AEP Ohio ordered to create new rate structure specifically for large data centers

COLUMBUS, Ohio (WCMH) -- The Public Utilities Commission of Ohio on Wednesday ordered AEP Ohio to file for new tariffs, or rate structures, that apply specifically to data centers in an effort to protect other customers from having to foot the bill.

PUCO acknowledged that AEP Ohio is "faced with unprecedented load growth that requires it to construct significant electric transmission infrastructure to serve data center customers in its territory."

The settlement intends to protect Ohioans from absorbing costs associated with powering data centers, which require significant infrastructure.

The new rate structure would apply to new data centers with a load of more than 25 megawatts that sign energy service agreements after the date of the settlement. Existing ESA's are grandfathered in, so long as they don't expand by more than 25 megawatts over their contracted capacity.

One megawatt can power approximately 750 homes.

The settlement agreement that was reached between AEP Ohio, PUCO, the Ohio Consumers' Council and others aims to protect non-data center customers from the risks of underused investments.

The agreement, which was filed in October and was awaiting approval from PUCO, requires large data center customers to pay for 85% of their stated energy needs each month, even if they use less. That would allow them to cover the costs of the necessary infrastructure while protecting other customers.

Data centers receive tax exemptions from the state of Ohio -- something lawmakers hoped to end with a provision in the state's budget, but it was ultimately vetoed by Gov. Mike DeWine.

"Today's order represents a well-balanced package that safeguards non-data center customers on an industrial and residential level while establishing a dependable and reasonable environment for data centers to continue to thrive within Ohio," PUCO Chair Jenifer French said in a statement.

"This decision will help to ensure that residential and small business consumers are shielded from bearing unfair costs associated with the massive electricity increases (for infrastructure and transmission expansion) needed to support energy-intensive data centers," the Ohio Consumers' Council said in a statement.

The Ohio Manufacturers' Association in a statement blasted the decision.

"It is disappointing that the PUCO decided today to allow discriminatory tariffs on energy-intensive users, creating a slippery slope for utilities to potentially punish industrial and other high-energy users," the organization said.

The association said it is considering options to appeal the decision.

AEP Ohio will have to file updated tariffs and end a moratorium on connecting new data centers as soon as possible.