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Date
May 5, 2026, at 9 a.m. ET
Call participants
- President and Chief Executive Officer — William J. Fehrman
- Executive Vice President and Chief Financial Officer — Trevor Ian Mihalik
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Takeaways
- Operating earnings -- $1.64 per share, or $891 million, compared to $1.54 per share in the same period a year prior.
- Full-year guidance -- Operating earnings guidance reaffirmed at $6.15 to $6.45 per share for 2026.
- Regulated earned ROE -- Increased to 9.3% for the quarter, with expectations for 9.5% by 2030.
- Contracted load growth -- Total load under contract rose to 63 gigawatts from 56 gigawatts, with nearly 90% attributed to data centers.
- Five-year capital plan -- Expanded to $78 billion, up $6 billion, primarily for transmission and generation projects.
- Transmission projects -- New awards include a $1.6 billion project in SPP and a $1.9 billion project in PJM, both anticipated to be in service by 2030.
- Generation CapEx outlook -- Raised by $3 billion to $24 billion through 2030, including new gas generation investments at Indiana Michigan Power (I&M).
- Expected rate base growth -- Forecasted five-year rate base CAGR of 11% across the plan period.
- Operating earnings CAGR -- Long-term target now expected to exceed 9% over 2026 through 2030 due to recent capital increases.
- Federal grants and loans -- Secured $315 million in grants and closed a $1.6 billion DOE loan guarantee for transmission, projected to yield $275 million in customer savings.
- Customer cost offsets -- Forecasted up to $16 billion in cost offsets for existing customers due to large load contracts over the contract term.
- O&M costs -- Operating and maintenance expense rising at a 4% CAGR, attributed to added staffing and support for new assets.
- Growth equity funding -- $1.1 billion increase brings planned growth equity issuance to $7 billion for 2026-2030, with most weighted to the plan's latter years.
- FFO-to-debt leverage metrics -- S&P ratio at 14.7%, Moody’s at 13.9%, against company targets of 14%-15%.
- Regulatory outcomes -- Recent approvals increased allowed ROE to 9.84% in Ohio, 9.65% in Arkansas, and 9.75% in West Virginia; approvals include rate decreases, and improved infrastructure cost recovery.
Summary
American Electric Power (AEP +1.91%) reported a quarter marked by expanded infrastructure investment plans, increased contracted load from hyperscale data centers, and incremental regulatory approvals with higher allowed returns. Management described a strong pipeline of $10 billion in new projects, not yet included in official guidance, as evidence of further upside potential. Large-scale grid modernization initiatives now represent 42% of the total capital plan, and company leaders expressed confidence in credit quality and discipline for both funding and execution. Strategic partnerships, such as with Quanta Services, were cited as pivotal for accelerating transmission development schedules. Management is closely monitoring regional transmission operator performance, particularly in PJM and SPP, and expressed readiness to adjust market participation if interconnection processes remain sluggish.
- Fehrman stated, "we are increasing our five-year capital plan to $78 billion, up from the prior $72 billion," citing newly approved projects as the basis.
- Mihalik reported, "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."
- Company leaders highlighted that nearly all additional contracted PJM load is "supported by take-or-pay ESAs," which mitigate revenue risk.
- Direct quote: Fehrman stated, "if something is not done now, I expect we could still be having these same conversations in 10 years," referencing slow pace of generation interconnections in PJM.
- Mihalik clarified, "$3 billion at the back end of the plan is tied to the $78 billion CapEx plan," emphasizing balance sheet discipline for incremental project financing.
Industry glossary
- PJM: Regional Transmission Organization covering parts of the eastern United States, facilitating wholesale electricity markets and grid reliability.
- SPP: Southwest Power Pool, a regional transmission organization operating electric grids and markets in the central United States.
- ESA: Electric Service Agreement, a long-term contract obligating customers to certain minimum electricity purchases, often used in take-or-pay structures.
