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The staff of the state public utilities commission has recommended approval of a pending data center tariff for AES Ohio, formerly Dayton Power & Light.

A similar tariff was approved last year by the commission for Ohio Power, a division of American Electric Power (AEP). This case is tied to the reliability backstop auction of the PJM Interconnection, which opened July 7 and closes July 14.

PJM’s capacity market, called the reliability pricing model, has been criticized by the Trump Administration and PJM state governors after prices for the 2027-2028 delivery year hit a record high $333.44 per MW/day.

The auction held late last year still left the grid short of its target reserve margin. PJM blamed the capacity price spike on demand for electricity caused by “AI data centers.”

AEP is concerned that the current auction results could prompt some large load data centers to return to the standard service offer (SSO), causing that offer price “to increase in magnitude or volatility going forward.”

To prevent this, AEP asked the Ohio commission to approve an interim tariff.

Ideally, the PJM reliability backstop auction price would follow the data center load being served, the utility filing said. If the auction price does not follow the data center load upon returning to the standard offer, a separate auction should be held for that load, so that data centers can pay the full price of their procurement without impacting the SSO price.

AEP wants a 180-day notice for data centers to return to the standard offer. Without sufficient advance notice, spot market purchases will be made.

AEP asked for several technical conferences on the matter, and one has been held. An administrative law judge at the commission is hearing the tariff case.

Many commentors said the commission should consider adopting the interim principles statewide through a separate docket.

The Ohio Manufacturers Association said directly providing generation service to standard service data center customers violates the state’s energy deregulation law and undermines the competitive market.

AEP’s proposal to procure spot market purchases and supply the returning customer also violate the longstanding established SSO framework and Ohio law, the association said.

Constellation Energy said the commission should state that the interim process must not extend into any capacity periods that would be affected by the final PJM reliability backstop auction.

Electric distribution utilities in the state can conduct an advance auction for a data center standard service offer product. “If the commission desires statewide consistency, a separate, yet simultaneous data-center-class-specific competitive process is a minor adjustment that can be implemented on an interim basis in Ohio,” Constellation said.

Google said the commission should require that AEP examine whether its existing tariff may inadvertently result in large-load customers being defaulted to the standard offer “in circumstances where the customer never intended to return to default service.”

The tech giant said new customers face an additional barrier because a retail energy provider cannot submit an electronic enrollment until a service delivery identifier is generated, “ensuring a period of initial SSO service before a switch can even be initiated.”

To avoid this, Google said AEP should identify administrative fixes to its tariff and processes to prevent unintended use of the standard service offer or return to it.

Amazon Data Services said the day‑ahead market in PJM is the appropriate mechanism to utilize during any period during which a large load customer receives SSO service through spot procurement.

Interstate Gas Supply proposed to create a supplier of last resort program for data center customers in the retail market. Eligible customers could shop with a retail provider and have access to detailed service rates presented in a standardized format from providers that choose to participate and are registered with AEP.

The Ohio Manufacturers Association has challenged the utility in related data center cases. AEP’s existing data center tariff includes a moratorium on new data center hookups, with 50 of them said to be in the interconnect queue.

The group has appealed this to the state supreme court, claiming that the tariff is unreasonable if AEP could refuse to serve a certain type of customer located within its territory and is discriminatory if it targets only data centers.

The association also claims the utility’s long term forecast report for electricity should be revisited. The state utilities commission has scheduled a public hearing on the matter on July 21.

The manufacturers group developed Senate Bill 457 in Ohio, the Electricity Forecast Integrity Act, introduced by Mark Romanchuk (R) and Paula Hicks-Hudson (D).

The bill ensures speculative, duplicative and unverified data center proposals are not treated as firm electricity demand, Dave O’Neil, communications director for the association, told MAGNIFYI.

House Bill 646 passed the Ohio state house in March and is just one flashpoint in a state that has the fifth most data centers in the nation, according to one count.

The bill requires the state utilities commission to create a new rate class to apply costs associated with power generation, distribution and transmission to data centers.

The state manufacturers association opposes the bill for many reasons. The group objects to writing a utility tariff into state law, because tariffs belong only before the commission.

The bill also says all direct costs associated with providing retail electric service to data centers, including any generation costs, transmission costs, and distribution costs, shall be allocated and recovered solely from data center operators.

The manufacturers association said that under the bill, utilities could still recover the costs of building infrastructure over decades and leave existing customers at risk if projected data centers are delayed, downsized or never built.

Data centers now can get full exemptions from sales and use taxes in the state, which the bill would halve. Projects on brownfields or that provide their own generation could get a 75% exemption.

The bill also caps local property tax abatements for data centers at 50% and eliminates access to Ohio’s enhanced job creation tax credit.

The bill details how existing data centers getting tax credits would be scrutinized to determine if their obligations to Ohio were met. Data centers which fail to meet the requirements will be obliged to make tax payments.

Ohio Governor Mike DeWine told the state tax credit authority on May 27 to pause consideration of any new data center tax exemption requests.

The bill also says an electric distribution utility has no obligation to provide a standard service offer to a data center.

If a data center has a monthly maximum demand of more than 250 MW, the facility must offset its consumption from the grid through self-generation, co-located load arrangements or at least a fifteen-year purchase power agreement.

Developers would have to post surety bonds to build data centers, and non-disclosure agreements would not supersede public records laws.

Data centers would be required to report water usage to state regulators and use water conservation best practices.

A select committee in the state legislature held hearings on the bill last month. The state Senate has yet to act on HB 646.

The office of Senator Brian Chavez (R), chair of the chamber’s energy committee, did not respond to an inquiry by MAGNIFYI. The legislature officially adjourns on December 31.