Ohio Forces Data Centers to Prepay for Power

Ohio energy regulators ruled that data centers will be subject to a new, special rate class and that they will face penalties if they fail to fulfill their commitments. According to an article by Dan Gearino in Inside Climate News, the action is a result of a proposal by American Electric Power (AEP), a Columbus-based utility.

As Gearino explains, “The ruling recognizes that data centers ‘pose a different type of risk, as well as an increased amount of risk,’ said the Public Utilities Commission of Ohio in its 5-0 decision.” The ruling seeks to prevent “highly speculative” projects that make agreements about power use, then never come to fruition. Now, data centers need to pay for at least 85 percent of the energy they sign up to use, regardless of their actual usage. “This provision helps to cover the costs of building infrastructure to serve the new development.”

Experts say rules like these are necessary because data centers require grid updates that all customers end up paying for, whether or not the data center is actually built. “Ideally, the regulations will mean that some of the most speculative data center plans will never reach the stage of making a power agreement with the utility, which makes it easier for AEP to plan for its future needs.”