Columbus, OH – As the Ohio Supreme Court prepares to consider whether American Electric Power’s (AEP) data center tariff plan constitutes discriminatory pricing, The Buckeye Institute is out with a new policy brief—Undermining Ohio’s Competitive Edge—that outlines how the pricing plan harms Ohio’s economy and will leave residential ratepayers on the hook for infrastructure costs. 

“While PUCO’s approval of AEP’s data center tariff was a short-term win for the utility, it will produce a long-term loss for Ohio,” said Aswin Prabhakar, an economic research analyst at The Buckeye Institute and the author of Undermining Ohio’s Competitive Edge. “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 Buckeye Institute paper outlines four critical ways in which the data center tariff harms Ohio’s economy and will ultimately lead to higher energy costs for consumers and fewer high-tech jobs in the Buckeye State.

• The Failure of AEP’s Pricing Model. Under its plan, AEP is expanding its grid infrastructure. However, its 85 percent minimum demand charge, 12-year contract terms, and steep exit penalties will drive data centers and other large-load users out of Ohio, leaving residential ratepayers holding the bag.
• Behind-the-Meter and Long-Term Impacts. If AEP’s punitive terms push every data center to build behind-the-meter generation, then AEP will collect zero revenue from these massive energy users and will again leave residential ratepayers holding the bag.
• Abuse of Monopoly Power. In March 2023, without PUCO approval, AEP imposed a two-year moratorium on new data center connections. The moratorium gave AEP enormous leverage, effectively telling prospective customers: accept our terms or build somewhere else. 
• Ohio’s Competitive Disadvantage. Large data center builders are investing hundreds of billions of dollars annually, and while Ohio debates punitive tariffs, neighboring states are courting those investors. Ohio’s share of that investment depends on whether its regulatory environment signals welcome or hostility.

AEP’s plan was approved by the Public Utilities Commission of Ohio (PUCO) and is being challenged in court by the Ohio Manufacturers’ Association Energy Group.

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