American Electric Power Aktie

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Electric Power First Quarter 2026 Earnings Conference Call. backgrounds. [Operator Instructions] I would now like to turn the conference over to Darcy Reese, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to American Electric Power's First Quarter 2026 Earnings Call. A live webcast of this teleconference and slide presentation are available on our website under the Events and Presentations section. Joining me today are Bill Fehrman, Chairman, President and Chief Executive Officer; and Trevor Mihalik, Executive Vice President and Chief Financial Officer. In addition, we have other members of our management team in the room to answer questions if needed, including Kate Dickson, Senior Vice President, Controller and Chief Accounting Officer.

We will be making forward-looking statements during the call. Actual results may differ materially from those projected in any forward-looking statements we make today. Factors that could cause our actual results to differ materially are discussed in the company's most recent SEC filings. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. We will take your questions following opening remarks.

I will now hand the call over to Bill.

Thank you, Darcy, and good morning. We appreciate you joining us for American Electric Power's First Quarter 2026 Earnings Call. I'll begin on Slides 4 and 5. This is a defining period for our industry. The pace of change is accelerating and the opportunities ahead of us are expanding.

Within this environment, AEP is extremely well situated to capture growth, given our scale, leadership position in generation and transmission, exceptional execution capabilities and our operational footprint in some of the fastest-growing regions in the country.

As customer needs evolve, scale, innovation and intense focus on execution will define the next generation of utility growth. We are ready to meet unprecedented demand across our large service territory, not only driven by data centers, but also broader economic development. This is meaningfully expanding the long-term opportunity ahead of us and in the communities we serve.

At the same time, our growth is only possible with trusted partnerships. We are staying closely aligned with our stakeholders, listening to our customers, governors, regulators and policymakers while working to advance solutions that support affordability, economic development, reliability and resiliency. As we scale our system, execution and operational discipline become even more crucial. These are significant strengths of the new leadership team at AEP.

By leveraging our size and experience we are mitigating supply chain pressures and acquiring critical resources to support what is a multiyear sustained period of infrastructure build-out. This includes already securing extra high-voltage long lead-time equipment like transformers, breakers and [ Lattice ] steel.

As we also said on past calls, we have secured more than 10 gigawatts of gas-fired turbine capacity. In short, we are executing on a disciplined strategy to deliver consistent and timely long-term value for both customers and shareholders.

Now turning to Slide 7 and 8 of the presentation, I will provide a high-level overview of our first quarter results strategic outlook, affordability and regulatory progress before handing it over to Trevor to walk through our financials and strong growth trajectory in more detail.

We are pleased to report first quarter 2026 operating earnings of $1.64 per share or $891 million. These results build on our financial and operational momentum from 2025 and give us confidence in reaffirming our full year 2026 operating earnings guidance range of $6.15 to $6.45 per share.

AEP continues to experience substantial system demand concentrated largely in our key growth states of Indiana, Ohio, Oklahoma and Texas. In the first quarter, we contracted an additional 7 gigawatts of load, coming mostly from AEP Texas and AEP Ohio. And we now have an incremental contracted total of 63 gigawatts expected by 2030. This is an increase from the 56 gigawatts we shared just last quarter. Of the 63 gigawatts, nearly 90% are data centers, which include hyperscalers, while the rest are industrials.

Contracted load customers must meet high credit standards through investment-grade credit quality, parent guarantees or other forms of credit support compliant with tariff requirements. They are also backed by electric service agreements and levers of agreement. To be very clear, I am intensely focused on execution of the projects required to get this load connected for our customers. That is why we earn business.

Of the 63 gigawatts, 53 gigawatts are in Texas and Ohio requiring large-scale transmission projects, which we believe we excel at constructing and operating. The remaining 10 gigawatts requires new generation, for which AEP has secured the necessary long lead-time equipment and has strategic contracting arrangements to supply the labor necessary to successfully execute on our delivery commitments. Size matters, and AEP is using our breadth and scale to aim to provide what is needed to meet customer demands. Trevor will discuss the 63 gigawatts in more detail shortly.

To support these projects, today, we are increasing our 5-year capital plan to $78 billion, up from the prior $72 billion, which now drives an expected 11% 5-year rate base CAGR. The $6 billion of incremental investments includes $3.5 billion in recently approved PJM and SPP transmission investments and $2.5 billion for I&M gas-fired generation.

In addition, we have line of sight to over $10 billion of projects for 2026 through 2030. These investments are incremental to the new $78 billion plan and include the Piketon transmission project, the Wyoming fuel cell initiative and additional new generation opportunities across our footprint. We stand ready to capture incremental growth opportunities while maintaining a strong balance sheet, which, as I have said many times, is a key priority for us.

Especially in light of the exceptional load expansion we are seeing, today, we are also reaffirming our premium operating earnings growth rate of 7% to 9% for 2026 through 2030. The $6 billion increase to our capital plan is driven by transmission and generation projects that come online later in the next 5 years. These investments are expected to be accretive to earnings in the back end of the plan and increase our expected long-term operating earnings CAGR to now greater than 9%.

Turning to Slide 9 of our presentation, we believe our transmission, scale and expertise remain unmatched in the industry. Today, AEP owns and operates more than 2,100 miles of ultra-high-voltage 765 kV transmission lines across 6 states. Large [ low ] customers continue to choose sites in our footprint because of the strength and sophistication of our advanced transmission network.

As we have highlighted before, AEP pioneered the modern 765 kV transmission system in North America, and we have more than 6 decades of experience designing, building and operating these ultra-high voltage assets. Currently, nobody even comes close to our experience and capabilities in this area. Hands down, we are the largest owner-operator in the United States.

The strategic partnership agreement with [ Quanta Services ] that we announced late last year, continues to drive high confidence in the execution of our high-voltage transmission projects. By pairing AEP's vision for a modern, resilient grid with an industry-leading partner like [ Quanta ], we are accelerating the development of the 765 kV infrastructure build-out that will be essential to meeting the reliability, resiliency and energy delivery needs of the future.

As I mentioned, we were recently awarded new 765 kV transmission projects in SPP and PJM. For SPP, we were directly assigned a major project that consists of 315 miles of 765 kV lines from Seminole, Oklahoma to Southwest [ Freeport ], Louisiana. We also secured additional projects from Potter, Texas to Beckham County, Oklahoma. Together, these projects totaled $1.6 billion and are anticipated to be in service by 2030.

In PJM, we were awarded the build-out of 330 miles of predominantly 765 KV lines in Ohio and Indiana. These projects totaled $1.9 billion and also have expected in-service dates towards the end of our 5-year plan.

Additionally, we are pleased to have been selected for a nearly 200-mile 765 kV project in MISO, which expands our competitive footprint into Wisconsin. While this project falls largely outside the current 5-year window with an in-service date of 2034, it gives us confidence and visibility in our longer-term growth rate into the future.

With the addition of these projects, our transmission investment forecast now totals $33 billion, representing 42% of the overall $78 billion capital plan and underscoring our position in strengthening the nation's critical electric transmission backbone.

Turning to new generation resources on Slide 10. AEP is proactively building the capacity needed to support accelerating demand and long-term growth. As part of this effort, we have expanded our generation capital outlook by $3 billion to $24 billion through 2030, driven by new gas generation at I&M.

At a broader level, our portfolio strategy is intentionally balanced and diversified with investments across natural gas, solar, wind and storage. This mix strengthens reliability while promoting a disciplined approach to delivering cost-effective investments for our customers over the long term.

We have secured access to more than 10 gigawatts of gas-fired turbine capacity from leading manufacturers and are advancing our projects through the interconnection process across PJM and SPP. We are leveraging experienced EPC partners alongside our in-house engineering expertise to deliver these projects efficiently and at scale. We are also maintaining flexibility in how we meet incremental demand for new generation, utilizing competitive RFPs and targeted bilateral acquisitions to supplement our self-developed pipeline and ensure we capture the most attractive opportunities.

In parallel, we continue to evaluate nuclear solutions aiming to position AEP at the forefront of next-generation baseload technologies. As we have previously mentioned, we are actively reviewing several potential sites and interconnection locations as we assess how nuclear can play a meaningful role in the future to support load growth.

Any nuclear investment will require strong capital protection, disciplined balance sheet safeguards and significant regulatory and governmental engagement, such as loan guarantees and long lead-time equipment support. No projects will move forward if they place undue risk on our business or our shareholders.

While we have been very successful with building out transmission infrastructure in PJM, AEP continues to identify some issues around how quickly and efficiently load is being connected to generation. The current state of PJM's performance and stakeholder approval process does not give me great confidence that these issues will be resolved anytime soon. In fact, if something is not done now, I expect we could still be having these same conversations in 10 years.

The PJM market worked very well when supply exceeded demand, but we are now in a very different time. As such, we are currently assessing all of our options to ensure that we are finding an efficient and effective path forward to deliver what our customers need, which simply put, is more interconnected generation to power their businesses.

We are performing a similar review of our membership in SPP. Expanding the strengthening the grid will ensure new generation resources across all technologies can connect quickly, reliably and affordably to serve our fast-growing loan. As our exciting generation plans mature, we will share the financial plans as part of our normal cadence on the third quarter call later this year.

Please turn to Slide 11. We -- even as we invest to meet rapidly growing load expectations, affordability is top of mind, and we remain focused on taking decisive actions to facilitate keeping residential rate impacts manageable. With the large load contracts we have secured, we are forecasting up to $16 billion in cost offsets for existing customers from their allocated contributions to expenses during the life of these agreements. This is a major affordability win for our existing customers and a clear validation of our customer-focused growth strategy.

At the same time, our focus on customer service through accountability is delivering results. In fact, we have had a meaningful reduction in the average duration of outages across the system across the last year. which is strengthening customer relationships through more reliable power.

While our rate base continues to expand, O&M is rising modestly at a 4% CAGR over the same period. driven by the additional staffing and maintenance support required to operate new generation and transmission assets being added to the system. This operational discipline is a real differentiator for AEP and positions us exceptionally well for the future.

We are also tapping federal tools to strengthen customer savings. The team has secured $315 million in generation and distribution brands. We closed on a $1.6 billion DOE loan guarantee related to transmission, projected to deliver over $275 million in customer savings over the life of the loans.

As part of our long-term strategy, we have also applied for additional DOE loans to fund our generation and transmission investments. We expect to provide periodic updates as loan closings progress. These are meaningful dollars going right back to customers, which is just another example of how we are pairing growth with affordability. Over the past 2 years, we have led the industry in establishing the right regulatory framework for a large load growth.

We secured approvals for new data center tariffs in Ohio, followed by large low tariff solutions in Indiana, Kentucky and West Virginia, and we are not stopping there. We have active filings in Michigan, Oklahoma, Texas and Virginia. You will find a full summary of these actions on Slide 12 of today's presentation.

These tariff structures are designed with a couple of clear goals: First, we are protecting our existing customers by ensuring data centers and other large load customers cover the investments required to support their energy needs.

And second, we are protecting our revenue and earnings base through minimum demand charges embedded directly within these binding take-or-pay contracts. We have made solid progress on tariff structures, and we will continue to work with our regulators and stakeholders to make sure large load customers pay their cost to serve and provide cost relief to our residential customers.

Turning to Slide 13, this brings me to our strong regulatory progress in the quarter across multiple jurisdictions. This continues to be a major focus area of mine. In Ohio, we secured commission approval of the distribution base case settlement, including an affordability measure, which contains a rate decrease for customers along with a 9.84% ROE, up from the prior ROE of 9.7%.

As another example, in Arkansas, we successfully increased our ROE from 9.5% to 9.65% and Pointedly, we have not ended up with a reduced ROE in any recent rate case outcome. In Indiana, we advanced our resource strategy with approval of our expedited generation resource plan. setting the stage for an upcoming base rate case that will include a customer rate reduction, supporting our focus on affordability.

In West Virginia, we received a favorable reconsideration order that increased the authorized ROE to 9.75% from 9.25%, a significant increase. The commission also approved a modified rate base cost infrastructure investment tracker.

Both of these approvals come at an important time as the state seeks to advance its long-term energy strategy. And the initiative aimed at ensuring West Virginia has the reliable, affordable energy needed to support rising demand.

With strong support from the governor, this presents significant investment opportunity under a more constructive regulatory environment. And we also continued to see consistent positive outcomes across other areas of our multistate footprint, including Oklahoma, Louisiana and Texas.

Taken all together, we believe these actions and outcomes reflect the growing strength of our regulatory approach. By listening closely to state leaders and aligning our plans with their needs, we are achieving balanced regulatory results that benefit both customers and investors.

Before I wrap up, I want to underscore just how exceptional the start of this year has been. Our team is operating at a level of execution that we believe is setting a new standard for the industry. We are making significant strategic investments to meet what is truly a transformative moment for our company.

At the same time, we are working hand-in-hand with our regulators and policymakers to advance their key priorities, all while taking disciplined, proactive steps to maintain affordability for our customers.

I'm extremely confident in our strategy, our capabilities and the AEP team, we are ready to capture the substantial opportunities in front of us by accelerating growth, having an intense focus on execution, driving customer affordability and and using AEP's size and scale to strengthen our competitive advantages while creating long-term value for our shareholders.

I'll now turn the call over to Trevor to walk through our first quarter performance drivers and provide more detail on our financials and strong growth trajectory.

Thanks, Bill, and good morning, everyone. On today's call, I will begin by reviewing the quarter's key earnings drivers, along with our confidence in load growth, which has increased 7 gigawatts from last quarter to now 63 gigawatts. I will then discuss our newly expanded $78 billion capital plan, up $6 billion and our expected increased long-term operating earnings CAGR of now greater than 9% based on this capital plan. I will then highlight the line of sight we have to over $10 billion of investment opportunities above our base capital plan before closing with comments on our balance sheet strength.

Please turn to Slide 15 of the presentation. First quarter 2026 operating earnings were $1.64 per share compared to $1.54 per share in the first quarter of 2025. Results in our VIU and T&D segments remained strong during the quarter, driven by constructive rate case outcomes across multiple jurisdictions.

As Bill noted earlier, we continue to see positive regulatory progress across our service territory. Regulated earned ROE for the quarter increased to 9.3% and is expected to reach approximately 9.5% by 2030 as we continue to execute our regulatory strategy with a focus on affordability for our customers.

In addition to robust regulatory performance, we continue to advance our transmission investment strategy and saw ongoing [ loan ] growth across our footprint, which I will discuss in more detail shortly. These positives were partially offset by prior year's favorable weather and continued spend to enhance system reliability.

Transmission Holdco performance was mainly impacted by increased expense, including storm restoration and higher property taxes. We expect Transmission Holdco earnings to be favorable on a year-over-year basis by the end of 2026. In the Generation & Marketing segment, results reflected stronger wholesale margin performance, partially offset by prior year contract optimization benefits.

Finally, in Corporate and Other, the variance was largely driven by higher O&M, increased interest expense and timing related to income taxes, of which we anticipate the impact to reverse by the end of this year.

Turning to Slide 16 and our current load outlook, we continue to see significant acceleration in contracted load growth. In support of that trend, we have executed on 63 gigawatts of total load, up from 56 gigawatts reported just a few months ago. This increase reflects continued progress converting projects from our planning queue into binding customer contracts.

As a reminder, these contracts include letters of agreement and long-term electric service agreements, depending on the relevant tariff provisions in each jurisdiction.

As Bill mentioned, with large load ESA contracts we have secured within our vertically integrated utilities, we are forecasting up to $16 billion in cost offsets for existing customers from their allocated share of fixed expenses. Our analysis estimates contracted revenue from large customers over the life of the ESAs and evaluates how fixed cost responsibility reallocates across customer classes over time, taking into consideration load wraps.

As contracted load continues to grow, we remain equally focused on the quality and credit strength of the customers who are driving it. As Bill referenced earlier, our contracted customers must meet high credit standards. The majority of contracted megawatts are with large, well-capitalized hyperscalers and industrial customers. This high-quality and diversified customer base forms a strong foundation for long-term partnerships and infrastructure development.

With that context, I'll turn to recent activity by region, starting with PJM. Contracted load in PJM increased by approximately 1 gigawatt during the quarter, driven primarily by additional customer contracts executed in Ohio. Substantially, all of our total incremental PJM load is supported by take-or-pay ESAs.

Beyond near-term additions, we continue to see a robust pipeline of longer-dated opportunities in PJM. Most notably, we recently announced a 10-gigawatt data center campus with [ SB Energy ] in Piketon, Ohio.

The majority of the incremental load associated with this project is not currently included in our load forecast that is reflected in the approximately 190 gigawatt active interconnection queue. Given the early stage of development, we anticipate incorporating this load into our forecast as commercial discussions progress and ESAs are formalized.

In addition to the Piketon campus, we are also evaluating a multibillion-dollar Google data center development in Putnam County, West Virginia. This opportunity remains in the early stages and is not included in AEP's current load forecast for financial outlook.

Turning to SPP. Contracted load increased by approximately 1 gigawatt during the quarter, driven primarily by an Amazon data center project in Northwest Louisiana. Almost half of our total incremental SPP load is now supported by take-or-pay ESAs, an increase from last quarter, reflecting continued progress converting new load development into binding take-or-pay ESAs.

Stepping back, these newly announced data center projects are supported by high-quality hyperscalers, most of whom have publicly committed to funding the required infrastructure upgrades, helping to protect rate affordability for our broader customer base.

At the same time, the scale of load growth we are seeing highlights the strength of our diverse footprint that is highly suited for data centers and our ability to attract large-scale economic development to the communities we serve.

Turning to Slide 17 and shifting to ERCOT. This region accounted for the majority of contracted load growth during the quarter. Load increased to 41 gigawatts, up from 36 gigawatts reported at the end of the fourth quarter. For context, I want to highlight how this load is contracted and how this differs from PJM and SPP.

All 41 gigawatts of contracted load in ERCOT meet the standards under Senate Bill 6 and are secured through executed LOAs. These agreements require customers to secure, complete interconnection studies provide detailed load forecasts and fully fund related construction costs. This structure acts as an effective filter, ensuring projects advancing into our forecast are well developed, financially backed and are executable.

With that framework in place, we are working closely with ERCOT and other stakeholders to advance solutions that will support the significant and growing demand.

Annually, in April, AEP Texas files its low growth forecast through ERCOT's regional transmission planning, or RTP, process. This RTP methodology analyzes peak load along with transmission and generation constraints to recommend system improvements.

In this year's April 1 RTP filing, AEP Texas submitted 31 gigawatts of incremental demand by the end of the decade. Due to submission requirements and timing, AEP Texas has since executed LOAs for another 10 gigawatts of load above the 31 gigawatts, underscoring AEP's low growth needs of 41 gigawatts in ERCOT.

Keep in mind, the underlying demand in ERCOT is real. It's supported by signed customer agreements formal planning submissions and backed by roughly 60 gigawatts of active load in the ERCOT interconnection queue. As Senate Bill 6 implementation advances, including backed processing, the focus will be increasingly on timing. We expect greater clarity and certainty later this summer as the rule-making progresses on when these loans will ultimately interconnect.

AEP is committed to building the required transmission and distribution infrastructure in Texas, but timing remains highly dependent on the supporting generation. In short, the question is not whether the demand exists. but when it comes online in ERCOT.

Turning to Slide 18. I want to spend some time on our capital plan and how it continues to strengthen our long-term earnings growth profile. Today, we formally increased our 5-year capital plan by $6 billion, bringing the total to $78 billion. This increase reflects our inclusion of the SPP and PJM transmission projects Bill referenced earlier, which together represent roughly $5 billion of awarded transmission projects.

Consistent with our disciplined approach to capital planning we have incorporated only approximately $3.5 billion of those awards into the capital plan. Specifically for the SPP project, the exact division of lines between AEP and a regional peer has not yet been finalized. So we're using a conservative 50% assumption to update the capital plan.

The expanded plan also includes our recent announcements related to I&M's planned acquisition of the [ Sycamore and Big Sandy ] natural gas generation facilities. From a timing perspective, this incremental $6 billion is largely associated with projects that enter service closer to the 2029 and 2030 time frame. As a result, these investments are accretive to earnings in the back end of the plan.

The best way to think about this is that these investments not only reinforce our earnings growth, but increase our expected long-term operating earnings CAGR to now greater than 9% over the period of 2026 to 2030.

Beyond the base plan, we continue to see meaningful upside. For the 2026 through 2030 period, we have line of sight to over $10 billion of projects that are not included in the $78 billion plan, including the Wyoming fuel cell project [ Hudson ] transmission project and additional generation investments.

While these incremental opportunities remain subject to key gating items or require clarity and are therefore not reflected in our base capital forecast, they highlight the depth and strength of our capital pipeline.

With contracted load growth now totaling 63 gigawatts combined with line of sight to over $10 billion of projects and other developing generation and transmission opportunities, we see meaningful upside to the current capital plan. We will provide a more fulsome update on the capital plan, our related financing strategy and talk through our long-term growth outlook as part of our normal cadence in the third quarter.

