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    Did AEP’s New 200 MW Prairie Creek Renewable PPA Just Shift American Electric Power Company’s Investment Narrative?

    Simply Wall St·12/21/2025 14:12:30
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    • Earlier this week, RWE and American Electric Power’s Indiana Michigan Power Company finalized a long-term power purchase agreement for the full 200 MW output of the Prairie Creek project in Indiana, intended to supply electricity equivalent to about 42,000 homes and support the state’s rising power demand.
    • This agreement underlines how AEP is using contracted renewable capacity to reinforce grid reliability and keep energy affordable as regional demand grows.
    • Next, we’ll examine how this new long-term renewable PPA ties into AEP’s capital investment plans and long-term load growth outlook.

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    American Electric Power Company Investment Narrative Recap

    To own AEP, you generally need to believe that regulated utilities can earn steady returns as electricity demand rises and grids transition to cleaner generation. The new 200 MW Prairie Creek renewable PPA supports that thesis by adding contracted capacity, but it does not materially change the near term picture where the key upside remains execution of AEP’s large capital plan and the biggest risk is heavy funding needs and related dilution or financing costs.

    The recent long term agreements with Quanta Services to support AEP’s US$72 billion capital plan are closely related, because both moves focus on expanding and hardening the transmission network while managing supply chain and construction risk. Together with Prairie Creek, they show AEP leaning into load growth with new infrastructure, even as investors weigh the implications of repeated equity offerings to fund that expansion.

    But investors also need to be aware that heavy capital spending, combined with equity raises and regulatory uncertainty in key states, could...

    Read the full narrative on American Electric Power Company (it's free!)

    American Electric Power Company's narrative projects $24.6 billion revenue and $4.1 billion earnings by 2028. This requires 6.0% yearly revenue growth and about a $0.5 billion earnings increase from $3.6 billion today.

    Uncover how American Electric Power Company's forecasts yield a $128.97 fair value, a 13% upside to its current price.

    Exploring Other Perspectives

    AEP 1-Year Stock Price Chart
    AEP 1-Year Stock Price Chart

    Simply Wall St Community members’ fair value estimates for AEP span roughly US$105 to US$129 across 2 views, underlining how far opinions can stretch. When you set that against AEP’s sizeable US$54 billion plus capital program and reliance on commercial and industrial load growth, it becomes even more important to compare several perspectives before deciding how this utility might fit in your portfolio.

    Explore 2 other fair value estimates on American Electric Power Company - why the stock might be worth 8% less than the current price!

    Build Your Own American Electric Power Company Narrative

    Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.