Dive Brief:
- The U.S. Department of Energy’s Loan Programs Office said Thursday it has closed a $1.6 billion loan guarantee to a subsidiary of American Electric Power to reconductor and rebuild around 5,000 miles of transmission lines across Indiana, Michigan, Ohio, Oklahoma, and West Virginia.
- The conditional loan commitment was announced in January as part of $23 billion in assistance DOE offered to eight utilities for investments in transmission, energy storage, grid modernization and gas pipelines.
- The Trump administration has been reviewing loan commitments and grants finalized in the waning days of the Biden administration, charging that many were rushed through with inadequate review. Energy Secretary Chris Wright said the AEP loan will bolster reliability and “ensure lower electricity costs across the Midwestern region of the United States.”
Dive Insight:
DOE did not immediately respond to questions about the status of other loan guarantees announced in January. AEP is the first company to close a loan guarantee under the Energy Dominance Financing Program created by the One Big Beautiful Bill Act. President Trump signed the legislation into law earlier this year.
The guarantee “was carefully evaluated” under new LPO guidance and “delivers on the Trump administration’s promise to responsibly steward taxpayer dollars and unleash American energy dominance,” DOE said in a statement.
AEP is “experiencing growth in energy demand that has not been seen in a generation," President, CEO and Chairman Bill Fehrman said in a statement.
Customers have committed to 24 GW of electricity demand by the end of the decade, AEP said, and necessary upgrades have been identified to support data center, artificial intelligence and manufacturing development.
Approximately 100 miles of transmission line across Ohio and Oklahoma are the first projects supported by the loan guarantee, AEP said; additional funding and projects will follow.
"This loan saves our customers money and improves reliability while supporting economic growth in our states,” AEP said. “The funds we will save through this program enable us to make additional investments to enhance service for our customers."
Electric utilities receiving an Energy Dominance Financing loan “must provide assurance to DOE that financial benefits from the financing will be passed on to the customers of that utility,” DOE said.
The loan guarantee, to AEP Transmission, will save customers “an estimated $275 million in financing costs over the life of the loan,” the company said. The company estimated about 1,100 construction jobs will be created through the projects.
“Seeking federal funding opportunities and implementing rate structures that ensure new large customers are supporting infrastructure investment are some of the ways AEP is working to reduce rate impacts for customers,” the company said.