Turning to Slide 19, I'll walk through our updated 5-year financing plan aligned with this new expanded capital program. To support the $6 billion of additional capital formally added today, we have modestly increased the level of growth equity in the plan. Equity has increased by $1.1 billion and now total $7 billion for the period of 2026 to 2030. Importantly, this incremental equity represents only 18% of the $6 billion of incremental capital growth, underscoring our continued focus on disciplined, balanced financing.

Looking at the timing of the equity issuance. The majority remains weighted towards the back half of the 5-year plan, providing flexibility as projects advance and cash flows build with execution. Consistent with that profile, we intend to remain opportunistic across all financing instruments as market conditions evolve, funding long-term growth in a measured and shareholder-friendly manner.

Let's now turn to our financing activity so far this year. Given our strong stock performance in the first quarter, we took advantage of the market and accelerated our at-the-market program. issuing $665 million of ATM equity. This fulfills 2/3 of our full year 2026 equity needs and reflects strong progress against our financing plan. In fact, we have issued the $665 million of ATM equity at an average price of over $131 per share.

Looking across the planning horizon, -- we remain well aligned with our FFO to debt targets of 14% to 15% for both S&P and Moody's. As of the first quarter, S&P FFO to debt stands at 14.7%, near the top end of our target range; while the Moody's metric is 13.9% and just below our target, And both remain well above the downgrade threshold of 13%.

Overall, the updated financing plan preserves balance sheet strength while supporting our expanded capital program. With a disciplined funding approach, a strong credit profile and flexibility to deploy a range of financing tools to take advantage of market conditions, we are well positioned to responsibly finance this growth while delivering exceptionally strong financial results over time.

Turning to Slide 20. I want to close by highlighting a few key takeaways that reinforce the progress we are making across financial performance, growth execution and balance sheet discipline.

First, we delivered a strong first quarter of 2026, with operating earnings of $1.64 per share. This performance gives us confidence to reaffirm our full-year operating earnings guidance of $6.15 to $6.45 per share, reflecting robust financial results through continued positive regulatory momentum.

Second, our load growth story continues to strengthen. We now have executed on 63 gigawatts of incremental contracted load through 2030, supported by a diverse and high-quality customer base. This continued large load demand provides a strong foundation for long-term infrastructure investments that enable us to deliver reliable power to our customers.

Third, we remain focused on executing our newly expanded $78 billion capital plan, which is driving an expected 11% 5-year rate base CAGR. The $6 billion of incremental investments reinforce our expected 7% to 9% annual earnings growth, increasing our expected long-term operating earnings CAGR to now greater than 9%.

With contracted load growth totaling 63 gigawatts in together with line of sight to over $10 billion of projects in other developing generation and transmission opportunities, we see meaningful upside to the current plan. We will assess and incorporate further opportunities as part of our normal cadence in the third quarter.

Fourth, we continue to fund this growth in a disciplined manner, with only a modest increase in incremental equity to support the expanded capital program. At the same time, our large and diversified footprint provides the flexibility to deploy capital, where it delivers the greatest impact while maintaining financial strength as we execute at scale.

Finally, we continue to work closely with regulators and other stakeholders to keep affordability front and center, including forecasting up to $16 billion in cost offsets for existing customers. Through constructive engagement, we are advancing regulatory frameworks that balance fairness for customers and shareholders and support the critical work of building and modernizing the electric grid.

Taken together, these elements highlight the momentum we are building and the discipline we bring to execution. We are confident in our strategy, supported by a growing pipeline of opportunities and a balanced financial approach. We believe AEP is one of the best positioned investor-owned utilities to deliver long-term value as we help build the critical infrastructure needed to support unprecedented growth.

We operate in states that are highly receptive to our service model and are very pro business. We continue to see strong positive momentum across the platform with electrification at the heart of our growth story. Thank you for joining us today.

I will now ask the operator to please open the line for questions.

[Operator Instructions] Our first question will come from the line of Steve Fishman with Wolfe Research.

Thanks for all the updates. Bill. So so many questions. The PJM commentary, could you maybe give a little more color on kind of what -- a little more on why and what you're assessing what are -- what would it take to actually exit PJM? What would you like them to see to do to not exit maybe? Just any more color on that.

Yes. To be clear, we're not saying we're exiting PJM. What we are seeing is that as we look at the RTOs that we operate in, obviously, they're increasingly struggling to provide the responses that we need to meet the demands. And as we begin to prepare our plans and our ability to execute on this. We're extremely comfortable that we have the equipment, we have the engineering, we have the contractors.

What we need is a faster way to interconnect into these systems. And so as we've seen, there's efforts that the government has put into place to try to move PJM along and SPP along and there's fits and starts on that and it's not really moving that quickly. And for us, we need to make sure that we're doing everything we can to, number one, help push that process along and work with our state regulators and governors and policymakers to try to advance the system that we have in place today.

But as the manager of risk of this company, I also have to look at what happens in the event that we can't find a path forward on that. So we're in the very early stages of the evaluation phase, obviously, considering full ranges of options, including staying in these or shifting or exploring alternative structures.

But the bottom line on this is we're going to continue to work closely with our regulators and policymakers, we're continue to engage directly with FERC and with the RTOs and with others to try to figure out how can we absolutely move this process along faster because while all of us are working very hard to get the equipment we need and the contractors we need, at the end of the day, we also have to get the interconnections we need to accelerate the interconnection and getting the generation to load.

So bottom line, we're committed to participating in a market that's responsive to the customer needs, but we also know that we have to figure out a way to get it to move more efficiently and more effectively.

Got it. That makes sense. Two other quick ones. Just on the bloom and customer agreement in Wyoming, just how confident are you about these requirements being met in the second quarter to move forward with that?

So those discussions continue to move forward. Obviously, for us, we're protected regardless of what happens on those projects. But our team has recently been in contact with the local mayor and other stakeholders in that region, there's active work going on. So I'm confident that, that project will continue forward, but there's some work that has to be done between other parties. For us, we are ready to go.

We have everything we need in place. We're essentially doing a little bit of earthwork on this project, waiting for the -- basically the full release. We're continuing to work with Bloom to ensure that we can meet schedules that the customers want to have. And so for us, I feel as though we're in great shape on this. We're in a good position with regards to our commercial terms on this project. And hopefully, this will all get resolved by the end of the second quarter.

Our next question will come from the line of Julian DeMolenSmith with Jefferies. .

I'll echo the comments here. Lots of questions and very well done guys, really quite something to start the year here. So maybe to pick it up for where Steve left it off here. How do you think about the cadence of the line of sight for that next $10 billion as you think about it, right? You've got this Wyoming piece, you get the Piketon piece. It seems like you might be insinuating some PJM generation opportunities. Again, I'm not sure exactly if that's right or when it's right or how you think about backstop procurement or bilateral participation.

But just as you think about this refresh, you guys have obviously provided a little bit of an out-of-cycle comment here. How do you think about the third quarter cadence for instance, versus how you would set expectations across the litany of things going?

Yes. Thanks, Julien. This is Trevor. Look, I would say, let me step back a little bit and just say we're always going to maintain a disciplined approach to capital planning where we only include really those projects that have sufficiently advanced and cleared getting the gating items with a high degree of regulatory confidence in our formal plan.

Now I will say we have announced the Pyton project and the Wyoming fuel cell project. And so that's why we wanted to shadow this $10 billion because just between those 2 projects, that could be around an $8 billion amount associated with that. And then we do have other opportunities and line of sight to additional generation in the footprint.

And so I think what I wanted to do was really put a marker around pipe in and Wyoming and then also show that there is incremental opportunity around generation and really kind of get the Street comfortable with the fact that we are really being pretty conservative in the $78 billion 5-year capital plan. And what I didn't want to do is just come out on the third quarter when we do the formal update without addressing these on the first quarter call because we have been public, at least with Piketon and Wyoming.

So again, I think it really just shows the robust nature of our growing capital plan. And again, I think if you take a look over the last several years, we've been growing our capital plan. If you look at over the last 4 years at roughly a 22% CAGR in -- so it's a robust plan.

And again, the $6 billion definitive line of sight, that's why we raised the plan and then the $10 billion is incremental on top of that. We're looking forward to coming out on the third quarter call with a more robust fulsome approach.

Got it. And just on PJM, just needle you a little bit here, timeline on that decision and if you would or how you participate in the backstop just to make sure I hear that right?

So on the backstop, obviously, when that process gets formally approved, we'll -- we are already looking for potential opportunities that we could bid in to that through our unregulated businesses. But the broader piece here for me is that we have to solve the speed to market issue here.

And as we're continuing to work with PJM and other stakeholders and our governors, clearly, this is an area that has to get fixed. And so the point here is we are going to intently engage in this, we're going to figure out how we can get this accelerated, make sure that we do it in an appropriate manner with our states and and see where this ends up because PJM, in particular, is clearly a system that is not expediting the connection of flow to demand.

And so we're very confident with where we sit today on the projects that we have today. But I also think in the world we're in, we need to figure out how to make it go faster.

Our next question will come from the line of David Arcaro with Morgan Stanley.

Bill, as you talk about trying to move more quickly here. Are you looking at other strategies to or potentially expanding like pursuing on-site power anywhere else across your system, expanding what you had done with the fuel cells?

As we work with our customers. We're very proud of the fact that we're able to bring to them a variety of bridging strategies to serve their loads. And we've got a number of examples where we've done fuel cells. We have access to [ aero ] derivatives. We can do smaller interconnections into our system.

So we have a variety of tools that we take to our customers to try to accelerate their ability to get their business online at the speed of which they want to move forward. And so we'll continue to offer those types of opportunities.

We're also working to accelerate our ability to get transmission built. We're looking at different ways of how we construct transmission or design of transmission to accelerate the overall construction of this. And obviously, with our partnership with Quanta, that gives us a tremendous competitive advantage with them to find innovations for speed.

And so this is, for us, all about getting our customers connected as absolutely fast as possible and working with them on where they want to be short term and where they want to be long term with their power supply and making sure that we're the ones that can deliver it, so we get their load.

Got it. That makes sense. And then let's see, Trevor. I was just wondering, looking at the equity financing update here relative to the incremental CapEx, could you also touch on now going forward to the extent some of that CapEx from the $10 billion bucket is brought into the plan over time? What does the equity financing need look like proportionally to that?

Yes, sure. Let me start by saying that what we have is a strong operating cash flow model here, and we're forecasted to generate over $47 billion of operating cash flows over this 5-year period. And so to fund the growth, we will use a full range of financing tools.

And you've seen us be pretty active with that, including hybrids and other equity-like instruments, structured financing and again, growth equity. And we want to make sure we take advantage of the most optimal market conditions and fund the plan in a balanced and shareholder-friendly way.

But you've heard me say many times, David, that I'm not opposed to issuing accretive growth equity. And generally, what you see in the industry is typically, it's around a 30% to 40% equity content for CapEx. And what we announced today with the $6 billion is only 18% of equity content. And so you're always going to see us make sure we balance the most effective way to finance this in the most shareholder-friendly way.

But again, I would go back to the strong operating cash flows. And the fact that we have multiple tools at our disposal and we're also very focused on our FFO to debt metrics, so I think you will see us continue to look at the timing of when that $10 billion rolls out over the plan and then the methodology in which we finance it.

But right now, when you take a look at Page 19 of the presentation today, you'll see that we have $1 billion of ATM in 2026, of which $665 million is already issued and then really nothing in '27. And then we've got the ATM at $1 billion a year in each of the years, '28, '29 and '30 and then just a modest amount of growth equity in the back end of the plan. And so again, I think what this does is it really gives us a great deal of flexibility in how we're going to finance the incremental $10 billion or what we ultimately roll out on the third quarter call. We are going to ensure that we're doing this in a very disciplined manner as we finance these great opportunities.

Our next question will come from the line of Richard Sunderland with Truist Securities.

I wanted to pick up a couple of the earlier themes around PJM, but kind of turn that to the SPP side. You spoke a little bit to progress there on the load front. But curious how you're viewing sort of SPP as a whole interest into that RCO and what it might mean for like Septoand continuing loan interest there?

Yes. So very similar view of SPP with regards to just a general focus of wanting to get load connected to generation there. SPP though, I would say, has been more aggressive in getting after these issues. We've had better luck in SPP. They've made their filings on the [ ARRIS ] program and such. And so it's, I would say, a little bit better there with regards to being able to get our generation connected and moving forward.

So -- but still, we still want to make sure that we're staying on top of this. And because it is a part of any of these projects. And every utility out there who's trying to do this has the exact same issues we have. We're just going to engage more on this and make sure that we eliminate the risk and get our customers connected just as quickly as we can.

Got it. That's super helpful. And then turning to, I guess, a bigger-level topic around transmission, you've had a lot of commentary today on what you're doing there. I'm curious, what you see on the policy side as needs for transmission? I mean there's been a lot of focus recently around some recent FERC actions elsewhere. And I guess just the bigger question is, do you think there are opportunities on the transmission side that go beyond the sort of engineering construction efforts you spoke to earlier?

Well, certainly, on transmission. There's keys around accelerating right-of-way acquisition, there's keys around the supply chain of this and getting ahead of that. And as we mentioned earlier, with our size and scale, we are well ahead on our supply chain and the procurement for all of these projects that carry us out through this plan. I feel very confident with regards to having what we need there to get these done.

Clearly, as we're going through the regulatory environment, I would say that at least in my discussions with the states. At the policy level, they're very supportive of transmission. They know that transmission forms the backbone for economic development. and that without a very strong transmission system that their economic development will, in some cases, be muted.

And so for us anyway, we've had great success on transmission, both on the regulated side, on the competitive side. We've got an exceptional relationship with Quanta. So we know we have the labor to get it bill. We're having very innovative design so that we can reduce right of way. We can reduce the amount of weight for each of these structures that we have.

So we're really attacking this from a multi-value stream of opportunity to continue our leadership role in the operation, maintenance and construction and transmission.

Our next question will come from the line of Nick Amicucci with Evercore ISI.

I wanted to just kind of dig in a little bit on the growth equity proportion on Slide 19. So do we think about that kind of the $3 billion of gross equity. Is that firm? Or is that kind of contingent upon the CapEx pace? And how should we think about kind of that just moving forward as you think about '28 through '30?

Yes. Definitely, Nick, I would say that, that $3 billion at the back end of the plan is tied to the $78 billion CapEx plan. And as we indicated, a lot of the uplift that we even had today with the $6 billion is in the back half of the plan when a lot of those dollars will come through. And so I would say it's pretty firm because we feel very confident about the CapEx plan. And this is what we would need to finance that. So the good news is we need it in that 28 to 30 period. And then we've been pretty focus on getting the ATM done this year and getting that $665 million done. And so from my perspective, I think the equity is really not much of an issue right now in support of the $78 billion 5-year capital plan. And it's really a modest amount of equity to think about what is ultimately needed to fund this growth plan.

Got it. That's helpful. And then as we -- as you kind of think about the potential uplift that we will receive with the third quarter update, to the CapEx plan. Should we -- is it fair to -- I mean we've seen a pretty consistent kind of breakdown between transmission and generation. And just given kind of the commentary surrounding speed to market. Is it fair to assume that, that breakdown kind of persists, so a little bit more heavily skewed towards transmission?

Yes. I think that's a pretty safe assumption on this. While you have seen that we have a fair amount or $33 billion of the capital plan is associated with transmission right now. We continue to see a lot of opportunities around the transmission business, both within our service territory as well as competitive opportunities.

Bill mentioned the one up in -- MISO up in the Wisconsin area. Those are opportunities that we continue to see, and people are acknowledging that AEP is differential with regards to being the largest transmission owner operator and the one that really pioneered [ 765 ]. And so a lot of that is a competitive advantage for us around transmission.

But I also will say that what we're seeing with the load growth of the 63 gigs across our footprint, generation is also very important. And that's where we have been very aggressive in leaning into securing turbine slots and putting those turbine slots into the planning cycle.

And so we're excited to roll out the updated capital plan on the third quarter call. But I didn't think that I could come out without actually updating on this call, at least the $6 billion. And then because we have mentioned the Piketon project as well as Wyoming, I needed to also at least speak to that $10 billion, which, again, in my prepared remarks, I said was fairly conservative.

Our next question will come from the line of Andrew Weisel with Scotiabank.

Thanks. Good morning, everybody. I can maybe start continuing a little bit on that last one. If you could speak to the timing and pricing of gas turbines. You keep adding generation to the outlook. It sounds like there's potentially more to come in the near future. Are you looking at simple cycles, CCGTs or both?

And given your strong relationships, you're certainly well positioned with suppliers. How soon could you add incremental units? And what level of pricing are you seeing?

So we're building out what our customers are asking for. So we have a variety of simple cycle projects as well as combined cycle projects across the 11-state footprint. As we talk with our customers and have them continue to lock in what their longer-term expectations are for additional projects and growth of the existing facilities that they have in place, we're in communication with the major turbine suppliers to ensure that we have access to those turbines.

As far as what we see sort of going forward, we're most active with Mitsubishi and GE on the supply. We do have access to turbines going well out into the future. Obviously, the actual pricing of those are under confidentiality agreements.

But for me, the important part of this is that we have access to turbines, we're able to get the equipment that we need to serve the load. We are a preferred supplier for these customers because our focus is on getting them interconnected either through a bridging strategy or through ultimate grid connection and expedited generation buildout.

And so I'm excited with where we're at. As we noted earlier, our Q actually continues to grow. We now have 190 gigawatts in our queue of people wanting to interconnect with us, which obviously solidifies our continued growth and what we're trying to do. And I think, again, a big reason for that is, that we are delivering for these customers, and we're coming up with innovative and creative solutions to make sure we get them connected as quickly as possible.

Okay. Great. And then I realize we're at the hour, but 1 more quick one. On the Wyoming fuel cells, Bill, I think you used the term that you're protected, can you discuss that a little bit? I know you're waiting for the customers to get their work done? And you said you're hoping gets resolved by the end of the second quarter, which is just at the end of next month. Is there a deadline associated with your contract? And what happens if the end of June comes and goes without the customers figuring their side out?

Yes. I'll have Trevor give you a couple of the details here, but this was a fundamental part of this commercial arrangement, was to make sure that our company and our investors were protected on this project.

Trevor, maybe you want to give them a little bit of color on this?

Sure, Bill. Yes. So the good thing here, as Bill says, we are protected. And we can -- if everything were to not proceed, we have the ability to put the fuel cells back to the hyperscale at a cost plus, and we've been public about that, it's roughly 10%. So we're protected on that side.

I think we have a deadline of the end of June, and then there is another 6-month period that the hyperscaler could -- if they can't advance discussions by the end of June, they could look to seek another location for that property. And if they can't, by the end of the year, find another property, then we can put those fuel cells to the hyperscaler at 110%.

And that property could be anywhere in the U.S.?

Correct.

Our next question will come from the line of Michael Lonegan with Barclays.

So when you say alternative strategies in obviously, you're already vertically integrated in West Virginia. Just wondering what are your thoughts on doing a [ Genco ] structure there? There's a clear backdrop in the state wanting more gas generation. Is that something you are considering? And what would you say that's within your risk tolerance there?

So we've been studying the Genco model, obviously, in Indiana is a perfect example of what they were able to complete there. We think that's an innovation that would work for us. Obviously, in West Virginia, we just completed the rate case that was in progress for a number of months, and we got a good reasonable outcome there, and we're in close communication with the governor and the energies are in West Virginia.

And so we'll stay closely connected to them to determine how best to move forward. He's very committed to his 50 gigawatts by 2050 vision. And with the more reasonable regulatory outcome that we got there now, we are in deep discussions with him and his team and the regulator there to determine how best to deliver what they want. There is tremendous opportunity in West Virginia. And so that is another major growth opportunity for us in that state.

Then a lot of questions on the financing. You touched upon your equity needs, obviously, Just would you consider selling noncore assets or a sale of a minority interest to finance additional capital or mitigate equity needs? And then if so, what assets could be on the table for potential divestitures?

Yes, Michael, I'm sure you're going to expect this answer, but we wouldn't talk about any kind of M&A and if we were contemplating that. But I would say this that we really like our footprint, we like the states we're in. We indicated that these are very pro-business states. And we're trying to grow this business and not shrink it. And I think there are alternative forms of financing that we can execute on to fulfill what we need around our growing capital plan without having to sell assets. So I would just leave it at that. .

Our next question will come from the line of Bill Appicelli with UBS.

Most of my questions have been asked. But just as we unpack sort of the magnitude of the EPS growth upside here, you guys are modifying the language to say greater than 9%. I mean how much of this incremental capital should be reflected in earnings in 2030?

And then when we think about the $10 billion, is that -- how much of that related to Piton and Wyoming could be sort of fully reflected by 2030 as well?

Yes. So I appreciate the question. And I would say AEP's growth rate certainly is 1 of the highest in the industry. And I think the key point is that the increase in the long-term earnings CAGR to greater than 9% is supported by the $6 billion of incremental capital that we formally added to the plan.

But as we said, it is weighted to the back half of the plan, and that's when we'll see more of the impact to EPS. But we do see other upside. And when you take a look at, for example, the Piketon project, if and when that advances, that's well within the 5-year capital plan. And it needs -- those assets need to be constructed by 2028. And so from that perspective, I think that's where we're saying there's upside and we're being conservative in the capital plan.

