A growing number of new and planned data centers in Ohio are positioned to significantly increase power demand in parts of the state, and utilities will need to ensure they have the capacity and transmission lines to ‘high voltage to meet this demand.
But who will pay to build the additional infrastructure?
AEP Ohio, a subsidiary of American Electric Power Inc., filed a request in May with the Public Utilities Commission of Ohio to add new rates to data center owners, saying it had signed agreements with them to an “unprecedented load growth” that will increase further. more than double the energy demand in central Ohio by 2030.
The company filed an agreement on Oct. 23 signed by commission staff, the Ohio Office of the Consumer Council, a state agency, as well as Walmart Inc. and other groups that would require large data center owners to pay at least 85 percent 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 increase. Data center owners would also have to demonstrate financial viability and pay an exit fee if a project is cancelled. The deal 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 needed infrastructure improvements,” Marc Reitter, president and COO of AEP Ohio, said in a statement .
But the Data Center Coalition, which represents the owners, says the proposal would risk stifling investment in Ohio by inflating costs and imposing burdensome requirements while unfairly targeting a specific business sector. In early October, the coalition signed an alternative agreement along with companies such as Amazon Data Services Inc., Google LLC and Microsoft Corp.
“Instead of joining a reasonable path forward, AEP Ohio has submitted a competitive stipulation in which they continue to propose a data center-targeted rate for disparate treatment and flatly reject opportunities to explore new measures of “cost savings, such as grid enhancement technologies, that would reduce the risk of system overload while providing significant 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 demonstrate that the location has insufficient transmission load capacity. AEP’s proposal would apply to data centers with more than 25 MW of demand and also include another fee on smaller “mobile data centers,” such as cryptocurrency miners with at least 1 MW of monthly demand.
This proposal would also include terms of up to 12 years, but with shorter options available, and would require data center owners to pay a minimum of 75% of monthly demand, or up to 85% in shorter contract terms .
But AEP Ohio said the proposal “does not adequately address the primary issues” raised in its rate application and lacks the customer protections included in its version. The 85% minimum payment threshold proposed by AEP is also a decrease from its original request for minimum payments of 90% and 95% for mobile data centers.
“Our agreement strikes a balance between the expensive investments required for high-powered cloud and the 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.
