Ohio has quickly become a top state for data centers. Because data centers use lot of electricity, many customers have questions about AEP Ohio’s role. Who figures out how much electricity they need? Is there enough power to serve them? Are existing customers paying for new infrastructure?
The answers begin with understanding what AEP Ohio does and doesn’t do.
Who decides how much electricity they need?
Data centers are physical structures that make the modern digital world possible — storing and processing information that enables everything from online banking, electronic medical records and video streaming to cloud computing, national defense and artificial intelligence.
Like every electric utility in Ohio, state law requires AEP Ohio to provide electric service to customers within our service territory. Whether the customer is a home, a small business, a manufacturing plant or a data center, our responsibility is the same: safely deliver reliable and affordable electricity. Just like with our other customers, AEP Ohio does not recruit, develop, own or run data centers.
When a company wants to build a data center, the customer — not AEP Ohio — decides how much electricity they will need based on the project’s purpose and design. That information is the starting point for AEP Ohio’s engineers and planners.
Our staff evaluates the request, completes detailed engineering studies and finds the best way to serve the facility. Those studies make sure the existing electric system has enough capacity and tell us when new substations, transmission lines and other infrastructure is needed.
Is there enough power to serve them?
Before answering that question, it helps to understand how AEP Ohio delivers electricity to your home or business.
AEP Ohio is a regulated, wires-only electric distribution company. By law, we do not and cannot own or run power plants, and we do not generate electricity. Our job is to use our network of substations, poles, wires and other equipment to deliver the electricity generated by power plants, wind farms and other suppliers.
Some large customers, including some data centers, choose to build their own on-site generation to help power their operations. Whether a data center draws its power from the electric grid, on-site generation or a combination of both, AEP Ohio is still responsible for ensuring the local electric distribution system serves all customers safely, reliably and affordably.
As we review requests for new service, AEP Ohio shares the amount of electricity the customers say they need with PJM, the regional organization responsible for planning and coordinating the high-voltage transmission grid across 13 states and the District of Columbia. PJM uses information from all electric utilities in the region to make sure there are enough transmission resources and power supplies to meet future demand.
Simply put, AEP Ohio’s role is to understand our customers’ needs, work out how to serve them safely and reliably, share that information regionally and manage the local poles and wires needed to deliver electricity.
Are residential customers paying for new infrastructure?
Several years ago, data center developers began requesting an unprecedented amount of electricity for new projects. AEP Ohio recognized that traditional regulations and pricing structures weren’t designed for this amount of growth at such a fast pace. To protect our other customers and better align infrastructure planning with actual demand, AEP Ohio developed its Data Center Tariff. This framework was one of the first of its kind in the nation and has become a model for utilities, regulators and policymakers across the country.
The Data Center Tariff set up a structured process that requires data center customers to make significant financial and contractual commitments before we build infrastructure to serve them. It also requires engineering studies, proves the customer’s financial health and protects other customers if projects are canceled or significantly delayed.
This approach helps ensure that actual projects drive infrastructure investments and that the costs of serving these large customers are assigned fairly. It helps AEP Ohio plan responsibly while protecting existing customers and supporting Ohio’s continued economic growth.
Our role is simple
As new businesses invest in Ohio, AEP Ohio’s responsibility is the same as it has been for over a century — safely providing reliable and affordable electric service to the communities we call home.
That means applying sound engineering, planning infrastructure responsibly, coordinating with regional grid operators and ensuring our electric distribution system is ready to meet today’s needs and tomorrow’s growth.
Thank you so much for explaining the process.
AEP stated the following ” By law, we do not and cannot own or run power plants, and we do not generate electricity.” Is there a site that tracks new initiatives from companies and/or organizations planning to build Power Plants in Ohio? If yes, can you share.
Mike, we’re not aware of any such site. Right now, there is an imbalance between the supply of generation and the growing demand for it. Because generation supply in Ohio has declined, the state is increasingly relying on electricity imported from other states through high-voltage transmission lines. As supply has tightened, both generation and transmission costs have increased. We sincerely hope the market will respond soon with additional generation sources in Ohio to help alleviate this burden for our customers.
The electric bill I just paid was around $220 dollars, that is about $100 dollars more than I have ever paid for this time of year in the past 20 years since I moved to Wooster Ohio. I have lived at the same apartment complex the entire time. One bed one bath. I suspect a scam.
Hi Doug. We understand how concerning it can be to receive a higher-than-expected bill. There are several factors that go into a customer’s bill, and AEP Ohio does not control all of them. AEP Ohio does not and cannot own generation, so customers can shop for their generation supplier or stay on AEP Ohio’s Standard Service Offer, where we purchase electricity from a generator on behalf of our customers and pass along the exact cost with no markups.
There is an imbalance between the supply of generation and the growing demand for it. Market operators such as PJM Interconnection oversee the wholesale power market and help ensure reliable, cost-effective electric service across 13 Midwest and Northeast states, including Ohio. Because generation supply in Ohio has declined, the state is increasingly relying on electricity imported from other states through high-voltage transmission lines. As supply has tightened, both generation and transmission costs have increased.