Now what I want to do, because we have almost best-in-class growth rate of this 7 to 9, and then we have intimated that we were at in over the 5-year period with the previous plan and now we're greater than 9 with this plan, I always want to be careful that we're under-promising and over-delivering.

And again, as you said, that $10 billion is not in that greater than 9% EPS CAGR. But what that ultimately means with regards to financing it and how that cascades through the earnings cycle that we would come out with once we update the plan on the third quarter call.

Okay. All right. No, that's helpful. And then just going back to a comment earlier about the reliability backstop, just to confirm, it sounds like you would be interested in submitting bids for under a bilateral fully contracted structure. Is that what I heard?

So we'll continue to follow the RPG process that's going through the approval process, and we'll assess that when it comes out. And if we have an opportunity to get into that through our unreg business, we'll certainly make that assessment.

We would have good potential opportunities for that. But at the end of the day, we have to see what the rules are of the game and figure out if we have something that we believe would be competitive.

Okay. And then just one other one along that same line. The cost allocation that's being proposed is going to be a function of the EDC load forecast. So within your PJM load forecast, you guys feel confident that there's not going to be any revisions to that at this point in terms of tightening for -- as it relates to what PJM is going to need to see for cost allocation?

Yes. I'm confident right now that we're good with where we sit.

Our final question will come from the line of Jeremy Tonet with JPMorgan.

This is actually Ed Kelly on for Jeremy. How are you using grid-enhancing technologies across your T&D network to do more with less and extract capacity by managing peaks better, whether that be through transmission grid management or grid edge intelligence and then using that to perhaps provide customer rebates to reduce rate of bill increases?

So our team is deeply engaged with innovation. We are tied in with a number of the manufacturers and technology developers out there on these types of of technologies and where they make sense. Our team is pursuing implementation of it.

But to be very clear, I think that those help fill in some gaps, but we have tremendous need here for new generation and new transmission. And so our focus is really on both of these -- the three legs of the school, if you will: One, getting new generation connected; two, to getting brand-new transmission built to build out the backbone and deliver the energy and reliability that our customers want. And then the third leg is the variety of of guests and energy efficiency tools and new technologies and AI and the variety of innovations that are coming our way to assess.

But with the dramatic need for additional generation, additional transmission that's out there, we have a strong focus on that to make sure that we're executing well for our customers.

Great. And just one remaining question for me. Could you clarify whether the current AEP Texas capital plan supports the contracted loads added in this quarter and last quarter or whether you might need to add more capital to support these added loads?

Yes. There definitely is incremental capital that we would put in the plan. Now I would say when you look at the $78 billion capital plan, recall last fall, we shared a $72 billion capital plan that was really alongside the 28 gigawatts of contracted load outlook. And really, since that time, that contracted load outlook has now grown on an overall basis. And again, Texas is a big part of that, to 63 gigawatts.

Now I will preface this by saying that the capital plan is really not built off of a direct one-for-one relationship between incremental megawatts and capital spend, certain investments are required regardless of the load growth. And so when you look at this, some incremental load can be served by existing system capacity, depending on location, timing and other factors,

However, I would say that with the significant increase in contracted load through 2030, it really implies a meaningful upside to our current capital plan. And so that's really not incorporated into the amounts that we put out at this point right now.

This concludes our question-and-answer session. I will now hand the call back over to Bill Fehrman for any closing comments.

Thank you. So we appreciate everyone joining us on today's call. We're very excited about the opportunities ahead at AEP as we continue to advance our long-term strategy. That's driving sustainable growth, enhancing the customer experience and really creating value for shareholders. Our focus remains on disciplined execution in some of the fastest-growing regions in the country, supported by our strong operational and financial foundation.

If there's any follow-up items, please reach out to our IR team with your questions, and we look forward to seeing many of you at the upcoming investor conferences and meetings. This concludes our call. And again, thank you for your continued interest in AEP.

Today's call will be available for replay beginning approximately 2 hours after completion and will run through 11:59 p.m. Eastern Time on Tuesday, May 12, 2026. Callers may access the replay by dialing (800) 770-2030 or 609-800-9909 and enter ID # 8577 followed by the pound key.

This concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, fellow shareholders and guests. I'm Bill Fehrman, President, Chief Executive Officer and Chair of the Board of Directors of American Electric Power Company. Welcome to the company's 119th Annual Meeting of Shareholders. The Board is delighted that you can attend our virtual annual meeting today. I want to thank you all for joining us, and I hope you and your families are healthy and well.

At this time, I call the meeting to order. I will act as Chair of the meeting. With me are Sara Martinez Tucker, Lead Director of the Board of Directors; Rob Berntsen, Executive Vice President, General Counsel and Corporate Secretary; and Darcy Reese, Vice President of Investor Relations. Mr. Berntsen will serve as Secretary of the meeting, and Ms. Reese will facilitate the Q&A session.

In addition, all current members of our Board of Directors who are standing for reelection are attending this meeting virtually today. Representatives of PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the company's 2025 financial statements, are also attending the meeting virtually.

We will be making forward-looking statements during today's presentation. These statements are based on management's current expectations, and actual results may differ materially from those projected in any forward-looking statement we make today. Factors that could cause our actual results to differ materially are discussed in the company's most recent SEC filings. Please refer to our Form 10-K for the year ended December 31, 2025, for a reconciliation of non-GAAP measures we may use when discussing our financial results.

Before turning to the formal business of the meeting, it is my pleasure to invite our Lead Director, Ms. Tucker, to share with you the Board's perspective on where the company stands and where we are headed.

Thank you, Bill. Good morning, everyone. Although AEP has changed significantly over time, our purpose remains the same: to deliver reliable, affordable power across our 11-state regulated footprint. Our industry is experiencing unprecedented growth, and AEP is leaning into that opportunity to deliver for customers by prioritizing structure, strategy and culture. Under Bill's leadership, the company has been organized around the customer, strengthening execution, financial performance and regulatory relationships.

The Board supports the company's focus on disciplined investment in our core businesses, generation, transmission and distribution under our $72 billion capital plan. At the same time, we remain on a growth trajectory that aim to limit residential rate increases to 3.5% annually.

Just as important, AEP has aligned around a shared culture, our ways of working, be an owner, be customer-focused, be a team player and get stuff done to help execute effectively for customers and for our shareholders. Taken together, we believe these priorities will position AEP to deliver long-term value, while continuing to serve our customers with reliable, affordable energy.

Bill, now let's proceed with the meeting.

Great, Sara. Thank you. We will now begin the formal business portion of our meeting. Our Board of Directors selected March 4, 2026, as the record date for determining shareholders entitled to vote at this meeting. An affidavit has been delivered attesting to the requisite notice of Internet availability or document mailing as applicable, which were made available or mailed starting on March 18, 2026, to all shareholders of record. This affidavit will be incorporated into the minutes of this meeting.

Our Board of Directors has appointed Ms. Reagan and Ms. Forsyth of Computershare to act as independent inspectors of elections at this meeting. The inspectors of elections have taken the oath of office and will file their signed oath of office with the Secretary of the meeting for inclusion in the minutes of the meeting. The inspectors of elections have advised me that there is a quorum present for the transaction of business. Accordingly, I declare the 119th Annual Meeting officially convened.

This meeting will be conducted according to the formal agenda and the conduct of annual meeting rules outlined in the proxy statement dated March 18, 2026, which you are encouraged to review. You may submit questions in the designated field on the virtual meeting website at any time during the meeting. After reviewing the items on the agenda and a management presentation, we will respond to appropriate questions about those items and other matters related to the company's business as time permits.

Note that only shareholders with a valid control number will be allowed to ask questions. All questions that do not pertain to the items involving votes or the company's business will be deferred, including any questions relating to first quarter 2026 earnings or our 2026 outlook. Please provide your name and your contact details when submitting questions.

Rob, please describe the matters to be voted on at today's meeting.

Thank you, Bill. The first item of business is the election of directors. There are 10 nominees who have been nominated for election to the Board and who, if elected, will constitute the entire Board of Directors. Each elected director will serve until the 2027 Annual Meeting or until his or her successor is elected and qualified. Information concerning the nominees is included in the proxy statement.

The nominees for election to the Board of Directors are Bill Fehrman, Ben Fowke, Art Garcia, Sandra Beach Lin, Margaret McCarthy, Daryl Roberts, Joseph Sauvage, Daniel Stoddard, Sara Martinez Tucker and Lewis Von Thaer. Our Board of Directors recommends that shareholders vote for each of the nominees. No other nomination for director has been properly made in advance of this meeting. Accordingly, all nominations are closed.

The second item of business to come before the meeting is ratification of our Audit Committee's appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the company for the year 2026. Our Board of Directors recommends that shareholders vote for ratification of the appointment of PricewaterhouseCoopers LLP as the company's registered independent public accounting firm for fiscal year 2026.

The third item of business to come before the meeting is approval of an amendment to the company's restated certificate of incorporation to increase the number of authorized shares of common stock from $600 million to $900 million. Our Board of Directors recommends that shareholders vote for approval of the amendment to the company's restated certificate of incorporation.

The fourth item of business to come before the meeting is approval of the AEP Employee Stock Purchase Plan. Our Board of Directors recommends that shareholders vote for approval of the AEP Employee Stock Purchase Plan.

The fifth item of business to come before the meeting is approval on an advisory basis of the company's named executive officer compensation as described further in the proxy statement. Our Board of Directors recommends that shareholders vote for the advisory approval of the company's named executive compensation program.

At this time, the polls for voting on all matters are open. Any shareholder who hasn't yet voted or wishes to change their vote may do so by clicking on the voting button on the web portal and following the instructions there. Shareholders who have sent in proxies or voted via telephone or the Internet and do not want to change vote do not need to take any further action.

Now that everyone has had the opportunity to vote, I declare that the polls are now closed, and the inspectors of elections will tally the ballots. We will then report the preliminary voting results. While the inspectors are tabulating the votes cast, Bill will comment on the past year and AEP's outlook for the future.

Thank you, Rob, and thank you to our valued shareholders for joining us today on this call. We appreciate your continued investment in our company. I would like to briefly talk about our progress and growth last year and our vision for the future.

Last year, our team translated strategy into results. We invested in critical infrastructure to meet unprecedented demand, enhance the customer experience and delivered strong financial performance, all while focusing on our most important operational and customer priorities: safety, reliability and affordability.

In 2025, we delivered operating earnings of $5.97, outperforming our full year guidance. AEP's share price also increased 25% in 2025 with a corresponding total shareholder return of 29%. We also reinforced our confidence in AEP's premium 7% to 9% long-term growth rate. A balanced approach of supporting growth whilst maintaining affordability is central to our long-term value proposition and our commitment to serving our customers.

As we look ahead, we believe 2026 and beyond will be transformational for our company and service territory. We remain focused on executing our capital plan efficiently, maintaining affordability for customers, partnering closely with policymakers and regulators and making targeted investments that deliver value and empower growth.

To our shareholders, thank you for your continued support of our work. We appreciate your investment in our vision to deliver safe, reliable and affordable energy to our customers.

While the inspectors continue to tabulate votes, I would like to share a video that highlights this work to seize the exciting opportunities ahead.

[Presentation]

We'll now respond to questions submitted by our shareholders. Please note that any questions not pertinent to the 5 voting items or that do not adhere to the conduct of annual meeting rules will not be addressed at this time.

Darcy, would you please report on any questions received?

Thank you, Bill. We have not received any pertinent questions related to the business of the meeting or the company's business activities. You may proceed with the remainder of the meeting.

The inspectors of elections have provided preliminary voting results. Rob, will you please inform us of the results?

Yes. Thank you, Bill. The preliminary results show that on the first item, the 10 director nominees have been duly elected. On the second item, the appointment of PricewaterhouseCoopers LLP as the company's registered independent public accounting firm for fiscal year 2026 has been ratified. On the third item, the amendment to the company's restated certificate of incorporation to increase the number of authorized shares of common stock has been approved.

On the fourth item, the employee stock purchase plan has been approved. On the fifth item, the compensation of named executive officers has been approved by advisory vote. We will file the final report of the inspectors of elections with the records of this meeting. We will also report the final results of the voting on Form 8-K filed with the Securities and Exchange Commission.

This concludes the business for the meeting, and I declare that the 2026 Annual Meeting of Shareholders is adjourned. Thank you all so much for attending.

Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Electric Power Fourth Quarter 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Darcy Reese, Vice President, Investor Relations. Please go ahead.

Good morning, and welcome to American Electric Power's Fourth Quarter 2025 Earnings Call. A live webcast of this teleconference and slide presentation are available on our website under the Events and Presentations section. Joining me today are Bill Fehrman, Chairman, President and Chief Executive Officer; and Trevor Mihalik, Executive Vice President and Chief Financial Officer. In addition, we have other members of our management team in the room to answer questions if needed, including [ Kate Dikson ], Senior Vice President, Controller and Chief Accounting Officer.

We will be making forward-looking statements during the call. Actual results may differ materially from those projected in any forward-looking statements we make today. Factors that could cause our actual results to differ materially are discussed in the company's most recent SEC filings. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. We will take your questions following opening remarks.

I will now hand the call over to Bill.

Thank you, Darcy, and good morning, and welcome to American Electric Power's Fourth Quarter 2025 Earnings Call. I'm happy to be here with all of you. We are operating in a period of incredible transformation across our industry, marked by accelerating the electrification, rapidly expanding AI-driven and industrial demand and rising expectations for reliable and affordable energy solutions. These trends only accelerated in 2025 and continued into 2026. As we look to the future, AEP stands out among its peers as one of the fastest-growing, high-quality pure-play electric utilities strategically positioned in multiple high-growth regions.

Let's begin on Slides 4 and 5 of today's presentation. AEP is rooted deep in innovation, and we are ready to meet unprecedented customer demand across our impressive 11 state regulated service territory and beyond. Resulting in significant infrastructure investment, which continues to drive our strong financial performance now and into the future. We are operating in an environment in time when scale matters more than ever and we continue to leverage our size to mitigate supply chain risk and focus on having the resources necessary to meet this massive system demand and investment opportunity. Notably, we are deepening our engagement with customers regulators, policymakers and suppliers to align our long-term goals and achieve favorable outcomes.

For example, we have key relationships with major gas turbine manufacturers, securing over 10 gigawatts of capacity and have entered into a long-term strategic partnership with Quanta Services to strengthen and accelerate capabilities for 765 kV transmission infrastructure build-out. Simply put, the AEP team has made significant progress in 2025. And as we look ahead, we have built a robust plan with a clear focus on operational excellence and accountability supported by the strength and experience of our winning team. I'm very excited to share our progress with you today.

Turning to Slides 7 and 8. I would like to first walk through our 2025 financial performance and share our outlook then speak to our recent key accomplishments and continued focus on customer satisfaction and affordability. I will then hand things over to Trevor for a more detailed summary of our financial results and the growth trajectory of our business.

Now on to our financial results. I'm proud of the dedication and accomplishments of the entire team over the past year. AEP has a long history of consistently delivering or exceeding our earnings guidance and 2025 was no exception. We achieved fourth quarter 2025 operating earnings of $1.19 per share, gaining our full year 2025 operating earnings to $5.97 per share. which is above the top end of our guidance range. In October, we also increased our quarterly dividend to $0.95 per share, demonstrating our ability to deliver competitive and sustainable shareholder returns. In fact, total shareholder return for 2025 was 29%, one of the highest in the industry.

AEP's execution-driven performance in 2025 has established a solid foundation from which we are reaffirming our 2026 full year operating earnings guidance range of $6.15 to $6.45 per share. With the remarkable load expansion we are experiencing, today, we are also reaffirming our premium long-term earnings growth rate of 7% to 9% for 2026 to 2030 with an expected 9% CAGR. We have a large but conservative $72 billion 5-year capital plan yielding a 10% rate base CAGR that continues to present incremental upside and is supported by a strong balance sheet. In short, we finished the year with positive momentum, and we are only just getting started. Later in the call, Trevor will walk through our fourth quarter performance and provide additional details about our financial growth outlook.

As we have discussed, we are in the midst of a generational load growth phenomenon throughout our diversified service territory, especially in Texas, Ohio, Indiana and Oklahoma. We now have 56 gigawatts of firm incremental contracted load additions doubling the 28 gigawatts we reported just last fall. These gigawatts are not speculative as they are all backed by signed customer agreements. However, meeting this demand must be done responsibly. It is critically important that costs associated with these large loads are allocated fairly and the right investments are made for the long-term success of our grid. AEP continues to work with federal and state leaders to quickly adopt reforms to streamline the connection of new energy resources to serve large loads and drive smart solutions to protect residential customers from extra costs. This builds on our progress over the last several years.

We laid the groundwork 2 years ago when we secured commission approvals for data center tariffs in Ohio and large load tariff modifications in Indiana, Kentucky and West Virginia. We now have pending tariff filings in Michigan, Oklahoma, Texas and Virginia. A summary of these tariff filings can be found on Slide 9 of our presentation. This methodology is designed to help protect our existing customers from bearing the cost of grid improvements required to meet data centers' energy demands. While this is good progress, additional measures must be taken to ensure that the infrastructure required to serve large loads is paid for by the customers who drive those needs.

Beyond these efforts, we are also building on AEP's history of innovation. We continue to explore generation solutions for the benefit of our customers during this period of massive demand. We have previously talked about AEP's ongoing efforts to develop Small Modular Reactors or SMRs in our service territory. We announced that we are participating in the early site permit process for 2 potential SMR locations in Indiana and Virginia. And we will, of course, only move forward with the appropriate returns and risk mitigating structures.

Additionally, last month, we announced plans to purchase $2.65 billion of fuel cells that will be part of a generation facility expected to be located near Cheyenne, Wyoming. The facility includes a 20-year offtake arrangement with a high-quality investment-grade third-party customer. Transmission will be equally important for affordability and to ensure new generation is quickly and reliably connected to serve large loads. Our unmatched scale on the transmission side continues to be a defining advantage for AEP.

As outlined further on Slide 10, we own and operate nearly 90% of the 765 kV infrastructure in the United States. With the largest electric transmission system in the country, AEP is exceptionally well positioned as the utility partner of choice for customers who need consistent large load power. As a matter of fact, AEP was recently recommended for approval or awarded new 765 kV projects in PJM, SPP and MISO, expanding our footprint even further. New transmission projects and our planned fuel cell facility in Wyoming reinforced AEP's growth trajectory, representing opportunities that include approximately $5 billion to $8 billion of confirmed or endorsed incremental generation and transmission projects. This is additive to our current $72 billion 5-year capital plan just announced last October.

Let me now touch on the progress we are making on the legislative and regulatory fronts for the benefit of our customers and communities. We remain focused on reducing the gap between our authorized versus actual ROE. In 2025, we achieved an earned ROE on the regulated business of 9.1%, up 30 basis points from 2 years ago with detailed plans to continue the improvement. Our successful approach of listening closely to state leaders and aligning with their needs has resulted in the passage of improved legislation and the achievement of positive balanced regulatory outcomes that benefit both our customers and investors. Our continued execution is evident through several recent milestones, all detailed in the appendix of today's presentation, including broader regulatory accomplishments achieved in 2025.

I'd like to highlight a few of these key milestones. Legislation that reduces regulatory lag was approved in Ohio, Oklahoma and Texas. I&M achieved approval on a generation resources filing, enabling targeted resource additions through an efficient streamlined process. Base rate cases in Arkansas, Kentucky and Ohio were approved or settled with additional new base rate cases recently filed in Oklahoma and Texas. Kentucky Power's investment in our [ Mitchell ] plant was approved, extending interest in its energy and capacity beyond 2028. And in West Virginia, we continue to work with leaders at all levels of the state on fair financial returns as the state's energy strategy aims to attract more capital investment and triple electricity generation to 50 gigawatts by 2050. While there is no statutory time line for the commission to rule on APCo's reconsideration filing made last September, we expect a decision soon.

Affordability is at the heart of our regulatory approach and as summarized on Slide 11, we are taking decisive action to keep customer bills as economic as possible. We are building on efforts to support incremental load growth with innovative rate design while also mitigating residential rate impacts through our focus on O&M efficiency and effective financing mechanisms such as securitization. As we invest in this electric infrastructure growth cycle, and assigned the appropriate cost to new large loads, we remain focused on protecting residential customers from increased costs.

To finish up, we are seeing rapid change in our industry as well as increased need and demand from our customers and communities. We have a clear strategy, a strong financial foundation and a team that knows how to deliver. All coming together to help us capitalize on the unprecedented opportunities ahead for the grid. I'm dedicated to AEP's vision of improving customers' lives with reliable, affordable power. I am also committed to leading AEP for many more years to come, and I look forward to working with our incredible team. We will continue to execute at an unmatched pace of play on behalf of our stakeholders to drive growth serve our customers and create value for our investors.

I will now turn the call over to Trevor, who will walk us through fourth quarter financial performance and provide more details surrounding our growth.

