AEP Ohio has submitted a settlement agreement that would provide a buffer on the cost risks of building infrastructure to serve future data centers that may not use as much electricity as they initially propose.
The move is a potential resolution of AEP Ohio’s May 13 filing with the Public Utilities Commission of Ohio (24-0508-EL-ATA). It requested a groundbreaking tariff that would require developers to pay for 90 to 95% of the projected energy demand of their proposed data center or crypto currency mine in its first decade of operation — even if they use less. (See AEP Ohio Asks PUCO for Data Center-specific Tariffs.)
Other stipulations were included to further insulate the utility and its ratepayers from the potential costs of building infrastructure for demand that did not materialize.
Amazon, Google and other tech firms criticized this proposal, and on Oct. 10, they submitted a joint recommendation of their own to PUCO.
That counterproposal would have dropped the minimum payment to a range of 75 to 85%. AEP Ohio said the offer contained problematic details and omitted important consumer protections.
On Oct. 23, AEP Ohio submitted the settlement agreement, in which it was joined by PUCO staff, the Ohio Consumers’ Counsel, the Ohio Energy Group, Ohio Partners for Affordable Energy and Walmart.
The agreement contains some compromises from the original request, including a decrease of the minimum payment to 85% of the anticipated demand.
It would require PUCO approval.
In a prepared statement, AEP Ohio President Marc Reitter said, “The agreement insulates our other customers — including residents, small businesses, manufacturers and other industries — from the impact of the necessary infrastructure improvements. Our goal throughout this process has been to provide customers with protections while keeping Ohio an attractive place to run and grow a business. This proposal provides that balance and was developed with PUCO staff and consumer advocates.”
AEP Ohio is facing the same squeeze many in the industry face with the simultaneous rise of energy-intense data facilities, attempts to revitalize American manufacturing and the drive to electrify swaths of the economy: Building generation, transmission and distribution to accommodate all these demands will be an expensive and time-consuming process.
AEP Ohio in its initial request May 13 said its peak demand in Central Ohio is about 4 GW, and before instituting a data center moratorium, it had signed binding service agreements for 5 GW of new data center load to come online by 2030. Meanwhile, more than 50 customers have submitted requests to reserve more than 30 GW of new or increased load at about 90 sites, it said.
AEP Ohio wants to cut the risk of building infrastructure to serve this demand with a requirement that those proposing the demand help pay for the infrastructure.
The settlement agreement submitted Oct. 23 also requires data centers to prove they are financially viable and able to meet these requirements, and to pay an exit fee if they cancel their project or are unable to meet the obligations of their contracts.
It creates a sliding scale to allow small- to midsized facilities greater flexibility. Contracts would run for eight years, plus a ramp-up period of up to four years.
Reitter said, “We welcome the incredible investment large data centers are making in Ohio. 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.”
