Why It Matters
Electric utilities across the United States are planning to spend $1.4 trillion on power grid infrastructure over the next five years, according to a new study from energy research group Powerlines. Much of that cost is expected to eventually appear on monthly utility bills for residential and business customers. The spending projection comes as utilities requested $31 billion in rate increases from consumers in 2025 alone.
Ohio residents served by Duke Energy and American Electric Power face exposure to billions in planned capital investments that could drive future rate increases through the state’s regulatory process.
What Happened
Powerlines reviewed quarterly earnings reports from 51 investor-owned utilities to produce the five-year capital expenditure forecast. The $1.4 trillion projection represents a roughly 20 percent increase compared to projections from a year ago.
Duke Energy, which operates in southeast Ohio, has the largest capital expenditure plan in the country at $103 billion. About $3.25 billion of that is earmarked for Ohio upgrades, with the bulk directed toward Duke’s operations in the Carolinas and Florida.
American Electric Power, operating in Ohio and 10 other states, ranks fifth nationally with $72 billion in planned spending. Approximately $5.7 billion is designated for Ohio projects, according to the company’s fourth quarter earnings presentation.
By the Numbers
The Powerlines study found utilities are proposing about 20 percent more in capital expenditures compared to last year’s five-year outlooks. Historical data shows actual capital spending typically reaches roughly 95 percent of projected amounts.
Utilities requested $31 billion in rate increases from customers in 2025. Those increases have not yet fully reached consumer bills.
One example of spending growth: American Electric Power completed fewer than eight transmission projects annually from 1998 to 2012. That number jumped above 20 in 2013, exceeded 100 in 2017, and reached 315 last year, according to figures cited by the Ohio Energy Leadership Council.
How Utilities Profit From Infrastructure
Utilities operate as regulated monopolies and generate revenue through a process overseen by state regulators. The companies spend money to deliver power, then seek reimbursement through rates approved by state authorities.
Capital expenditures—new power plants, transmission lines, and grid infrastructure—differ from operational expenses like maintenance and fuel costs. While utilities recover both types of spending, capital investments generate an additional return on top of cost recovery. That return serves as the primary profit mechanism for utility companies.
Powerlines Founder Charles Hua noted utilities report these metrics to investors because capital spending directly determines profit margins. The continual upward trend raises questions about whether investment figures are inflated to achieve greater returns, he said.
Regulatory Concerns
During debate over Ohio House Bill 15 last year, the Ohio Consumers’ Counsel and the Ohio Energy Leadership Council warned that utilities are making large investments in transmission projects subject to limited regulatory review.
Industrial power users argued these projects are not reviewed for cost effectiveness or necessity. State regulators trust transmission companies to build what they determine is needed for reliability without additional scrutiny.
Proposed changes to strengthen oversight did not make it into the final legislation.
What’s Next
Utilities must still present their capital investments to state regulators and demonstrate expenditures were prudent and reasonable. The $1.4 trillion in planned spending does not automatically translate to equivalent rate increases.
However, historical data shows a strong correlation between higher capital expenditures and subsequent rate increase requests. If past trends hold, consumer bills are likely to rise as utilities recover costs and earn returns on grid infrastructure investments approved through the regulatory process.