Thanks, Bill, and good morning, everyone. As you have heard, AEP delivered an exceptional year of performance in 2025. Our year-to-date results exceeded expectations, supported by industry-leading load growth fundamentals, constructive regulatory and legislative developments and disciplined execution of our robust plan with affordability front and center.

I'm pleased to walk through our progress today. I will start with the key earnings drivers behind our 2025 performance and build on Bill's comments regarding load growth. From there, I will provide additional context around our $72 billion base capital plan. I will then highlight the incremental projects that have been identified beyond the base plan. And finally, I will close with remarks reinforcing our continued commitment to our operational and financial strength that positions us to deliver long-term value for our customers and investors.

Please turn to Slide 13 and 14 of the presentation. Our 2025 full year operating earnings was $5.97 per share, exceeding the high end of our guidance range of $5.75 to $5.95. This strong performance in our regulated segments was due to constructive rate case outcomes across many of our jurisdictions, steady progress on our transmission investment program and the continued momentum in low growth across our service territory, which I will speak more about shortly. These positive drivers were partially offset by additional spending on system reliability improvements, higher depreciation from our growing capital base and interest expense. We also continue to see meaningful performance in our Generation & Marketing segment, driven by favorable energy margins and the benefits we realize from contract optimization within the portfolio.

Turning to Corporate and Other. The year-over-year variance was largely due to a $0.06 per share tax benefit recognized in 2024 from updated state tax apportionment. As Bill noted earlier, our 2025 performance continues to give us confidence in our financial plan, and we are reaffirming our '26 guidance and our long-term earnings growth outlook through 2030.

As we turn to sales trends on Slide 15, you will note that 2025 was a transformative year for AEP. Our total system sales exceeded 200 million-megawatt hours for the first time in AEP history. This milestone highlights the historic load growth we are seeing on our system with what we anticipate will be even more incredible opportunity ahead of us. Retail sales grew 7.5% in 2025 compared to 2024 driven by significant commercial and industrial sales growth of nearly 10%, primarily from data centers in Indiana, Texas and Ohio as well as industrial sales in Texas. Comparatively, residential sales grew approximately 3% in 2025 across our footprint, mostly attributable to I&M and SWEPCO. Keep in mind that our revenues are supported by these rising sales growth trends and further strengthened by minimum demand charges included in our large load customer agreements. So while total retail sales rose 7.5% in 2025, corresponding revenue was up 8.3%.

Turning to Slide 16 and the future. We have previously discussed our forecast of 28 gigawatts of incremental contracted load growth by 2030. Today, we increased and doubled that outlook by 28 gigawatts to 56 gigawatts of incremental load. This step-up reflects our continued success in converting projects from our planning queue into binding financial commitments. The increase to 56 gigawatts over our prior disclosure is driven by growth in ERCOT, PJM and SPP. In PJM, contracted load increased by 4 gigawatts driven largely by activity in Ohio. This growth continues to be reinforced by data center development. And importantly, about 90% of the incremental PJM load is supported by executed take-or-pay electric service agreements, or ESAs. We are also seeing positive momentum in the SPP region in Oklahoma where contracted load has grown by 1 gigawatt and driven primarily by a commitment with a large aluminum smelting customer. Together, PJM and SPP account for the 5 gigawatt increase in our contracted load outlook.

Let me turn to ERCOT because the Texas story remains a central part of our long-term growth outlook. As a transmission and distribution utility, AEP Texas does not directly bill retail customers in ERCOT, we secure contracted load through letters of agreement or LOAs. Under these agreements, customers must secure land, complete and pay for interconnection studies provide detailed load forecasts and importantly, fund all of the construction costs. This structure ensures that only viable and financially backed projects advance into AEP's forecast, supporting greater confidence in our long-term load additions.

Within AEP's 56 gigawatts of identified incremental load, AEP Texas has signed LOAs for 36 gigawatts with large industrial customers, well-capitalized hyperscalers and mega size data center developers. This is a significant increase of 23 gigawatts since October, and all of these new loads meet Senate Bill 6 criteria outlined on Slide 17. As implementation of this legislation progresses in Texas, we anticipate improved clarity and certainty around the timing of when additional loads will connect in ERCOT. As such, AEP is well positioned to build the transmission and distribution infrastructure that Texas needs and investment timing will be influenced by resource availability to support growing system load. We will continue to update our load forecast throughout the year as we support and benefit from the rapid economic growth in Texas.

Please turn to Slide 18. I want to take a moment to ground us in the foundation of our capital plan and the opportunities ahead. We built our forecast using relatively conservative assumptions, which gives us a lot of confidence in our ability to deliver and creates opportunity for upside as conditions evolve. For example, our $72 billion 5-year capital plan is based on the 28 gigawatt incremental demand outlook we shared last fall. As we continue to see new opportunities materialize across our service territory, the capital plan will continue to expand. Just since the third quarter call, we have seen upside of approximately $5 billion to $8 billion of confirmed or endorsed generation and transmission projects for the period of 2026 to 2030 that are in addition to the base capital plan.

I'd like to emphasize that any capital related to the incremental load outlook which has increased by an additional 28 gigawatts is additive to our $72 billion plan and is not part of the $5 billion to $8 billion of capital upside.

As I have articulated on prior earnings calls, we want to have a cadence of updating the capital plan annually in the third quarter. This timing allows us to run the full plan through our modeling process and provide a view of the associated financing needs. That said, given the size and rapid growth of the incremental opportunity, we felt it was important to highlight some investments that have come into the 5-year window. We will provide additional clarity on these opportunities formally update our capital plan and address the associated financing when we have a greater line of sight. We have a plan that is supported by tangible upside and is designed with affordability considerations for our existing customers. We are confident in our ability to advance this critical work of building a resilient, modern grid that will help power the economic growth in our service territory, including the rapidly expanding AI-driven and industrial demand.

Now moving to Slide 19. I want to highlight the key takeaways that reflect the steady progress we're making in both operational and financial execution and reiterate some of the themes you heard today. First, today, you heard that our positive results in 2025 give us strong confidence in the financial commitments we have laid out. We delivered performance that exceeded our 2025 operating earnings guidance which supports our conviction in reaffirming the 2026 guidance range and the long-term earnings growth rate.

Second, you heard that we have increased our load forecast to 56 gigawatts of additional contracted load by 2030, all backed by signed customer financial agreements. This is real committed load, much of which is under take-or-pay large low tariff agreements and positions us to advance the critical infrastructure our customers and communities will rely on for decades to come.

Third, you heard that our capital plan remains relatively conservative with approximately $5 billion to $8 billion of confirmed or endorsed projects incremental to the $72 billion base capital plan and continued acceleration of load growth could also support further expansion.

Fourth, you heard that we remain committed to maintaining a healthy balance sheet. This is endorsed by our FFO to debt target of 14% to 15% and we currently exceeded this target with S&P at 15.2% as of year-end. Comparatively, our Moody's FFO to debt is just under 14%, underscoring our commitment to balance sheet strength. Our diverse high-growth footprint also provides the flexibility to deploy capital efficiently and direct support of customer needs, regulatory priorities and long-term shareholder value. This disciplined approach ensures we can prioritize high-impact projects and maintain financial strength as we execute at scale.

Finally, you heard that, along with large-scale infrastructure investment execution we continue to work closely with our stakeholders to advance regulatory strategies to keep customer affordability top of mind. This includes our data center and large load tariff filings and our focus on O&M efficiency. Taken as a whole, these actions reinforce a balanced approach that supports affordability while advancing critical investments needed to meet the growing customer demand. I'm excited by the momentum we have built over the last year, and I'm confident in the discipline we are bringing to our execution. We're delivering on our robust plan guided by a high-quality seasoned leadership team that has come together to leverage AEP's size and capabilities, resulting in strong operational and financial performance.

With unmatched infrastructure assets and deep expertise, I believe AEP is exceptionally well positioned to build the critical infrastructure our country needs to support unprecedented growth. I'm extremely proud to be part of an organization with this much opportunity. We really appreciate you taking the time to listen to our prepared remarks.

I'm now going to ask the operator to open the line so that we can take your questions. Thank you.

[Operator Instructions] Your first question comes from Shar Pourreza with Wells Fargo.

So just quickly, I mean, obviously, you guys have doubled your signed contract load since the last update. You're seeing very healthy demand from large load customers, especially in Texas. Can you just maybe give us a small inkling even kind of directionally on what this could mean to the CAGR. I mean, could this put upward pressure on the current 9% or when you look to roll forward, especially as you continue to sign additional ESA. So I guess could the CAGR be a 3Q update in addition to CapEx and funding?

Shar, it's Trevor. I appreciate the question. Yes. Look, I think the good news here is the $72 billion 5-year capital plan does not include this incremental load growth of 28 gigawatts and we really try to articulate that we think the $72 billion is somewhat conservative. And that's why we did want to come out with this incremental $5 billion to $8 billion that we have line of sight to.

I do think what we'll do is on the first quarter call when we have a little bit of greater line of sight around the 5 to 8 will come out with some more definitive ideas around how we're going to finance it and what that ultimately means to the growth rate. For the bigger question that you're asking on the 28 gig, that probably will be more around the third quarter call, as we formally put forward our revised capital plan and run it through our internal processes. However, if we see some big chunks like we have with this 5 to 8 that are meaningful. We may address those on the second quarter call as well. But I would say keep an eye out on the formal process, we really are trying to stick to the cadence of doing this once a year. But with this much load growth that we're seeing, I think it was really important for us to come out and at least give the Street some line of sight into what this really means for us.

The good news also, though, is with this 28 gigs that gets us up to the 56, we still have 180 gigs plus in the queue in various stages of development. And so even while we upsize the interconnection up to 56, we didn't lower the 180 gigs just because we're seeing that much growth on the system. And so I think what that really means is you'll see a greater line of sight beyond 2030 as we continue to deploy capital into the next decade or past this decade into the next decade. But again, I would say let's see what we can pull together by the first quarter call and then ultimately, what the formal process generates on the third quarter call.

Got it. Yes, it's pretty amazing growth. I mean just -- I know Trevor and Bill, the ESAs have been sort of under sort of a bit of a microscope with investors. I mean, I guess, talk a little bit about the protections and the level of confidence there. And the reason why I ask is we've at least seen one data center pull out of a project due to local pushback, and that was despite having sort of a signed ESA in place. Just maybe talk about the level of confidence there because it's obviously been on the microscope with investors.

Yes. This is Trevor again, Shar. So from that perspective, again, what gives us a great deal of confidence is that 180 gigs that are backing any of those firms ESAs that are in the load right now. But we do actually a pretty good job of really just stilling down those loads on our system to ensure that they're backed by financially secure and very committed counterparties. And then as you know, the ESAs have a take-or-pay component and the large load tariffs that we've pioneered lock those counterparties in place to ensure that the dollars that are spent are not going to be detrimental to our existing customers.

So we feel very, very good about where we are under the ESAs and even the LOAs in Texas, given how [ SV6 ] is really trying to fare it out and ensure that only those loads that are very committed are advancing. And that's where we're at, and that's why we feel good about coming out with this 28 gig incremental on top of the 28 that were there. And so from our perspective, we feel very, very secure in the 56.

And then Shar, I would add to that with our service territory predominantly being more on the rural side, we're actually having very good success with our local communities and the desire to host this type of economic development. Obviously, we have a few here and there that we need to do more work with. But the thing I love about AEP's footprint is the diversity of the assets that we have and the locations that we have and the desire across many of those locations to get this economic development built and built as quickly as we can.

And so in addition to what Trevor had with regards to the contractual side of this, I love how our teams are attacking the need to build those community relations and working with our individual states and really working to deliver what they want.

Got it. Big congrats to both of you. I mean, the turnaround has been nothing short of amazing.

Your next question comes from Steve Fleishman with Wolfe Research.

So just on the [indiscernible] is there any more kind of color that you can provide on -- I know that people are making significant commitments, but I guess in the scale of the value of making sure you're kind of in the in the kind of [ SB6Q ]. What -- how much risk there might be that these are just like options being put on the table? And it's worth putting a decent amount of money for an option as opposed to really a committed project. I don't know if that makes sense the question, but -- just wanted to get a sense of like the scale of commitment relative to the scale of these projects.

Yes, Steve. Again, we try to articulate just our confidence in all of this in the prepared remarks. But again, what we're seeing is a big chunk of what's coming in, in ERCOT is around the data center load, which is a lot of hyperscalers and data center developers, more than 50% of that load is now hyperscaler load. And so these are counterparties that are significantly committed to their place in the queue and putting dollars at risk and so we feel very good about that. And then again, with the amount of capacity in the backlog that isn't even in the 56. If anyone were to walk away or just have, like you say, a financial holding position, we feel we could backfill that very, very quickly. So all of that gives us a great deal of confidence in these LOAs in Texas.

Okay. That makes sense. And then maybe just on the transmission projects, could you -- is there any more info you can share on H1 and the rough investment related to those?

Yes, let me say -- right. Roughly, there's, call it, almost $5 billion associated with those projects is about $2.7 billion of transmission projects in SPP, about $1.5 billion in PJM and about $0.5 billion in MISO. That all adds up to the kind of the $4.7 billion or close to $5 billion of transmission projects that have either been awarded or kind of assigned to us. And then you layer on top of that the $2.7 billion associated with the [ Bloom ] fuel cells that we announced under the 8-K and that gets you to roughly $7.4 billion of the breakout of the 5 to 8 that we talked about.

Again, I would say the 3 transmission opportunities of that $4.7 billion, we feel very, very good about. And largely most of that, I think it's only the MISO piece that doesn't fall within the window through 2030. It's -- I think 2031 is when it would go in service, but everything else would be in the 5-year window, 2026 to 2030.

And Steve, I'd add that with our transmission business, the huge advantage we have, of course, is that we operate 90% of the 765 system in this country and are by far the leader in that voltage level and with our exceptional partnership we have with Quanta, we are the preferred provider of these projects. And so again, as Trevor laid out, I am very excited about our future in this area and our ability to win these projects and deliver on them, particularly with our push to acquire the components that we need well ahead of time and our size matters in this area because we're out ensuring that we have the equipment that we need, we have the contractor that we need, we have the capabilities that we need to deliver on these projects. And so I really love where we sit from a competitive position.

Your next question comes from Julien Dumoulin-Smith with Jefferies.

Just following up maybe in the same vein width here with Steve. How do you think about this contracted generation business inasmuch as Bloom seems a little a step away from the core rate base opportunity. Again, obviously, PJM is reevaluating its own construct here. They've got this backstop thing they're considering. How do you all think about the prospects of contract gen effectively backstop and serve some of the 56 that you guys are talking about here? In terms of whether that's PJM or more in Wyoming. How do you think about that almost as like an adjacent business segment, whether that's scaling up with Bloom beyond this commitment or whether that's something adjacent in a more traditional gas context?

Yes. Thanks for that question. And for us, it's really about serving our customers and arriving at solutions for them to get them connected as quickly as we possibly can. And in many of these cases, where the Grid Connect could be out for a couple of years. We've been able to offer to them the capabilities of bringing the data centers online significantly faster through deals like the Bloom Energy deal and perhaps the deployment of batteries and some other opportunities. And so I see this as a significant customer service that we're providing to them to support what they ultimately want to do and need to meet their business requirements.

So I'm very excited about where we sit on this. I like the deals that we've done with Bloom. It's clearly a proven technology that can be deployed relatively quickly. And so I see it as very complementary to the rest of our business, and we'll continue to provide those services to the customers as they need it.

And Julien, let me just also add one thing on this is, as we've said in the 8-K, this is a long-term agreement with a very creditworthy counterparty. And so from our perspective, that long-term contracted cash flows off of a material asset like this is very, very important for us. And to me, it's very similar to a regulated return because here, you have a very, very high-quality counterparty signing a 20-year PPA agreement. And ultimately, you don't have to go in for a rate case every so often on this, and it's very, very positive for us.

Yes. No, indeed. And then with respect to PJM, any comments on that front as to how you think about tackling it? And again, that could be an Ohio specific thought process as you think about engaging this year and future years or frankly, directly PJM, again, to the same vein as serving your customers, right, under this contracted generation effort.

We're deeply engaged in PJM as well as SPP and MISO. Obviously, the secret sauce on all of this is figuring out methodologies to speed up connecting generation to load. We're fully in supportive of the administration's work on trying to solve this issue in PJM and to find ways to accelerate that process. And so our teams are working directly with a variety of stakeholders on all of this, and I'm hopeful that we'll find a path forward that will allow for this to be expedited.

The thing for us is we're super prepared for this. We have the equipment we need. We have the contractors we need. And so once we get through the processes at the RTO, the beauty of that is it falls back on us to execute, and I am absolutely confident in our team that we will execute once we can start dig in the holes.

Your next question comes from Michael Lonegan with Barclays.

Your 2026 EPS guidance that you initiated on the third quarter call reaffirmed today, in the third quarter, you included 4 gigawatts of incremental contracted load which was raised to 7 gigawatts today, but you reaffirmed that 2026 EPS guidance, would you say you expect to be towards the high end of that EPS guidance this year now?

Yes, Michael, this is Trevor. What I would say is we really give a range for a reason. It's still very early in the year right now. We do see some opportunity for incremental CapEx, but that most likely would not manifest itself in the next several months here. So I would say we still are very, very confident with the 615 to the 645 range that we put out and with the midpoint being 630. And as we've said in 2025, we worked to guide to the upper end of the range, and then we exceeded the high end of the range, we certainly are a management team that focuses on execution and putting out things that we can deliver on.

But I'm very much of the mindset I want to underpromise and overdeliver. And so we see a lot of opportunity coming together. But at this point, we're going to just continue to affirm our range. And if something else comes forward on future calls, we would certainly address it at that time.

And then you continue to talk about steady earned ROE improvements over the course of your plan. I know driven by legislative enhancement. Do the recent rate case settlement in Ohio, Kentucky and Arkansas support that trajectory? And I know you also recently filed in Oklahoma on SWEPCO, Texas. Do we expect more recent rate case filings across the board, given all the robust capital opportunity from the load and the 5 to 8 you identified. If so, when what jurisdictions should we expect you to file in next?

Yes. So Michael, you've asked a few questions in there. So let me start with the ROEs and the earned ROEs and how we ended up in 2025 at the [ 92 ] again, feeling very good about that. And the projection over the 5-year period is to get us to the 95. And so we feel like there is a good path and it's not just speculative items that we're putting in with assumed benefits to rate cases. There are some definitive things that have transpired like the UTM in Texas, [ SB998 ] in Oklahoma and certainly the forward-facing test year in Ohio, all will help us get to where we think we will come out on the 9.5 by the end of the 5-year plan. So we feel very good about that and again, how we executed in the current period.

With regards to incremental filed rate cases, we certainly look at the appropriate times, whether it's the required filing periods or when you can go in and ask for incremental capital that would benefit the customers. Those all get put through the normal regulatory process internally. And again, we feel good about where we are from the regulatory standpoint and ensuring that we're getting constructive outcomes that not only benefit our customers but also add value to our shareholders.

Yes. Let me add into there that. Our philosophy here is no plugs, no basically things that get added into our plan that we don't have a clear line of sight to execute against. And so when we put these numbers out, we have absolute detailed disciplined plans that we will execute against and measure ourselves against to get there. And so while others might just put numbers out there, we won't allow that. There has to be something behind it, and that's essentially the philosophy that Trevor and I have as we push the organization forward.

Your next question comes from David Arcaro with Morgan Stanley.

Looking at the 36 gigawatts here that you've got in ERCOT, I was just wondering, are there physical constraints in the grid to consider with all that load coming on by 2030 or labor constraints, I guess, what needs to be done from a transmission investment perspective to actually make sure that it can all come on?

Yes, a really good question, and that goes right to the heart of the thing I believe in most of which is execution around this organization. And as our teams are looking at the requirements to deliver these projects for our customers. We're getting well ahead of the equipment supply and the contracting supply that we need to ensure that we're able to deliver on these projects.

Now we know the demand on this is real. The timing will depend on the [ SP6 ] implementation and some of these could potentially move around. But we're making sure we have the capabilities and resources in place to deliver on these in accordance with what our customers are demanding, and that's fundamental to our business. So I feel very comfortable with where we're at in that regard, we'll obviously continue to adjust as the [ SB6 ] implementation moves in and out. But I can guarantee you, our team is all over this.

Got it. That's helpful. And obviously, a big inflection, a big step change up were here in the ERCOT activity that you're seeing. I was wondering also on the 180 gigawatt overall that you have of load. Is that also heavily weighted toward ERCOT? Or how is that split where are you seeing the incremental progress on the margin across your service territories?

Yes. Generally, David, what you're seeing is in that roughly 180 gigs, call it, roughly about 70 gigs is in ERCOT. And then you've got about 20, 25 gigawatts in AP Ohio and then about 30 gigawatts in PSO and another 30 gigawatts in APCo and then 16 in I&M. So you can see it's spread around very well around the core states that we've talked about around our growth. And those 4 states around the growth tend to be Texas, Oklahoma, Ohio and Indiana.

