William J. Fehrman
President and Chief Executive Officer at American Electric Power
Thank you Darcy and good morning everyone. Welcome to our fourth quarter 2024 earnings call.
Let me start by saying that after six months on the job, I continue to get more excited about the very strong and comprehensive AEP value proposition. Our future is extremely bright and we are committed to delivering on our promises to customers, regulators and investors. By putting our robust capital plan to work, we are building a platform of success by focusing on execution and accountability.
These are exciting times at AEP and I see incredible value in this company which I am confident we can further unlock by advancing our long term strategy and providing safe, affordable and reliable service across our large footprint. Before we jump into our results, I'd like to start by introducing our new cfo, Trevor Mihalik, who joined AEP last month and is on the call with me today. Trevor is a proven leader and an industry veteran.
He's hit the ground running and is already considered a very strong, disciplined and focused member of our senior leadership team. I've made a number of changes over the last six months to streamline our leadership structure by eliminating management layers, reorganizing and reducing the size and scope of the service corporation and improving procurement processes to drive much higher value from suppliers. The leadership team is coming together to make AEP a premium traded utility that is highly respected and trusted by our many stakeholders.
Lastly, I'd like to take a moment to thank Chuck Zabula for his more than 25 years of dedicated service to AEP. We're grateful for his steady hand during the transition and will continue to benefit from his expertise until his well earned retirement in March. In my remarks this morning, I will discuss our strategic focus and our results at a high level before passing it over to Trevor to walk through our financials in more detail.
Today we announced fourth quarter 2024 operating earnings of $1.24 per share or $660 million, bringing our full year 2024 operating earnings to $5.62 per share.
Recall, as part of our commitment of continuing to deliver value to our shareholders, last October we increased the quarterly dividend from 88 to 93 cents per share. In addition, today we are reaffirming AEP's 2025 operating earnings guidance range of $5.75 to $5.95 per share and affirming our long term operating earnings growth rate of 6 to 8%, all reinforced by our robust $54 billion capital plan from 2025 through 2029. As we have talked about previously, I'm committed to a strong balance sheet and I believe it is critical to funding our robust capital plan. We will responsibly finance the great opportunities ahead of us from a position of strength.
Trevor will address this further in his remarks. We will also be disciplined around portfolio management. In fact, last month we announced the Ohio and INM minority interest transaction on the transmission business with KKR and PSP Investments for $2.82 billion. The transaction is highly accretive at 2.3 times rate base and valued at 30.3 times price to earnings. To put this into another perspective, this is equivalent to issuing AEP common stock at $170per share. Moreover, in the last couple of weeks we filed for approval with FERC and we expect to close in the second half of 2025, at which time we'll still retain 95% of AEP's total transmission assets.
The proceeds from this transaction allow us to rotate capital into investments that benefit our customers as we enhance reliability and deliver on growing energy demand. In addition to the minority interest transaction, we also recycled almost a half billion dollars in net cash proceeds in 2024 through the sale of the New Mexico Renewable Development, Solar Portfolio and Distributed Resources business. We continue to work with federal policymakers, state legislators and regulators across our large service footprint to determine what their goals are so we can relentlessly deliver on them.
I would also like to spend some time this morning walking through AEP's future growth opportunities, which are underpinned by four major drivers large load in our service territories, including data center load that we appreciate having the chance to serve and are aggressively pursuing economic development efforts in our states, investment across the system in our transmission and distribution infrastructure and new generation. Our capital plan includes customer commitments for 20 gigawatts of incremental load by 2030, driven by data center demand, reshoring and manufacturing and continued economic development. In fact, large load impacts are already being felt in many of AEP's service territories, especially in Ohio, Texas and Indiana.
As demonstrated in our fourth quarter results, we experienced commercial load growth of 12.3% over the fourth quarter and 10.6% growth on the full year compared to 2023. One of the reasons we are seeing such growth now is that we have an advanced transmission system that can help support current large loads, which is significant advantage for us versus our peers. As we execute on our $54 billion capital plan to support customer needs, affordability remains top of mind and we are committed to fair cost allocation associated with large loads. We proactively filed the Data Center Tariff in Ohio and large low tariff modifications in Indiana, Kentucky and West Virginia, and we look forward to commission decisions in Indiana and West Virginia on both states Unanimous settlements in the near future.
The Data Center Tariff hearing in Ohio concluded last month and we should have a commission decision by the third quarter of this year. In addition to our efforts to support load growth, our current capital plan contemplates sustained and substantial investments across our distribution infrastructure to better meet our customers energy needs and improve customer service. Since AEP's distribution system is one of the nation's largest at approximately 225,000 distribution miles, these efforts include work to harden or replace poles, conductors, transformers and other assets, as well as deploy automated technologies like AMI meters and GripSmart for enhanced operational performance.
