AEP considers additional asset sales to fund capital expenditure plan boost
American Electric Power executives announced on Wednesday that they are considering asset sales in order to fund their five-year capital expenditure plan of $54 billion, a 25% increase from the previous plan.
AEP also considers cutting layers of management as well as various equity strategies in order to reduce costs and raise funds to fund its build out plan, which includes $10 Billion in transmission construction for new power demands from data centers and large customers.
Bill Furman, CEO of AEP, said in a conference call about the company's earnings that "we have a lot more wood to cut around the company." Furman refused to reveal which parts of AEP could be sold.
The company has sold large assets in wind and solar since 2023.
AEP anticipates 20 gigawatts in new load by 2029. Data centers will be the driving force behind this growth. This would represent a 60% rise in demand from AEP's current peak load.
AEP beat Wednesday's estimates for the third-quarter profit as increased electricity consumption at data centers drove demand from commercial clients.
According to U.S. Energy Information Administration (EIA) data, the U.S. demand for power is expected to reach record levels by 2024. This will be fueled by a growing demand for data centers that use artificial intelligence.
AEP, based in Columbus, Ohio, said that its commercial load (the amount of electricity used by customers at any given time) increased more than 10 percent compared to last year. Based on customer contracts signed over the next three-year period AEP expects the commercial load will grow 20 percent annually.
The company reported that sales growth has increased more than at any time since the late 1960s.
An analysis by the Electric Power Research Institute in May found that data centers could consume up to 9% the total electricity produced in the United States at the end of this decade, depending on how quickly GenAI and other technologies are adopted.
AEP's 2025 operating earnings per share are expected to range from $5.75-$5.95, compared to a Wall Street forecast of $5.98, according to LSEG data.
It reported operating profits of $1.85 a share for the quarter ended September 30, compared to analysts' estimates of $1.80 a share. Reporting by Laila K. Kearney, New York; Sourasis B. Bose, Bengaluru. Editing by Pooja D. Choy and Marguerita C. Choy.
(source: Reuters)