- FFO-to-debt: Ratio of funds from operations to total debt, a key credit metric for evaluating financial leverage in utilities.
- ATM: At-the-market equity offering program, allowing a company to issue shares incrementally at prevailing market prices.
Full Conference Call Transcript
William J. Fehrman: Thank you, Darcy, and good morning. We appreciate you joining us for American Electric Power Company, Inc.’s first quarter 2026 earnings call. I will 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, American Electric Power Company, Inc. 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 American Electric Power Company, Inc.
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 buildout. This includes already securing extra high-voltage, long lead-time equipment like transformers, breakers, and lattice steel. As we have 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 slides 7 and 8.
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. American Electric Power Company, Inc. 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 letters 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 are in 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 require new generation for which American Electric Power Company, Inc. 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 American Electric Power Company, Inc. is using our breadth and scale to provide what is needed and to meet customer demands.
Trevor will discuss the 63 gigawatts in more detail shortly. To support these projects, today we are increasing our five-year capital plan to $78 billion, up from the prior $72 billion, which now drives an expected 11% five-year rate base CAGR. The $6 billion of incremental investments include $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 five 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, we believe our transmission scale and expertise remain unmatched in the industry. Today, American Electric Power Company, Inc. owns and operates more than 2,100 miles of ultra high-voltage 765 kV transmission lines across six states. Large load customers continue to choose sites in our footprint because of the strength and sophistication of our advanced transmission network. As we have highlighted before, American Electric Power Company, Inc. pioneered the modern 765 kV transmission system in North America, and we have more than six 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 American Electric Power Company, Inc.’s vision for a modern, resilient grid with an industry-leading partner like Quanta, we are accelerating the development of the 765 kV infrastructure buildout 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 Shreveport, Louisiana. We also secured additional projects from Potter, Texas, to Beckham County, Oklahoma. Together, these projects total $1.6 billion and are anticipated to be in service by 2030. In PJM, we were awarded the buildout of 330 miles of predominantly 765 kV lines in Ohio and Indiana. These projects total $1.9 billion and also have expected in-service dates towards the end of our five-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 five-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, American Electric Power Company, Inc. 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 American Electric Power Company, Inc. 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, American Electric Power Company, Inc. continues to identify 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 and strengthening the grid will ensure new generation resources across all technologies can connect quickly, reliably, and affordably to serve our fast-growing load. As our 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.
Even as we invest to meet rapidly growing load expectations, affordability is top of mind, and we remain focused on taking decisive actions to keep 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 fixed 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.
We have had a meaningful reduction in the average duration of outages across the system over the last year, which is strengthening customer relationships through more reliable power. While our rate base continues to expand, O&M is rising 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 American Electric Power Company, Inc. 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 grants.
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 another example of how we are pairing growth with affordability. Over the past two years, we have led the industry in establishing the right regulatory framework for large load growth.
We secured approvals for new data center tariffs in Ohio, followed by large load tariff solutions in Indiana, Kentucky, and West Virginia. 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 and other large load customers cover the investments required to support their energy needs. 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%. In Arkansas, we successfully increased our ROE from 9.5% to 9.65%.
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 initiatives 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. We also continued to see consistent positive outcomes across other areas of our multistate footprint, including Oklahoma, Louisiana, and Texas. Taken together, we believe these actions 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 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 am extremely confident in our strategy, our capabilities, and the American Electric Power Company, Inc. 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 using American Electric Power Company, Inc.’s size and scale to strengthen our competitive advantages while creating long-term value for our shareholders.
I will 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.
