Power company’s data center tariffs before Ohio Supreme Court

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(The Center Square) – For Ohioans, the technological revolution being brought on by artificial intelligence is cast as an inevitability, with proponents spreading the message to get on board or get out of the way.

Perhaps nowhere is that ultimatum more pronounced than in the context of data centers and the energy required to fuel them, an issue now being considered by the Supreme Court of Ohio in light of tariffs imposed on the centers by American Electric Power Ohio.

The tariffs for data centers and cryptocoin mining operations are meant to offset the massive energy company and infrastructural stress caused by the industry. The Ohio Manufacturers’ Energy Group have appealed what they call the Public Utilities Commission of Ohio’s “unjust, unreasonable, and unlawful approval” of the tariffs.

The group claims the tariffs, which call for an 85% minimum energy demand charge over 12-year contract terms with exit penalties, are discriminatory and don’t accurately reflect the energy landscape. It argues that determinations about cost must be made based on the end-use of energy consumers, not their industries.

Some of the state’s economists agree with them, warning that tariffs intended to offset the demand of energy centers are likely to drive data centers to states with greater incentives for development.

“These measures signal that Ohio’s largest electric utility views its most promising customers as liabilities, not opportunities,” wrote Aswin Prabhakar of the Buckeye Institute. “And efficient pricing, grid reliability, and Ohio’s competitive position all suffer under the current framework.”

On Monday, the institute released a policy brief titled “Undermining Ohio’s Competitive Edge” on the topic warning against the potential for long-term losses if the state’s utilities maintain course.

“If Ohio persists in treating data centers as threats instead of opportunities, these companies will respond. Data centers will still be built and will still create high-tech jobs – just not in Ohio,” the brief said.

Critics have said that the job creation promised by data centers may be short-lived and overstated. The development projects require significant labor to get up and running but far fewer workers once online. Some cite environmental concerns like water usage for cooling servers as well as ethical concerns around artificial intelligence itself.

At the same time, residents are voicing opposition to the centers. A petition created by a group from Brown and Adams counties was filed earlier this week that would call for a vote on a constitutional amendment prohibiting the construction of new data centers with peak loads of more than 25 megawatts in the state.

“My biggest concern is because I love Adams County,” Nikki Gerber, one of the petitioners told Cleveland.com. “What it feels like they are doing is just taking advantage of the unzoned rural areas of Ohio, where they can go ahead and put in whatever they want.”

Legislators in the state are also working to catch up with the new development of data centers and concerns that they pose. Bills from both sides of the aisle aim to put limitations on the growth and consumption of new data centers.