For perspective, AEP’s systemwide peak load at the end of 2023 was 35 GW. The utility serves 5.6 million customers in 11 states through its subsidiaries and has the country’s largest transmission system.

AEP Interim CEO Ben Fowke said the company continues to work with data centers to meet their increased demands for power, while ensuring that new contracts are fair to all of its customers.

“I want to emphasize that it’s 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,” Fowke told investors.

Fowke cited AEP filing new data center tariff proposals in Ohio and large-load tariff modifications in Indiana and West Virginia.

In Ohio, the proposed rate structure would require new data centers with loads greater than 25 MW and cryptomining/mobile data center operations with loads greater than 1 MW to agree to meet certain requirements before infrastructure is constructed to serve them.

Data centers specifically would be required to make a 10-year commitment to pay for a minimum of 90% of the energy they say they need each month – even if they use less.

Along with Exelon, AEP is also protesting a proposal that would result in the co-location of an Amazon Web Services (AWS) data center at Talen Energy’s Susquehanna nuclear plant in northeast Pennsylvania. The utilities claim the proposed interconnection agreement would result in unfair cost burdens on ratepayers and negatively impact market operations and reliability.

According to a study published by EPRI in May, data centers could consume up to 9% of U.S. electricity generation by 2030 — more than double the amount currently used.

The burgeoning of data centers is one reason utilities are planning for the largest increase in natural gas-fired plants in over a decade. Buyers of F-Class, advanced-class and aeroderivative gas turbines are reportedly experiencing lead times not seen since the gas boom of the early 2000s.

AEP’s Public Service Company of Oklahoma (PSO) plans to seek regulatory approval for the purchase of Green Country, a 795 MW natural gas combined-cycle plant in Jenks, Oklahoma. Subject to approval, PSO expects to close on the transaction by June 30, 2025.

On impact of environmental regulations

In the utility’s 10-Q, AEP said federal rules and environmental control requirements would impact the utility’s generation fleet. AEP noted EPA’s suite of measures to crack down on pollution from fossil-fired plants.

Under one of the measures, coal-fired plants which plan to stay open beyond 2039 would have to reduce or capture 90% of their carbon dioxide emissions by 2032. As of June 30, 2024, AEP said approximately 46% of the company’s owned generating capacity was coal-fired.

AEP said it is in the early stages of identifying the best strategy for complying with the rule while ensuring resource adequacy.

The company, along with other utilities, states, companies and trade associations challenged the rule and requested a stay, which was denied by the D.C. Circuit Court of Appeals.

AEP and other utilities have now filed applications with the United States Supreme Court seeking an emergency stay.

Most recently, Fehrman served as president and CEO of Centuri Holdings, where he helped to launch Centuri as a public company, while leading their efforts to partner with regulated utilities to build, modernize and maintain energy infrastructure. Prior to that, he was president and CEO of Berkshire Hathaway Energy. Fehrman also led MidAmerican Energy Company, PacifiCorp Energy and Nebraska Public Power District as president and CEO.

“I’ve spent my entire career in the energy business, and I’m honored to join a renowned industry leader like AEP during a pivotal time for the organization and our industry,” Fehrman said. “AEP has built a strong foundation with a long history of solid operational and financial results and a focus on customers. I’m committed to building on the company’s legacy of success and service by strengthening relationships with our stakeholders and continuing to execute our robust capital plan to enhance the resiliency of the grid and transform the company’s generation portfolio. I see incredible potential in this company, and I look forward to working with the best-in-class team at AEP to continue delivering safe, reliable and affordable service to customers and advancing our long-term growth strategy.”

Fehrman is AEP’s 13th president and ninth CEO in the company’s 118-year history. He will succeed Ben Fowke, who has been serving as interim CEO since February 2024. Fowke, who was elected to the Board in 2022 and will continue as a board member, will serve as a senior advisor for several months.

