By Pooja Menon

(Reuters) -U.S. utility Dominion Energy (NYSE: D ) reported first-quarter revenue and profit above Wall Street expectations on Thursday, helped by lower interest costs and strong demand from Virginia and South Carolina.

Power demand in the U.S. is expected to hit record highs in 2025 and 2026 due to rising demand from AI data centers, cryptocurrency technologies as well as homes and businesses, according to the U.S. Energy Information Administration.

Adjusted operating earnings from Dominion’s Virginia segment rose 32.3% to $561 million in the first quarter from a year ago, while those from the South Carolina segment rose 90% to $152 million.

Dominion’s Virginia utility services the world’s largest cluster of data centers, which has a bigger capacity than the next four largest global data center clusters combined, according to the company.

The utility expects tariff impacts to be manageable as the vast majority of its material suppliers are in the U.S., especially those related to solar procurement, CEO Robert Blue said on a post-earnings call.

"We have been placing some orders ahead of tariff effective dates to mitigate cost increases... so those actions have enabled us to avoid some of the impact," Blue said.

Dominion Energy’s first-quarter interest expenses fell 16.4% to $480 million.

Its electric and gas service areas saw a 25.6% rise in actual heating degree days - a measure of energy demand for space heating - during the quarter.

Its quarterly revenue was $4.08 billion, up from $3.63 billion a year ago, beating analysts’ average estimate of $3.97 billion, according to data compiled by LSEG.

The utility’s adjusted operating earnings were 93 cents per share in the first quarter, compared with estimates of 75 cents per share.

Shares of the company rose 1.4% in afternoon trading.