Our next question comes from Carly Davenport with Goldman Sachs.

Maybe just a follow-up on a few of the questions earlier on the ERCOT growth. Just as you've seen that materialize over the last couple of years. Are there any historical data points or rules of thumb you can share just about the conversion from LOA to finalize customers taking power? Just trying to get a sense of that conversion rate and any potential risk around the headline there, recognizing you still have the strong backlog to backfill.

Yes, Carly, I would say the thing that I would look at for AEP is we have some pretty big large loads associated with some of the data centers that a significant amount of capital is being deployed. As you know, for example, [ Stargate ] is in [ Abilene ] and that's squarely in our service territory. So I would say it's not really a rule of thumb, I would go by, but really look at more the quality of the counterparties that are stepping forward, making the financial commitments and signing up for this load. And again, we feel very, very good about that 36 gigs in Texas that have signed LOAs.

And then as I just said to David, almost another 70 gig behind that. So 100 gigawatts, just in Texas alone, with really strong hyperscalers and these mega data centers that are coming into our service territory. And then the other thing that I think I would really point out as well is there's a large industrial load in Texas when you think about around the port of Corpus Christi, there's a large amount of LNG activity there that draws heavily on the load. So that's another 5.1 gigawatts of industrial load that we're seeing in our service territory in Texas. So it's a good dispersion across data centers and industrials as well.

That's helpful. And then maybe you just -- you had continued strength in the G&M business in '25. I think earnings came in a bit above your initial expectations there. Could you talk a little bit about what you think contributed to that? And then just how you would expect those trends to evolve in 2026 and then sort of over the course of the plan?

Yes, absolutely. I'll let Kate take that question.

So in G&M in the fourth quarter, it's really 2 drivers. We had strong performance with margins in our retail business. And then in our wholesale business, a number of contracts moved in and out of contracts. So contract optimization in that business. We do expect some of that to continue into next year. You saw when we released our guidance at EEI, we still expect that same level of performance for G&M for next year.

Your next question comes from Sophie Karp with KeyBanc.

A lot of my questions have been answered. I just wanted to have you guys talk a little bit about the potential permitting reform that's brewing in the U.S., I guess, on the federal level. And what kind of opportunities might that unlock in the near and medium term for you?

Sure. Thank you for the question on permitting reform. We are deeply engaged with our Senate partners and working towards a solution on permitting reform. I in fact, was in D.C. yesterday and was visiting with a number of the leadership folks and reinforcing the need for this to really accelerate infrastructure development in this country who knows if it will get traction and if it will go, particularly in a manner that would be super helpful to us. But our team is very much engaged with the appropriate parties on this topic, and we have been communicating directly with Secretary [ Wright ] at Department of Energy, Secretary [ Bergen ] in the Interior, and they understand that something in this area would unleash even more investment faster.

So hopefully, we'll get there. But in this environment, it's hard to say.

Your final question comes from Anthony Crowdell with Mizuho.

I mean just hopefully 2 quick questions. One is, I guess, last month, ERCOT came out with a new batch study maybe on how large loads connect. Is that really factor into the hookups or your forecast of ERCOT loads?

So we're deeply engaged on the batch study. We've put in our information and I would say that for us, it's positive. We don't see a significant hindrance in this area. But again, like any process, we'll make sure we're on top of it, and we're pushing it through to make sure we get the right outcomes that we need to support this level of investment.

Great. And then I think I want to add on to David's question earlier, you guys talked about maybe supply chain and labor. I'm just wondering, when you look at the size of 56 gig, I don't doubt that AEP is executing get everything built. But Will the generation be there? Like I worry that you guys are going to clearly execute on it. But then when you just think of the load of like New York City, the hottest state is 13 gig, and just look at the magnitude that's been added just in 3 months, will the generation be there for the load?

Yes. That's a really, really good question and that we've obviously been very focused on this. And for our T&D companies, the RTOs are really responsible for the generation and I would say both PJM and ERCOT have taken very important steps to address the large low generation needs particularly through PJM's Reliability backstop auction process and then ERCOT Senate Bill 6.

Clearly, we support efforts to accelerate new generation development and we also fully support modernization of the transmission and interconnection process so that we can get customers connected to load faster and get the new resources built much more quickly and at a lower cost. So as those right reforms come together, we're ready to work with our stakeholders to try and move it along even faster. We really need to work on streamlining how new generation comes online because we know it's critical for reliability and sort of amid this rapid load growth.

But at the end of all this, the one thing I would also say is keep in mind that all this must focus on proper cost allocation. And so our residential customers should not be asked to absorb the higher bills just because the demand is increasing and in our case, we're making sure that these large load customers bear the cost of any new infrastructure is required to serve them. So obviously, generation is going to be critical. We're deeply involved in it for our load within our own VIUs. We believe we have sufficient resources to meet our current growth projections. We're very focused on working with our commissions to ensure that they understand the priorities, and we're making sure that they support us. We've communicated to them that we've secured over 10 gigawatts of gas-fired generation in the plan. So we're confident on the vertically integrated utility side that we've got the right generation strategy there to serve the loads that are coming on.

So overall, that's clearly a big focus for us, but we're going to stay deeply engaged and work very hard to ensure we have what we need when the load shows up.

There are no further questions at this time. I'll now turn the call back over to Bill for any closing remarks.

Well, I'd like to thank all of you for participating on our earnings call this morning, and we really appreciate everybody who joined with us.

I'd like to close with just a couple of summary remarks. As you can tell, super exciting times continue here at AEP and we're very well prepared for 2026 and beyond. We're driving the business very hard. We're diving it forward with our plan to deliver results on behalf of our customers and our communities and our investors and other stakeholders. We're participating in a very meaningful way to capture this growth. I'm extremely proud of the entire AEP team and all the strong support we received from our Board of Directors.

If there's any follow-up items, please reach out to our IR team with your questions, and we look forward to seeing many of you at the upcoming IR conferences and meetings. This concludes our call. And again, thank you for your interest in AEP.

Ladies and gentlemen, this call will be available for replay for 7 days. To access the replay, please dial 1800-770-2030 or 609-800-9909 and enter conference ID 6984853.

That concludes today's call. Thank you all for joining. You may now disconnect.

Ladies and gentlemen, thank you for standing by. My name is Colby, and I'll be your conference operator today. At this time, I'd like to welcome you to the American Electric Power Third Quarter 2025 Earnings Call. [Operator Instructions] I'd now like to turn the call over to your host for today, Darcy Reese, Vice President of Investor Relations. You may begin.

Good morning, and welcome to American Electric Power's Third Quarter 2025 Earnings Call. A live webcast of this teleconference and slide presentation are available on our website under Events and Presentations. Joining me today are Bill Fehrman, Chair, President and Chief Executive Officer; and Trevor Mihalik, Executive Vice President and Chief Financial Officer. In addition, we have other members of our management team in the room to answer questions, if needed, including Kate Sturgess, Senior Vice President, Controller and Chief Accounting Officer.

We will be making forward-looking statements during the call. Actual results may differ materially from those projected in any forward-looking statement we make today. Factors that could cause our actual results to differ materially are discussed in the company's most recent SEC filings. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. We will take your questions following opening remarks. Please turn to Slide 6, and let me hand the call over to Bill.

Thank you, Darcy, and welcome to American Electric Power's Third Quarter 2025 Earnings Call. I'm happy to be with everyone this morning. This is a transformative moment for our industry, and I'm proud that AEP is standing out among our peers as one of the fastest-growing, high-quality pure-play electric utilities. Over the last year and to ensure AEP is extremely well situated for unprecedented growth and value creation, we have welcomed several new proven leaders. We have made significant changes to the organization to grow financial strength and deliver constructive regulatory and legislative outcomes while at the same time, driving accountability and operational excellence.

I believe this is a different AEP from the past. Our winning team is executing at an accelerated pace of play to grow this incredible company and deliver results for our customers and shareholders as we invest significantly in infrastructure across high-growth regions in our impressive 11-state service territory. align our business with state and federal goals and achieve positive legislative and regulatory outcomes and leverage our size and scale to manage cost and supply chain pressures.

For example, AEP is one of the best positioned utilities in the industry with 8.7 gigawatts of gas turbine capacity currently secured from major manufacturers and a high-voltage equipment agreement in place with a key industry player. As a result of our tremendous progress and rapidly growing opportunity in front of us, 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 over the 5-year period. This impressive growth rate is driven by one of the largest capital plans in the industry, $72 billion, which is underpinned by massive system demand and supported by a balance sheet demonstrating strong credit quality.

There is a lot to be excited about at AEP. And in my remarks today, I will provide an overview of our strong financial results and outlook before speaking to the drivers behind our growth trajectory, our recent regulatory and legislative progress and our focus on affordability for customers. An overview of our new financial plans and key messages can be found on Slides 6 and 7 of our presentation.

We are pleased to share that AEP reported third quarter 2025 operating earnings of $1.80 per share or $963 million. These results, in combination with our strong financial performance in the first half of the year and ability to execute, give us confidence in reaffirming our 2025 full year operating earnings range of $5.75 to $5.95 per share, while guiding to the upper half of this range. We are also unveiling our 2026 operating earnings guidance range of $6.15 to $6.45 per share, which is an approximate 8% increase based off the 2025 guidance range midpoint.

In a few minutes, Trevor will walk through third quarter performance drivers and provide additional details surrounding our outlook for 2026 and beyond. Electricity demand growth is happening, and we are seeing it play out across the country in real time. Regions with concentrated data center and industrial development, including AEP's footprint, are emerging as clear winners. Large annual capital budgets from hyperscalers totaling hundreds of billions of dollars reinforce the conviction, strength and staying power of this demand growth. At a high level, AEP's revised long-term earnings trajectory has been updated to reflect the strong load growth we are experiencing across the communities we serve.

We project a system peak demand of 65 gigawatts by 2030 within our diversified service territory, especially in Indiana, Ohio, Oklahoma and Texas. This growth is fueled by data centers, reshoring of manufacturing and further economic development, which we expect to create jobs in local communities and maintain affordability as our load grows by almost 76% in the next 5 years. The 65 gigawatt AEP system-wide projection now includes 28 gigawatts of contracted load additions on top of our existing 37 gigawatt system. These incremental 28 gigawatts, up from our formerly reported 24 gigawatts are backed by electric service agreements or letters of agreement, protecting us and our customers from changes in planned usage.

I also want to emphasize that it is critically important that costs associated with these large loads are allocated fairly and the right investments are made for the long-term success of our grid. For that reason, we have secured commission approvals for data center tariffs in Ohio and large load tariff modifications in Indiana, Kentucky and West Virginia with pending tariff filings in Michigan, Texas and Virginia.

These baselines are designed to protect other customers from bearing the cost of grid improvements required to meet the energy demands of large load customers. As you can see on Slide 8, we have unmatched transmission scale and expertise and large load customers are drawn to our footprint because of AEP's advanced transmission system. Through innovation, we pioneered the modern 765 kV transmission system in North America. These are the highest voltage lines that form the backbone of the transmission network. We have over 60 years of expertise in design, construction and operation of assets like these and many current industry standards and practices for 765 kV transmission were developed by AEP.

Today, AEP owns and operates in excess of 2,100 miles of these ultra-high-voltage 765 kV transmission lines across 6 states, representing 90% of the 765 kV infrastructure in the U.S. This is more 765 kV lines than all other utilities combined, uniquely positioning us with the biggest electric transmission system in the country to attract customers who need large volumes of consistent and reliable power.

Building on this, AEP was recently awarded 765 kV projects in the ERCOT Permian Basin and through the PJM regional transmission expansion plan, setting us up well for future growth opportunities. These transmission awards were included in our new $72 billion capital plan spanning over the next 5 years. By combining AEP's vision for a modern, reliable grid and our partnership with a major energy infrastructure equipment provider, we can accelerate the development of 765 kV projects that are essential to meeting future reliability, resiliency and energy delivery needs.

Turning to Slide 9. We are focused on operational excellence to advance service and reliability interest in each of the states we operate in, while achieving constructive outcomes that are good for our customers and our shareholders. ADP's (Sic) [AEP's] operating company leadership is changing how we run our businesses, and we are working diligently with legislators and policymakers for constructive outcomes. I personally have been actively engaged and met with regulators and leaders across all 11 states that we have the privilege of serving, to better understand each of their needs and priorities.

In addition to better serving our customers, all of these efforts will help us to reduce regulatory lag and improve forecasted regulated ROEs to 9.5% by 2030. This will support operating cash flows as we drive forward with $72 billion of infrastructure investment while maintaining affordability. In 2025, we have been involved in the passage of constructive state legislation. Some of these positive legislative outcomes include Ohio House Bill 15, which establishes a new regulatory framework with a multiyear forward-looking test period with true-up provisions for AEP Ohio rate cases.

Oklahoma Senate Bill 998, which authorizes the deferral of plant costs placed in service between rate cases at PSO and Texas House Bill 5247 that allows for a single annual unified tracker mechanism to recover depreciation and carrying costs associated with capital investments at AEP Texas. The improvement in the customer experience and stakeholder relationships also results in positive regulatory outcomes as we put power in the hands of our local leaders to build financially strong utilities in the communities we serve. Our operating companies continue to advance ongoing base rate cases including AEP Ohio, Kentucky Power and SWEPCO in Arkansas and Texas.

We look forward to working with stakeholders to achieve positive and balanced outcomes that benefit both our customers and investors. As an update on the case that APCo filed late last year in West Virginia, we are pleased that the commission issued an interim order with full approval of the $2.4 billion securitization proposal, which will enable the redeployment of capital throughout our business, while at the same time driving affordability to our West Virginia customers.

However, we are not finished with the recent base case order in West Virginia. There is more work to be done as evidenced by APCo's reconsideration filing made last month centered around adjustments to the authorized ROE, capital structure and rate base. We continue to have conversations with state leaders regarding fair financial returns that they desire to attract more capital and make West Virginia an energy hub. Moving on to resource adequacy. Electricity demand growth is putting pressure on reliability, and this new demand is driving the need for generation diversity, including significant generation additions or retirement delays.

I will highlight several recent key developments that help support AEP's generation resource adequacy needs and reinforce grid stability for our communities. In August, parties reached a unanimous settlement on I&M's acquisition of the 870-megawatt combined cycle natural gas generation facility in Oregon, Ohio. This follows commission approval of Green Country, which is PSO's 795-megawatt natural gas-fired facility in James, Oklahoma. In September, generation resource filings were submitted by I&M for up to 4.1 gigawatts and by PSO for approximately 1.3 gigawatts. And earlier this month, APCo filed an integrated resource plan in West Virginia for roughly 5.9 gigawatts of resource needs over the next 10 years, outlining our strategic approach to meeting future energy and capacity requirements through a balanced approach.

In summary, additional capacity is needed to ensure the availability of continued reliable power for both current and future customer needs, while providing more efficient and timely regulatory approval processes. AEP is well positioned to be a significant player in meeting these generation needs. Beyond these filings and in line with our history of innovation, we continue to explore generation solutions for the benefit of our customers during this period of massive demand. We previously announced our participation in the early site permit process for 2 potential small modular reactor or SMR locations, one in Indiana and another one in Virginia.

As we evaluate these exciting opportunities, our moving forward with SMR considerations will require strong capital investment protections, safeguards for our balance sheet and credit metric strength and clear regulatory and governmental support. And finally, as seen on Slide 10, I would like to reiterate that our team is keenly focused on customer affordability as we advance our $72 billion capital plan over the next 5 years. We are mitigating residential rate impacts through affordability levers, including incremental load growth, rate design, continuous focus on O&M efficiency and financing mechanisms like securitization.

Earlier this month, AEP also closed on a loan guarantee from the U.S. Department of Energy related to upgrading 5,000 miles of transmission lines. The loan backs projects that enhance reliability while also supporting economic growth in our states and reducing bill impacts for customers. As we ramp up our investments in this electric infrastructure super cycle, more of the incremental costs are assigned to commercial and industrial customers who are driving the increased investment. We forecast residential customer rates to increase on the system average by approximately 3.5% annually over the 5-year period. This is relatively mild and below the 5-year historical average inflation rate of over 4%.

Wrapping up, we have had an extremely busy and productive year so far with the entire team working at an unmatched pace to deliver results for all stakeholders. We are investing substantially to meet an extraordinary moment in our industry, engaging with our regulators and state leaders to deliver on their key policy objectives and taking concrete steps to keep customer bills affordable. I have great confidence in our strategy and team, and I am excited about the opportunities ahead as we drive growth and create value for our investors. With that, I will now turn the call over to Trevor, who will walk us through the third quarter performance drivers and provide details surrounding our incredible financial growth outlook.

Thank you, Bill, and good morning, everyone. I'm excited to share several key updates with you today. I will begin with a review of our third quarter and year-to-date financial results, followed by an in-depth look at our newly established long-term operating earnings growth rate of 7% to 9% Building on Bill's comments, I will also highlight the exceptional load growth we are seeing, supported by the updated $72 billion 5-year capital plan. And finally, I will wrap up with remarks on our financing strategy. Let's now walk through our financial results starting on Slide 12.

Operating earnings for the third quarter totaled $1.80 per share compared to $1.85 per share in the same period last year. This change primarily reflects the impact of the prior year sale of the on-site partners distributed resources business within Generation & Marketing. Turning to Slide 13. Year-to-date operating earnings totaled $4.78 per share, up from $4.38 per share in 2024. You will see that this represents an increase of $0.40 per share or approximately 9% year-over-year. This strong year-to-date performance was mainly driven by favorable rate changes across multiple jurisdictions, strong transmission investment execution and continued benefit from load growth.

Notably, we saw significant commercial and industrial load growth of nearly 8% on a rolling 12-month basis as of September 30, 2025, compared to the same period last year. Recall, a majority of our large load customers are under take-or-pay contracts, which I'll address in more detail shortly. Additional information on our sales performance can be found in the appendix. These positive drivers were partially offset by increased spending on system improvements, depreciation tied to higher capital investments and interest expense. Similar to the quarterly results, our year-to-date performance in the Generation & Marketing segment reflects the prior year sale of the distributed resources business. While this transition led to a lower contribution from the segment, it was meaningfully offset by favorable energy margins, which helped support overall results.

Our strong year-to-date results provide us with the confidence to guide to the upper half of our 2025 operating earnings range of $5.75 to $5.95. Please turn to the next slide. We've established our 2026 operating earnings guidance range at $6.15 to $6.45 per share with a midpoint of $6.30. This reflects nearly an 8% increase over our 2025 guidance midpoint and is fully aligned with our newly introduced long-term operating earnings growth rate. As Bill mentioned earlier, we are excited to announce our increased long-term operating earnings growth rate of 7% to 9% annually from 2026 through 2030 with an expected CAGR of 9% over the 5-year period.

We anticipate growth to be in the lower half of the range for the first 2 years and at or above the high end of the range in 2028, 2029 and 2030. This outlook is supported by our exceptional load growth fundamentals, highlighted by 28 gigawatts of incremental and contracted load backed by electric service agreements or letters of agreement. This unprecedented demand serves as the foundation of our expanded $72 billion capital investment plan, positioning us to deploy the critical infrastructure needed today while actively shaping the energy infrastructure landscape of tomorrow, building a more reliable, resilient grid of the future.

Turning to Slide 15. We're illustrating AEP's strong load forecast for the period from 2026 through 2030. There are 3 defining characteristics I'd like to emphasize. Our load growth forecast is big, conservative and drives our capital strategy. First, it is big. In this quarter alone, approximately 2 gigawatts of data center load came online, roughly equivalent to 2 large-scale nuclear power plants. And for the 28 gigawatts of forecasted additions, this is equivalent to almost doubling our current system. Customers behind this growth are substantial with approximately 80% coming from data processors, including large hyperscalers such as Google, AWS and Meta. These are well-capitalized global firms with sustained demand profiles.

The remaining 20% is driven by new industrial customers. These include major projects such as Nucor Steel Mill in West Virginia and Cheniere's LNG facilities in Texas. Together, these diverse customer groups form a strong foundation of long-term partnerships in infrastructure development, driving substantial energy demand and economic growth to the communities that we serve.

Second, it's conservative. Our forecast is not a theoretical model. It's built on signed contracts. From roughly 190 gigawatts of customer interest, we have distilled this down to 28 gigawatts of executed financial commitments.

We have evolved our contracting strategy to sign full take-or-pay agreements earlier in the development cycle, helping us to filter out speculative load. Commission approved tariff reforms have strengthened these contracts, especially in our vertically integrated businesses but generation investments must be tightly aligned with the real demand to protect customer rates.

Finally, this load forecast is the foundation of our capital plan. To serve this growth, AEP must deliver more than 100 million-megawatt hours of incremental power annually by 2030. Meeting this demand will require a scale of capital investment that sets a new benchmark for AEP.

I will walk through the details of our large capital plan on Slide 16. Our $72 billion 5-year capital plan represents a more than 30% increase over our previous plan. Over 2/3 of this investment is directed towards transmission and generation, supporting the extraordinary load growth I mentioned earlier. In addition, nearly order of the plan is focused on strengthening our distribution network including system enhancement programs and other grid modernization efforts that are critical to improving reliability and performance for our customers. This capital plan drives a 5-year rate base CAGR of 10%, with nearly 90% of the investment recovered through reduced lag mechanisms, including formula rates, forward-looking test years and capital riders and trackers.

