May 1 (Reuters) - Power company Southern Co SO.N beat Wall Street estimates for first-quarter profit on Thursday, helped by an increase in electricity retail sales and higher demand for power.

Utilities across the U.S. are experiencing a surge in demand as the growing use of artificial intelligence is driving up the need for more power-guzzling data centers.

Along with data centers, electricity demand from residences and businesses for heating and transportation purposes has also gone up.

The U.S. Energy Information Administration in February forecast power demand to hit record highs in 2025 and 2026.

The company experienced a 4.2% increase in kilowatt-hour sales in the first quarter, led by residential, commercial and industrial customers.

The power company noted a 11% rise in usage by existing data centers for the first quarter and said it had a large load pipeline of above 50 gigawatt, out of which 10 GW is committed and 6 GW is contracted.

Quarterly total operating revenues rose 17% to $7.78 billion from a year earlier.

However, interest expenses rose 7.3% to $714 million in the first quarter, while operating expenses increased to $5.8 billion from $4.9 billion a year ago.

Southern Company is the second-largest utility company by customer base in the U.S., supplying power in six states – Alabama, Georgia, Illinois, Mississippi, Tennessee and Virginia.

The Atlanta, Georgia-based company posted an adjusted profit of $1.23 per share for the three months ended March 31, compared with analysts' estimates of $1.20 per share, according to data compiled by LSEG.

(Reporting by Katha Kalia in Bengaluru; Editing by Leroy Leo)

((Katha.Kalia@thomsonreuters.com;))