Dive Brief:
- AEP Ohio is pushing back against a proposal from Amazon, Google, Microsoft and others that would set the terms for the utility to connect data centers and other “electricity-intensive” customers to the grid.
- “It’s unprecedented to present a ‘settlement’ to the [Public Utilities Commission of Ohio] that isn’t supported by the PUCO staff or the utility that initially raised the concern,” Marc Reitter, AEP Ohio president and chief operating officer, said in a statement Friday. “The PUCO should reject it.”
- The technology companies and others on Thursday filed what they said was a negotiated settlement to resolve an AEP Ohio data center interconnection proposal at the PUCO. All parties in the docket were part of the negotiations that led to the agreement on the terms for connecting electricity-intensive customers to the grid, according to the filing.
Dive Insight:
The tech companies’ stipulation agreement came as part of a PUCO review of an AEP Ohio proposal that would set financial requirements for interconnecting data centers and cryptocurrency operations. The Columbus, Ohio-based utility said its plan would help protect its customers from the cost of building transmission facilities for data centers, in part by requiring data centers to enter into to 10-year electric service contracts.
When AEP Ohio filed its proposal in May, the utility said there was about 600 MW of data center load in its service territory in Central Ohio and that it had agreements to connect an additional 4.4 GW of data center load by 2030, which could be handled by the region’s transmission system.
However, AEP Ohio has received inquiries from companies considering building data centers that could add an additional 30 GW of load, which could require significant transmission investments, the utility said. Amazon Web Services, for example, in June 2023 said it planned to spend $7.8 billion expanding data centers in Central Ohio by the end of the decade.
In what AEP Ohio deems a highly unusual move, the tech companies filed a stipulation agreement that they said should be approved instead of the utility’s proposal. The proposed tariff would apply to any electric service agreement signed after the tariff takes effect for new load greater than 50 MW at a single location, if AEP Ohio provides proof of a transmission capacity constraint.
Among other things, the agreement asks the PUCO to open an investigation to see if transmission capacity on AEP Ohio’s system could be expanded through reconductoring, battery storage, virtual power plants and grid-enhancing technologies.
Parties to the agreement are: the Data Center Coalition; Amazon Data Services; Google; Microsoft; Sidecat, a Meta Platforms affiliate; Constellation Energy Generation and Constellation NewEnergy; Enchanted Rock, a microgrid company; Interstate Gas Supply; Ohio Blockchain Council; Ohio Energy Leadership Council; Ohio Manufacturers Association Energy Group; One Energy Enterprises; and the Retail Energy Supply Association.
The Office of the Ohio Consumers’ Counsel contends the proposal could hurt residential customers. “While business growth in Ohio is a good thing, residential utility consumers — who already pay exorbitant transmission costs — should not be forced to subsidize utility investment for data centers operated by multi-billion -dollar companies,” Maureen Willis, director of the OCC, said in an email Monday.
The settlement provides favorable terms that will lower costs for companies such as Amazon, Google and Microsoft at the expense of other consumers, according to the OCC. The settlement shortens contractual commitments, reduces exit fees and reduces demand charges that data centers would pay, the office said.
The OCC largely supported AEP Ohio’s proposal, and urged the PUCO to follow “cost causation” principles by ensuring that data centers pay for any transmission upgrades their facilities need, according to July testimony with the commission.
It appears to be the first stipulation agreement in Ohio that doesn’t include the utility making the initial proposal or PUCO staff, according to a Friday filing at the PUCO made by AEP Ohio, American Municipal Power, Buckeye Power and the Ohio Energy Group, a group representing energy-intensive utility customers. Also, the agreement represents only a limited set of interests and, for most of the issues it covers, is skewed towards the sole interests of data center customers, they said.
The signing parties shared the agreement three days before filing it and never held a settlement conference to talk about it, according to the AEP Ohio-led filing.
Approving the proposal would cause “chaos” in future proceedings, AEP Ohio and the other organizations said.
“Allowing multiple intervenors to enter into a settlement or stipulation without the utility, and then permitting that settlement to entirely supplant the utility’s application allows those parties to arbitrarily change the utility’s rates, limit the utility’s investment, and/or modify the utility’s service to its customers — all of which significantly hinder the utility’s ability to provide adequate and necessary service to customers across its service territory,” AEP Ohio and the organizations said.
It appears the aim of the “Hail Mary counterproductive maneuver” is to prevent the PUCO staff from filing its testimony on AEP Ohio’s data center tariff application and derailing a hearing set for Oct. 21 on the application, according to the filing.
The PUCO should allow the commission staff’s testimony to be filed and the hearing to be held, according to the AEP Ohio-led filing. The commission could then set a schedule for considering the tech companies’ proposed tariff agreement, the utilities and energy group said.
Further, the parties that didn’t sign the agreement are close to finishing settlement negotiations on AEP Ohio’s proposal, the utility and other organizations said.
Clarification: We have updated the headline to this article to clarify that "Hail Mary" was a term AEP Ohio and others used in their filing opposing the negotiated settlement regarding its data center interconnection proposal.
