Spokeswoman Melissa McHenry says the utility, based in Columbus, Ohio, has given workers until the end of the month to make a decision. AEP says it will resort to layoffs if there are too few takers.
The economic downturn has hurt power providers because demand for electricity has slumped.
AEPs sales dropped 6 percent in 2009, including a decline of nearly 16 percent for industrial customers.
AEP employees learned of the buyout offer in a letter from CEO Michael Morris.
CEO Mike Morris has said the company sees a modest turnaround happening this year, but most economists predict any broad economic recovery will be slow.
That could affect hiring at industrial companies and also for power providers like AEP, which deliver electricity.
AEP is one of the nations largest power generators, with more than 5 million customers.
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