AEP raises capital spending plan to meet data center power demand

By Pooja Menon

Oct 29 (Reuters) - American Electric Power AEP.O stepped up its five-year capital plan to $72 billion, from $54 billion previously, on Wednesday to meet unprecedented power requirements driven by large-load customers such as data centers and industrials.

Shares of the company rose 6% in morning trading.

U.S. utilities are ramping up capital expenditure budgets as they address growing demand for power capacity from major technology companies that are setting up data centers to support complex AI-related tasks.

AEP said it had reached service agreements to provide 28 gigawatts of load additions by 2030, up 4 GW since July, and an additional 190 GW of load requests at various stages of development.

On a post-earnings call, the utility said 80% of this growth is driven by large hyperscalers such as Alphabet's GOOGL.O Google, Amazon.com AMZN.O and Meta META.O, while the remaining 20% driven was by new industrial customers, including Nucor's NUE.N steel mill in West Virginia and Cheniere's LNG.N LNG facilities in Texas.

The company, which has about 5.6 million customers in 11 states and possesses the largest electric transmission system in the United States, said its peak system demand is expected to surge to 65 GW by 2030, up from a current peak of 37 GW.

It expects long-term operating earnings growth target to be between 7% and 9% through 2030, bolstered by the capital plan.

AEP reaffirmed its full-year adjusted profit forecast in the range of $5.75 to $5.95 per share and said it now expects it in the upper half of that range.

The company's total quarterly operating revenue rose nearly 11% from a year earlier to $6.01 billion.

During the third quarter, its transmission and distribution utilities segment reported operating earnings of $259.1 million, compared with $245.2 million a year ago.

The Ohio-based utility reported adjusted profit of $1.80 per share for the quarter ended September 30, narrowly missing analysts' average estimate of $1.81 per share, according to data compiled by LSEG.