If you choose to get your generation supply from another provider, it’s important to check the offer’s rate, term and any fees. Some offers start with a lower or variable rate that may be surprising if you don’t review your bill carefully. You can compare providers at the PUCO’s Apples to Apples page. AEP Ohio’s current price for generation supply is $0.1097/kWh.
Who pays for new power plants that will be needed? Will the power plants use coal? I hope not.
Hi Michael. AEP Ohio is not allowed to own generation, so we’re not able to speak to how the generation imbalance will be solved. We’re a wires-only distribution company responsible for delivering electricity to homes and businesses in 61 counties via local poles, wires, substations and other equipment — we do not manage the power supply.
Does PJM share the same commitment? How do we locate that information?
That’s a great question for PJM, Rhonda. Their website is PJM.com.
Lots of talk. What are the facts? What is AEP’s capacity, what was its “run-rate” by season in the past 5 years in kWh production? What is the new forecast for data centers in kWh? Get to the point. What was the price per kWH in 2019 and what is it today, and what are the projections over the next 5 years?
Hi Gary. Ohio is a deregulated state, which means AEP Ohio does not and cannot generate electricity. AEP Ohio is a wires-only company that delivers electricity to homes and businesses, but we do not produce power or manage the power supply. Questions about current and forecasted demand are best answered by PJM, the regional transmission organization that directs the flow of electricity across the power grid in Ohio and 12 other states, including the District of Columbia.
Thank you, AEP Ohio, for taking the time to explain your role in supporting Ohio’s growing number of data centers. As a customer, I appreciate the clear, straightforward information about how electricity demand is planned, who is responsible for building new infrastructure, and—most importantly—how existing residential customers are being protected from bearing those costs.
With artificial intelligence, cloud computing, and other technologies expanding so rapidly, it’s reassuring to see the planning and safeguards that are in place. I hope you’ll continue providing updates like this as Ohio continues to grow. Transparent communication helps build trust and gives customers a better understanding of the important work happening behind the scenes.
Because of the data centers you are taking private citizens property to install your lines. NOT ONE HOMEOWNER SHOULD HAVE THAT HAPPEN NOR SHOULD THEY PAY FOR ELECTRIC UPGRADES TO YOUR GRID. YOU ARE COMPLICIT IN DESTROYING PEOPLES PROPERTIES AND LIVES TO SUPPORT RICH BILLIONAIRES WHO ARE JUST TRYING TO OUT DO EACH OTHER IN THE SANDBOX.
Good informative article
OK. You have a plan but you give no specifics. Too many unknowns. The state of Florida passed legislation stating that residential customers will not be affected by data centers. They foot the bill for any sub structures needed to insure that and submit the plan for approval before allowed to build. We need that here.
So why has the cost to deliver my electric doubled ? The existing wires I use were already there.
We understand what you’re saying, Mark, and we share your concerns about rising electricity costs. The biggest driver behind higher bills is the price of power generation, which is market-based. Customer bills are made up of three parts: generation, transmission and distribution. We operate as a wires-only company, meaning we deliver electricity, not generate it. Ohio is a deregulated state, which means AEP Ohio cannot generate electricity to offset that energy demand.
Right now, there is an imbalance between the supply of generation and the growing demand for it. Market operators such as PJM Interconnection oversee the wholesale power market and help ensure reliable, cost-effective electric service across 13 Midwest and Northeast states, including Ohio. Because generation supply in Ohio has declined, the state is increasingly relying on electricity imported from other states through high-voltage transmission lines. As supply has tightened, both generation and transmission costs have increased. We sincerely hope the market will respond soon with additional generation sources in Ohio to help alleviate this burden for our customers.
Thanks for the information.
I do not consent to building data centers in my area
Simply put, AEP Ohio’s role is to understand our customers’ needs, work out how to serve them safely and reliably, share that information regionally and manage the local poles and wires needed to deliver electricity.
We’re about to test that theory with evidence stretching back over four years and our preferred testers are going to be FERC and Ohio Consumer Council. Be ready! Tired of all the constant money grabs and the willful neglect. Don’t ask me to explain because I’m tired of that as well. We are extremely frugal electric users and you constantly ask for more and more and defeat our purpose while making huge profits and sweeping safety under the rug. Years not weeks, months..years.
With generation suppliers short in Ohio then why did the WH Sammis power station in Stratton get dismantled so quickly after Trump won the election . Why, because the previous administration was and still are all about money in their pockets under the disguise of “clean air” because that was a coal fired plant. Now they’re all up in arms about electricity supply needed for the AI plants. Question….did AEP do anything to stop the Sammis from being shut down?
Hi Carolyn. AEP Ohio does not and cannot own generation, so we’re unable to help with your question. I’d suggest taking it up with public officials in your area, or reaching out to AEP corporate.