AEP Ohio proposes data center, crypto financial requirements between 30 GW in service requests

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Quick dive:

• Faced with about 30 GW of potential data center load, AEP Ohio on Monday asked state regulators to approve a proposal that would set greater financial requirements for new data centers and cryptocurrency operations.

• The proposed rates for data centers larger than 25 MW and crypto and mobile data centers larger than 1 MW would help ensure they pay for the new transmission needed to serve them, which could cost billions, according to documents filed with the Ohio Public Utilities Commission.

• “The data center fees proposed by AEP Ohio will require data centers to make long-term financial commitments – to have more leverage in the game – to mitigate the risk that transmission infrastructure is built for data centers but is not needed “Matthew McKenzie, vice president of regulatory and finance for AEP Ohio, said in testimony to the PUC.

Further information:

There are about 600 MW of data center load in AEP Ohio’s service territory in Central Ohio, according to documents filed with the PUC. The utility has agreements to connect another 4.4 GW of data center load by 2030, which can be handled by the region’s transmission system.

However, AEP Ohio has received inquiries from companies considering building data centers that could add another 30 GW of load, which would require new transmission, possibly 765 kV lines, on the PJM Interconnection System, according to the company. public services.

PJM recently approved approximately $5 billion in transmission projects in Dominion Energy and First Energy territories to help serve more than 7.5 GW of data center load in the Northern Virginia area, Kamran Ali, vice president of transmission planning and analysis for American Electric Power Service Corp., He told the PUC.

In response to the requests, AEP Ohio in March 2023 suspended accepting new service requests from data center customers so it could assess how they would impact the company’s energy delivery system, Ali said.

The proposed fees will help AEP initiate potential siting efforts and identify transmission routes in the central Ohio area, as well as PJM’s development of potential regional solutions through a competitive solicitation process, he said.

“Without requiring data centers to make long-term financial commitments to support transmission investments, data center load growth could leave AEP Ohio with insufficient transmission capacity to support the kind of ordinary, non-data center-related economic growth that creates jobs and fuels Ohio’s economy,” McKenzie said.

Additionally, if transmission facilities were built but data center load did not materialize as expected, PJM retail customers would have to pay for unnecessary transmission capacity, he said.

Under AEP Ohio’s proposal, data centers would have to commit to 10-year electric service contracts, with the option to pay an “exit tax” after five years, according to McKenzie. Additionally, he said, data centers would be required to pay minimum demand charges based on 90% of their contracted capacity, up from the 60% under the company’s current general service charge. Mobile data centers, like cryptocurrency mining operations, would be required to pay minimum demand charges based on 95% of their contracted capacity.

The proposal would apply to service contracts entered into after AEP Ohio’s moratorium was lifted.

According to McKenzie, AEP Ohio’s largest customers in the past have been industrial facilities with peak demand in the order of a few hundred megawatts. Now, AEP Ohio has had several customers say they are considering building data centers that could have loads of 1 GW or more, he said.

AEP Ohio has a general obligation to serve all customers in its service territory, but that obligation does not require the company to extend service to customers in a manner that would be unreasonable or unfair to the company and other customers, McKenzie said.

Data centers have less of an impact on the local economy than typical commercial and industrial customers, Lisa Kelso, vice president of customer experience at AEP Ohio, he told the PUC.

On average, non-data center C&I customers support about 25 direct full-time equivalent jobs per megawatt, while data center customers support less than one direct FTE job per megawatt, it said.

According to Kelso, large-scale data center owners are attracted to Central Ohio for AEP Ohio’s reliable electric service, available fiber connectivity, water resources and retail choice for energy supply.

Some mobile cryptocurrency operations have appeared in AEP Ohio’s service territory and then left, he noted.

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