Importantly, we are applying a ruthless capital allocation lens to every dollar we deploy, ensuring that each investment is aligned with customer needs regulatory efforts and long-term shareholder value. This disciplined strategy allows us to prioritize high-impact projects and maintain financial strength as we execute at scale.

Let's turn to Slide 17 to discuss our high-growth transmission business. As Bill mentioned earlier, large load customers are drawn to our footprint because of AEP's world-class transmission system particularly our ultra-high voltage 765 kV backbone. Our unmatched expertise in the design and construction of ultrahigh voltage transmission continues to secure major projects. positioning AEP as one of the industry leaders best equipped to meet and capitalize on the accelerating AI-driven demand. Transmission is a core engine of value creation for AEP. In fact, more than 50% of our projected 2026 operating earnings will come from this high-growth business.

Looking ahead, our transmission rate base is expected to exceed $50 billion by 2030. And generating substantial shareholder value through highly constructive regulatory framework.

Next, I will cover our 5-year financing plan on Slide 18. This plan is built on strong cash flow from operations, driven by disciplined investment execution, favorable legislative and regulatory developments and a continued focus on cost management. It supports robust liquidity and with only about 25% of our outstanding debt maturing through 2030. In addition, we remain committed to returning capital to our shareholders through consistent dividend growth.

A key component of the plan includes a modest amount of growth equity totaling $5.9 billion. In fact, we have limited near-term equity needs with over 80% of the growth equity projected to be issued during the back half of the 5-year plan.

This financing plan is designed with flexibility in mind, enabling us to evaluate and deploy the most efficient financing tools to support our capital expansion. Over the planned horizon, we are targeting an FFO to debt ratio of 14% to 15% for both S&P and Moody's. We currently exceed our FFO to debt target with S&P at 15.7% this quarter and comparatively we are above our 13% downgrade threshold at Moody's. We expect to be near our 14% target with Moody's by the end of 2026 and in the targeted range for the remainder of the plan. Additional details on our third quarter FFO to debt metrics can be found in the appendix.

Before we open the line for your questions, let's turn to Slide 19 and recap the key takeaways from today's discussion. Each one reinforcing why we are so energized about AEP's future as a high-growth, high-quality pure-play electric utility. First, we have delivered exceptional financial performance year-to-date which gives us the confidence to guide to the upper half of our 2025 operating earnings range of $5.75 to $5.95.

This reflects not only disciplined execution as we leverage our size and scale but also the strength of our streamlined organization, which is driving accountability, operational excellence and results; second, we formalized our large $72 billion capital plan driving a 10% 5-year rate base CAGR with nearly 90% of investment recovered through reduced lag mechanisms. We're applying ruthless capital discipline to ensure every dollar deployed delivers on customer priorities regulatory alignment and long-term shareholder value.

Third, today, we introduced an increased long-term growth rate of 7% to 9% and with growth expected to be at or above the high end of the range in the final 3 years of the plan. This marks a strategic step forward in our outlook grounded in real accelerating demand.

Fourth, our earnings growth is underpinned by strong load growth, driven by our ultra-high voltage transmission backbone that continues to attract new customers into our footprint. This growth outlook is not only substantial, but it's also conservative and it forms the foundation of our $72 billion capital plan.

Fifth, affordability and balance sheet strength remains central to our strategy as we execute our multibillion-dollar capital plan with discipline. We are forecasting average system residential customer rates to increase at approximately 3.5% annually through 2030, well below the 5-year average rate of inflation of 4%.

This reflects our commitment to ensuring cost stability for our customers as we invest in the system. At the same time, our financing strategy is grounded in strong cash flow from operations with over 80% of growth equity projected to be issued during the back half of the plan. This approach is intentionally designed to support disciplined capital expansion through efficient financing while maintaining financial strength and flexibility. And finally, our momentum is further supported by constructive legislative and regulatory progress as we continue to empower local leadership and build financially strong utilities in the communities we serve. These efforts are expected to reduce regulatory lag, trim the gap between earned and authorized ROEs and support strong operating cash flows.

I am truly excited to be part of this journey. I firmly believe AEP is one of the most compelling companies in our industry, uniquely positioned to lead, grow and deliver in today's transformative environment. With a clear strategy, the strength of our size and scale disciplined execution and unmatched infrastructure capabilities, we are well equipped to seize the opportunities ahead with confidence and create significant value for our stakeholders.

We appreciate everyone's time today and your interest in AEP. We look forward to seeing many of you at the EEI conference in the next couple of weeks. And with that, I will now ask the operator to open the line so we can take your questions.

[Operator Instructions] Our first question comes from the line of Ross Fowler from Bank of America.

Just a couple of questions. If I'm looking at Slide 14, that looks like a pretty big earnings step-up as I look at the CAGR going out on the bars in 2028. Can you just kind of maybe Trevor, walk through the drivers of that? And is part of that maybe the schedule and timing of the Ohio rate case filing or under the new construct? Or how should I be thinking about it?

Yes. Thanks, Ross, and I appreciate you joining today. We do see a lot of the earnings being driven by the capital plan. And certainly, in the middle part of the plan in '27 and '28 is when the most CapEx gets deployed. And so we're seeing about the capital plan peaking at about $17 billion in the middle part of the plan. And that's really what's driving a lot of the increase in the earnings for that step-up in that period. The other thing is, as you say, we've also gotten some positive legislative and regulatory outcomes that will manifest itself in that part of the planning cycle. And that includes the forward-looking test year in Ohio, Certainly, HB 5247 in Texas is a huge benefit to attracting capital to the state and having us deploy capital, which also is helping to narrow the gap around ROEs.

And then also SB 998 in Oklahoma is another piece of legislation that also is helping narrow the gap. And so those are where you see that a little bit of the step change. And I know it's been a little unorthodox with regards to how we have put out the growth rate saying that we would be at below the midpoint of the growth rate in the first couple of years of the plan. And in fact, you can see us going from the midpoint of the $585 million to the $630 million in '25 to '26. But then we're pretty confident of being at or above the high end of the range in the back 3 years of the plan, and that's why we also put that 9% CAGR out there for the overall earnings.

That's very fair, Trevor. And I guess as I look at Slide 18, talking about $5.9 billion of equity in the plan. How are you thinking about the composition of the business? Do you think there's more potential for minority stake sell-downs? Or how should I think about addressing that equity need over time?

Yes. I'll take the equity, and then I'll let Bill address where he thinks we are with regards to potential any other sell-downs. But what we've tried to do is recall that we've said that we anticipate between 30% and 40% equity with regards to increasing the capital plan. And so when we laid out the $18 billion increase in the capital plan, this is roughly, call it, 33% of growth equity. The good news is because we've been very proactive under the $54 billion existing capital plan with both the asset sale in the Transcos this year as well as issuing the equity for the full 5-year plan, we really have a situation where a lot of that growth equity is now in the back end of the plan.

And so what we will do is we're showing an ATM in 2026 of, call it, roughly $1 billion. And then we don't need equity for a period of time in the middle part of the plan. And then as we get to the back end of the plan, we'll either do an ATM or potentially a block equity deal in the back end of the plan. But again, I think this is very indicative of us saying we will issue equity to fund growth and great growth at that across the system. And then, Bill, do you want to take the question on any further sell-downs?

Yes. Thanks, Trevor. As Trevor noted, we're very encouraged by very favorable legislative and regulatory developments across our states. And our continued focus on disciplined cost management is going to continue to be a major effort of ours to support FFO. And so at this time, we're not planning any asset sales to fund the plan going forward. But obviously, we'll continue to assess things as they come up.

Our next question comes from the line of Shar Pourreza from Wells Fargo. Our next question comes from the line of Steve Fleishman from Wolfe Research.

Congrats. The -- I guess, maybe, Trevor, on the '28 to '30, the part where you're kind of 9% or better. Is there like -- is there some type of shaping to that over those periods? Like does it accelerate higher? Or is it just pretty consistently 9% or better those years?

Yes. Steve, I think where we are is it kind of gets back a little bit to Ross's question as we see the earnings step up in the mid part of the plan. And I would say what we're feeling pretty confident about is that giving the guidance where we said of '28, '29 and '30, we will be at or above the high end of the plan, I think you can assume that, that is pretty flat as of this point. Now I will say the good news is we continue to see a lot of growth, and we're excited to roll out this new plan. '28, '29 and '30 are out quite a ways with regards to the plan.

And so it still gives us a potential to see incremental deployments. We continue to sign LOAs and ESAs. But right now, the way we've got it modeled, and again, this gets back to my mantra of make sure that we're very confident in the numbers we put out and deliver on those numbers. And so this gets back to the underpromise and overdeliver. And from my perspective, by saying that we're at or above the 9%, you can assume that, that's pretty flat in those 3 years at or above that 9%.

One just clarification. What's -- can you just clarify what the difference is between an LOA and an ESA?

Yes. So really, an LOA for the letter of agreement is generally a first step before you get to an ESA. Both have financial obligations, but an ESA, an energy service agreement tends to be more binding. Now that being said, I will say down in Texas in ERCOT, we only sign LOAs and not ESAs. And so from that perspective, we want to make sure that when we talk about that 28 gigs, we're very confident in that because they're all under LOAs or ESAs. And in Texas, where there is no ESA, we feel very good about those LOAs that are getting signed down there.

I will say, as we distill down from that 190 gigs and we continue to scrub that, that ultimately generates the 28 gigs of incremental load growth, I will say there are some LOAs that are executed that are not included in that 28 gigawatts as we continue to negotiate and work through to ultimately get to an ESA. So again, it gets back to my point in the prepared remarks where I said that it's real and it's conservative on the 28 gigawatts.

Okay. And then last question maybe for Bill. Just -- you mentioned something about a partnership with an infrastructure provider. Could you maybe give more color there? And just the turbine orders, like I think those are somewhat new, kind of when do those come in? And any update on Bloom, so just all your different partnerships and supply chain?

Sure. Thanks, Steve. So we're in the process of putting in place long-term supply framework agreements for the major equipment components that we'll need to deliver on the plan. And the good news for us is that we have in place significant agreements for turbines and for the high-voltage transmission transformer equipment that we need. And so I'm very comfortable with where we sit. The team has done a nice job of positioning us well to deliver on this.

As I noted in my comments, I've added a lot of strength into this management team, particularly from Berkshire, who are very skilled at delivering multibillion-dollar capital programs and bringing them in to deliver. And so again, I'm quite comfortable with where we sit both on the management talent and on the major equipment that we have. On Bloom, we're still working with potential customers to deploy the additional megawatts that we have with them and look forward to hopefully having more to report on that perhaps by EEI.

Our next question comes from the line of Jeremy Tonet from JPMorgan.

Just want to look through the planned roll forward a little bit more as it relates to dividends. I was just wondering if you could talk a bit more specifically on what you see the DPS CAGR over that time period being, particularly in the back part of the plan.

Yes. So Jeremy, I appreciate that question. What we've really done here is we just got out of our Board meeting and our Board did recently raise the dividend by 2% going into this next year. And we're also signaling that we are going to be at a 50% to 60% payout ratio. And the reason for this is because we have this robust capital plan and deploying capital is critical right now during this period of growth. And so what we've done is in the plan, we've assumed that the dividends are really increasing by the number of shares outstanding, and then we would make recommendations to the Board.

As you know, this is a Board discretionary item and the Board would ultimately make the decision as to where we're going with the dividends. That said, certainly, the discussion that we had with the Board was they are supportive of us growing the dividend over a period of time. And I will say this marks 115 consecutive years of AEP paying a dividend, and we have had a continued dividend growth over the last, call it, a decade or so. And so this is something that we really look at as part of the overall total shareholder return and getting value back to our shareholders is both the dividends as well as the growing earnings over that period of time.

So again, I would say, in conclusion, the Board is very committed to our dividend and getting a dividend that has a yield as well as a payout ratio that is well within the industry norms, but we did moderate it a little bit and made that recommendation to the Board given the 30-plus percent increase in the capital plan.

Got it. That's very helpful. And then I just want to come back to the EPS CAGR, if I could, one more time to put maybe a finer point. When you're referring to the high end of 28% to 30%, is that year-over-year or CAGR? So basically, is this a CAGR of '26? Or is this year-over-year from '27 into '28?

It's a year-over-year.

Your next question comes from the line of David Arcaro from Morgan Stanley.

I was wondering if you could maybe just give a bit more of a sense of how the conversations are going with data centers and constraints on the system that you're seeing. So I guess I'm curious, are you able to keep up with the transmission capacity needs for data centers to handle all of this load growth? What's the wait time to connect that you're having to discuss with these customers? And is it fair to characterize a lot of this transmission CapEx that you're adding to the plan here? Is that opening up additional capacity to bring in these new customers? Wondering how that all kind of balances right now.

Yes. Thanks for that question. Really excited about where we sit in this regard. As we've noted in here, the increased incremental load growth projected through 2030 is the 28 gigawatts, up from the 24 gigawatts that we talked about before. And that demand growth is roughly 80% tied to data centers in the commercial class and about 20% tied to the industrials. Breaking that up a little more, about 75% is related to transmission and distribution, while 25% is tied to the vertically integrated utilities. And so as I look out across the RTOs, roughly half ends up in ERCOT, 40% in PJM and about 10% in the SPP.

And so as we look at where we sit to connect these customers, clearly, we're working with them to site where we have available transmission today to help them with their ramp-ups in the manner in which they want to run their side of the business. And then in other cases, we're working with them to put in place behind-the-meter solutions. Obviously, Bloom is a part of that in certain cases. But we also have other strategies that we're deploying to support the data centers. And so for me, this company is all about serving our customers and trying to figure out a way to get them connected as quickly as they can.

As we build out the transmission system, of course, that's going to open up additional opportunities to perhaps bring on more of that 190 gigawatts, but in the meantime, as Trevor noted, we're very focused on reporting what we have signed. We're going to underpromise and overdeliver in this area, but I couldn't be more excited with where we sit across our service territory. We are in, I would say, the cat bird seat with regards to connecting data center load. The 765 kV transmission network that we have provides us with an extreme competitive advantage for where these folks are trying to site. And so I just see an amazing future ahead of us in this area.

Okay. Excellent. Yes, that's helpful. And then I was wondering if you could characterize your strategy or your thoughts on the generation side as well for vertically integrated utilities. Just how do you manage the balance between how you're thinking about renewables, serving this new load versus gas?

Yes, that's basically the question. Just as you see -- you've talked about peak load for sure, but you're seeing energy demands across the entire system and then, of course, peak as well. But yes, what's the balance there between renewables versus gas on the generation side?

Well, we're focused on doing what our states want as their energy policy. And so as we go across our major states and work with the customers in those locales, we'll move forward with the types of generation planning that they want. That, of course, gets sorted out generally through the integrated resource plans that we submit. And if you look at our major states, obviously, they're very much driven by gas at this point in time.

That said, a number of our customers are still heavily interested in renewables. We have about a little over $7 billion in our capital plan for the deployment of renewables to support those customers. And so we're going to continue to go down that path and make sure that we're balanced between what the states want and what our customers want. And I feel very confident in our team that we have the capability to be able to deliver whatever approach those customers want to have in the states that they're located.

Your next question comes from Julien Dumoulin-Smith from Jefferies.

Nicely done. What a difference a year makes Absolutely. Wow, dream team here. Look, let me frame 2 questions. One, going back to the direction Steve was pressing you guys with respect to cadence. I mean, if you're accelerating towards the end of the plan, naturally, you'd ask, how does that trend beyond the current plan? And if I can cite evidence here, your peers in Indiana put out a growth rate that extends beyond 2030 at this point.

How do you think about what you're seeing shape up, whether it's commitments for further ramp beyond 2030 and/or just being able to process some of that load in the longer term, right? I know that folks are trying to get in the queue quickly. But certainly, some of that's just going to take longer to process and drive growth beyond that period of time. How do you think about that 31%, 32%, if there was anything to say preliminarily?

Yes. So Julien, I appreciate the question. And I tell you, this kind of gets back again to what I have said earlier that what we want to do is be very confident in the numbers that we put out and deliver on those numbers. And that's why I think this 9% CAGR and saying that in '28, '29 and '30, we'll be at or above the high end of the range, we have a great deal of confidence in that. What I want to do is ensure that we are going to deliver on what our commitments are over the next 5 years.

And then as we continue to see opportunities roll in, we will revise that on an annual basis. That being said, I did intimate that of the 28 gigs that we say we see and are under firm LOAs and ESAs that there is some additional opportunity to see continued load growth on the system as we convert some of the LOAs that are currently being discussed and signed before they get to ESAs to come on. But what I don't want to do is put something out there that I don't feel very confident that we can deliver in.

And that's why I'm very positive and comfortable with where we are on the 5-year and again, saying that we're at or above that 9%. And then I don't want to kind of try to sculpt that beyond or where that is in the '28, '29 period. And that's why I told Steve that we're going to be fairly flat in that area at the 9% or above. But again, what we're seeing is just incredible growth across the system right now, and that has been accelerating, and I think that will carry into the years beyond.

And again, if I can go back to it and ask it in a slightly different manner. With respect to the current 5-year outlook, obviously, you have a lot of folks knocking on your door, right? You've got this 28 gigawatts, as you described, that you've got under contract. To what extent could you actually see positive revisions further as you convert some of the interest into more of those LOA, ESA term sheets? Is that conceivable? Or do you think given what you understand about your system that, look, this is pretty locked in and we frankly have a pretty rigid ability to accommodate more in this 5-year period?

Yes. Look, Julien, I think we're excited about just like you said at the very opening comment here, what a difference a year makes and what we've been able to do within this 1 year as we continue to see this mass amount of growth on the system. And I know that some people say that we should be somewhat cautious in talking about the 190 gigawatts that are backing the 28 gigawatts, and those are in various stages of discussion. But again, we feel very good about that 28 gigawatts because of the 190 gigs behind it. And so I think that really could color your view as to where we are on the growth for the system, is it conservative given that you've got 190 gigs in various stages of discussion. And even if only a fraction of that were to come online, it's still a pretty compelling story from where we are today.

Your next question comes from Carly Davenport with Goldman Sachs.

Just a follow-up on some of the comments that you've been making on the LOAs versus ESAs. Are there LOAs outside of Texas that are in the plan? And then is there a defined term or gating factor for the LOAs that are included in the 28 gigawatts versus those that are not?

Yes. So there are some LOAs outside of Texas. So again, in PJM, what we have is 100% of the increase is under LOA and then almost 80% is under ESA. Likewise, in SPP, 100% is under LOA and then there's a piece of it is under the ESAs. And then in ERCOT, of course, everything is under LOA. So again, what I want to emphasize, though, is these LOAs do have financial commitments associated with them, and that's why we have so much confidence in the 28 gigawatts, Carly.

Got it. Great. And then just on the new transmission budget, curious what that assumes on the PJM open window opportunities. Is the most recent window sort of baked in there? Or is that a source as you think about potential upside opportunities on the transmission piece of the business?

Yes, Carly, I would say we've taken into consideration into the 5-year capital plan, everything that we know with regards to existing transmission that we feel pretty confident about. But again, we continue to see opportunities around incremental investments in the transmission system, maybe not under new transmission lines, but certainly the continuation of the rebuilding of some of the infrastructure. But the PJM opportunities are built into this 5-year capital plan.

Your next question comes from Nick Campanella from Barclays.

A lot of good questions have been asked, but just maybe just on the earned ROE improvement, '26 through 2030, just what are you kind of holding your team to in terms of improvement year-by-year? Is that supposed to happen linearly through the plan? I know you have some big rate cases like Ohio that will be filed, which can kind of help catalyze that. But just maybe you can kind of comment on the cadence of ROE improvement between now and 2030 and what you expect year-by-year?

Yes. Thanks for that question. And first and foremost, I want to make sure that everyone knows ROE is front and center with us, and we've been spending an incredible time with the states and our regulators to look for improvements in this arena. And as I look back at where we were a year ago, our ROEs have shown steady improvement. And the drivers of that were constructive regulatory outcomes and pretty favorable legislative developments. And so I know that as we look forward, we're going to continue to drive better outcomes. But I really like where we're at. Just in the recent past, we've had a lot of success.

If you look at AEP Transmission, AEP Ohio, I&M, all of those have posted ROEs near or above their authorized. AEP Texas is going to continue to improve their ROE rising to 9% in quarter 3 from 8.6% last quarter. And again, that's due to a great legislative outcome in HP 5247. And then at PSO, SWEPCO and Kentucky Power, while those are impacted by regulatory lag, we expect to see good improvements and really better outcomes due to the new base cases and the generation filings we're making there.

And then I want to address West Virginia right upfront. It was obviously -- their ROE was affected by the most recent regulatory order we got, but we're fully engaged in West Virginia. We have filed for reconsideration. We're working with all the stakeholders there, and that continues to be a major focus of mine. I'm spending a significant amount of time in West Virginia to try and support a better outcome there.