“Bill is an accomplished leader and industry veteran with a proven ability to drive operational excellence, produce strong financial results and deliver for customers and stakeholders,” said Sara Martinez Tucker, chairman of the AEP Board of Directors. “He led one of the nation’s largest electric utility companies and a utility infrastructure firm, and his expertise and unique perspectives will help AEP implement new solutions as we build the energy system of the future to power our communities. His diverse background in finance, operations, regulatory matters, safety, cybersecurity and renewable energy will be instrumental to advancing our strategic vision. As our industry continues to change rapidly, the Board is confident that Bill is the right person to seize the opportunities ahead and lead AEP in this next chapter.”

The proposed rate structure would require new data centers with loads greater than 25 MW and cryptomining/mobile data center operations with loads greater than 1 MW to agree to meet certain requirements before infrastructure is constructed to serve them.

Under the proposal, data centers would be required to make a 10-year commitment to pay for a minimum of 90% of the energy they say they need each month – even if they use less.

Adding additional large energy users requires investment in new transmission lines, which can take 7-10 years to plan and construct. AEP Ohio said this new rate structure would provide the utility with the certainty needed to develop long-term plans and offers data center and cryptocurrency mining customers “a clear understanding of their obligations as customers.”

“While we see no concerns serving current or new residential and existing commercial or industrial customers, we need to ensure that the right long-term investments are made to the electric grid,” said Marc Reitter, AEP Ohio president and chief operating officer. “We need accurate plans and solid commitments from large data center customers so the right facilities are built at the right time.”

Demand for computing power from data centers, fueled by artificial intelligence and other new technologies, requires enormous amounts of power. Ohio is seeing unprecedented demand from data center customers, especially in the central part of the state.

According to AEP testimony to state regulators, data center load is expected to reach a total of 5,000 MW in Central Ohio by 2030, based on signed agreements with the company. As of April 2024, actual data center load was approximately 600 MW in Central Ohio.

The Buckeye State is not alone. In the U.S., data center demand is expected to reach 35 GW by 2030, up from 17 GW in 2022, McKinsey & Company projects. Grid operators and utilities are projecting significant load growth driven by electrification, new manufacturing and data center development. 

AEP netted $1.2 billion in cash after taxes, transaction fees and other adjustments.

The portfolio includes 14 projects made up of 1,200 MW of wind and 165 MW of solar in 11 states. Renewable power from the projects is contracted under long-term agreements with other utilities, corporations and municipalities.

AEP said it remains committed to “de-risking the company and prioritizing investments” in its core regulated businesses. Proceeds from the sale will be directed to a pipeline of projects to advance the utility’s clean energy transition, among other purposes.

The utility plans to invest some $40 billion over the next five years in its regulated wires and generation business with a focus on adding 17,000 MW of new generation resources and more resilient, efficient transmission and distribution infrastructure.

AEP signed an agreement to sell the wind and solar assets in February 2023, one year after announcing its plan to shed the portfolio.

In December, the Federal Energy Regulatory Commission denied approval of the sale, citing insufficient evidence to show the transaction wouldn’t affect customer rates. The agency outlined the additional information about customer protections needed to obtain approval.

In mid-February, AEP and Algonquin business unit Liberty Utilities filed a new application with the commission and asked that approval be granted by April 26.

Liberty pledged to take several measures during the next five years, including maintaining the return on equity, maintaining the current cost cap on equity, financing future credit investment at the current credit rating, and capping certain operating and administrative costs. 

Earlier, AEP had agreed to shave around $200 million off the purchase price after conflicting regulatory decisions sent the deal back to the negotiating table.

Last May, Kentucky utility regulators approved the acquisition, but required changes to the proposed operating and ownership agreements related to the 1,632 MW Mitchell coal generating facility in which Kentucky Power owns a 50% interest. On July 1, West Virginia regulators issued their own order on the power plant that differed from the Kentucky regulatory action. 

The discrepancies led AEP and Liberty to renegotiate the sales agreement, which both sides announced on September 30. 

Liberty Utilities had originally agreed to buy the assets for around $2.85 billion, including some $1.221 billion in debt.

In an April 17 press release, AEP said it now plans to file a base rate case in Kentucky in June with a six-month expected commission approval process, and new rates taking effect in January 2024. The company said it also planned on “right-sizing its rate base” including securitizing retired coal assets through the Kentucky commission’s hoped-for approval to reduce rates.

