AEP Ohio, a subsidiary of American Electric Power (Nasdaq: AEP), has filed a settlement agreement to meet the substantial electricity needs of Ohio’s expanding data center industry while safeguarding other customers from related costs. The agreement, developed in partnership with the Public Utilities Commission of Ohio (PUCO) staff, the Ohio Consumers’ Counsel (OCC), the Ohio Energy Group (OEG), Ohio Partners for Affordable Energy, and Walmart, is pending PUCO approval.
“Ohio’s success in attracting data centers comes with immense energy demands, and we’re committed to meeting these efficiently and responsibly,” said AEP Ohio President and COO Marc Reitter. “This agreement shields residents, small businesses, manufacturers, and other customers from the cost of infrastructure improvements necessary to support data centers. Our focus has been on protecting existing customers while ensuring Ohio remains an attractive location for business growth. We’re grateful for the collaborative effort from all stakeholders in developing this balanced proposal.”
Key provisions of the agreement require large data centers to pay for at least 85% of their forecasted monthly energy needs to cover infrastructure costs, even if their usage falls short. A sliding scale offers flexibility to smaller and mid-sized data centers, while a financial viability check and exit fee requirement protect AEP Ohio in case a project cannot meet its commitments. These requirements will be in place for up to 12 years, including a 4-year ramp-up period.
The agreement also establishes a path to lift the current moratorium on new data center agreements in Central Ohio.
The settlement, part of PUCO case no. 24-508-EL-ATA, follows AEP Ohio’s May 2024 proposal to reconcile infrastructure costs driven by the data center industry’s growth. Earlier in October, a separate agreement from data center industry representatives proposed a 75% payment of forecasted energy use, but it lacked some consumer protections and was not supported by AEP Ohio, PUCO staff, OCC, or OEG.
Data center developments, particularly in Central Ohio, have surged, with electricity demand projected to more than double by 2030. “Our proposal acknowledges the critical role data centers play in the local and national economy,” Reitter noted. “We welcome their investments in Ohio and believe this agreement balances high-powered infrastructure investments with protections for our existing customers.”
