AEP to invest $1.7 billion in transmission upgrades

COLUMBUS, Ohio - American Electric Power (NASDAQ: NASDAQ:AEP), a utility giant with a market capitalization of $56.9 billion, and its affiliate Transource Energy, LLC have announced plans to invest around $1.7 billion in transmission system upgrades across several states served by PJM Interconnection. The investment aims to enhance reliability and address growing power demand in Indiana, Maryland, Ohio, Virginia, and West Virginia. According to InvestingPro data, AEP’s stock is currently trading near its 52-week high of $107.84, reflecting investor confidence in the company’s expansion strategy.

The PJM Board has approved the proposals submitted by AEP and Transource Energy through the Regional Transmission Expansion Plan (RTEP) process, which seeks optimal solutions for forecasted reliability concerns. These projects are essential for maintaining reliable electric service and supporting future energy needs. With a strong financial health score rated as "GOOD" by InvestingPro, AEP appears well-positioned to execute these capital-intensive projects. The company has demonstrated consistent shareholder value, maintaining dividend payments for 55 consecutive years with a current yield of 3.48%.

Bill Fehrman, AEP president and CEO, emphasized the importance of building and upgrading infrastructure to deliver reliable power and fuel economic growth. AEP’s experience with the largest transmission system in North America positions it well to address PJM’s identified needs. The company is preparing to engage with communities and stakeholders as it advances these projects.

Approximately $1.1 billion of the investment will be channeled through Transource Energy as part of a joint venture with Dominion Energy (NYSE:D) and FirstEnergy (NYSE:FE) Transmission, LLC, forming the Valley Link Transmission Company, LLC. This joint venture will develop competitive transmission projects, including two 765 kilovolt transmission lines in West Virginia, Virginia, and Maryland.

The remaining $600 million will fund projects by AEP’s Transmission Companies and operating companies in Indiana, Ohio, and Virginia. All projects are in the preliminary stages, with a commitment to collaborate with local residents, governments, and stakeholders.

The upgrades are part of a larger $54 billion investment plan by AEP from 2025 through 2029 to enhance service and meet the energy needs of its communities. AEP operates the nation’s largest electric transmission system and serves 5.6 million customers in 11 states. With annual revenues of $19.7 billion and a steady revenue growth of 3.89% over the last twelve months, the company continues to demonstrate strong financial performance. The company is also a major electricity producer with a diverse generating capacity of approximately 29,000 megawatts. For deeper insights into AEP’s financial health and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, which are available for over 1,400 top US stocks.

PJM Interconnection, the regional transmission organization that approved the upgrades, coordinates the movement of wholesale electricity in a 13-state region and the District of Columbia. The projects selected by PJM are expected to be in service by 2029, contributing to the region’s energy infrastructure and economic development.

This report is based on a press release statement from American Electric Power.

In other recent news, American Electric Power (AEP) reported its fourth-quarter 2024 earnings, which fell slightly below analysts’ expectations. The company posted an earnings per share (EPS) of $1.24, narrowly missing the forecast of $1.25, while revenue came in at $4.69 billion, falling short of the projected $4.87 billion. Despite these misses, AEP demonstrated a solid annual earnings growth of 7% and increased its quarterly dividend from $0.88 to $0.93 per share. The company also provided an optimistic outlook for 2025, with projected operating earnings between $5.75 and $5.95 per share and plans for significant capital investments.

In addition to financial results, American Electric Power announced a change in its board composition. Donna A. James, a member of the Board of Directors, decided not to seek re-election at the 2025 Annual Meeting of Shareholders due to personal reasons. The company has not yet named a successor to fill the upcoming vacancy.

Furthermore, AEP has been actively managing its portfolio, including the recent sale of transmission assets to KKR and PSP Investments for $2.82 billion. This transaction is expected to close in the second half of 2025 and is seen as a strategic move to rotate capital into investments that benefit customers. The company is also exploring securitization and hybrid financing options to support its robust $54 billion capital plan from 2025 to 2029.

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