American Electric Power Company, Inc.

What they do

AEP operates primarily through regulated public utility subsidiaries, including AEP Texas, Appalachian Power, Indiana Michigan Power, Ohio Power, Public Service Company of Oklahoma, and Southwestern Electric Power. The company generates, transmits, and distributes electricity to residential, commercial, and industrial customers. It also operates a competitive generation and marketing segment. Revenues are derived from electricity sales, transmission services, and other utility charges.

Revenue drivers

• Transmission and Distribution Utilities — This is the largest revenue segment, including regulated rates for delivering electricity over AEP's transmission and distribution networks, with cost recovery mechanisms and returns on rate base.
• Generation and Marketing — This segment sells electricity generated from AEP's fleet, including regulated and competitive generation, with revenues tied to market prices and contracted agreements.
• Large Load Customers — AEP has signed contracts with large load customers, including take-or-pay agreements, which provide contracted revenue streams and support cost offsets for residential customers.
• Other Revenues — Includes miscellaneous utility revenues, such as fees and other charges, contributing to overall revenue.

Recent performance

For the second quarter of 2026, AEP reported GAAP earnings of $713 million, or $1.31 per share, down from $1,226 million, or $2.29 per share, in the same quarter of 2025. Operating earnings were $742 million, or $1.36 per share, compared with $766 million, or $1.43 per share in Q2 2025. Full-year 2025 revenue was $21.70 billion, net income $3.70 billion, and diluted EPS $6.66. As of March 31, 2026, total assets were $117.78 billion and shareholder equity was $31.81 billion.

Strategy

AEP is focused on meeting accelerating customer demand, adding 69 GW of new load through 2030 and securing approximately 13 GW of gas-fired turbine capacity, with an additional 10 GW under evaluation. The company has a five-year, $78 billion capital plan, with line of sight to over $10 billion in incremental investments including a fuel cell project in Wyoming and the Piketon transmission opportunity in Ohio. AEP emphasizes affordability through cost offsets, large load tariffs, and federal loans and grants. Management expects operating earnings growth of 7% to 9% through 2030, with a CAGR of over 9% based on the 2025 guidance midpoint.

Risks

• Regulatory recovery risk — AEP's ability to recover costs and earn returns depends on timely and favorable regulatory decisions in multiple states, with some rate cases pending.
• Wildfire and natural disaster exposure — Wildfires and extreme weather could cause significant damages, legal liabilities, and costly restoration, potentially not covered by insurance or rates.
• Capital markets and funding risk — AEP relies on access to capital at reasonable costs; volatility or disruptions could affect funding of its $78 billion capital plan and refinancing of existing debt.
• Construction and supply chain risks — Delays or shortages in labor, materials, equipment, and supply chains could impair completion of planned generation and transmission projects.

Outlook

AEP raised full-year 2026 operating earnings guidance to $6.25 to $6.55 per share from $6.15 to $6.45, reflecting strong first-half performance. The company reaffirmed operating earnings growth of 7% to 9% through 2030, with a CAGR above 9% based on 2025 guidance. Management sees continued customer demand growth, enabling incremental investment and supporting long-term earnings growth.