And so when I add all that up and I think about where we're at overall from where we were just a year ago with the focus that we've had on ROE, I feel very good about what we put in the plan. I know we're 20 basis points off where we thought we might be, but for me, when I look at the significant improvement we've had across all of our states, I'm very excited about what the team has done, and it just really sets us up very strongly for moving forward from here.

Okay. Okay. And I'm sorry if I'm not understanding it fully, but just on the 7% to 9% because there's just this dual communication here. Just in '28, should we be growing that 9% plus off of '27? Or should we look at that as a CAGR from '26 and what 9% would imply for '28?

Yes. So I think what you want to do is we've kind of bifurcated it into the 2 pieces here. And we've said for the first 2 years of the plan, we will be growing at below the midpoint of the 7% to 9%. And really on the back 3 years, we will be growing at or above the 9%. And so from a standpoint, that's why I gave the 9% CAGR over that 5-year period starting from the midpoint of 2025.

And so I think what that does, Nick, is it really allows you to kind of walk out the EPS numbers almost on an annual basis here because I'm giving you the midpoint of the 2026 and then you can assume that the 2027 is kind of consistent with that growth. And then once we go up to '28, '29 and '30, we'll be growing at that basically high end of the range, at or above that high end of the range for an overall CAGR over that 5-year period of 9%...

I'm sorry to make you repeat yourself and looking forward to EEI.

Are you there, Colby? We have time for one last question. Operator?

Well, it sounds like the call is coming to a close. Really appreciate all of you joining us on today's call. I'd like to close with just a few summary remarks.

So I'm very excited about when I think the -- about the opportunities ahead at AEP as we advance on our long-term strategy to drive growth and create value while enhancing the customer experience.

I'm also extremely proud of the entire AEP team and particularly all of the strong support received from our Board of Directors. We're putting our robust $72 billion capital plan to work as we continue to grow the business across our large footprint and deliver on our commitments for the benefit of our customers, our communities and all of our other stakeholders and investors.

And finally, if there are any follow-up items, please reach out to our IR team with your questions, and we look forward to meeting with many of you at EEI in a couple of weeks. This concludes our call. Thank you.

Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's American Electric Power Second Quarter 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Darcy Reese, Vice President of Investor Relations. Darcy?

Good morning, and welcome to American Electric Power's Second Quarter 2025 Earnings Call. A live webcast of this teleconference and slide presentation are available on our website under the Events and Presentations section. Joining me today are Bill Fehrman, President and Chief Executive Officer; and Trevor Mihalik, Executive Vice President and Chief Financial Officer. In addition, we have other members of our management team in the room to answer questions, if needed, including Kate Sturgess, Senior Vice President and Chief Accounting Officer.

We will be making forward-looking statements during the call. Actual results may differ materially from those projected in any forward-looking statement we make today. Factors that could cause our actual results to differ materially are discussed in the company's most recent SEC filings. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. We will take your questions following opening remarks.

Please turn to Slide 4, and let me hand the call over to Bill.

Thank you, Darcy. Good morning, and welcome to American Electric Power's Second Quarter 2025 Earnings Call. I'm extremely proud of the effort and dedication that our team has put forward, resulting in significant progress on our strategic objectives of delivering reliable and affordable service to our 5.6 million customers. Before we begin, I'd like to first recognize three seasoned executives who have recently joined and solidified our leadership ranks.

In May, Doug Cannon was named President of AEP Transmission to lead all aspects of our best-in-class largest in the nation transmission business, which contributes 55% of AEP's total operating earnings. Doug comes to AEP after being CEO of Berkshire Hathaway Energy's NV Energy. He understands the pace of play and disciplined leadership I want as we grow this segment of our company. We look forward to benefiting from Doug's deep industry experience and strong leadership as we prepare the business for significant growth and meeting the future demands of our customers.

And this month, Rob Berntsen was named General Counsel. Rob comes to AEP after serving as General Counsel at Xcel Energy. But before that, he worked with me at Berkshire Hathaway Energy for many years. He understands the direction I want to head and how we need to get there. This is a pivotal time for AEP and Rob's legal expertise, deep business and utility background, coupled with his disciplined leadership and commitment to excellence will serve us well as we continue to navigate complex operational, financial and regulatory landscapes.

Finally, Johannes Eckert was named Chief Information and Technology Officer. He joins us after a very successful career at Cox Communications, where he led an expansive team that was incredibly focused on the customer, both internal and external. Johannes will lead our continuing efforts to build an efficient, innovative organization that supports the right technology to meet the ever-changing needs of both our customers and the business. We are proud to welcome these leaders who will report directly to me and support the execution of our long-term strategy.

Today, I'd like to discuss the ways in which we have advanced on our commitments to grow financial strength, drive operational excellence and deliver constructive regulatory and legislative outcomes. Each is a key priority that our team and I are laser-focused on. We have continued to leverage our size and scale to ensure AEP is extremely well positioned for unprecedented growth and value creation.

I will begin with the key financial highlights for the quarter, cover the low growth opportunities ahead and provide additional insight into both federal and state level regulatory and legislative successes that we have delivered since the last earnings call. Trevor will walk us through second quarter performance drivers and provide additional details surrounding AEP's financial position.

Please refer to Slide 5 of our presentation for a summary of today's remarks. Starting with our financial results. AEP delivered the strongest ever second quarter operating earnings in our 100-year history. This team delivered operating earnings of $1.43 per share or $766 million. I am seeing significant improvement in execution, discipline and regulatory outcomes that is fueling this performance. With added strength to the management team, as previously discussed, I fully expect us to continue building on these levels of results.

My confidence in this management team and workforce across AEP is incredibly strong. I see the culture changing to one of accountability, performance and trust in each other, and we are fortunate to also have exceptional support from our Board of Directors. Our future is very bright and with strong results halfway through the year, we are now guiding to the upper half of our $5.75 to $5.95 per share operating earnings range.

Additionally, with the robust capital plan, we are seeing a continued path and are reaffirming our long-term operating earnings growth rate of 6% to 8%. My confidence in our ability to execute is very high. This is critically important as we look to the future and the growth that is in front of us. Specifically, we are executing on our $54 billion capital plan and expect to announce a new 5-year capital plan this fall of approximately $70 billion. The incremental capital can be allocated with approximately 50% to transmission, 40% to generation and 10% to distribution.

As we have previously highlighted, there have been several announcements on some 765 kV transmission projects that we will incorporate into our third quarter capital plan update and look forward to providing a robust outlook later this year to support our incredible growth. Moving on to AEP's significant expansion opportunities. We are experiencing transformative load growth across our sizable 11-state footprint. We are excited about the substantial customer interest in AEP service territory, and our team is taking a very disciplined approach when thinking about this new load.

We have increased our firm customer commitments and now expect to have 24 gigawatts of incremental load by the end of the decade, up from our previously reported 21 gigawatts, driven primarily by data centers, reshoring of manufacturing and further economic development. I want to emphasize these 24 gigawatts are all backed by signed customer agreements, protecting us from changes in usage-driven volatility.

We believe this amount of committed capacity is differential compared to almost any other utility, and we are well prepared to deliver on this for our customers and our states. Beyond the 24 gigawatts, customers are also actively seeking to connect approximately 190 gigawatts of additional load to our system. This is 5 times our current system size of 37 gigawatts.

Potential customers are drawn to AEP's footprint because of our advanced transmission network capable of delivering consistent large load power. Recall that we own and operate more ultra-high voltage 765 kV lines than all other utilities combined, uniquely positioning us with the largest electric transmission system in the country.

Please turn to the next slide. There is a long list of accomplishments we have achieved this quarter outlined on this page. And to be very clear, we are aligning our business with the goals of our state and federal regulators, legislators and policymakers. As previously noted, we see significant opportunities to invest in generation, transmission and distribution across our footprint and beyond. In connection with these investments, customer affordability remains top of mind as we consider how to fairly allocate costs related to critically needed infrastructure.

Let's walk through a couple of noteworthy accomplishments. First, Ohio has become a recognized hub for data centers, and we are actively participating in this growing economic development opportunity. Earlier this month, the Ohio Commission established enhanced financial obligations that data centers will need to undertake to fund necessary infrastructure. This approved data center tariff provides assurances that there will be reliable electric grid infrastructure to deliver the power we all count on while keeping costs as low as possible for all customers.

This approval joins other large load tariffs previously secured in Indiana, West Virginia and Kentucky. AEP has been at the forefront of securing these tariffs that bring down system average costs as we add data center customers, promote certainty around build-out while providing customer protections and are a powerful risk mitigation tool for us.

Moving on to Oklahoma. Following commission approval in June, PSO purchased the Green Country Power Plant, a 795-megawatt natural gas-fired generation facility located in Jenks, Oklahoma. As customer energy demands rise in the region, this facility will play an important role in delivering reliable power while ensuring grid stability for the communities we serve and supporting the state's economic growth. This plant has been successfully integrated into PSO's operations and is performing well, showing AEP's strength of execution.

And finally, we continue to explore innovative ways to bring tailored power solutions to our customers during this period of massively growing power demand. At AEP, we are at the forefront of innovation and small modular reactors or SMRs are just one option we are considering to provide our customers with safe, reliable and clean baseload energy. We have already shared our plans with you to begin the early site permit process for two potential SMR locations, one in Indiana and the other in Virginia to support significant load growth in our service territory.

While this represents an exciting opportunity for us, we will continue to be extremely prudent in our capital allocation, protection of our balance sheet and credit metric strength. We are also continuing to pursue deployment of Bloom fuel cells. This is a low-risk approach to bridging data center load from first power to ultimate grid connection. We are excited about this innovative solution and are in discussions with various customers about this energy supply option.

Demand for power is growing at a pace I have not seen in my 45-year energy career. This was reinforced just last week with PJM capacity prices clearing above the $325 per megawatt day price cap as we continue to see the need for capacity and energy materially rise. With AEP's generation requirements increasing to support capacity, this gives us confidence in our growing capital plan. A fundamental and core priority of mine is to continually demonstrate to our regulators and customers that we will be highly focused on safety, service, reliability and deliver balanced and constructive regulatory outcomes.

I'm proud to say we've made great strides on this front. For example, AEP Texas was recently granted an ERCOT Permian Basin 765 kV transmission project, opening the door for future 765 kV projects. In addition, system resiliency plans at AEP Texas and SWEPCO Texas received the green light. AEP Ohio secured approval for its Phase 3 gridSMART rider. Kentucky was authorized recovery of advanced metering infrastructure.

And as previously mentioned, AEP Ohio received the data center tariff approval, while PSO was granted authority to purchase the Green Country natural gas facility in Oklahoma. These important developments reflect collaborative efforts with our regulators as we find solutions that support existing and future customers. Additionally, in the second quarter, FERC issued orders agreeing with AEP's proposed treatment of NOLCs within its transmission formula rates, which Trevor will go into more detail shortly.

A couple of our operating companies recently filed new base rate applications, including SWEPCO, Arkansas in March and AEP Ohio in May. We look forward to working with all stakeholders in both of these cases to achieve constructive and balanced outcomes that benefit both our customers and investors. In West Virginia, late last year, APCo filed a base case and offered the option for securitization of up to $2.4 billion as a means to help mitigate rate impacts on the proposed base rate increase.

We expect a commission order in the third quarter and appreciate the stakeholder feedback we have received during this process as we all continue to focus on customer needs and affordability. Turning now to AEP's legislative efforts. We have also been working diligently with federal policymakers and state legislatures to deploy large amounts of capital while reducing regulatory lag. Our team has been actively engaged throughout the legislative process leading into the federal budget reconciliation bill signed into law on July 4.

The bill contains several tax provisions impacting utilities, primarily centered around tax credits for generation assets. To be very clear, the legislation currently supports 100% of AEP's $9.9 billion 5-year capital plan for wind and solar generation, maintaining the required criteria to capture the full tax credits. We are also closely monitoring the July 7 executive order to assess potential impacts on tax qualification.

Even if the U.S. Department of the Treasury issues new guidance under the order that redefines the beginning of construction criteria, we currently expect that only a few projects at the back end of the plan may need to be reassessed for tax credit eligibility. Keep in mind that while our generation mix may vary, the load growth remains robust, and we will need future generation to service the forecasted demand.

So any impacted capital would just be reassigned to alternative forms of generation assets at the back end of the plan. Texas House Bill 5247, which became law in June, is an incredibly constructive piece of legislation for AEP Texas. This unified tracker mechanism allows utilities that meet certain criteria to submit a single filing each year instead of multiple filings for distribution and transmission investment, essentially eliminating lag, further streamlining the regulatory process and substantially improving the earned ROEs.

This is highly supportive of increasing our capital allocation to Texas as we participate in the massive infrastructure build-out needed to drive the economic growth in the state. With Ohio House Bill 15 taking effect in August, the new legislation eliminates electric security plans or ESPs and introduces a multiyear forward-looking test year with a true-up mechanism, which promotes timely and efficient recovery of investments.

AEP Ohio's transition from ESPs to this new construct in 2028 will proceed seamlessly without any gap in timing since the current ESP expires concurrently when the forward-looking test year rate case will take effect. This is very positive for AEP Ohio. For Oklahoma and Senate Bill 998, PSO views the impacts of this legislation also as very constructive. The ability to defer 90% of all distribution and general plant that goes in service between rate cases as a regulatory asset is intended to encourage investment, reduce regulatory lag and increase earnings recognition.

This legislation is also effective beginning in August. I'll close by emphasizing how proud I am of all we have accomplished over the past 12 months. This tremendous progress would not be possible without the unwavering dedication of the entire AEP team and our Board of Directors. We continue to push our strategic priorities forward and deliver for all of our customers and other stakeholders every day at a dramatically increased pace of play.

This is only the beginning, and I believe we are just getting started. We will continue to work at a fast pace on our commitments while remaining focused on customer service, operational excellence, financial discipline, sound execution and driving value for our shareholders. I'll now turn the call over to Trevor, who will walk us through the second quarter performance drivers and other financial information.

Thanks, Bill, and good morning to everyone. Today, I'll review our financial results for the second quarter, build on Bill's comments regarding our exceptional load growth and then finish with comments on our commitment to the financial strength of the company. Let's start with Slide 7, which details our quarterly operating earnings performance by segment. For your reference, there is a detailed reconciliation of GAAP to operating earnings for the quarter on Slide 24 of today's presentation.

Operating earnings for the first quarter totaled $1.43 per share compared to $1.25 per share in 2024. This was an increase of $0.18 per share or about 14% year-over-year, highlighting the solid momentum we have heading into the second half of 2025. This momentum, coupled with our proven ability to execute, gives us the confidence to guide our operating earnings per share to the upper half of the 2025 range of $5.75 to $5.95.

As Bill briefly indicated, we have been working with each of the various regulators in our service territories to align our ratemaking for the tax net operating losses with the rulings we received from the IRS last year. This quarter, we received a final decision from FERC affirming the appropriate treatment of NOLCs to our transmission formula rates, resulting in a $480 million or $0.90 per share increase to GAAP earnings. The tax benefit related to prior years has been excluded from operating earnings.

With the resolution of this issue by FERC, we have now transitioned substantially all of our ratemaking to the required regulatory approach. Looking at the drivers by segment. Operating earnings for the Vertically Integrated Utilities were $0.56 per share, up $0.10 from a year earlier. Positive drivers included rate changes across multiple jurisdictions and increasing load from data centers, which I'll get to in more detail shortly. These items were partially offset by the variance from last year's extremely favorable weather in the quarter and higher depreciation in the current year, driven by increased capital investment.

The Transmission & Distribution Utilities segment earned $0.42 per share, up $0.01 from last year. Favorable drivers in this segment include rate changes driven by rider recovery of distribution investments in Ohio and the base rate case in Texas as well as continued gains in retail sales from large loads. These items were partially offset by increased year-over-year O&M, primarily driven from system improvements and spending on storm-related expenses.

As Bill mentioned, we had an incredibly impactful legislative session in Texas, most notably the passage of House Bill 5247, also known as the Unified Tracker Mechanism, or UTM. This bill applies to AEP Texas, given its inclusion in the Permian plan, participation in ERCOT and the significant amount of capital we anticipate spending throughout the state over the next decade.

The UTM basically eliminates regulatory lag and supports increased capital investment in AEP Texas in response to the legislature's goal of developing the electric infrastructure necessary to harden the grid, which is driven by the state's incredible economic growth. In late June, AEP Texas made a notification filing with the commission that they intend to use the UTM process going forward. The AEP Transmission Holdco segment contributed $0.42 per share, up $0.03 from last year.

Our continued investments in transmission assets as new loads are added on to the system remain the key driver in this segment. Generation & Marketing produced $0.17 per share, up $0.05 from last year. Favorable energy margins were partially offset by lower distributed generation margins due to the sale of the OnSite Partners business back in September of 2024. Finally, Corporate and Other was relatively flat over last year, demonstrating our focus on overall cost controls.

Moving on to Slide 8. I'd like to speak to some of the significant increases in load that we continue to see across the system. The numbers you see here are the basis behind our existing $54 billion 5-year capital plan. Keeping in mind, we expect to increase the capital plan to a new 5-year spend of up to $70 billion. We are seeing great clarity into this capital growth, and we will be ready to lay out the details of our revised capital and financing plans on the third quarter earnings call.

The chart to the left depicts how our load story is impacting the second quarter growth. On a weather-normalized basis, we've added more than 4 gigawatts of incremental peak demand since this time last year, growing from 33.5 gigawatts to 37.6 gigawatts. This increase is largely due to new data centers and other industrial customers coming online in Indiana, Ohio and Texas, resulting in a roughly $200 million year-over-year increase in revenues. This slide highlights the strong relationship between peak demand and revenue. That's because our C&I customer bills are based more on peak demand than megawatt hour sales.

Higher peak demand, coupled with the contractual minimums built into the latest tariff provisions, predominantly in Indiana, are driving up revenues. These demand minimums for large load customers are helping to more than fully offset revenue impacts from energy efficiencies among our residential customers. Turning to the graphic on the right and looking beyond the current quarter, our $54 billion 5-year capital plan is supported by 24 gigawatts of contracts that have already signed firm commitments for incremental load through the end of the decade.

We will be taking this into consideration as we update our full forecast later this year. These contracts are a combination of letters of agreement or LOAs, and long-term electric service agreements, or ESAs, depending on tariff provisions in the jurisdictions in which they're located. To put a fine point on this, we are really one of the only investor-owned utilities that not only has incremental load of 24 gigawatts backed by signed LOAs or ESAs, but also has an incremental 190 gigawatts in the interconnection queue actively looking to connect to our system.

This represents an unprecedented growth opportunity that is largely unique to AEP given the size and technological profile of our transmission system. This 190 gigawatt queue consists of requests at varying stages of development and is indicative of the fact that we have substantial unsigned load that is looking to connect. While we continue to see a lot of public speculation about data center load, we have developed detailed internal processes for executing on a firm pipeline of actual growth that we are already seeing come to fruition.

Earlier, you heard Bill mention a few of our regulatory successes and several revolved around strengthening and lengthening those tariff provisions. Just this year, we've had large load tariffs approved in Indiana, Ohio, West Virginia and Kentucky that provide financial protections for our existing customers as we invest to serve those new large loads. Relying on these signed contracts as opposed to more speculative forecasting methods differentiates AEP and gives us confidence that these loads will materialize on our system.

Again, now that we have some of the new tariff provisions in place, particularly in Indiana and Ohio, we are working towards getting more of those requests converted into signed agreements that can eventually be incorporated into the load forecast that we will be communicating later this year. Let's move on to Slide 9. On the left of the slide, you can see our liquidity summary, which remains very strong at above $5.6 billion and is supported by $6 billion of credit facilities.

Our balance sheet is also healthy, reinforced by the recent closing of the $2.82 billion minority transmission transaction in early June and our proactive $2.3 billion forward equity offering in the first quarter. As a result, S&P moved AEP's outlook to stable and reaffirmed our BBB+ credit rating. We remain committed to continued credit quality, and I want to reiterate that we have fulfilled our equity needs that supports our $54 billion capital plan from '25 through '29.

As previously mentioned, we expect to increase this $54 billion capital plan to a new 5-year investment plan of up to $70 billion. We are evaluating upcoming incremental capital spend opportunities and efficiently matching them with optimal financing strategies, including items like growth equity and hybrids in support of this capital expansion. We do not have immediate equity needs and maintain near-term flexibility as we evaluate all options to efficiently finance our growth.

We're also encouraged by favorable legislative developments, constructive regulatory outcomes and our continued focus of disciplined cost management. Together, these factors support operating cash flow growth and provide a solid foundation to fund incremental capital investment. On the top right table, S&P's FFO/Debt metric stands at 14.8% for the 12 months ended June 30, and Moody's FFO/Debt metric stands at 13.2% for the same period using their recently revised methodology.

