American Electric Power Company, Inc. ((AEP)) has held its Q1 earnings call. Read on for the main highlights of the call.
American Electric Power Company, Inc. (AEP) recently held its earnings call, revealing a positive outlook driven by strong financial performance and growth opportunities. The company has achieved significant regulatory and legislative successes, which support its long-term strategy. Despite challenges such as declining residential load and legislative impacts on OVEC cost recovery, AEP remains optimistic due to robust growth and strategic investments.
Strong First Quarter Financial Performance
American Electric Power reported a remarkable first quarter for 2025, with operating earnings reaching $1.54 per share or $823 million, marking a 20% increase from the previous year. The company has reaffirmed its 2025 operating earnings guidance range of $5.75 to $5.95 per share and maintains a long-term operating earnings growth rate of 6% to 8%.
Significant Load Growth
AEP experienced substantial growth in its commercial load, which increased by 12.3% in the first quarter of 2025 compared to the same period last year. The company anticipates annual retail load growth of 8% to 9% through 2027, largely driven by demand from data centers and industrial sectors.
Regulatory and Legislative Successes
The company reported several positive regulatory outcomes, including approvals for large load tariffs in Indiana, Kentucky, and West Virginia. Additionally, the passage of Ohio House Bill 15 supports capital investment growth and provides customer benefits, further strengthening AEP’s strategic position.
Major Investment Plans
AEP has committed to an ambitious $54 billion capital plan over the next five years, with potential additional investments of up to $10 billion to meet increasing electric demand. The company has already secured its equity needs through 2029, ensuring financial stability for future growth.
Residential Load Decline
While AEP reported a decline in residential sales, this is being offset by increased commercial and industrial sales. The decrease in residential load is attributed to efficiency improvements and reduced throughput in the residential sector.
OVEC Cost Recovery Impact
Due to legislative changes with Ohio House Bill 15, AEP recorded a $28 million charge related to the write-off of previously deferred OVEC costs. This change will impact future earnings by less than $10 million annually.
Forward-Looking Guidance
During the earnings call, AEP provided guidance on several key metrics. The company reaffirmed its 2025 operating earnings guidance range and projected a long-term operating earnings growth rate. AEP’s total retail load growth is expected to reach 8% to 9% annually through 2027, driven by commercial demand. The company also highlighted its secured rate-related revenue for 2025 and completed equity needs through 2029.
In summary, American Electric Power Company, Inc. has demonstrated strong financial performance and growth potential, supported by strategic investments and regulatory successes. Despite some challenges, the company’s positive outlook and commitment to its long-term strategy position it well for future success.