Data Centers Face Higher Electric Charges in Ohio

Ohio energy regulators sided with consumers over data centers Wednesday, increasing up-front electricity charges paid by Amazon, Google and other tech firms. The decision could set a precedent in other places grappling with soaring data center power demands as summer temperatures climb and AI’s appetite for energy raises concerns about rising home electricity bills.

The Public Utilities Commission of Ohio sided with American Electric Power and consumer groups’ revised proposal to charge data centers 85 percent of projected usage, up from the current 60 percent. The commission said the higher level “balances the encouragement of incoming data center investment from global companies that will significantly alter Ohio’s grid for years to come, with protecting non-data center customers from service disruption.”

Major tech companies including Meta, Google, Microsoft and Amazon have data centers in Ohio. The tech giants supported a competing proposal that would have been more lenient on them but risked passing the increased costs on to consumers. The companies did not immediately respond to requests for comment.

The Data Center Coalition, an industry group representing the tech firms, said it was “very disappointed” in the commission’s decision, calling it “a deviation from the long-established, sound ratemaking principles that have carried both Ohio and the nation through periods of electricity demand growth and flat demand.”

“We continue to maintain that no one customer type or industry should be singled out for disparate rate treatment by the utility,” said Lucas Fykes, the coalition’s director of energy policy. The industry is “committed to paying its full cost of service,” he added.

The Ohio showdown over data centers’ impact on energy infrastructure started last year when American Electric Power proposed increasing a monthly charge on data centers from 60 percent to 90 percent of their projected consumption. Surging power demand from data centers is on track to force utilities to make expensive grid upgrades in Ohio and other states.

Virginia is home to more data centers than any other state and offers an exemption to the state’s retail sales and use tax to attract large-scale data centers. Ohio also offers data centers a sales tax exemption. Data centers enable essential services and cutting-edge technologies that drive the economy, industry representatives said.