American Electric Power Company, Inc. (NASDAQ:AEP) traded steadily on Thursday after announcing a major financing milestone and earning a bullish outlook from a Wall Street analyst.
The utility secured a $1.6 billion federal loan guarantee to modernize its power grid across five states, marking one of the largest infrastructure upgrades in its history.
BMO Capital Markets analyst James Thalacker reaffirmed an Outperform rating on American Electric Power and raised the firm’s price forecast from $121 to $127.
American Electric Power’s transmission subsidiary, AEP Transmission, closed on a $1.6 billion loan guarantee from the U.S. Department of Energy’s Loan Programs Office (LPO).
The funding will support upgrades to nearly 5,000 miles of transmission lines in Indiana, Michigan, Ohio, Oklahoma, and West Virginia.
American Electric Power said the project will save customers approximately $275 million over the life of the loan through lower financing costs reflected in utility bills.
The project involves replacing aging lines within existing rights-of-way with higher-capacity infrastructure, boosting grid reliability and efficiency.
American Electric Power estimates the initiative will generate about 1,100 construction jobs while strengthening the company’s ability to meet growing energy demand, particularly from sectors such as artificial intelligence, data centers, and manufacturing.
The company projects that new and expanding customers will drive an additional 24 gigawatts of electricity demand by 2030.
Bill Fehrman, American Electric Power’s Chairman, President, and CEO, said that the DOE-backed financing will help lower customer costs, improve reliability, and enable further investment in modernization initiatives.
American Electric Power outlined the scope of its grid modernization by state, noting that Ohio Transco will handle 76 projects covering about 2,122 miles of transmission lines serving 1.5 million customers.
Indiana & Michigan (I&M) Transco will oversee 29 projects spanning 1,410 miles for roughly 600,000 customers. In Oklahoma, 17 projects will replace 1,434 miles of lines reaching 1.2 million customers. West Virginia will see four projects covering 26 miles, benefiting approximately 460,000 customers.
Approximately 100 miles of the first upgraded lines will be in Ohio and Oklahoma, with additional projects to follow.
The modernized grid will help American Electric Power handle record-breaking load growth while supporting the nation’s transition toward cleaner energy sources and digital infrastructure expansion.
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