U.S. Energy Department Finalizes $1.6 Billion Loan Guarantee to AEP for Midwest Grid Reliability Project

The U.S. Department of Energy’s Loan Programs Office on Oct. 16 finalized a $1.6 billion loan guarantee to a subsidiary of American Electric Power, one of the nation’s largest utility companies. The financing aims to strengthen grid reliability and lower electricity costs by reconductoring and rebuilding about 5,000 miles of transmission lines in Indiana, Michigan, Ohio, Oklahoma, and West Virginia. The project is expected to create more than 1,000 construction jobs and expand grid capacity in areas experiencing rapid electricity demand growth.

The transaction marks the first financial close under the Energy Dominance Financing Program, a new initiative established through the Working Families Tax Cut, also known as the One Big Beautiful Bill Act. The program advances the administration’s energy dominance policy by promoting investments that enhance U.S. energy infrastructure, improve reliability, and deliver measurable financial benefits to consumers. Utilities receiving funding through the program must demonstrate that savings generated from the loan are passed on to their customers.

The loan guarantee aligns with President Donald Trump’s executive order on Strengthening the Reliability and Security of the United States Electric Grid, directing federal efforts to reinforce the resilience of the nation’s power system. The project underwent detailed evaluation to ensure responsible management of taxpayer funds and alignment with national energy and security priorities.

By leveraging the LPO’s financing capabilities, DOE aims to expand access to affordable and dependable power, modernize aging transmission infrastructure, and promote investment in critical grid upgrades. The initiative underscores the agency’s commitment to leveraging federal financing tools to strengthen U.S. energy independence and deliver long-term economic benefits for households and businesses across the midwestern region.