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AEP Ohio Asks to Establish Data Center Rate Structure

May 14, 2024
The utility’s proposal would require facility operators to agree to long-term minimum commitments prior to the start of construction.

American Electric Power Co.’s Ohio utility is asking regulators to let it set up a new billing category for data centers and cryptocurrency mining operations, a move officials say will let them better plan their spending and help ensure that their power-hungry customers are paying their fair share.

The topic of data centers and their vast energy needs was omnipresent during the recent earnings conference calls of many publicly traded utilities. Executives celebrated the plans of Meta, Google and other technology giants to add capacity in various parts of the country—much of it to feed the artificial-intelligence investment boom that’s underway and expected to mushroom—but several also said they were mindful that utilities’ spending to meet that demand shouldn’t result in rate hikes for other customers.

“Across the AEP system, I see the need to increase capital spend in the future, including incremental investment related to commercial load growth from data centers and resiliency spend,” AEP Interim President and CEO Ben Fowke said on his team’s earnings call April 30. “The key to capturing this commercial and industrial growth is to work with parties to make sure that commitments are real and secure, the tariffs and contracts are fair to all customers and growth is self-funded.”

Hence AEP Ohio’s new filing with the Public Utilities Commission of Ohio: It would require new data centers with loads of more than 25 megawatts (as well as crypto mining operations and mobile data centers with loads greater than 1 megawatt) to commit—before construction on their centers can start—to pay at least 90% of their projected energy needs every month for 10 years. The companies would be held to that 90% payment commitment even if they use less energy than projected in a month.

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