AEP · Q3 2025 Earnings

Bullish

American Electric Power

Reported October 29, 2025

30-second summary

30-second take: AEP raised its 2026–2030 operating EPS growth rate from 6–8% to 7–9% (with explicit 9% CAGR framing), initiated 2026 operating EPS guidance at $6.15–$6.45, and reaffirmed 2025 at the upper half of $5.75–$5.95. Signed load commitments stepped up from 24 GW to 28 GW, the five-year capex plan was formalized at $72B (vs. "approximately $70B" last quarter), and rate base is now guided to a 10% CAGR to $128B by 2030. Q3 operating EPS came in at $1.80 on revenue of $6.01B (+10.9% YoY). This is the structural upgrade Q2 telegraphed — every major forward number moved up, and management has back-loaded the earnings cadence (lower half of range in 2026–2027, at-or-above high end in 2028–2030).

Headline numbers

EPS

Q3 FY2025

$1.80

Revenue

Q3 FY2025

$6.01B

+10.9% YoY

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$6.01B	+10.9%	$5.09B	+18.1%
EPS	$1.80	—	$1.43	+25.9%

Guidance

AEP raised long-term operating earnings growth guidance from 6-8% to 7-9% CAGR (2026-2030), disclosed 2026 EPS guidance of $6.15-$6.45, and increased new load commitments to 28 GW, reflecting surging hyperscale demand and higher capital deployment.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

Metric	Period	Guide	YoY
Operating EPS (2026)	FY2026	$6.15 to $6.45	—
Rate Base Growth (2026-2030 CAGR)	FY2026-FY2030	10% compounded annual growth rate to $128 billion by 2030	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Long-term Operating Earnings Growth Rate	FY2026-FY2030	6% to 8%	7% to 9%	+100 bps midpoint (6% to 8% → 7% to 9%)	Raised
New Load Commitments by 2030	FY2026-FY2030	24 gigawatts	28 gigawatts	+4 GW (24 GW → 28 GW)	Raised
Five-Year Capital Plan	FY2026-FY2030	approximately $70 billion	$72 billion	+$2 billion (~2.9% increase)	Raised

Reaffirmed unchanged this quarter: Operating EPS (Full Year) ($5.75 to $5.95)

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
Rate Base Growth (CAGR 2026-2030)	10%
New Load Commitments by 2030	28 GW
Peak System Demand by 2030	65 GW
Pending Load Requests in Development	190 GW
Five-Year Capital Plan	$72 billion
Transmission Network Investment	$30 billion
2025 Operating EPS Guidance (Upper Half of Range)	$5.75 to $5.95
Long-Term Operating EPS Growth Rate (2026-2030)	7-9%

Management tone

Q2 telegraph → Q3 formalization. The "different AEP" framing introduced last quarter has now been backed by raised numbers across every forward metric, with the CEO explicitly positioning AEP as a standout rather than a participant.

The long-term growth range moved up rather than tightening, which is the opposite of what utilities adding capex usually do. Last quarter management reaffirmed 6–8% while signaling a 30% capex increase — preserving room to over-deliver. This quarter that room was used: "We are extremely excited to announce our new increased long-term operating earnings growth rate of 7% to 9% for 2026 to 2030, with an expected 9% compounded annual growth rate." Most utilities adding $18B to a capex plan would defend the existing range; AEP raised it 100bps. The signal is that the contracted-load visibility is now firm enough to underwrite the upgrade.

Load commitment language has tightened from "signed customer agreements" to a two-tier ESA/LOA framework with explicit disclosure of which markets use which. Last quarter management leaned hard on the "24 GW backed by signed agreements" framing as a category differentiator. This quarter introduces structural granularity: "From roughly 190 gigawatts of customer interest, we have distilled this down to 28 gigawatts of executed financial commitments… helping us to filter out speculative load." ERCOT is LOA-only; PJM is 100% LOA / ~80% ESA; SPP is 100% LOA with partial ESA conversion. This is a maturation of the contracted-load narrative from a marketing line into an auditable framework — and explicitly invites investors to discount the LOA portion if they choose.

Earnings cadence is now explicitly back-loaded — "lower half" 2026–2027, "at or above high end" 2028–2030 — which is a different posture from last quarter's even-keel reaffirmation. Management volunteered this shape rather than being pulled to it in Q&A, and Trevor in the Wolf exchange clarified the 2028–2030 years are expected to be "pretty flat at or above" 9%, not accelerating further. This is a more honest cadence than utilities typically provide and front-loads investor patience for 2026–2027 while anchoring conviction in the back three years tied to transmission/generation in-service dates.

