American Electric Power has closed on a $1.6 billion U.S. Department of Energy loan guarantee to help finance 5,000 line-miles of transmission upgrades.

AEP Transmission will perform the work in Indiana, Michigan, Ohio, Oklahoma and West Virginia. It estimates the preferred interest rate deal will save ratepayers $275 million over the life of the loan while supporting economic development and technology advancements in the communities and regions served by the lines.

These benefits were emphasized by DOE officials as they announced the loan guarantee, which is the first closed under the Energy Dominance Financing Program created by the One Big Beautiful Bill Act in July.

“Energy is central to human lives in the United States and around the world,” Energy Secretary Chris Wright said during a call with reporters Oct. 16. “It’s not one sector of the economy; it’s THE sector of the economy that enables all the other sectors.”

DOE said electric utilities that receive loan guarantees under the DOE program must provide assurance they will pass along savings to their customers.

AEP provided a list outlining the 127 projects in the package. They range from a rebuild of 0.13 line-miles on the Comville-Cyril line in Oklahoma to work on 345 and 349.8 line-miles on segments of the Desoto-Sorenson line in Indiana.

In his remarks, Wright roundly criticized the energy policies of President Joe Biden and the financial support they offered for clean energy and decarbonization efforts. DOE’s Loan Programs Office — which has been renamed the Energy Dominance Financing Office — was central to this, Wright said.

Accordingly, DOE (like other federal agencies) has been canceling programs and funding central to Biden’s green agenda since President Donald Trump began his second term. (See DOE Terminates $7.56B in Energy Grants for Projects in Blue States and Energy Grants Worth $24B Appear Poised for Cancellation.)

But the review of these Biden-era awards — including AEP’s $1.6 billion loan guarantee, which was announced conditionally Jan. 16 — is showing that “not all of them were nonsense,” Wright said.

“The ones that are in the interest of the American taxpayers, in the interest of the American ratepayers, and there’s a helpful role for government capital, we’re happy to support those,” he said.

“We don’t care about authorship,” he told a reporter. “You’re right, this one started under the Biden administration, but it’s a good project. We’re happy to move forward with that. But, boy, there’s a lot [of projects] that don’t check those boxes.”

One of those was the Grain Belt Express, an $11 billion, 800-mile HVDC project under development since 2010. (See DOE Pulls $4.9B in Funding for Grain Belt Express.)

A reporter asked why DOE was backing AEP but not Grain Belt.

Wright said the AEP package is “a lot of bang for the buck” that will allow for better flow of power over existing lines to support economic development and reduce costs in five states.

Grain Belt, by contrast, will be slower and far more expensive per mile because it is new construction. Beyond that, it is a fundamentally different concept.

“Ultimately, that’s a commercial transaction, and it involves some market risk. Is that arbitrage big today, is that arbitrage still going to be big? Is it going to fund and pay off the construction of that transmission line? … It probably will, but it’s a more commercial enterprise that’s just done with private entrepreneurs and private capital.”

Greg Beard, who has been running what was known as the Loan Programs Office, added: “That project had a lot of merchant risk that was yet to be solved, and a consideration was: What’s appropriate for taxpayer risk and what’s appropriate for private market risk?”

Wright said: “I love energy infrastructure. I have nothing against the Grain Belt Express, I suspect it will still be developed.”

AEP hailed the agreement in a news release and said it will work with communities and landowners on siting the upgrades. CEO Bill Fehrman said earlier in 2025 that AEP will meet load growth with a capital spending plan totaling at least $54 billion. (See AEP to Meet Load Growth with More Infrastructure.)

He reiterated the growth in the Oct. 16 news release: “AEP is experiencing growth in energy demand that has not been seen in a generation. 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.”