Trevor Ian Mihalik: Thanks, 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 2025. Results in our VIU and T&D segments remained strong during the quarter, driven by constructive rate case outcomes across multiple jurisdictions. As William 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 load 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 2026. The Generation and 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, which we anticipate will 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 William 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 ramps. As contracted load continues to grow, we remain equally focused on the quality and credit strength of the customers who are driving it. As referenced earlier, our contracted customers must meet high credit standards. The majority of contracted megawatts are with large, well-known hyperscalers and industrial customers. This high-quality and diversified customer base forms a strong foundation for long-term partnerships in infrastructure development. With that context, I will 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 but 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 American Electric Power Company, Inc.’s current load forecast or 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 land, 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 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 load 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 American Electric Power Company, Inc.’s load growth needs of 41 gigawatts in ERCOT. Keep in mind, underlying demand in ERCOT is real.
It is 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 batch processing, the focus will be increasingly on timing. We expect greater clarity and certainty later this summer as the rulemaking progresses on when these loads will ultimately interconnect. American Electric Power Company, Inc. 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 five-year capital plan by $6 billion, bringing the total to $78 billion. This increase reflects our inclusion of the SPP and PJM transmission projects William 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 American Electric Power Company, Inc. and a regional peer has not yet been finalized, so we are 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 timeframe. 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, Piketon 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 our long-term growth outlook as part of our normal cadence in the third quarter. Turning to slide 19, I will walk through our updated five-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 totals $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 five-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. 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; 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 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% five-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, together with line of sight to over $10 billion of projects and 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 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 American Electric Power Company, Inc. 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. We will now open the call for questions.
Operator: We will now begin the question and answer session. To ask a question, press star then the number one on your telephone keypad. Please pick up your handset and ensure that your phone is not on mute when asking your question. Our first question will come from the line of Steven Isaac Fleishman with Wolfe Research. Please go ahead.
Steven Isaac Fleishman: Good morning. Thanks for all the updates. William, the PJM commentary—could you give a little more color on why you are assessing options, what it would take to actually exit PJM, and what you would like to see them do to avoid that? Any more detail would be helpful.
William J. Fehrman: To be clear, we are not saying we are exiting PJM. What we are saying is that as we look at the RTOs that we operate in, they are increasingly struggling to provide the responses we need to meet demand. As we prepare our plans and our ability to execute, we are extremely comfortable that we have the equipment, the engineering, and the contractors. What we need is a faster way to interconnect into the system. There are efforts that the government has put into place to try to move PJM and SPP along, but there are fits and starts and it is not moving quickly.
We need to do everything we can to help push that process along and work with our state regulators, governors, and policymakers to advance the system we have in place today. As the manager of risk for this company, I also have to look at what happens if we cannot find a path forward. We are in the very early stages of the evaluation phase, considering a full range of options, including staying in these markets, shifting, or exploring alternative structures. Bottom line, we will continue to work closely with our regulators and policymakers, and we will continue to engage directly with FERC and with the RTOs to figure out how to move this process along faster.
While all of us are working very hard to get the equipment and contractors we need, we also have to get the interconnections needed to accelerate getting generation to load. We are committed to participating in a market that is responsive to customer needs, but we also know that we have to find a way to make it more efficient and effective.
Steven Isaac Fleishman: That makes sense. Two other quick ones. On the Bloom and customer agreement in Wyoming, how confident are you about these requirements being met in the second quarter to move forward with that?
William J. Fehrman: Those discussions continue to move forward. For us, we are protected regardless of what happens on those projects. Our team has recently been in contact with the local mayor and other stakeholders in that region. There is active work going on. I am confident that the project will continue forward, but there is 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 are doing a little bit of earthwork on this project, waiting for the full release. We are continuing to work with Bloom to ensure that we can meet the schedules that the customers want.
I feel we are in great shape with regard to our commercial terms on this project, and hopefully this will all get resolved by the end of the second quarter.
Operator: Our next question will come from the line of Julien Patrick Dumoulin-Smith with Jefferies.
Julien Patrick Dumoulin-Smith: Lots of questions and very well done. To pick it up where Steven left off, how do you think about the cadence of the line of sight for that next $10 billion? You have the Wyoming piece and the Piketon piece. It seems like you might be insinuating some PJM generation opportunities. How do you think about backstop procurement or bilateral participation, and how do you think about the third quarter cadence versus how you would set expectations across the litany of things going?
