AEP Nabs Up to $3.26B DoE Loan to Shore Up Texas Grid

American Electric Power said a $32.6 billion loan from the U.S. Department of Energy is heading to its Texas unit, earmarked for infrastructure work that improves grid reliability. The money, a loan guarantee through the DoE's Loan Programs Office, will help fund transmission and distribution upgrades across the utility's Texas service territory.

The award lands amid a stretched Texas grid. ERCOT, the state's independent system operator, has warned repeatedly that reserve margins outside of peak generation remain tight, especially during summer heat waves and winter storms. AEP Texas, the utility subsidiary behind the application, operates poles and wires across the state's southern and western regions, serving roughly 400,000 customers.

The $3.26 billion figure covers the main loan amount. The utility has the option to draw an additional $1.05 billion in