AEP

American Electric Power is one of the largest electric utilities in the United States, serving approximately 5.6 million customers across 11 states through regulated subsidiaries. The company owns and operates roughly 40,000 miles of transmission lines — the largest transmission network in the country — along with significant generation and distribution assets in Ohio, Virginia, Texas, Indiana, West Virginia, Kentucky, Oklahoma, and other states.

The data center story is about geography, transmission, and scale. AEP's service territories overlap with the highest-density data center markets in the country, with growth concentrated in four key states: Texas (36 GW contracted via LOAs in ERCOT, including the Stargate project in Abilene), Ohio (~20-25 GW in pipeline via AEP Ohio in PJM), Indiana (~16 GW via I&M), and Oklahoma (~30 GW via PSO in SPP). Total contracted load has doubled to 56 GW by 2030 as of Q4 2025, all backed by signed customer agreements — Electric Service Agreements (ESAs) with take-or-pay provisions in regulated territories, and Letters of Agreement (LOAs) in Texas where customers fund all construction costs under SB 6 requirements. Roughly 90% of incremental PJM load is under executed take-or-pay ESAs. An additional 180+ GW remains in the development pipeline (roughly 70 GW in ERCOT, 20-25 GW in Ohio, 30 GW in PSO, 30 GW in APCo, 16 GW in I&M).

The investment thesis translates data center demand into regulated returns. AEP's $72 billion base capital plan through 2030 funds transmission expansion, generation additions, and distribution upgrades, with an incremental $5-8B of confirmed or endorsed projects already identified on top of that base plan. The incremental projects break down as: ~$2.7B transmission in SPP, ~$1.5B in PJM, ~$0.5B in MISO, and ~$2.65B for Bloom Energy fuel cells near Cheyenne, Wyoming (with a 20-year offtake from an investment-grade counterparty). Importantly, the $72B plan was built on the prior 28 GW load outlook — the additional 28 GW that brought the total to 56 GW represents further capital upside not yet in any plan. AEP earned a regulated ROE of 9.1% in 2025 (up 30 bps from two years ago) with a target of 9.5% by end of the 5-year plan. Regulatory lag reduction legislation has been approved in Ohio, Oklahoma, and Texas.

Large load tariffs have been approved in Ohio, Indiana, Kentucky, and West Virginia. Pending tariff filings are active in Michigan, Oklahoma, Texas, and Virginia. Base rate cases were approved or settled in Arkansas, Kentucky, and Ohio during 2025, with new cases filed in Oklahoma and SWEPCO Texas. Ohio's forward-facing test year is a meaningful structural improvement. In West Virginia, Kentucky Power's investment in the Mitchell plant was approved, extending interest in its energy and capacity beyond 2028.

FY2025 operating earnings were $5.97/share on $21.88B revenue (above top of guidance range). Total system sales exceeded 200M MWh for the first time, with retail sales up 7.5% and C&I sales up ~10% driven by data centers in Indiana, Texas, and Ohio. Revenues grew 8.3%, outpacing sales growth due to minimum demand charges in large load agreements. FFO to debt stands at 15.2% (S&P) and just under 14% (Moody's) against a target of 14-15%. At ~$135 and ~$74B market cap, AEP is near its 52-week high.