AEP also named Cindy Wiseman as Kentucky Power president and chief operating officer. AEP earlier had said that Brett Mattison, president and COO of Kentucky Power, would take on a similar role at Southwestern Electric Power Co., effective Jan. 1. Mattison succeeded Malcolm Smoak, who retired. 

Liberty Utilities, a regulated utility unit of Canada-based Algonquin Power, now will buy the stock of Kentucky Power and AEP Kentucky Transco for a reduced price of $2.646 billion. In October 2021, Liberty agreed to buy the assets for $2.846 billion, including around $1.221 billion in debt.

AEP said it now expects to receive around $1.2 billion in cash, net of taxes and transaction fees. It also expects to record a third quarter pre-tax GAAP loss ranging from $180 million to $220 million as a result of the amended sales agreement and a change to the expected timing of the completion of the transaction. 

AEP initially expected to net $1.4 billion in cash, which it said it would reinvest in renewable energy in other AEP subsidiaries, none of which are in Kentucky.

The deal is now slated to close in January, pending approval by the Federal Energy Regulatory Commission, which could issue a decision in December.

AEP also said that Brett Mattison, president and chief operating officer of Kentucky Power, would become president and COO of Southwestern Electric Power Co., effective Jan. 1. Mattison succeeds Malcolm Smoak, who is retiring. Liberty previously announced that David Swain will lead the Kentucky operations when the transaction is finalized. 

Last May, Kentucky utility regulators approved the acquisition, but required changes to the proposed operating and ownership agreements related to the 1,632 MW Mitchell coal generating facility in which Kentucky Power owns a 50% interest. 

On July 1, West Virginia regulators issued its own order on the power plant that differed from the Kentucky regulatory action. 

These discrepancies led AEP and Liberty to renegotiate the sales agreement, which both sides announced on September 30. 

Kentucky Power and Wheeling Power are both units of AEP, each owning a 50% interest in Mitchell, which is located in Moundsville, West Virginia. Kentucky Power’s interest falls under Kentucky regulatory jurisdiction while Wheeling Power’s interest is subject to West Virginia regulators oversight.

The underlying issue is complex. But under a 2014 operating agreement, Kentucky Power operated Mitchell held most of its permits. Kentucky Power filed a motion to revise the operating agreement in part due to conflicting regulatory decisions in Kentucky and West Virginia regarding projects to comply with coal combustion residuals (CCR) and effluent limitations guidelines (ELG).

In brief, environmental rules require a wastewater treatment upgrade for the plant to remain in operation past 2028. In 2021, Kentucky regulators rejected the wastewater project. But West Virginia regulators allowed the work to continue, with only West Virginia ratepayers paying for it.

Under ELG rules, the Mitchell power plant has to be compliant or retire by Dec. 31, 2028. Kentucky Power asserted that Wheeling Power expected to continue operating Mitchell through 2040, which is the retirement date based on Mitchell’s expected service life.

West Virginia regulators wrote that “prematurely shutting down used and useful power plants with many years of remaining life would require billions of dollars in replacement costs that would be in addition to the continuing recovery of unrecovered costs already expended on those power plants.” 

They determined that a plan to shut down Mitchell early was unreasonable and imprudent and “would greatly increase West Virginia’s reliance on purchases of energy.”

Liberty Utilities has said it will continue with the exit from the Mitchell plant in 2028. After that, Wheeling Power will take full control of the power plant and operate it until 2040.

In recognition of Women's History Month, AEP Executive Vice President and Chief Operating Officer Lisa Barton talked about her rise to leadership and the future energy workforce.

Lisa Barton’s journey in energy hasn’t been without its barriers.

For starters, when she attended engineering school, the ratio of men to women was 10 to 1. And she has often been the only woman in the room, on the team, or in the department.

“I recall taking a course at MIT, and I could not even find a women's restroom,” she said. “Little did I know that in the energy field, the ratio would be much higher.”

Long before she ascended to leadership positions within American Electric Power (AEP), Barton had mentors to whom she looked for guidance.

