Black Friday Sale! Save huge on InvestingProGet up to 60% off

AEP mulls more asset sales to fund capex plan boost

Published 11/06/2024, 07:43 AM
Updated 11/06/2024, 10:31 AM
© Reuters. FILE PHOTO: Electric power transmission pylon miniatures and American Electric Power logo are seen in this illustration taken, December 9, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
AEP
-

(Reuters) -American Electric Power is considering more asset sales to help fund its five-year $54 billion capital expenditure plan, which has jumped by 25% from the previous plan, company executives said on Wednesday.

AEP is also considering cutting layers of management and various equity strategies to reduce costs and raise capital to fund its build-out plan, which includes $10 billion in transmission construction to accommodate new power demand from data centers and other large customers.

"We have a lot of wood to chop yet around the company," AEP CEO Bill Furman said on a company earnings call. Furman declined to say which parts of the company could be put up for sale.

The company finalized large wind and solar asset sales since 2023.

AEP expects 20 gigawatts of new load through 2029, with data centers driving that growth. That demand would be about a 60% increase from the company's current peak load.

AEP beat estimates for third-quarter profit on Wednesday, as higher electricity usage at data centers boosted demand from commercial customers.

U.S. power demand is poised to rise to record highs by the end of 2024, backed by growing demand for artificial intelligence data centers, according to U.S. Energy Information Administration data.

Columbus (WA:CLC), Ohio-based AEP said its commercial load - the amount of power used by customers at a given point - increased more than 10% in the reported quarter compared with last year and expects commercial load to grow an average of 20% annually over the next three years based on signed customer contracts.

Sales growth is rising more than it has since the late 1960s, the company said.

Data centers could use up to 9% of the total electricity generated in the United States by the end of the decade, depending on the adoption pace of GenAI and other technologies, an Electric Power Research Institute analysis said in May.

© Reuters. FILE PHOTO: Electric power transmission pylon miniatures and American Electric Power logo are seen in this illustration taken, December 9, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

AEP forecast 2025 operating earnings in the per-share range of $5.75 to $5.95, compared with a Wall Street estimate of $5.98 per share, according to data compiled by LSEG.

It reported operating earnings of $1.85 per share for the three months ended Sept. 30, compared with analysts' average estimate of $1.80 per share.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.