American Electric Power (NASDAQ: AEP) delivered robust first-quarter 2025 results, underscoring its strategic positioning in high-growth regions and the accelerating impact of data center and industrial demand on its business.
The company posted operating earnings of $1.54 per share, a 21% increase from $1.27 per share in the same period last year, and reaffirmed both its 2025 operating earnings guidance of $5.75–$5.95 per share and its long-term growth rate target of 6%–8%.
Quarterly Performance Highlights
AEP reported GAAP earnings of $1.50 per share ($800 million) for the first quarter, with operating earnings reaching $1.54 per share ($823 million).
While GAAP earnings declined from $1.91 per share in Q1 2024, the significant rise in operating earnings reflects strong core business performance.
The improvement was fueled by rate changes, favorable weather, and normalized sales growth across all segments. Vertically integrated utilities contributed $0.66 per share, transmission and distribution utilities added $0.36 per share, and AEP Transmission Holdco delivered $0.44 per share.
Data Center and Industrial Load Growth
AEP’s Q1 presentation highlighted a 12.3% year-over-year surge in commercial load, driven by rapid expansion in data centers and large industrial projects.
The company serves 5.6 million customers across 11 states, supported by 40,000 miles of transmission and 225,000 miles of distribution lines.
Looking ahead, AEP forecasts annual retail load growth of 8%–9% through 2027, with commercial customers expected to account for 45% of total sales by that year-up from 34% today. This shift is projected to increase total retail sales from 182,000 GWh to 234,000 GWh by 2027.
Major investments fueling this growth include new AWS and Google data centers in Indiana and Ohio, Tesla’s lithium project in Texas, Cheniere’s LNG expansion in Corpus Christi, and Nucor’s steel manufacturing facility in West Virginia.
Data centers alone represent 13 GW of the company’s load forecast, underscoring the sector’s outsized influence on demand.
Capital Investment and Financing
AEP has outlined a $54 billion capital investment plan for 2025–2029, fully allocated to regulated businesses. The company completed all anticipated equity needs for this period through a $2.82 billion minority interest transaction in its transmission business and a $2.3 billion forward equity offering.
Of the total capital plan, 63% ($34 billion) is dedicated to transmission and distribution infrastructure, while 26% ($14 billion) targets new regulated generation, including renewables. This strategy is designed to support a projected 8% compound annual growth in rate base.
AEP’s financing plan is underpinned by $41.5 billion in expected cash from operations, supplemented by equity and debt issuances, and offset by $13.4 billion in dividends and other investing activities. The company’s FFO/debt ratio stood at 13.2% at the end of Q1, with a target range of 14%–15% as operational performance and strategic initiatives progress.
Regulatory and Strategic Achievements
Recent regulatory wins have supported AEP’s growth strategy, including approvals for major transmission upgrades, system resiliency plans, and cost recovery mechanisms across multiple states. The company’s regulated earned ROE was 9.3% for the twelve months ended March 31, 2025, reflecting solid returns across its operating footprint.