Her interest in math and science led her to Worcester Polytechnic Institute (WPI) in Massachusetts, where she was attracted to electrical power engineering by one professor who fueled her passion for the industry and for leadership. 

“Dr. Harit Majmudar…even to this day when I say his name, I have to take a deep breath,” Barton said.

She said Dr. Majmudar cared about his students on a very personal level, taking them out for pizza and cooking for them at his home.

“[He] would constantly tell us when we tried to pick up the bill that we could come back and take him out when we launched our own careers,” Barton remembered. “He taught us the gift and power of paying it forward. He loved teaching, loved the power industry and the men and women who dedicated their lives to keeping the lights on so others could reach their potential.” 

Barton said she has carried that mindset of “paying it forward” with her through her career.

“I remember fondly the male and female leaders who mentored me along my professional journey,” she said. “It’s essential to keep that going.  To me, making a positive difference in the lives of others is how you should measure your life, your career and your contributions.”

Barton stressed the importance of seeing the energy industry from as many different perspectives as possible.

The Connecticut native started her career with Northeastern Utilities (NU), now Eversource, working in a little of everything: engineering, regulatory, legal, compliance, marketing and customer service. She earned a law degree along the way, and represented water and gas utilities and working in corporate and trademark law.

Her second stint with NU allowed her to start the North American Electric Reliability Corporation (NERC) compliance program, a good fit for both her engineering and legal backgrounds. From there she accepted a role at AEP, moved to Ohio and invested time and attention on growing AEP’s transmission opportunities and leadership.

Barton continued to broaden her responsibilities at AEP before being named executive vice president and COO. She leads the day-to-day activities of all AEP utilities, as well as the operations of the Generation and Transmission business units, and the Procurement, Supply Chain and Fleet Operations organization.

When asked about the biggest accomplishment of her career, she spoke about AEP bouncing back from what had been an initial defeat. AEP had launched its $4.5 billion Wind Catcher project, a combination of a long transmission line and 2 GW in renewable generation located in Oklahoma’s panhandle.

After years of work, the company in 2018 pulled the plug on what would have been the biggest-ever U.S. wind farm. The project had received regulatory approval from three of the four states needed. But Texas regulators rejected the project because it didn’t offer enough benefits for ratepayers.

“Despite the setback," Barton said, "it was literally the next week that the team dusted themselves off and got back to work on our North Central Energy Facilities.”

AEP scaled down its effort to what is now known as the North Central Wind Facilities. The three wind farms offer 1,485 MW of generating capacity and are powered by 531 General Electric (GE) turbines.

In March, Invenergy and GE Renewable Energy completed the Traverse Energy Center, the largest and last of the three wind projects that constituted AEP's reconstituted effort to build large-scale wind. The 998 MW Traverse project is considered the largest wind farm constructed in a single phase in North America.

“After even more work and regulatory proceedings, the project was approved,” said Barton. “I was struck by the commitment of the team.”

More than ever, Barton said the energy industry needs to be thoughtful and intentional in its long-term planning. While capacity needs in power generation are especially changing, she said she doesn’t think about the industry’s assets when looking toward the future; Barton, instead, thinks more about its people.

“This industry is built on stewardship," she said. That makes it an attractive industry for younger people "who want to ensure that what they are doing provides value and has meaning,” As a result, "we need to focus on telling that story and ensuring that people can connect those dots.”

Barton said that the energy industry's transformation marks the beginning of a new journey. "We need a broad range of talent, diversity of skills, people and ideas to make it all happen," she said. And building trust among all stakeholders will be even more important in the future than it has been in the past.

“If you want to change the world," Barton said, "this is industry to do it!"

Invenergy and GE Renewable Energy have completed the Traverse Energy Center, the largest of three wind projects in Oklahoma collectively known as the North Central Energy Facilities.

The 998 MW Traverse project is considered the largest wind farm constructed in a single phase in North America. It joins the already operational 199 MW Sundance Wind Energy Center and the 287 MW Maverick Wind Energy Center as the last of three projects developed by Invenergy for American Electric Power (AEP).

