AEP Ohio, an American Electric Power company, has filed a settlement agreement over a proposed data center rate structure that drew pushback from big tech names like Google, Amazon, Microsoft, and Meta
The staff of the Public Utilities Commission of Ohio, the Ohio Consumers’ Counsel (OCC), the Ohio Energy Group (OEG), Ohio Partners for Affordable Energy, and Walmart joined AEP Ohio in the filing.
This agreement, which is subject to review and approval by the PUCO, requires large new data center customers to pay for a minimum of 85% of the energy they say they need each month – even if they use less – to cover the cost of infrastructure needed to bring electricity to those facilities. The original proposed rate structure would have imposed a 10-year commitment to pay for a minimum of 90% of the energy customers say they need each month.
The agreement also creates a sliding scale that is meant to give small and mid-sized data centers more flexibility. It requires data centers to provide proof they are “financially viable” and able to meet those requirements, as well as to pay an exit fee if their project is canceled or unable to meet the obligations outlined in the electric service agreement contract. The requirements would be in place for up to 12 years, including a 4-year ramp-up period. The agreement also outlines a process to end the moratorium on new Central Ohio data center agreements.
Earlier this month, a group of data center industry leaders filed a separate agreement, which was not supported by AEP Ohio, the PUCO staff, OCC, or OEG, AEP said. They proposed to pay for a minimum of 75% of the energy they say they will use. AEP said the separate agreement “excluded important customer protections and included other problematic provisions in their deal.”
The settlement filed today by AEP Ohio, PUCO staff, the Ohio Consumers’ Counsel, OEG – a manufacturing coalition – and others is the latest in PUCO case no. 24-508-EL-ATA. AEP Ohio requested a new rate structure that would require new data centers with loads greater than 25 MW and crypto mining/mobile data center operations with loads greater than 1 MW to agree to meet certain requirements before infrastructure is constructed to serve them.
The case began in May 2024, when AEP Ohio filed a proposal to reconcile the costs of infrastructure improvements required for Ohio’s growing data center industry. In direct testimony to Ohio’s Public Utilities Commission in August, several individuals, including consultants and tech employees, opposed AEP’s request, arguing that the new rates would be “discriminatory” and “unreasonable.”
In testimony on behalf of Google, consultant Brendon Baatz argued that AEP’s proposed rates would deviate from standard regulatory practices, because “it introduces terms and conditions based on the end-use of electricity.”
“While AEP Ohio has demonstrated that the growth of data centers is 29 driving an increase in electric demand, and that new investments will be necessary to 30 accommodate this growth, they have not provided any evidence that these challenges result from anything other than the large per-customer load size of these requests,” Baatz said in his testimony. “With its discriminatory focus on data centers, AEP Ohio is asking the commission to pick winners and losers in the local economy by imposing unfavorable terms for basic electric service on a single industry.”
Overall, AEP is facing 15 GW of projected load growth from data centers by 2030, the utility said on its second-quarter earnings call in July.
According to a study published by EPRI in May, data centers could consume up to 9% of U.S. electricity generation by 2030 — more than double the amount currently used. Demand for computing power from data centers, fueled by artificial intelligence and other new technologies, requires enormous amounts of power. Ohio is seeing unprecedented demand from data center customers, especially in the central part of the state.
According to AEP testimony to state regulators, data center load is expected to reach a total of 5,000 MW in Central Ohio by 2030, based on signed agreements with the company. As of April 2024, actual data center load was approximately 600 MW in Central Ohio.
The Buckeye State is not alone. In the U.S., data center demand is expected to reach 35 GW by 2030, up from 17 GW in 2022, McKinsey & Company projects. Grid operators and utilities expect to see significant load growth driven by electrification, new manufacturing, and data center development.
