American Electric Power Company (AEP) Q3 2026 Earnings Call: Q&A Summary

Q: Shar Pourreza with Wells Fargo asked how to frame the potential upside to the 10-plus percent CAGR from the $100 billion capital plan and why the CAGR steps down through 2033.

A: Bill Fehrman, Chairman, President and CEO, stated that additional transmission in Texas, SPP integrated transmission plans, competitive RFPs, and organic growth combined with future plant retirements create a robust investment pipeline well into the next decade, giving confidence in the 10% EPS CAGR through 2033.

Q: Shar Pourreza with Wells Fargo asked about the timing of equity and the 300 basis points of lag between rate base and EPS growth.

A: Trevor Mihalik, CFO, responded that the company has been forward leaning by sitting on over $5 billion of equity forwards and maintains options to utilize the ATM program, block equity, or equity-linked securities over the next two years in a shareholder-friendly manner.

Q: Steve Fleishman with Wolfe Research asked if generation builds in Indiana and APCO will be in regulated businesses or considered for a Genco structure.

A: Bill Fehrman, Chairman, President and CEO, explained that AEP is actively evaluating the Genco structure and socializing it with regulators, but current focus remains on securing load and moving forward with generation investments in vertically integrated utilities while preserving flexibility for a Genco framework in states like West Virginia and Indiana.

Q: Steve Fleishman with Wolfe Research asked whether only 35 gigawatts of the total 84 gigawatts of contracted load are baked into the plan.

A: Trevor Mihalik, CFO, and Kate Dixon, Senior VP, Controller and Chief Accounting Officer, confirmed that the increase includes projects like Piketon and others, and noted that the Texas capital plan is fairly conservative and focused primarily on system reliability and resiliency rather than full buildouts associated with all LOAs.

Q: Julien Dumoulin-Smith with Jefferies asked about the timing of the Texas conversation regarding Batch 0 versus Batch 1 and when other load could firm up.

A: Bill Fehrman, Chairman, President and CEO, noted that ERCOT expects to file its data center audit report on December 10, and while there is a slight delay, signed load in ERCOT is real with over $2 billion collected in cash or collateral and strong customer commitment to connect.

Q: Julien Dumoulin-Smith with Jefferies asked about lumpy items to watch in the final years of the 7-year rate base growth window.

A: Trevor Mihalik, CFO, pointed to the continuation of the build-out in transmission and generation across vertically integrated utilities as key drivers for subsequent years.

Q: Ross Fowler with Bank of America asked for clarification on what remains in the Texas capital plan after the Howard Solstice line and how to scope the remainder for LSAs.

A: Kate Dixon, Senior VP, Controller and Chief Accounting Officer, reiterated that about 85% of the AEP Texas capital plan is allocated to system reliability, resiliency, and replacing infrastructure, leaving upside as Batch 0 and broader transmission planning crystallize.

Q: Julien Dumoulin-Smith with Jefferies asked how to reconcile rate base growth figures in final years with EPS growth commitments.

A: Trevor Mihalik, CFO, clarified that the 7-year look on the 10% CAGR reflects a conservative approach where incremental capital and financing beyond the 5-year plan have not yet been fully added, maintaining confidence in long-term execution.

Q: Nicholas Amicucci with Evercore ISI asked how much of the $37 billion transmission plan, specifically the $17 billion RTO-driven portion, has been awarded versus pending regional planning or competitive bids.

A: Kate Dixon, Senior VP, Controller and Chief Accounting Officer, answered that all items in the plan have already been through the regional transmission planning process in SPP or PJM, with the majority ready to construct while working through final regulatory stages.

Q: Nicholas Amicucci with Evercore ISI asked what is driving the accretion from contracted assets in the new AEP infrastructure segment given the Wyoming fuel cell project comes online in 2028.

A: Trevor Mihalik, CFO, explained that the Wyoming fuel cell project comes on in five to seven discrete stages, providing earnings contributions in 2027 and reaching full run rate in 2029, with Kate Dixon adding that detailed earnings drivers will be provided at EEI.

Q: David Arcaro with Morgan Stanley asked how capital allocation to the AEP infrastructure segment is framed and what defines the timeframe for additional CapEx opportunities.

A: Trevor Mihalik, CFO, stated that dollars allocated to the unregulated business must compete at higher returns than regulated businesses, focusing on long-term contracted infrastructure with highly creditworthy counterparties to augment existing capabilities.

Q: Richard Sunderland with Truist Securities asked how AEP views the market shift to long-term contracts and the timing to realize opportunities in the infrastructure segment.

A: Bill Fehrman, Chairman, President and CEO, responded that the segment has been proactive in identifying opportunities, but growth will be managed opportunistically to balance regulated and unregulated operations while securing long-term contracted cash flows.

Q: Richard Sunderland with Truist Securities asked for an update on gas turbine reservation positions and activity since the second quarter regarding gas generation.

A: Trevor Mihalik, CFO, noted that firm long-term take-or-pay ESAs for 15 gigawatts provide a foundation for new baseload generation, backed by framework agreements with blue-chip turbine suppliers and favorable legislation in Indiana and Oklahoma.

Q: Ross Fowler with Bank of America asked if the 24% incremental equity ratio of CapEx is the expected baseline going forward for modeling new incremental CapEx.

A: Trevor Mihalik, CFO, emphasized that while $5 billion of free cash flow and forward contracts provide flexibility, future equity issuances will be evaluated to ensure they are accretive and shareholder-friendly without boxing the company into a rigid sub-5% financing rule.

Q: Jeremy Tonet with JPMorgan asked for the specific large load number baked into the plan and how to think about future dividend growth.

A: Bill Fehrman, Chairman, President and CEO, and Kate Dixon confirmed that large load for the rest of the plan is baked in while Texas remains conservative, and Trevor Mihalik added that dividend growth is projected at a modest 2% per annum to support the $100 billion capital plan, subject to Board discretion.