Transmission has been re-positioned from "important segment" to "core engine," with >50% of 2026 operating earnings now attributed to it. "Transmission is a core engine of value creation for AEP… more than 50% of our projected 2026 operating earnings will come from this high-growth business." This is a significant reframing — AEP is implicitly inviting the market to value it on transmission-utility multiples for the majority of its earnings stream rather than vertically integrated utility multiples.

SMR language hedged. "Moving forward with SMR considerations will require strong capital investment protections" is more cautious than Q2's framing of SMRs as actively progressing site permits. Read as: balance-sheet discipline is a binding constraint on SMR deployment scale.

Recurring themes management leaned on this quarter:

Unprecedented AI/data center load growth (28 GW contracted, 80% from hyperscalers)Ultra-high voltage transmission dominance and attraction (2,100+ miles of 765 kV, 90% of US)Aggressive capital deployment ($72B plan, 30% increase, 10% rate-base CAGR)Regulatory tailwinds and legislative wins (Ohio HB15, Oklahoma SB998, Texas HB5247)Customer affordability maintained despite growth (3.5% annual residential rate increases vs 4% historical inflation)Organizational transformation and leadership changes driving execution pace

Risks management surfaced:

Balance sheet and credit metric strength constraints on SMR expansionRegulatory approval timelines for pending tariff filings in Michigan, Texas, VirginiaWest Virginia APCO reconsideration filing still pending on ROE, capital structure, rate baseSupply chain pressures and equipment sourcing (though mitigated by secured capacity)Cost allocation fairness for large load customers across rate jurisdictions

Q&A highlights

Ross Faller · Bank of America

What are the drivers of the significant earnings step-up in 2027-2028 shown on slide 14, particularly regarding capital deployment and rate case filing timing?

Trevor explained the earnings drivers are primarily the capital plan peaking at $17 billion in the mid-plan period (2027-2028), combined with favorable legislative and regulatory outcomes including Ohio's forward-looking test, Texas HB 5247, and Oklahoma SB 998. These factors narrow ROE gaps and support the 9% CAGR guidance with confidence in at-or-above high-end earnings in the back three years of the plan.

Capital plan peaks at ~$17 billion in mid-plan period9% CAGR overall earnings guidancePlan to be at or above high end of 7-9% range in 2028-2030Ohio forward-looking test provides positive outcome

Jeremy Tonnet · JPMorgan

Can you provide specificity on dividend per share CAGR over the planning period, particularly in the back half of the plan, given the significant capital plan increase?

Bill stated the board recently approved a 2% dividend increase and is signaling a 50-60% payout ratio target due to the need to deploy capital during the growth period. Dividends will increase by share count growth with board discretion on further increases. The company has 115 consecutive years of dividend payments and the board remains supportive of long-term dividend growth as part of total shareholder return alongside earnings growth.

2% dividend increase approved by boardTarget payout ratio: 50-60%Dividends to increase by share count growth in plan115 consecutive years of dividend payments

Steve Fleishman · Wolf Research

Is the 9% or better EPS growth in 2028-2030 expected to accelerate or remain consistently flat across those three years? Also, can you clarify the difference between LOAs and ESAs?

Trevor clarified that 2028-2030 growth is expected to be pretty flat at or above the 9% high-end range, not accelerating further. He explained LOAs (letters of agreement) are first-step commitments with financial obligations, while ESAs (energy service agreements) are more binding. In ERCOT, only LOAs are signed; in PJM and SPP, there is a mix. Of the 28 GW projected load, some LOAs are not yet reflected as they are still being negotiated toward ESAs, reinforcing the conservative nature of the 28 GW commitment.

2028-2030 EPS growth: flat at or above 9% high endLOA = Letter of Agreement (first step, financial commitments)ESA = Energy Service Agreement (more binding)ERCOT: only LOAs signed

David Ocaro · Morgan Stanley

How is AEP managing transmission capacity constraints for data center connections? Are wait times significant? Is most of the added transmission CapEx driven by opening capacity for data center load?