In total, we are investing more than $13 billion over the next five years in these areas to improve reliability and reduce both frequency and duration of outages. By advancing these initiatives, as well as an aggressive vegetation management program, we will increase customer satisfaction, strengthen our system's resilience to weather events and reduce cost for operations and maintenance Demand for power is growing at a pace not seen over my 44 years in this business. As we discussed last quarter, meeting this demand could require incremental investment of up to $10 billion driven by additional transmission, distribution and generation infrastructure not included in our current $54 billion capital plan.
For example, in our three primary RTOs, we see an opportunity of approximately 4 to 5 billion dollars of incremental transmission awards recently approved or expected to be approved in the near term, with additional upside on other initiatives. The remainder of the $10 billion of incremental capital upside is in transmission, distribution and generation infrastructure across the business. In addition, as you'll recall, in November we announced a partnership of Bloom Energy related to fuel cells.
Our current capital plan does not include any investment in this custom solution which will enable our large customers to quickly power their operations. And while the grid is built out to accommodate further demand, once the necessary infrastructure is connected to these large customers, they can use the fuel cells as backup generation, further adding resiliency to their operations. This demonstrates our commitment to finding innovative customer solutions that let them power up much quicker, allowing their business to deliver service to their customers, which will generate profits much sooner than waiting for a grid connection.
As a matter of fact, just this week AEP Ohio filed with the Ohio Commission for approval of the first two customer projects using this fuel cell technology totaling 100 megawatts. Not only is AEP working to bring solutions tailored to the current power needs of our states, but we are leading efforts in the industry on the potential that small modular reactors or SMRs have to meet the growing needs of the future. Looking to partner with the U.S.
Department of Energy to support the early site permit process for two potential SMR locations, one in Indiana and the other in Virginia. We are laying the groundwork to find solutions to support large loads and are fortunate for the opportunity to build these SMRs, but only with appropriate risk sharing. The tech companies are fast movers and AEP will be there to support them with whatever technology solution they want to deploy, but we need to ensure that we are protected and compensated.
Moving on to regulatory over the last six months I have visited 10 of our 11 states and have been actively engaged with various stakeholders, listening to their preferences as we invest more in resources at the local level. I firmly believe that by delivering for our states and the customers who live there, we can over time improve our earned roes and increase equity layers. As states are more receptive for the need to attract capital, it is an absolute imperative that AEP listen closely to our states and then aggressively deliver on the agreed upon commitments.
That's my promise to them when I look at 2024. In review, our operating companies achieved a number of positive regulatory developments including received constructive base rate case outcomes in Indiana, Michigan, Oklahoma, Texas and Virginia obtained Commission approval of the Ohio Electric Security Plan, updated formula rates in Arkansas and Louisiana and filed system resiliency plans in both of our operating companies in Texas. As we discussed on our last call, APCO filed its base case in West Virginia while offering securitization as a concept to help mitigate the proposed base rate increase.
Intervenor testimony in this case is set for April with rebuttal testimony following in May and a hearing set to start in mid June of this year. We look forward to working with everyone involved in this case to achieve a positive outcome for both our customers and our shareholders. Shifting now to our generation fleet, we previously filed for approval of PSO's Green Country 795 megawatt natural gas facility, SweptCo's new Hullsville 450 megawatt natural gas plant, as well as SwepCo's Welsh 1053 megawatt natural gas conversion project.
These facilities and RFPs which are currently in progress at APCO, IM and PSO in addition to future Integrated Resource Plan filings over the next couple years in Arkansas, Kentucky, Indiana, Michigan, Virginia and West Virginia, support our capacity obligations and will go a long way in meeting our customers energy needs. In summary, we're engaged with key stakeholders on the regulatory front as we keep affordability, system, reliability, resiliency and security top of mind. I'm excited to start the new year having made meaningful progress and will continue these important efforts as we advance on our commitment to excellence and deliver on what our states want.
I'll close by thanking everyone at AEP for their hard work and dedication in 2024. I'm energized as we enter 2025 with a strong team and a more streamlined structure that are significantly driving efficiencies, reducing bureaucracy and creating a much more nimble company that can quickly execute on opportunities. We're also having our employees who have been working from home return to the office full time by June 1st to put all hands on deck with a renewed focus on execution and accountability that will serve us well as we advance our strategic priorities to enhance value for our stakeholders.
With that, I'll now turn it over to Trevor.
