The Public Utilities Commission of Ohio has granted AEP Ohio’s request for tariffs requiring data center developers to financially guarantee they will use the electricity they are requesting. 

Customers requesting more than 25 MW of new power for data centers will have to pay for at least 85% of the energy for which they are subscribed — whether they use it or not — for eight years. A ramp-up period of up to four years will be allowed before the eight-year term. 

The July 9 PUCO ruling in 24-0508-EL-ATA is among the first attempts in the U.S. to address the high costs associated with the huge new power demands that may result from data center buildout. 

It seeks to ensure that other ratepayers are not stuck with paying for infrastructure upgrades made to accommodate demand that does not materialize as requested. 

Along with the financial guarantee mechanism, the new tariff will create a sliding scale for small and mid-sized facilities to allow for some flexibility; require data center owners to prove they are financially sound and able to meet the requirements; and impose an exit fee for projects that are canceled or fail to meet the terms of their contract. 

The state is seeing heavy interest in data center development, thanks in part to favorable policies. The Columbus area in the center of the state already has a strong concentration of these facilities. 

In March 2023, AEP placed a moratorium on data center service requests in central Ohio so it could analyze the impacts of this trend. 

In May 2024, it requested the data center-specific tariff, saying it was facing 30 GW of potential new load, some of it from sectors it considered to have elevated risk of not meeting their commitments. (See AEP Ohio Asks PUCO for Data Center-specific Tariffs.) 

Representatives of data centers and other industrial sectors criticized the tariff request as an unprecedented and potentially chilling move. On Oct. 10, 2024, they submitted a settlement proposal. 

AEP said some details in that proposal were problematic while other important details were omitted. On Oct. 23, the utility submitted its own settlement agreement, which revised or deleted some aspects of its original request. (See AEP Ohio Proposes Revised Data Center Tariff.) 

Signing on to the submission were PUCO staff, the state consumer utility advocate, an organization for large industrial ratepayers and a coalition of 54 community energy advocacy agencies. 

PUCO’s unanimous ruling adopts AEP’s settlement proposal, with some modifications to exit fees and other details. It directs AEP to file updated tariffs and lift the moratorium as soon as possible. 

“Today’s order represents a well-balanced package that safeguards non-data center customers on an industrial and residential level while establishing a dependable and reasonable environment for data centers to continue to thrive within Ohio,” PUCO Chair Jenifer French said in a news release. 

The industry membership group Data Center Coalition, which was an intervening party in the case, continues to maintain that no one industry or class of customer should be singled out for disparate rate treatment by a utility. 

“The decision is a stark departure from solutions enacted in other key data center markets and, more consequentially, is a deviation from the long-established, sound ratemaking principles that have carried both Ohio and the nation through periods of electricity demand growth and flat demand,” DCC Director of Energy Policy Lucas Fykes said in a statement. 

“The data center industry is committed to paying its full cost of service. DCC will continue to advocate for evidence-based solutions in Ohio and across the country that support data center development and advance an affordable and reliable electricity grid for all customers.” 

In a news release, AEP Ohio President Marc Reitter said the ruling would support the state’s growing tech sector and keep the industry in the U.S. while protecting other customers from shouldering the costs of providing power to it. 

“I am grateful for the collaboration of all the parties involved in this filing, which ultimately brings clarity and certainty for infrastructure planning,” he said. “We are looking forward to ending the moratorium and continuing to support development of more data centers in our service territory.”