October that it plans to invest $100 billion over five years through 2031 1. About $37 billion is for transmission, $36 billion for generation and approximately $22 billion for distribution 1.

It expects its rate base to reach $162 billion by 2031, with the transmission part nearly doubling to approach $70 billion 1. The company expects rate base to grow 13 percent or more a year through 2031 1.

For earnings, the company expects 2026 operating earnings at or above the high end of $6.25 to $6.55 per share 1. It issued ranges of $6.75 to $7.05 for 2027 and $7.40 to $7.70 for 2028 1.

It also introduced an expected annual operating earnings growth rate of 9 to 11 percent from 2027 through 2031 1. The company said fully executed take-or-pay agreements are expected to generate up to $21 billion in fixed cost offsets for existing residential customers, up from $16 billion 1.

In August 2026 AEP signed agreements to build three 765 kV transmission lines for a proposed 10.4 GW data center campus in Piketon, Ohio 2. Each line is targeted to be in service on 31 December of 2028, 2029 and 2030 2.

In Indiana, the IURC is expected to issue its final order on the 918 MW Sycamore plant purchase in December 2026 2. Hearings on Indiana Michigan Power's rate case and on return-on-equity and tracker issues are scheduled for February 2027 2.

Indiana Michigan Power intends to apply in the first quarter of 2027 to extend the Cook nuclear plant licenses to 2054 and 2057 2. In February 2026 Kentucky Power and Wheeling Power asked regulators to approve a cooling tower at the Mitchell plant at an estimated cost of $191 million 2.

In Texas, the state's utility commission is writing rules for Senate Bill 6, with final adoptions planned throughout 2026 3. AEP Texas has signed letters of agreement for an incremental 36 gigawatts of load by 2030 3.