AEP Receives U.S. Department of Energy Loan Guarantee to Upgrade 5,000 Miles of Transmission Lines

Rhea-AI Summary

American Electric Power (Nasdaq: AEP) closed a $1.6 billion loan guarantee from the U.S. Department of Energy Loan Programs Office on Oct. 16, 2025 to upgrade nearly 5,000 miles of transmission lines in Indiana, Michigan, Ohio, Oklahoma, and West Virginia.

The financing at a preferred interest rate is expected to save customers an estimated $275 million in financing costs over the loan life, support replacement of lines in existing rights-of-way to carry more energy, and create approximately 1,100 construction jobs. AEP says upgrades will enhance reliability and help meet an estimated 24 GW of new demand tied to data centers, AI and manufacturing. About 100 miles in Ohio and Oklahoma are the first projects; additional funding and projects will follow.

Positive

• $1.6 billion DOE loan guarantee secured
• Estimated customer savings of $275 million over loan life
• Planned upgrade of nearly 5,000 miles of transmission lines
• Approximately 1,100 construction jobs created
• Supports an estimated 24 GW of new demand for AEP footprint

Negative

• Only 100 miles are funded as first projects; majority await further funding
• Additional funding and projects required beyond the $1.6 billion guarantee

Insights

Infrastructure finance expert

DOE loan guarantee of $1.6 billion materially reduces AEP's financing cost and accelerates 5,000 miles of transmission upgrades.

AEP secured a $1.6 billion loan guarantee from the U.S. Department of Energy at a preferred rate to fund upgrades to nearly 5,000 miles of transmission lines across five states. The financing is stated to save customers an estimated $275 million in financing costs over the loan life and will initially support about 100 miles in Ohio and Oklahoma.

The business mechanism is straightforward: federal credit support lowers borrowing costs, enabling capital deployment for line replacements inside existing rights-of-way. The projects target enhanced capacity and reliability to serve estimated incremental demand of 24 gigawatts and support identified loads such as data centers, AI facilities and manufacturing; AEP also cites creation of about 1,100 construction jobs.

Key dependencies and risks include successful local siting and permitting, continued access to DOE-preferred terms for follow-on projects, and rate designs that allocate costs to new large customers as described. If any of these items change, the timing or scale of customer bill benefits could shift.

Watch for the rollout of the next project tranches, specific permitting outcomes in the listed states, and any regulatory filings that reflect how the $275 million savings flow into customer rates; near-term milestones include the initial ~100 miles being executed following the Oct 16, 2025 closing.

COLUMBUS, Ohio, Oct. 16, 2025 /PRNewswire/ -- AEP Transmission, a subsidiary of American Electric Power (Nasdaq: AEP) has closed on a $1.6 billion loan guarantee at a preferred interest rate from the U.S. Department of Energy's Loan Programs Office (LPO) to upgrade nearly 5,000 miles of transmission lines in Indiana, Michigan, Ohio, Oklahoma, and West Virginia while saving customers an estimated $275 million in financing costs over the life of the loan, benefits that customers will realize through lower costs in their bills.

The upgrades supported by this financing will replace existing transmission lines in existing rights-of-way with new lines capable of carrying more energy. The upgrades will provide enhanced reliability for customers and facilitate new economic growth opportunities by bringing additional power capacity to the communities AEP serves. AEP estimates that 1,100 construction jobs will be created through these projects.

Energy demand is increasing across AEP's footprint. Customers have committed to business expansions or additions that will require an additional 24 gigawatts of electricity demand by the end of the decade. The upgrades have primarily been identified to support data center, artificial intelligence and manufacturing development and represent generational load growth on the electric system. Seeking federal funding opportunities and implementing rate structures that ensure new large customers are supporting infrastructure investment are some of the ways AEP is working to reduce rate impacts for customers.

"AEP is experiencing growth in energy demand that has not been seen in a generation. As the first company to close a new loan with the Trump Administration under this program, we are excited to get to work on these projects to improve the service we provide to our customers," said Bill Fehrman, AEP chairman, president and chief executive officer. "This loan saves our customers money and improves reliability while supporting economic growth in our states. The funds we will save through this program enable us to make additional investments to enhance service for our customers."

State Transco	Total Projects	Line Miles Replaced	Customers Served (Approximate)
Ohio Transco	76	2,122	1.5M
I&M Transco	29	1,410	600,000
Oklahoma Transco	17	1,434	1.2M
West Virginia Transco	4	26	460,000

AEP will work with local communities and landowners in siting these critical transmission lines that will power important technology advancements and facilitate economic development for the states and communities AEP serves.

Approximately 100 miles of transmission lines across Ohio and Oklahoma are the first projects to be supported by the loan guarantee. Additional funding and projects will follow.

About AEP

Our team at American Electric Power (Nasdaq: AEP) is committed to improving our customers' lives with reliable, affordable power. We are investing $54 billion from 2025 through 2029 to enhance service for customers and support the growing energy needs of our communities. Our nearly 17,000 employees operate and maintain the nation's largest electric transmission system with 40,000 line miles, along with more than 225,000 miles of distribution lines to deliver energy to 5.6 million customers in 11 states. AEP also is one of the nation's largest electricity producers with approximately 30,000 megawatts of diverse generating capacity. We are focused on safety and operational excellence, creating value for our stakeholders and bringing opportunity to our service territory through economic development and community engagement. Our family of companies includes AEP Ohio, AEP Texas, Appalachian Power (in Virginia, West Virginia and Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana, east Texas and the Texas Panhandle). AEP also owns AEP Energy, a competitive retail energy supplier. AEP is headquartered in Columbus, Ohio. For more information, visit aep.com.

 

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SOURCE American Electric Power

FAQ

What did AEP announce on Oct. 16, 2025 about the DOE loan guarantee?

AEP announced a closed $1.6 billion DOE loan guarantee to upgrade nearly 5,000 miles of transmission lines across five states.

How much will AEP's DOE loan guarantee save customers (AEP)?

AEP estimates the loan guarantee will save customers about $275 million in financing costs over the life of the loan.

Which states and transcos are included in AEP's transmission upgrades (AEP)?

Upgrades cover Indiana, Michigan, Ohio, Oklahoma, and West Virginia across AEP transcos including Ohio Transco, I&M Transco, Oklahoma Transco, and West Virginia Transco.

How many jobs will AEP's transmission projects create (AEP)?

AEP estimates approximately 1,100 construction jobs will be created by these projects.

What portion of projects are starting first under the AEP loan guarantee (AEP)?

About 100 miles of transmission lines in Ohio and Oklahoma are the first projects supported by the loan guarantee.

How do AEP upgrades support new demand for electricity (AEP)?

The upgrades replace existing lines with higher-capacity lines to improve reliability and accommodate an estimated 24 GW of projected demand from data centers, AI, and manufacturing.