Traverse is providing power to customers in Oklahoma, Arkansas and Louisiana. As part of a recent one-on-one interview with Clarion Energy, AEP President and CEO Nick Akins talked about the latest addition:

Traverse is now operational and powered by 356 of GE’s 2 MW turbines. GE’s platform is a three-blade, upwind, horizontal axis wind turbine with a rotor diameter of either 116, 127 or 132 meters, operates at a variable speed and uses a doubly fed induction generator with a partial power converter system.

The North Central Energy Facilities collectively are powered by 531 GE turbines.

Invenergy will provide operations and maintenance, balance of plant, energy management and asset management services under a ten-year agreement. The company said it now manages close to 13 GW of sustainable energy projects globally.

AEP has a goal of achieving net-zero carbon emissions by 2050 and an interim goal of cutting emissions 80% from 2000 levels by 2030. Integral to AEP’s goal is adding approximately 16,000 MW of wind and solar by the end of the decade.

Clarion Energy spoke exclusively with AEP President and CEO Nick Akins about the company’s renewables goals at the CERAWeek Conference in Houston.

WATCH:

Indiana Michigan Power is asking renewable developers to propose 800 MW of wind and 500 MW of solar power projects to help diversify its generating fleet.

The announcement follows a filing with the Indiana Utility Regulatory Commission in February, detailing planned actions from the near future through the next 20 years.

From this request, I&M said it expects some of the new renewable resources to be online by as early as the end of 2024 and the full 1,300 MW online as early as the end of 2025. The RFP calls for solar projects within Indiana or Michigan. Wind projects can be in those states, as well as Illinois or Ohio. Bids are due April 21, and I&M plans to have contracts in place by the end of 2022.

A second RFP is planned for a later date, seeking proposals for about 800 MW of solar, 60 MW of battery storage and 1,000 MW from natural gas peaking units to meet system needs by 2028. Altogether, both solicitations would add new resources that would more than quadruple I&M’s current solar and wind generation capacity.

With the scheduled retirement of I&M’s coal-fired Rockport Plant by 2028, the natural-gas peaking units would generate power only during periods of high energy use and could potentially use hydrogen as a future fuel source.

READ: AEP gains court approval for modified plan to retire Indiana coal-fired units

Indiana Michigan Power is a unit of American Electric Power (AEP), which has a goal of achieving net-zero carbon emissions by 2050 and an interim goal of cutting emissions 80% from 2000 levels by 2030. Integral to AEP’s goal is adding approximately 16,000 MW of wind and solar by the end of the decade.

 The microgrid includes an existing 658-panel solar array on site that powers a new 250 kilowatt/ 1,140 kilowatt-hour battery energy system. It is expected that this system would be able to maintain power to the plant for up to five days in the event of an outage. When an outage occurs, the microgrid will take over delivering power to the plant within minutes. 

As part of the demonstration project, AEP Ohio, in partnership with the city of Athens, will perform a series of planned outages over the next 11 months to test the microgrid’s effectiveness in various situations. 

This microgrid is one of three for AEP Ohio. In 2020, a microgrid was installed at the Columbus Zoo and Aquarium to help power the water filtration system at the Polar Frontier exhibit, while a third microgrid is scheduled for construction at a Columbus Public Water facility. In partnership with the host sites and the Public Utilities Commission of Ohio, simulated outage data will be analyzed as AEP Ohio looks for new ways to adapt in an evolving utility industry.  

“AEP Ohio is always looking for new solutions for the future of electrical service,” said AEP Ohio’s Anthony DeBord, Customer and External Affairs Manager. “This microgrid project was a great opportunity for AEP Ohio to partner with the city of Athens and gain experience that could one day benefit all of our customers.” 

“This new solar-powered backup system will truly enhance the resilience of one of our most vital assets, the Athens Water Treatment Plant,” said Athens Mayor Steve Patterson. “I really appreciate AEP Ohio engaging with Athens on this demonstration project and for bringing it across the finish line.” 

The project is part of the Smart City program and is an important piece of AEP Ohio’s commitment to build a smarter, more resilient energy grid. 

The microgrid is owned by the city of Athens and operated by AEP Ohio.