A growing number of new and planned data centers in Ohio are positioned to greatly increase demand for power in parts of the state, and utilities are going to need to ensure they have the capacity and high-voltage transmission lines to meet that demand.
But who’s going to pay to build the additional infrastructure?
AEP Ohio, a subsidiary of American Electric Power Inc., filed an application in May with the Public Utilities Commission of Ohio seeking to add new tariffs on data center owners, saying it had signed agreements with them for “unprecedented load growth” that will more-than-double the amount of demand for power in central Ohio by 2030.
The utility filed an agreement Oct. 23 signed by commission staff, the Office of the Ohio Consumers’ Counsel—a state agency—as well as Walmart Inc. and other groups that would require large data center owners to pay for at least 85% of the energy they say they need each month, even if they end up using less, for up to 12 years including a four-year ramp-up. Data center owners would also need to prove their financial viability and pay an exit fee if a project is canceled. The agreement would require commission approval to be implemented.
“The agreement insulates our other customers—including residents, small businesses, manufacturers and other industries—from the impact of the necessary infrastructure improvements,” said Marc Reitter, president and COO of AEP Ohio, in a statement.
But the Data Center Coalition, which represents owners, says the proposal would risk chilling investment in Ohio by inflating costs and imposing burdensome requirements while unfairly targeting a specific business sector. Earlier in October, the coalition signed an alternate agreement along with companies including Amazon Data Services Inc., Google LLC and Microsoft Corp.
“Rather than joining a reasonable path forward, AEP Ohio has filed a competing stipulation in which they continue to propose a tariff that targets data centers for disparate treatment and flatly reject opportunities to explore new cost-savings measures, such as grid-enhancing technologies, which would reduce the risk of system overbuilds while also providing meaningful reliability benefits to the AEP Ohio system,” said Josh Levi, president of the Data Center Coalition, in a statement.
The data center owners’ proposal would apply to new agreements with monthly demands greater than 50 MW at a single location if AEP Ohio can prove the location has insufficient transmission load capacity. AEP’s proposal would apply to data centers with demand greater than 25 MW and also include another tariff on smaller “mobile data centers” such as cryptocurrency miners with at least 1 MW of monthly demand.
That proposal would also include terms of up to 12 years, but with shorter options available, and require data center owners to pay for a minimum of 75% of monthly demand, or up to 85% under shorter contract terms.
But AEP Ohio said that the proposal “fails to adequately address the main issues” raised in its tariff application and that it lacks customer protections included in its version. AEP’s proposed 85% minimum payment threshold is also a decrease from its original request for 90% minimum payments and 95% from mobile data centers.
“Our agreement strikes a balance between the costly investments required for high-powered cloud and AI needs and protections for AEP Ohio’s other customers,” Reitter said.
The next hearing on AEP Ohio’s application is scheduled for Nov. 4.