Energy Department Offers $1.6 Billion Loan Guarantee to Upgrade Lines Across Midwest

Energy Secretary Chris Wright said the agency was ‘using funds to better the American experience by investing in energy that helps families and business.’

Transformers and power transmission lines in a power distribution yard on Aug. 18, 2003 in Des Plaines, Illinois. Tim Boyle/Getty Images

The Trump administration finalized a $1.6 billion loan guarantee on Oct. 16 through the Department of Energy to upgrade nearly 5,000 miles of transmission lines throughout five states, mostly in the Midwest.

The project offers billions to AEP Transmission, a subsidiary of Ohio-based American Electric Power—one of the nation’s largest power companies—to upgrade power lines in Michigan, Indiana, Ohio, Oklahoma, and West Virginia, mostly enhancing grid reliability and capacity, according to the Energy Department.

“We already have transmission lines in place, but by replacing the conductors themselves, we can get more electricity that can avoid blackouts,” a senior administration official said on Thursday.

Energy Secretary Chris Wright said the agency is “using funds to better the American experience by investing in energy that helps families and business.”

“The president has been clear: America must reverse course from the energy subtraction agenda of past administrations and strengthen our electrical grid,” Wright said in a statement.

“This loan guarantee will not only help modernize the grid and expand transmission capacity but will help position the United States to win the AI race and grow our manufacturing base.”

The project is expected to create more than 1,000 construction jobs while boosting electrical capacity in “rapidly growing areas,” according to a news release from the Energy Department.

The upgrades will replace transmission lines in existing rights-of-way with new lines that can carry more energy, according to American Electric Power.

“The upgrades will provide enhanced reliability for customers and facilitate new economic growth opportunities by bringing additional power capacity to the communities AEP serves,” the company said, adding that energy demand is increasing across its customer footprint.

American Electric Power said customer business expansions and additions will require an additional 24 gigawatts of electricity demand by the end of the decade.

“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,” Bill Fehrman, American Electric Power chairman, president, and chief executive officer, said in a statement.

“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.”

The first projects that the loan guarantee will support are 100 miles of transmission lines throughout Ohio and Oklahoma, with additional projects to follow, the energy company said.

Overall, the money will be used to replace more than 2,100 miles of transmission lines serving 1.5 million customers in Ohio, as well as more than 1,400 miles of lines serving 600,000 customers in Indiana and Michigan, according to American Electric Power.

Additionally, more than 1,400 miles of lines serving 1.2 million customers in Oklahoma and 26 miles of lines serving 460,000 customers in West Virginia will be replaced.

That amounts to 126 projects in total, the company added.