American Electric Power executives say they’re embracing large loads and, fortunately for them, they say they have firm commitments for more than 15 GW of load coming from just data centers by 2030.
AEP told financial analysts during its July 30 second quarter earnings call with financial analysts that it’s seeing “unprecedented” load growth, split primarily between Texas and its PJM footprint. Commercial load has increased 12.4% over the second quarter of last year as new data processing facilities came online, the company said.
“We continue to see strong interest in Ohio and Texas, as well as several of our vertically integrated states, from customers looking to develop new data processing facilities,” interim CEO Ben Fowke said during the company’s call. “Affordability remains top of mind, and we’re working to ensure that the investments made in the grid to support this increased demand are allocated fairly and provide benefits to all customers.”
Noting AEP’s system-wide peak at the end of last year was 35 GW, Fowke said the company continues working with data center customers to meet their increased demand, but also ensuring contracts and new initiatives are “fair and beneficial” for all customers. He said AEP would provide details on its generation and transmission capital investment necessary to meet demand later this year.
“I want to emphasize that it’s critically important that costs associated with these large loads are allocated fairly and the right investments are made for the long-term success of our grid,” Fowke said.
AEP subsidiary Public Service Co. of Oklahoma (PSO) in June announced it will seek regulatory approval of an agreement to purchase Green Country, a 795-MW natural gas facility. Peggy Simmons, executive vice president of utilities, said the transaction will help PSO meet SPP’s higher planning reserve margin, which was increased to 15% from 12%.
“This was a very proactive approach that the team took to go out and find some affordable assets that we can bring onto the system,” she said.
AEP reported second-quarter earnings of $340 million ($0.64/share), down from 2023’s second quarter earnings of $521 million ($1.01/share). The company reaffirmed its 2024 operating earnings guidance range of $5.53-$5.73/share and its 6%-7% long-term growth rate.
Incoming CEO Bill Fehrman, who takes over AEP’s top job Aug. 1, did not participate in the call. Fehrman replaced Julie Sloat in June after his predecessor parted ways with AEP in February following just one year as CEO. (See AEP Selects Industry Veteran as Next CEO.)
“With Bill’s expertise and diverse background, you can anticipate a smooth transition and continuity of strategic direction. Expect more focus on execution,” said Fowke, who served as interim CEO and will advise Fehrman during a transition period.
The company’s share price rallied late July 30 to close at $98.14, up $1.07 from its previous close.
