The Trump administration has finalized $1.6 billion in financing for a subsidiary of utility giant American Electric Power to upgrade thousands of transmission lines across five states.
The decision to close the loan was unexpected, as the administration has moved to cut the Department of Energy’s office in charge of distributing such financing, particularly for clean energy-focused projects. It marks the first time under President Donald Trump’s second administration that the Department of Energy has closed on a loan guarantee under its new Energy Dominance Financing Program and Loan Programs Office, which lost roughly half of its staff this year and has seen billions of dollars’ worth of loans canceled.
The $1.6 billion loan will go to AEP Transmission to replace nearly 5,000 miles of existing transmission lines with upgraded lines capable of carrying more energy to consumers across the country.
The project is expected to create more than 1,000 construction jobs and save consumers $275 million in financing costs over the life of the loan, lowering bills in Indiana, Michigan, Ohio, Oklahoma, and West Virginia.
Roughly 100 miles of transmission lines in Ohio and Oklahoma will be the first to be replaced, supported by the loan guarantee.
“AEP is experiencing growth in energy demand that has not been seen in a generation,” Bill Fehrman, AEP chairman, president, and CEO, said in a statement. “As the first company to close a new loan with the Trump Administration under this program, we are excited to get to work on these projects to improve the service we provide to our customers.”
“This loan saves our customers money and improves reliability while supporting economic growth in our states. The funds we will save through this program enable us to make additional investments to enhance service for our customers,” Fehrman continued.
The loan guarantee was first announced in the final days of the Biden administration, which estimated that the upgrades would increase transmission capacity by around 70%.
For months, there was speculation that the loan was at risk of cancellation, as Energy Secretary Chris Wright publicly doubted the validity of loan commitments made in the weeks between Trump’s inauguration and the November presidential election.
In July, Wright also canceled a loan commitment for a massive multistate transmission project, which was said to provide upward of five new gigawatts of energy across the Midwest.
Current and former LPO employees have insisted that projects like AEP Transmission’s would support the administration’s energy dominance agenda by lowering costs for consumers and bolstering the straining grid.
Wright told reporters Thursday morning that his department has found several projects with conditional commitments that are “in the interest of the American taxpayers,” including AEP Transmission.
“This one started under the Biden administration, but it’s a good project,” he said, confirming that none of the terms and conditions of the loan were changed since the Biden administration announced the financing.
While the administration is happy to move forward on this one project, Wright and LPO senior adviser Greg Beard said there are many others that were rushed through.
Beard said that the administration has closely reviewed projects to determine whether they will increase costs for consumers or fail to increase grid reliability.
“Many projects that we’ve seen in the last prior four years did, we don’t want to have anything to do with that,” Beard told reporters.
In announcing the loan closure, the Department of Energy did not acknowledge that it was first negotiated under its predecessors, crediting the loan to Trump.
FORMER DOE OFFICIAL PRESSES GOP FOR RELEASE OF OVER $40B IN LOANS
“Thanks to President Trump and the Working Families Tax Cut, the Energy Department is ensuring the American people will have access to affordable, reliable and secure energy for decades to come,” Wright said.
“The President has been clear: America must reverse course from the energy subtraction agenda of past administrations and strengthen our electrical grid,” he continued. “This loan guarantee will not only help modernize the grid and expand transmission capacity but will help position the United States to win the [artificial intelligence] race and grow our manufacturing base.”