Trevor Ian Mihalik: Thanks, Julien. We will always maintain a disciplined approach to capital planning where we only include projects that have sufficiently advanced and cleared gating items, with a high degree of regulatory confidence, in our formal plan. We have announced the Piketon project and the Wyoming fuel cell project, and that is why we wanted to flag the $10 billion—just between those two projects, that could be around an $8 billion amount. We do have other opportunities and line of sight to additional generation in the footprint. We wanted to put a marker around Piketon and Wyoming and show incremental opportunity around generation, and also get the Street comfortable that we are being conservative with the $78 billion five-year capital plan.
I did not want to come out on the third quarter with the formal update without addressing these on the first quarter call because we have been public with Piketon and Wyoming. It shows the robust nature of our growing capital plan. Over the last several years, we have been growing our capital plan at roughly a 22% CAGR. The $6 billion has definitive line of sight, which is why we raised the plan, and the $10 billion is incremental on top of that. We look forward to a more robust, fulsome approach on the third quarter call.
Julien Patrick Dumoulin-Smith: And on PJM, timeline on that decision and how you would participate in the backstop, just to make sure I heard that right?
William J. Fehrman: On the backstop, when that process gets formally approved, we are already looking for potential opportunities that we could bid into through our unregulated businesses. The broader piece for me is that we have to solve the speed-to-market issue. As we work with PJM, other stakeholders, and our governors, this is clearly an area that has to get fixed. We are going to intently engage, figure out how we can accelerate it, and make sure we do it in an appropriate manner with our states. PJM, in particular, is not expediting the connection of generation to load. We are confident with where we sit today on the projects we have, but we need to make it go faster.
Operator: Our next question will come from the line of David Keith Arcaro with Morgan Stanley. Please go ahead.
David Keith Arcaro: Good morning. William, as you talked about trying to move more quickly, are you looking at other strategies or potentially expanding on-site power anywhere else across your system, expanding what you have done with the fuel cells?
William J. Fehrman: As we work with our customers, we are proud to bring a variety of bridging strategies to serve their loads. We have examples where we have done fuel cells. We have access to aeroderivatives. We can do smaller interconnections into our system. We have a variety of tools to try to accelerate their ability to get their business online at the speed they want. We will continue to offer those types of opportunities. We are also working to accelerate our ability to get transmission built, looking at different ways of constructing or designing transmission to accelerate overall construction. Our partnership with Quanta gives us a competitive advantage to find innovations for speed.
This is all about getting our customers connected as fast as possible and working with them on where they want to be short term and long term with their power supply, ensuring we are the ones that can deliver it.
David Keith Arcaro: Thanks, that makes sense. Trevor, looking at the update relative to the incremental CapEx, 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?
Trevor Ian Mihalik: We have a strong operating cash flow model and we are forecasted to generate over $47 billion of operating cash flows over this five-year period. To fund the growth, we will use a full range of financing tools, including hybrids and other equity-like instruments, structured financing, and growth equity. We want to take advantage of optimal market conditions and fund the plan in a balanced and shareholder-friendly way. I am not opposed to issuing accretive growth equity. Generally, in the industry, equity content for CapEx is around 30% to 40%. What we announced today with the $6 billion is only 18% equity content, underscoring our balanced approach.
You will see us continue to look at the timing of when that $10 billion rolls out over the plan and the methodology in which we finance it. On page 19 of the presentation, you will see we had $1 billion of ATM in 2026, of which $665 million is already issued, then nothing in 2027, and ATM at $1 billion a year in each of 2028, 2029, and 2030, with just a modest amount of growth equity in the back end of the plan. This gives us flexibility in how we will finance the incremental $10 billion or what we ultimately roll out on the third quarter call.
We will ensure we are doing this in a very disciplined manner as we finance these opportunities.