Bill stated AEP is well-positioned with significant competitive advantages via its 765 kV transmission network. The company is working with data centers both on available transmission capacity and behind-the-meter solutions (including Bloom Energy). Of the 28 GW load growth, ~75% is transmission/distribution tied, ~25% vertically integrated. Distribution: 50% ERCOT, 40% PJM, 10% SPP. The company is focused on connecting customers quickly while under-promising and over-delivering. Data center demand is 80% of the 28 GW; industrial is 20%.

28 GW load growth: 80% data centers, 20% industrialLoad growth allocation: 75% transmission/distribution, 25% vertically integratedGeographic split: 50% ERCOT, 40% PJM, 10% SPP765 kV transmission network is competitive advantage

Nick Campanella · Barclays

What is the cadence and year-by-year trajectory of ROE improvement from 2026 through 2030? Is improvement expected to be linear, and how do major rate cases like Ohio factor in?

Trevor emphasized ROE is a top priority and highlighted recent steady improvements via constructive regulatory outcomes and favorable legislation. Specific successes noted: AEP Transmission, AEP Ohio, INM at/near authorized ROEs; AEP Texas rising to 9% in Q3 from 8.6% due to HB 5247; PSO, SWEPCO, Kentucky Power expecting improvements from new base cases and generation filings despite regulatory lag. West Virginia impacted negatively but under active reconsideration and stakeholder engagement. Overall plan ROE is 20 bps below prior estimates but reflects significant year-over-year improvement; team confidence remains high.

AEP Transmission, AEP Ohio, INM at/near authorized ROEsAEP Texas ROE: 9% in Q3 (up from 8.6% prior quarter)HB 5247 driving AEP Texas ROE improvementPSO, SWEPCO, Kentucky Power: near-term regulatory lag, expecting improvements

Answers to last quarter's watch list

Formal $70B capital plan announcement — Plan came in at $72B (vs. ~$70B telegraph), with rate base anchored at $128B by 2030 (10% CAGR). Capex peaks at ~$17B in 2027–2028. ~90% recovered through reduced-lag mechanisms. Year-by-year cadence shape implied (back-loaded); financing mix not yet broken out in press release. Status: Resolved positively

Equity issuance language — Press release does not introduce a forward equity program or ATM expansion; Q&A focused on dividend payout (50–60% target) rather than equity issuance plans. Management's Moody's 14% target by end of 2026 implies balance-sheet metrics remain a binding constraint on financing flexibility. Status: Continue monitoring

24 GW signed load conversion — Raised to 28 GW (+4 GW, +17%), with explicit disclosure that some LOAs in negotiation are not yet in the figure. Clean conversion from the 190 GW funnel; no slippage disclosed. Status: Resolved positively

FY2025 EPS landing zone — Reaffirmed at upper half of $5.75–$5.95. YTD operating EPS of $4.78 implies Q4 of $0.97–$1.17 to land in the upper half. No further tightening this quarter. Status: Continue monitoring

Treasury renewable tax credit guidance impact — Not addressed in press release or Q&A excerpts. Status: Continue monitoring

SMR site permit progression — No specific Indiana/Virginia milestones disclosed; management's language shifted to "SMR considerations will require strong capital investment protections," indicating balance-sheet discipline is a gating factor. Status: Continue monitoring

What to watch into next quarter

2026 EPS landing zone within $6.15–$6.45 — management has framed 2026 as "lower half"; watch Q4 commentary for whether they specify a midpoint or trim the range

Financing mix for the $72B plan — specifically whether 2026 introduces a formal equity program, hybrid/junior subordinated issuance, or asset sales; Moody's 14% by year-end 2026 is the binding ratings constraint

LOA → ESA conversion progress — track whether the LOA portion of the 28 GW migrates to ESAs and whether the figure rises beyond 28 GW from the in-negotiation pipeline

West Virginia APCO reconsideration outcome — ROE, capital structure, and rate base treatment all under review; resolution would lift or further drag plan-wide ROE

Ohio HB15 forward-test-year rate case filing and outcome — the largest single regulatory lever on the 9% CAGR; first formal filings expected

Transmission earnings disclosure — management said >50% of 2026 operating earnings from transmission; watch whether segment reporting separates this cleanly to support a re-rating argument

Sources

AEP Q3 2025 8-K press release, filed 2025-10-29: https://www.sec.gov/Archives/edgar/data/4904/000000490425000169/a3q20258kpressreleaseex991.htm
AEP Q3 2025 earnings call transcript, October 29, 2025.

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