CenterPoint Energy Boosts Capital Investment Amid Surging AI-Powered Data Center Demand Despite Profit Dip

CenterPoint Energy reported a decline in first-quarter profit on Thursday. However, the U.S. utility firm announced an increase in its capital expenditure in anticipation of rising demand from data centers powered by artificial intelligence technologies.

Earlier this year, a severe winter storm impacted the Gulf Coast region of the United States, resulting in significant disruptions in major cities like Houston and New Orleans. The storm also led to unprecedented low temperatures, causing damage to transmission lines and widespread power outages, which, in turn, drove up operating and maintenance costs for utility companies.

CenterPoint stated that their operating and maintenance expenses surged by 5.4% year-on-year to $747 million this quarter. Similarly, costs associated with natural gas, fuel, and purchased power saw a near 28% increase, reaching $1 billion.

Despite these challenges, CenterPoint increased its decade-long capital expenditure plan by $1 billion to a total of $48.5 billion, reflecting the anticipated surge in demand from artificial intelligence firms. This decision aligns with the broader trend among U.S. utility companies, which are significantly expanding their capital expenditure budgets due to mounting requests for new power supplies from major tech firms seeking optimal locations for new data centers.

The company revealed on Thursday that since the end of January, new connection requests have risen by nearly 7 gigawatts. This trend has bolstered their confidence in Texas's robust economic outlook, reinforcing their commitment to ramping up capital investments.

CenterPoint Energy serves over 7 million customers with electricity and natural gas services across Indiana, Louisiana, Minnesota, Mississippi, Ohio, and Texas. Headquartered in Houston, Texas, CenterPoint reported that its net income for the quarter ending March 31 dropped from $350 million (or 55 cents per share) a year earlier to $297 million (or 45 cents per share).