Adds details on how AEP Texas plans to use the loan, details from US Energy Department

By Pooja Menon and Timothy Gardner

July 8 (Reuters) - American Electric Power AEP.O said on Wednesday it has secured a loan of up to $3.26 billion from the U.S. Department of Energy to help boost electricity transmission on the Texas grid.

Power consumption in the U.S., which hit its second straight annual record high in 2025, will rise further in 2026 and 2027, driven by data centers and artificial intelligence and electrification of vehicles and appliances, according to the U.S. Energy Information Administration.

AEP Texas said the federal funding is expected to save customers about $685 million over 30 years and finance nearly 100 projects across Texas aimed at enhancing grid reliability.

The DOE said the loan from the Office of Energy Dominance Financing, formerly known as the Loan Programs Office, will finance projects including replacing old existing low-capacity wires with advanced conductors, a process known as reconductoring, and constructing new transmission infrastructure spanning about 2,800 miles (4,500 km).

The projects will double the power-carrying capacity of upgraded transmission infrastructure, reduce power interruptions, and connect new power plants and electricity generation to the grid, the department said.

It said the projects will help meet power demand from data centers, manufacturing, and oil and natural gas development in the Permian Basin, the country's top producer of those fossil fuels.

Nearly a year ago, the administration of President Donald Trump axed a conditional $4.9 billion loan guarantee for the Grain Belt Express transmission project to send power from wind and solar energy in Kansas to cities in the Midwest and East. Farmers had opposed that plan which had been launched by the administration of former President Joe Biden, as the project had filed dozens of eminent domain, or compulsory acquisition, petitions against landowners.

AEP Texas also said it has signed letters of agreement supporting up to 41 gigawatts of potential new power demand, known as new load additions, through 2030.