Dive Brief:
- AEP Ohio and key stakeholders asked the Public Utilities Commission of Ohio on Wednesday to approve a settlement agreement that sets terms and conditions for connecting data centers to the grid.
- Parties to the agreement include PUC staff, the Ohio Consumers’ Counsel, the Ohio Energy Group, Ohio Partners for Affordable Energy and Walmart. Earlier this month, Amazon, Google, Microsoft and Meta joined Constellation Energy and other groups in proposing their own set of rates for data centers and other “electricity-intensive” customers for PUCO consideration.
- “In a landmark agreement, OCC, AEP, the PUCO staff and other consumers united to find a way to protect Ohio utility consumers from footing the bill for data center expansion in central Ohio,” said Maureen Willis, director of the OCC, which represents Ohio ratepayers. “Now it’s up to the five PUCO commissioners to do their part by adopting this broadly-supported, pro-consumer agreement.”
Dive Insight:
The “consumer protective” settlement agreement filed by AEP Ohio for PUC approval closely resembles the utility’s initial filing in May, according to the OCC.
If the agreement is approved by the PUC, new data centers larger than 25 MW would have to pay for at least 85% of the energy they expect to need each month, even if they use less, to cover the cost of infrastructure needed to bring electricity to the facilities, AEP Ohio said in a news release.
The agreement also requires data centers to show they are financially viable and able to meet certain requirements, as well as to pay an exit fee if their project is canceled or they can’t meet obligations set in their electric service agreement contracts, AEP Ohio said. The requirements would be in place for up to 12 years, including a 4-year ramp-up period.
The agreement counters the “pro-industry, anti-consumer” agreement offered by the data center coalition, the OCC said in a statement. That agreement shortens contractual commitments required of data centers, reduces exit fees and reduces demand charges that data centers would pay, according to the ratepayer advocate’s office.
The Data Center Coalition, a party to the earlier settlement pact, said the AEP Ohio-filed agreement could dampen investment in Ohio by artificially inflating costs on a targeted subset of customers, while imposing red tape on behind-the-meter energy generation at data centers.
“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,” DCC President Josh Levi said in an email Thursday.
No U.S. utility imposes terms on data centers like the ones found in the AEP Ohio agreement, according to Levi.
The debate at the Ohio PUC comes as U.S. utilities are facing an increasing number of data center interconnection requests that are also growing in size.
About 60% of utilities responding to a survey by the Electric Power Research Institute said they have service requests from data centers with loads bigger than 500 MW and 48% have received requests for facilities with loads larger than 1,000 MW. Almost half of the 25 utilities surveyed have data center requests that exceed 50% of their system peak demand, according to a report on the survey EPRI released last month.
EPRI found that 75% of the utilities responding to the survey handle data center service requests using their standard large load service request process.
In Indiana, the Citizens Action Coalition earlier this month urged state lawmakers to enact a data center moratorium to give the state time to set policies that would protect the state’s consumers from data center utility-related costs and other issues.
Indiana Michigan Power, an AEP utility, has proposed a data center tariff for Indiana. The utility estimates that hyperscaler data centers will use 35 million MWh annually by 2030, compared with current residential use of 31.9 million MWh a year, according to CAC, a consumer and environmental group that largely supports the utility’s proposed tariff.
