Utilities plan $1.4 trillion in grid investments, likely pushing bills higher in Ohio and elsewhere
By 2030, utilities around the country plan to spend $1.4 trillion building out the power grid, according to a study by the energy research group Powerlines. Eventually, much of that expense will likely show up on consumers’ monthly utility bills.
Powerlines reviewed quarterly earnings reports from 51 investor-owned utilities to produce its study. The five-year forecast represents a sharp increase compared with projections from just a year ago, and it comes as utilities around the country requested $31 billion in consumers rate increases in 2025.
“These two data points, the $1.4 trillion in capital spending over the next five years, and the $31 billion in rate increase request last year, that has not yet fully hit people’s utility bills,” Powerlines Founder and Executive Director Charles Hua explained. “We consider them both leading indicators for where the trend around utility and electricity affordability could go over the next coming years.”
Duke Energy which operates in southeast Ohio has the largest capital expenditure plan of any utility in the country. The biggest share of that $103 billion investment is headed for its utilities in the Carolinas and Florida. Duke plans to spend about $3.25 billion on upgrades in Ohio.
American Electric Power, which operates a utility in Ohio as well as 10 other states, lands at number five on Powerlines’ list of proposed capital expenditures. The company expects to spend $72 billion across its 11-state footprint. According to AEP’s fourth quarter earnings presentation in 2025, about $5.7 billion of that is planned in Ohio.
What’s a capital expenditure and why is it important?
Utilities operate as regulated monopolies, and they generate revenue a little differently than an ordinary business. To simplify a complex process, the utility spends money to deliver power and then takes the bill to state regulators to get reimbursed. Utility customers pay for that reimbursement through the rates approved by regulators that show up on their monthly bills.
But Hua explained there are two different kinds of utility spending.
“One is capital expenditures,” he said, “that is new power plants, new power lines, the poles and wires that make up our grid. And then the other category is operational expenditures, so anything from maintenance to labor to fuel costs.”
The important difference is that while utilities can get their operational expenses back, capital expenditures give them the same reimbursement plus a return. In effect, capital expenses are their opportunity for profit.
“That is also why they’re reporting these metrics in the first place to their investors and shareholders,” Hua explained. “Their shareholders recognize that that is what determines their profit margin.”
Compared to last year’s five-year outlooks, Powerlines found utilities are proposing about 20% more in capital expenditures. And while proposed projects don’t always come to fruition, the report noted over the last decade actual capital spending has been roughly 95% of the amount projected.
Hua explained that continual upward trend raises questions about the necessity of utilities’ investments and whether their figures are “padded” to achieve greater returns.
It’s a concern that has come up in Ohio before. During last year’s debate over Ohio House Bill 15, the Ohio Consumers’ Counsel and a lobbyist for the Ohio Energy Leadership Council, which represents industrial power users, warned utilities are making big investments in specific transmission projects that get lighter regulatory review.
In a committee hearing, OELC lobbyist David Proaño shared a report from the regional grid operator’s independent market monitor. It showed from 1998 to 2012, AEP never had more than eight of those projects come online in a given year.
Those figures jumped to more than 20 in 2013 and then cleared 100 in 2017. Last year, there were 315.
“They’re not reviewed for cost effectiveness. They’re not reviewed for necessity,” Proaño said at the time. “They trust these transmission companies to build it, because we’ll trust that you’re doing whatever you need to do to keep things reliable. That’s the only standard.”
The change Proaño and the Ohio Consumers’ Counsel were seeking didn’t make it into the final version of the bill.
Incentives
Hua stressed utilities still need to present their investments to state regulators, proving their expenditures were “prudent and reasonable,” or that the facilities they built are “used and useful.” So, $1.4 trillion in capital expenditures doesn’t necessarily translate to a $1.4 trillion increase in utility bills.
But if you look back over the past 10 years, Hua said, there’s a strong correlation between higher capital expenditures and rate increase requests.
“If history is any indicator,” he explained, “in general, when spending on capital expenditures has gone up over the last decade, so have rate increase requests as well as retail electric prices.”
To Hua, the problem boils down to incentives. Utilities get to determine what kinds of investments they make and the current system rewards new capital spending — not investments in operational efficiency.
Grid enhancing technologies, for instance, can improve the system’s overall efficiency by allowing more power through lines when it’s safe to do so, or better routing power to avoid congestion when demand rises. Those upgrades could pay for themselves, and even generate consumer savings, in “as little as several months” Hua said.
“But in general, we’re not fully deploying those solutions,” he went on, “largely because utilities don’t earn a financial reward or incentive for that.”
By the same token, he said, it’s unsurprising utilities are leaning into capital expenditures as demand from data centers skyrockets. For many years, demand had been relatively flat, making it harder for utilities to justify rate increases.
Powerlines found greater demand was the most commonly cited reason among utilities for new capital expenditures. Many also chalked up investments to improving system reliability. In the Southeast and West, in particular, utilities cited extreme weather including wildfires, hurricanes and winter storms.
The view from Ohio
According to the Powerlines study, the Midwest, which runs from Ohio west to Kansas and north through the Dakotas, will see the second largest share of capital spending, clocking in at $272.2 billion. For context, the South has the largest share with $572 billion.
In addition to Duke and AEP, the Powerlines report includes several other utility companies with a presence in Ohio, including FirstEnergy, AES Ohio, and the corporate parents of Ohio Gas and Columbia Gas.
Powerlines noted AEP is forecasting the largest load growth of any utility in the country, driven by data centers.
In a written statement, AEP Spokesman Scott Blake underscored that growth as justification for the company’s investments. Across the company’s 11 states, he explained, they currently have 37 gigawatts-worth of customer demand. By 2030, they’re expecting another 56 gigawatts on top of that.
“Efficiency upgrades alone cannot meet demand increases of this scale,” Blake said. “To maintain reliability, additional infrastructure such as new lines and substations is necessary.”
Blake noted AEP has “pioneered” new billing plans, known as tariffs, to ensure data centers pay for the infrastructure necessary to connect to the grid. That effectively bills a portion AEP’s capital spending plan to a specific class of customers, instead of spreading the cost across its entire customer base.
“AEP Ohio did this to protect other customers,” Blake said. “The protections are working so well that bipartisan legislation is now pending at the Ohio Statehouse to expand AEP Ohio’s protections to the entire state.”
AEP companies have filed similar tariffs in a total of eight states, and have gotten approval in four, including Ohio.
Blake added that the company “invest(s) regularly in grid efficiency and reliability,” and the $5.7 billion AEP plans to invest in Ohio will “improve reliability, shorten restoration times, and help control long‑term costs for customers.”