In December, a snow-covered Columbus hearing room hosted a fight that could shape U.S. electricity policy for years. Lawyers for Amazon, Google, and Microsoft clashed with American Electric Power (AEP) over how to price the massive demand of dozens of new data centers.
AEP projected it would need six times the electricity central Ohio produces today to meet tech companies’ requests. Its proposal: a new rate class for data centers, requiring them to pay for at least 85 percent of the power they request, even if unused. The tech firms countered with their own plan, offering just 75 percent, leaving the rest to be absorbed by other customers.
Ohio regulators sided unanimously with the utility, creating a precedent that other states are now studying. Virginia, home to the densest cluster of data centers in the world, is considering a similar move after finding that residents’ bills could rise $276 annually by 2030.
The core issue is risk. Utilities build costly infrastructure on the assumption that demand will materialize. But tech companies sometimes cancel or delay projects. In Virginia, a developer’s years-long delay forced local households to cover millions in grid upgrades. If the A.I. boom cools, regulators fear ordinary consumers could again be left paying for stranded costs.
Technology firms argue that data centers create jobs and regional investment, and that grid upgrades ultimately benefit everyone. But utilities and consumer groups counter that the scale of demand — potentially raising Columbus’s power use to the level of Manhattan’s — justifies treating data centers differently.
Despite the Ohio defeat, tech companies are pushing back in other states, warning that industry-specific rate classes are discriminatory. Yet compromise models exist. In Indiana, Google and others agreed to share some upfront costs without being segregated into a new customer class.
For now, the race to build data centers continues. But the battle over who pays for the electricity they consume is only beginning — and state regulators are no longer content to let tech giants write the rules.