Finally, let's move to Slide 10 before we take your questions. I'll briefly summarize what you heard from Bill and me today. First, you heard how we delivered strong financial performance in the second quarter, substantially growing earnings at 14% quarter-over-quarter. We're guiding to the upper half of our 2025 operating earnings range of $5.75 to $5.95 per share, which is driven by strong year-to-date results and confidence in our ability to execute for the remainder of the year.

Second, you heard that we continue to achieve constructive regulatory and legislative outcomes. This was highlighted by positive developments like House Bill 5247 in Texas and Senate Bill 998 in Oklahoma, alongside solid regulatory execution on several key filings like the approval to build a new 765 kV transmission line in Texas, the acquisition of the Green Country generation facility in Oklahoma and the approval of large load tariffs across several jurisdictions.

Third, you heard how we've strengthened our balance sheet through the closing of the $2.8 billion minority interest transmission transaction on top of the $2.3 billion forward equity offering completed late in the first quarter. Fourth, you heard how our remarkable load growth story continues to evolve and contribute to earnings, how our commitment to obtaining signed contracts and our sizable interconnection queue gives us great confidence that these projects will come to fruition.

Also, you heard how those same contracts provide financial protection for our investors and other customers. Lastly, you heard about our continued commitment to execute on our capital plan, and we expect to increase our capital plan to a new 5-year investment plan of up to $70 billion. As we mentioned earlier, we are looking forward to sharing our plan and the associated financing on the third quarter call later this year.

It's an exciting time to be in the electric industry, and I believe we are extremely well positioned to drive exceptional operational and financial results and deliver value to our customers and shareholders. I'm now going to ask the operator to open the call so we can take some of your questions.

[Operator Instructions] All right. It looks like our first question today comes from the line of Ross Fowler with Bank of America.

Congrats on a great quarter. Just a couple of questions for me this morning. So first, Trevor, on the indicative CapEx increase to the $70 billion from the $54 billion in that 5-year window, that you're thinking about for Q3. How do you -- or can you give us some color on the financing needs and the option for that incremental $16 billion?

And then in addition to that, given that you've got an Ohio forward test year hopefully coming through the rate case, you've got the universal tracker in Texas. How do you see the impact of this higher CapEx on your growth rate given more real-time recovery? Even if the capital is back-end loaded, back of the envelope math would suggest kind of 100 basis points OnSite, but how do you think about it?

Yes, Ross, thanks for those questions. Appreciate it. On the financing on the capital plan, let me just start by saying we have been really proactive in financing the existing $54 billion capital plan. And as I said in my prepared remarks, since January, we've issued that $2.3 billion of equity under a forward and then closed on the $2.82 billion minority interest transmission transaction, which essentially took care of all of our current 5-year equity funding needs.

So by doing this, we really don't have near-term equity needs even for an increasing capital plan in the near term. So this gives me a great level of flexibility as we evaluate all options to efficiently finance this plan. But basically, said another way, Ross, we've essentially prefunded 5 years of equity needs in the first 6 months for the $54 billion. And so again, that gives me some level of flexibility.

So when I look at this incremental capital, I'm going to continue to prioritize the balance sheet strength as we explore the multiple options around capital structure, including hybrids, growth equity and then again, the strong continuing cash flow from operations, especially given the favorable legislative developments that we've seen that reduces this regulatory lag.

So that will increase FFO and also we're focusing on cost management. So together with these factors, I think we will come out in the third quarter with our revised financing strategy. But what it really does is gives me a level of leeway in the near term here to do things in the most efficient way. And then to the long-term growth rate, you raised a good point, and we're seeing, again, robust growth from the $54 billion to this up to $70 billion.

But remember, last year, we raised our growth rate when we were 6% to 7%, and we raised it to 6% to 8%. And we really believe this incremental load with capital investments and the financing strategy and this positive regulatory and legislative developments really position us well within the 6% to 8% range. I want to see continued progress on operational and financial performance, coupled with near-term impacts on expanding capital plans before we make any upward revisions to the long-term growth rate.

I'm really looking to be disciplined as we balance stakeholder interests, including strengthening the balance sheet and driving long-term growth. These areas, I think, are critically important, Ross, and we really are ensuring we're not trying to prioritize one over the other. The great news is we're seeing so much opportunity for positive financial results given this once in a generational growth, but we're going to be disciplined in how we roll out messaging and how we roll out the financing.

That's perfect, Trevor. And then one more, if I may. Flipping over to Slide 12 and just looking at that ROE trajectory on the left-hand side up to the 9.3%, see AEP Texas is at 8.6%, PSO is at 8.3%, but given we're going to go to a 4 test year, hopefully, in Ohio, we're moving to the universal tracker in Texas, as that lag reduces, you would expect those two to move higher. That's a pretty significant proportion of your rate base. So the overall trajectory on the ROE trend from that 9.3% should push higher as well, if I think about that correctly.

Yes. I think there's no doubt you will see, I think, an increasing ROE. We've kind of been public about the fact that with the UTM in Texas, the objective there is the state is really trying to attract as much capital as possible to this growing needs in the state. And this, we've said, is going to probably increase our ROEs in AEP Texas by 50 to 100 basis points.

And our next question comes from the line of Steve Fleishman with Wolfe Research.

So just, I guess, first, Bill, you mentioned kind of the SMRs. Maybe you can give a little more color on kind of that plans there and just how you're looking at kind of protecting the risk on that?

Sure. Steve, thanks for calling in. So our focus right now on SMRs is really on the early site permit work. We've got very strong regulatory support, particularly in Virginia, where we're allowed to invest up to $125 million with recovery there to move forward on the site work. And so we're continuing to go down that path and have the government there be in a very supportive position for us. Similarly, in Indiana, there's a positive regulatory environment there for early site investment.

And that's really -- our focus right now is preparing ourselves for the potential down the road. Clearly, if there's an opportunity to do something on behalf of our customers and in partnership with our customers, as I've said many times before, we will make sure that there is extremely strong capital investment protections and that we've got safeguards on our balance sheet and credit ratings and that there's very clear regulatory and government support for anything that would go beyond the early site permit process for us.

So very excited about where we're at on our partnership with Virginia, in particular, Governor Youngkin has been incredibly supportive of looking at sites in preparation for what might come, but for now the focus for us is on looking at basically at ground and the availability of potential locations and doing that through the government and the state regulatory environment.

Okay. Great. And then on the -- Trevor, on the NOLC that you mentioned, is there any ongoing earnings impact from that change? I know you mentioned the onetime...

Yes. The onetime is the piece that we recorded in this quarter. There is an impact that we will see later this year. It's not going to be material, but I'll let Kate kind of address some of this as well.

Yes. So the onetime item was primarily to do with remeasuring the balance sheet. We've said before that we would expect the ongoing impact to be around $0.03, and that's still how we see that flowing through operating earnings from an annual basis.

Okay. Great. And I guess maybe just it would be good to get an update on the West Virginia case.

So the West Virginia case has gone through the regulatory process. We've had extremely good engagement with all the parties. As you know, we did offer up the alternative for securitization in that case. And that was seemingly well received throughout the discussions with the stakeholders. All of the work is essentially complete, and we're awaiting an order, which is expected to come out late August or early September.

And our next question comes from the line of David Arcaro with Morgan Stanley.

Reflecting on the CapEx increase that you're signaling here, this is the second one. I guess, just 8, 9 months ago, you also increased your CapEx plan by 30% at that time. Here, you've got another kind of 30% increase coming. So I guess I'm just wondering, as we look ahead, is this the new normal? Is there a limit in terms of what you're seeing around CapEx opportunities? Could this -- could we continue to see further escalation in these 5-year CapEx plans as you roll them out?

Yes, David, again, what we're seeing is just tremendous growth on the system. And I want to really kind of emphasize where you take a look at our overall peak summer load is 37 gigawatts and we've also announced that we have an incremental 24 gigawatts that is signed up to connect to our system under either LOAs or ESAs. So that takes us north of 60 gigawatts on our system size.

And then there's another 190 gigawatts behind that in various stages of development. We know not all of that is going to come online, but even a fraction of that is significant. And so from that perspective, we continue to see opportunity to continue to invest. We're going be disciplined. But even raising our capital plan from $54 billion to up to $70 billion is a sizable growth, and we want to ensure we're digesting that in a way that is disciplined and ensuring we're also protecting our balance sheet as we're continuing to grow this business.

But the big thing that I want you to take away here is across our 11-state footprint, we've got a large footprint and a lot of economic and other type of activity looking to connect and so a lot of positive.

Yes, absolutely. I appreciate that color. And then as you look at the pipeline of data center activity, wondering if you could just give a little color as to where you're seeing it, which states -- how does that split out among your states and service territories? And just curious, I mean, with such a rush of activity, like what is the wait time? How long does it take at this point to connect new data center load into your system?

Yes. We'll start at sort of a global view of data centers in general. Our area is extremely attractive for data centers. We have ample fiber capacity. We have good supply of water. And of course, with having the largest transmission system in the country and the 765 kV backbone, we're incredibly well positioned to attract the data centers and couple that with our level of operational excellence and our ability to come up with creative solutions to bridge these data centers over from perhaps early use of fuel cells into grid connect is also very attractive to these customers.

And so we've put in very strong protections for our customers through the use of the data center tariffs, which I noted in my comments, we have in a number of states. But even with those, we still have an incredible attraction of new data centers wanting to come into the territory. And so as we look at this, we've got an incredible background of backlog of these data centers. Of course, depending on what state we're in, we'll determine what their wait times are.

But again, as we work with them, we're trying to give them innovative solutions so that they can come online quicker. For instance, in Ohio, we've got the two customers, Amazon Web Service and Cologix that we've done fuel cells with while we worked through the interconnection agreements with them, which is probably 5 to 7 years. And I would say that's not unusual in many of our locations as we work through this.

But we also have areas of our system that still have available transmission and those sites obviously are being discussed with the customers to allow quicker connections. And so while a lot of our focus is on data centers, we have a lot of other activity going on in our states. We have a lot of reshoring of manufacturing, and we have an incredible amount of economic development of existing businesses that continue to grow that we're dealing with.

And so just overall, we're in a tremendously positive place. We've got exceptional opportunities to continue to attract these customers, and we're going to do everything in our power to execute on these agreements that we have and get them interconnected as quickly as possible.

And our next question comes from the line of Jeremy Tonet with JPMorgan.

Just want to pick up on the capital plan, possibly increasing notably here. You talked a bit about funding, but I wanted to talk a little bit more if you could there. And just wondering as far as how you might prioritize funding or how you see asset sales potentially fitting into, I guess, the pecking order there, particularly with regards to the previous moves to sell Kentucky Power in the past, just wondering how asset sales fit together versus other funding sources?

Yes. Well, I appreciate the question. And again, the additional capital for us is incredibly exciting for us. To maybe give you a little bit of a breakdown on that, it's about $2 billion in the I&M for generation, about $3 billion in PSO for generation, about $7 billion in AEP Texas for transmission and then another couple of billion for distribution across the APCos and then a couple of billion across miscellaneous projects.

And as we think about that, our focus is really on growth. I'm not really want to sell assets as a strategy. Obviously, we'll look at all alternatives and do what's in our best interest of shareholders. But my focus right now is really looking at the opportunity in front of us and growing this company as best we can.

Got it. Understood. And I was just wondering -- within the transmission plans, just wondering if you could expand a little bit on how maybe gets in reconductoring, quick factoring and help for speed-to-market solutions here given data center needs here, particularly given your prior experience with the ACCC conductor and what that brought to the system?

Our transmission team is acting in a forward-looking mode looking at various reconductoring projects. We've actually worked with the government and received a number of grants to support reconductoring our system. But again, that I would say, adds small incremental capacity to the system.

What we really need to be looking at is a dramatic 765 kV backbone addition across our service territory and was very excited to see Texas come out with their proposed plan to use 765 across the Permian area to really enhance the strength and resiliency of that system. And my view would be that we need a lot more of that into our grid and into particularly PJM, SPP and MISO. The reconductoring ideas and some of the more innovative products that are out there are interesting and intriguing. But with the size and scale that we have in front of us, we have to think much, much bigger and get moving on these projects.

Got it. Just one last question, if I could. And conversation that you presented so far in nuclear focuses, it seems like more on SMRs versus AP1000s, I'm just wondering if you could provide any thoughts, I guess, on one versus the other and what drives the preference?

Well, for us, again, as I said, our fundamental focus right now is on just the sites and working within our regulatory environments and what our states want us to pursue at the moment. As I think about SMR technologies and the AP1000 all of those are really something that even if we started today, wouldn't be available until early to mid-next decade.

I think from a customer perspective, as we've had discussions with our customers, I think that there's, I would say, a leaning more towards SMRs only because of the diversity that they offer and that if you have four of those supplying service to a data center and you need to shut one down to refuel, you still have three versus just having the risk of one big unit there.

But really for us at this stage, we're focused on sites. We're focused on staying within the regulated environment. We're working with our customers to determine what they would like to do and how they would like to do it. But again, I think it's really to mid to mid-next decade before any of these types of things are going to be commercially available in this country.

And our next question comes from the line of Nicholas Campanella with Barclays.

I wanted to ask just -- just to put one quick follow-up on financing, and I apologize. Just it doesn't sound like there's anything near term for equity in either plan that you need right now and the credit is back to stable to your point. But just for funding the $16 billion, is there just a percentage of equity that's required that we should be thinking about, whether it's 20 or 40 or I'll just stop there.

Yes, Nick, I think we've talked a little bit about this that generally, I think in the industry, you're hearing people talking in the 30% to 40% of potential equity as you look at CapEx growth. And I think that's within the range of what we would contemplate here. But again, that needs to be refined over the coming months before we roll out the formal plan and the associated financing, given that we have other tools that we will use.

And I mentioned that a little bit in my remarks where we have potentially hybrids that we can issue. And then we also want to see what the near-term FFO to debt is with these really positive legislative results. So we always want to be really judicious with any kind of growth equity issuance. But again, I think growth equity when you have this type of robust plan is not something we should shy away from, but it is always something that we will be very judicious with in issuing shareholder equity.

Understood. Very clear. And then just quickly on the sales growth for this year. I know you guys kind of combined C&I now. Can you just kind of talk about what's driving the shift on the combined view and then thoughts on fiscal '25 overall, which I think was just updated lower?

Yes, absolutely. And you did pick up on that. We did combine in the earnings slides that we presented today, the C&I load combined together. And really, there are several reasons for this. One, I think it's more in line with how others in the industry present the load on a C&I basis. Also, I think it's also more reflective of our business that there is a growing convergence between how some commercial and industrial customers are classifying themselves.

And that's particularly true also between some of the crypto versus the data centers. And then also the financial protections in the contracts for the data centers, we kind of believe that those are -- that commercial load associated with is more akin to an industrial load. So from that perspective, I think it makes more sense and it's better presentation for our investors to see it as one combined load. And overall -- what you're seeing is load increasing overall on the entire system on a throughput basis. So very positive in that regard across the whole retail load.

Okay. And then just '25, I think, was lower. Is that still coming from that segment? Or just -- I know that there's a ton of growth in the future, but just the '25, I believe, Chris, correct me if I'm wrong, is lower. So I was just hoping you could address that as well.

Yes. Again, what we're seeing is -- one of the things I want to emphasize here is the financial protections in the commercial load and whether or not they actually take the minimums, they're paying for what they've signed up for that capacity because they're still ramping up their data center loads in the various locations, but they want to ensure that they have connectivity to our system.

And so from that perspective, it doesn't really matter to us financially whether that load is actually coming on or not. And so we do see some volatility as this load ramps up. But again, from our perspective, we're protected financially.

And our next question comes from the line of Julien Dumoulin-Smith with Jefferies.

Nicely done, really, truly remarkable across the board here, so great stuff. In fact, Bill, if I can pick it up -- absolutely. If I can pick it up here, I mean, 20% increase in contracted load here just in 1 quarter up to 24 gigs is remarkable. Can you provide a little bit more color on just the composition? I know you mentioned this a little bit earlier, like what portion of that is like hyperscalers, for instance, if you can speak to that?

And then if you can speak to -- like what percentage of these have progressed beyond LOAs to fully executed ESAs. I mean just give us a little bit more color behind the 24. And then if I can take that and just add a subpoint to that, how do you think about your earned ROEs, right? I see the load growth profile per Nick's question. How do you think about it given that you're targeting a 9.3% here this year? Again, obviously, a lot going into that. But the scope of what's possible on earned ROE as you think about this load growth now hitting over the next couple of years versus earlier long-term guide?

Yes. Thanks, Julien. So to give you a breakdown of the 24 gigawatts, about 2.5 of that is in the SPP, about 9 of that is in PJM and about 13 of that is in ERCOT. And obviously, we continue to work with our customers. We're getting significant inbounds on the desire to sign up to our system. We've had great success in getting the contracts put in place. And so we're continuing to push forward with the designs and the interconnections for these customers.

Interestingly enough, in the SPP, about -- of the 2.5 gigawatts, about 2.1 of that is data centers and about 0.3 gigawatt of that is crypto. And then in PJM, really, that's split across AEP Ohio, I&M and APCo and about 3.7 of that is data centers in Ohio, about 3.1 of that is data centers in I&M and about really just a little bit of that is in APCo. And so ERCOT is probably the more interesting one, which is where we see about 2 gigawatts on data centers, but about 5 gigawatts on crypto.

And so Texas is clearly becoming the crypto center for us, and we're making sure we have the appropriate procedures in place to get crypto signed up as most of that as we can with Texas, as I said, becoming sort of the center of crypto right now. And so overall, we're continuing to work through the agreements with these customers. I expect all of them will move to the next level. They're very aggressively wanting to getting contracts signed. So my confidence level on this 24 gigawatts is extremely high. I don't know, Trevor, anything to add?

Yes. Just one thing, Bill. And Julien, one of the things that we're excited about here is as we're looking to attract capital to Texas and Oklahoma, when you take a look at Texas, our authorized ROE, call it, roughly 9.7%, 9.76% and our earned ROE is roughly 8.6%. So that's where we're saying 50 to 100 basis point increase with the UTM in Texas. So that will go a long way to adding to the 9.3% overall earned ROE.

And then in Oklahoma, similarly, we've got 9.5% and our earned ROE is 8.3%. And with SB 998, that should be pretty beneficial as well. So all very positive in that regard, and that's why we wanted to highlight both the regulatory and the legislative positive outcomes that we think are really driving policy in the states for the benefit of our customers, but it will also be beneficial to our shareholders.

Got it. And you think you can close the gas in Oklahoma, just to clarify that last -- last comment there, Trevor?

We -- it will -- I'm not saying we're going to close it, but I think it will go a long way to improving the earned ROEs in Oklahoma.

And our final question today comes from the line of Carly Davenport with Goldman Sachs.

Just a quick follow-up on Nick's question earlier on the 2025 load growth. Should we think about that as just a timing impact in terms of the ramp of some of these larger facilities? Or are there any read-throughs to '26 and beyond?

Yes, Carly, thanks for that. I think one of the things when you really look at the C&I load ramp, the big point that we're trying to highlight here is that C&I customers are mainly but based on peak demand. And so higher peak demand, along with the demand minimums embedded in the tariff provisions is driving the revenue stability and really mitigates that earnings volatility. But more importantly, I'd say rising peak demand unlocks the valuable capital investment opportunities, which enables us to continue enhancing and expanding our system.

So there's no doubt that data centers are locating within our footprint due to the robust transmission infrastructure that Bill talked about and that we've got available capacity in a lot of our system as well as the other critical resources needed such as fiber and water and land areas. So we will see the C&I load ramp continue, and we feel very confident in that 24 gigawatts of incremental load coming on. And those are, again, backed by signed LOAs and ESAs.

Great. That's very clear. And then just one other quick one on -- you mentioned on the back of the OBBBA passing, you believe that the renewables plan should be unchanged through '29. But just curious if there's any potential to pull any projects forward to secure the tax credits for customers? Or is there anything embedded in that new potential $70 billion plan to reflect a pull-forward dynamic?

Yes. Thanks, Carly. Look, I want to be really clear on this point. I would say right now, we have almost $10 billion of renewables in our capital plan -- in our $54 billion 5-year capital plan. And right now, under what is in OBBBA we believe 100% of those projects will be eligible. Now depending on what ultimately comes out of the EO and the Treasury department's guidelines, as we said on our prepared remarks, there's a couple of projects on the back end of that plan.

And I would say worst-case scenario, we would see maybe a couple of billion dollars that we would reallocate from renewables to other sources of generation. But it largely, I would say, this -- the OBBBA does not impact our renewables generation as written right now, and all of our projects qualify.

And that does conclude our Q&A session. So I will now turn the call back over to Bill Fehrman. Bill?

Great. Thank you. We appreciate everyone joining today. I'd like to close with just a few summary remarks. So exciting times obviously continue ahead, and I'm extremely proud of the entire AEP team and all of the strong support received from our Board of Directors. We're driving the business forward with our plan to deliver results for the benefit of our customers, our communities and all other stakeholders.

I'm very confident we can unlock the incredible value in this company by advancing our long-term strategy and providing safe, affordable and reliable services across our footprint. And finally, if there are any follow-up items, please reach out to our IR team with your questions. This concludes our call.