Leaders of American Electric Power Co.’s Ohio utility and Buckeye State regulators have negotiated an agreement that, if finalized, will require data center operators to pay for at least 85% of their projected energy needs each month. The settlement, which comes five months after AEP Ohio first filed to establish a special rate for energy-hungry data centers, could become a model for other states.
AEP Ohio’s deal with the Public Utilities Commission of Ohio also includes the manufacturing-focused Ohio Energy Group, Walmart and consumer groups and still needs to be approved by PUCO's five-person board. The goal of the new rate structure—if approved, it would be effective for up to 12 years, including a four-year ramp-up window—is to give utilities some certainty that much of the large investments they need to make to accommodate energy-intensive data centers aren’t pushed onto other customers’ bills.
AEP had this spring pushed for data centers to have to commit to 90% of their projected energy needs for 10 years. A coalition of data center companies—including Amazon, Google and Microsoft—and other stakeholders earlier this month filed a counterproposal to AEP’s “unprecedented application” calling for a 75% commitment but that didn’t meet with much support.
“We welcome the incredible investment large data centers are making in Ohio,” AEP Ohio President and CEO Marc Reitter said in a statement. “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.”
In addition to the minimum commitment clause, the AEP proposal also would require data centers to show they are financially viable and to pay fees if they cancel a project or don’t meet their electric service obligations. The plan also creates a sliding scale for smaller data centers.
Administrative Law Judge Isabel Marcelletti on Oct. 25 ordered that a hearing previously scheduled for Nov. 4 be pushed to Dec. 3.