Operator: Our next question will come from the line of Richard Sunderland with Truist Securities. Please go ahead.
Richard Sunderland: Good morning, and thanks for the time today. I wanted to pick up a couple of the earlier themes around PJM but turn it to the SPP side. You spoke to progress there on the load front, but how are you viewing SPP as a whole and what it might mean for SWEPCO and continuing load interest there?
William J. Fehrman: We have a very similar view of SPP with regard to the focus on getting load connected to generation. SPP has been more aggressive in getting after these issues. We have had better luck in SPP. They have made filings on the ARRIS program and such. It is a little bit better there with regard to being able to get our generation connected and moving forward. We still want to make sure we are staying on top of this because every utility trying to do this has the same issues. We are going to engage more, eliminate risk, and get our customers connected as quickly as we can.
Richard Sunderland: Got it. Turning to a broader topic around transmission, you have had a lot of commentary on what you are doing there. What do you see on the policy side as needs for transmission? There has been a lot of focus recently around some FERC actions elsewhere. Do you think there are opportunities on the transmission side that go beyond the engineering and construction efforts you spoke to earlier?
William J. Fehrman: On transmission, there are keys around accelerating right-of-way acquisition and addressing supply chain. With our size and scale, we are well ahead on our supply chain and procurement for these projects throughout this plan. I am confident we have what we need to get these done. In the regulatory environment, in my discussions with the states at the policy level, they are very supportive of transmission. They know transmission forms the backbone for economic development and that without a strong transmission system, their economic development will, in some cases, be muted. We have had great success on transmission both on the regulated and competitive side.
We have an exceptional relationship with Quanta, so we know we have the labor to build it. We are deploying very innovative designs to reduce right-of-way and reduce the weight of structures. We are attacking this with a multivalue approach to continue our leadership role in the operation, maintenance, and construction of transmission.
Operator: Our next question will come from the line of Nicholas Joseph Campanella with Evercore ISI. Please go ahead.
Nicholas Joseph Campanella: Good morning. Trevor, I wanted to dig in on the growth equity proportion on slide 19. Do we think about the roughly $3 billion of growth equity as firm, or is that contingent upon the CapEx pace? How should we think about that moving forward in 2028 through 2030?
Trevor Ian Mihalik: That $3 billion at the back end of the plan is tied to the $78 billion CapEx plan. A lot of the uplift we added today with the $6 billion is in the back half of the plan when those dollars will come through. I would say it is pretty firm because we feel very confident about the CapEx plan, and this is what we would need to finance it. The good news is we need it in the 2028 to 2030 period. We have been focused on getting the ATM done this year—getting that $665 million done.
From my perspective, equity is not much of an issue right now in support of the $78 billion five-year capital plan, and it is a modest amount of equity relative to the growth plan.
Nicholas Joseph Campanella: Got it. Thanks. And as we think about the potential uplift we might see with the third quarter update to the CapEx plan, we have seen a pretty consistent breakdown between transmission and generation. Given the commentary surrounding speed to market, is it fair to assume that breakdown persists, skewed a bit more toward transmission?
Trevor Ian Mihalik: I think that is a safe assumption. While $33 billion of the capital plan is associated with transmission right now, we continue to see a lot of opportunities around transmission both within our service territory and competitively. William mentioned the MISO opportunity in Wisconsin. People acknowledge that American Electric Power Company, Inc. is differentiated as the largest transmission owner-operator and the pioneer of the 765 kV system. That is a competitive advantage for us. At the same time, with 63 gigawatts of load growth across our footprint, generation is also very important. We have been aggressive in securing turbine slots and moving those into the planning cycle.
We are excited to roll out the updated capital plan on the third quarter call. I needed to update at least the $6 billion today and, because we have mentioned the Piketon project as well as Wyoming, speak to that $10 billion, which, as I said in my prepared remarks, is fairly conservative.
Nicholas Joseph Campanella: Great. Thanks, guys.
