DOE closes $3.26 billion transmission loan to AEP Texas

The Department of Energy has closed a $3.26 billion loan to AEP Texas to help pay for nearly 100 transmission projects, including work to upgrade existing power lines and build new ones. The projects cover about 2,800 miles of lines and are meant to improve grid reliability while preparing for a big jump in electricity demand through 2030, driven largely by data centers.

The loan comes from DOE's Office of Energy Dominance Financing, which has now made three such loans to utilities, including an earlier $1.6 billion deal with AEP's parent company and a much larger $26.5 billion deal with Southern Company. Because federal loans carry lower interest rates than private financing, DOE says the deal will save an estimated 1 million Texas households about $685 million on electricity bills over the next 30 years. AEP Texas can use the loan to cover up to 80 percent of project costs, with the company responsible for the rest.

The full list of projects isn't finalized yet — only eight have been formally approved so far, with more requiring separate federal review. AEP's parent company has also raised its five-year spending plan to $78 billion through 2030, with $33 billion of that going to transmission upgrades across its territories. Separately, AEP is seeking special rate structures in several states to keep the cost of serving data centers and other large power users off of regular household bills. Those tariffs are already approved in Indiana, Kentucky, Ohio, and West Virginia, with Texas among the states still considering similar proposals.