AEP Lifts 2026 Earnings Guidance by $0.10 Amid Q2 Timing and Q3 Regulatory Uplift

AEP Q2 2026 operating earnings and the $0.10 guidance increase: drivers, Transmission Holdco timing, and Q3 regulatory uplift

Q2 2026 operating earnings result: what AEP said drove the year-over-year comparison

AEP reported Q2 2026 operating earnings of $1.36 per share versus $1.43 per share in Q2 2025. ¹ Management attributed the Q2 2026 result being below last year primarily to timing-related items, most notably Transmission Holdco performance and income tax timing. ²

1) Transmission Holdco timing (minority interest sale timing effect)

AEP explained that Transmission Holdco earnings reflect the impact of the 2025 minority interest sale, which closed in June of last year. ²
Management’s framing was essentially a comparability/timing issue: while it hurt the Q2 YoY comparison, AEP expected Transmission Holdco earnings to provide a favorable year-over-year contribution by the end of 2026, as continued infrastructure investment drives those earnings. ²

2) Corporate and other income tax timing

AEP also pointed to income tax timing items in the corporate and other segment, tied to consolidated impacts of the effective tax rate, with the expectation that these will reverse by the end of the year. ² The same categories of transmission-sale/timing-related tax items were noted as reflected in AEP’s year-to-date performance. ²

Underlying performance (despite the timing headwinds)

After highlighting the timing items affecting Q2 comparability, AEP stated that underlying results remained strong and that earnings benefited from several fundamental factors, though those were described more broadly than as the precise bridge to the $1.36 print:

• Constructive regulatory outcomes ²
• Higher normalized sales ²
• Growth in transmission revenues ²

These were described as partially offset by (1) prior year’s favorable weather and (2) increased O&M spend to enhance system reliability. ²

The $0.10 per-share increase to 2026 guidance: how management linked it to H2 expectations and Q3 “regulatory uplift” items

AEP raised its 2026 full-year operating earnings guidance to $6.25–$6.55 per share from $6.15–$6.45—an increase of $0.10 per share. ¹

1) Guidance increase framed as “in excess of plan” through Q2

Management emphasized that results through Q2 were “well within, or actually… in excess of” the level assumed when the guidance range of $6.15–$6.45 was built. ³

2) Q3 is historically the strongest quarter—plus regulatory uplift expected in multiple operating companies

AEP then explained the mechanics for why the midpoint increase was supportable:

• Historically, Q3 is typically AEP’s strongest quarter. ³
• Management expected earnings uplift from certain regulatory matters, “primarily” in:
  • AEP Ohio (described as inflation-based rates) ³
  • SWEPCO Texas ³
  • PSO ³
• These items were described as phasing in over the second half of the year, giving confidence to increase the range by the $0.10. ³

3) Reinforcement from CFO summary: “raised… by $0.10 per share” based on YTD and trends

In the closing financial-performance remarks, the CFO stated more directly that, based on year-to-date performance and trends across the business, AEP raised 2026 operating earnings guidance by $0.10 per share. ⁴ This aligns with the CEO’s “H2/Q3 uplift + better-than-plan start” logic. ³⁴

Where Transmission Holdco timing fits into the guidance story (and why it didn’t block the raise)

AEP’s comments on Transmission Holdco in Q2 mainly addressed year-over-year comparability, not an impairment to the outlook:

• The June 2025 minority interest sale created timing effects in Q2 2026 results versus 2025. ²
• But AEP expected a favorable year-over-year contribution by the end of 2026, driven by continued infrastructure investment. ²

That expectation is consistent with the guidance raise being justified by (a) being ahead of plan through Q2 and (b) expecting Q3/H2 regulatory uplift items to phase in—rather than by assuming Transmission Holdco would be unfavorable throughout the year. ²³

Summary: AEP’s explanation in one integrated chain

• Q2 2026 operating earnings were $1.36/share, below Q2 2025, primarily due to timing-related Transmission Holdco impacts (minority interest sale closed in June 2025) and income tax timing items expected to reverse by year-end. ¹²
• Management said underlying drivers still supported results (constructive regulatory outcomes, higher normalized sales, transmission revenue growth), offset partly by prior-year weather and higher O&M for reliability. ²
• Despite the timing headwinds in Q2 comparability, AEP raised 2026 guidance by $0.10/share because results through Q2 were ahead of the plan and because Q3 is typically strongest, with regulatory-driven earnings uplift expected to phase in over the second half, primarily in AEP Ohio (inflation-based rates), SWEPCO Texas, and PSO. ³¹⁴
• Transmission Holdco timing was treated as a comparability issue, with AEP expecting a favorable year-over-year contribution by end of 2026 as infrastructure investment continues—supporting the idea that the guidance raise did not depend on eliminating that Q2 timing effect. ²