Feb 12 (Reuters) – American Electric Power surpassed Wall Street expectations for fourth-quarter profit on Thursday, and said it would expand its five-year capital expenditure plan beyond $72 billion to meet the surging demand for power.
U.S. electricity demand is rising at an unprecedented pace, with utilities ramping up investments to address growing demand for power capacity from Big Tech as they set up data centers to support complex AI-related tasks.
AEP is among the primary beneficiaries of this surge in demand, with 80% of its growth being driven by large hyperscalers including Alphabet’s Google, Amazon.com and Meta.
AEP’s shares rose 1.7% in premarket trading.
The company said it has identified $5 billion to $8 billion in additional transmission and generation projects beyond its current $72 billion capital investment plan.
However, as utilities beef up spending on power plants, cables and other electrical infrastructure to meet rising demand, concerns are growing about rising customer power bills.
AEP CEO Bill Fehrman said the company remained focused on affordability and protecting residential customers from increased costs associated with providing service to new large load customers.
“Through federal loans, state grants, innovative rate designs and direct bill assistance, we are working to limit bill impacts while continuing to invest in the system,” Fehrman said.
The utility said it had signed an additional 28 gigawatts of load, with the incremental demand for new load doubling since October.
AEP said it would partner with ERCOT, an independent system operator in Texas, to build the necessary transmission and distribution infrastructure and “bring these large loads online in a timely manner and within the regulatory construct”.
The Ohio-based company posted operating earnings of $1.19 per share for the three months ended December 31, compared with analysts’ average estimate of $1.15 per share, according to data compiled by LSEG.
(Reporting by Vallari Srivastava in Bengaluru; editing by Tasim Zahid and Saumyadeb Chakrabarty)
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