The Buckeye Institute released a policy brief on Mar. 16 outlining concerns about American Electric Power’s (AEP) data center tariff plan, which is currently under review by the Ohio Supreme Court. The organization said the pricing model could harm Ohio’s economy and increase costs for residential ratepayers.
The issue is significant as it may affect both energy prices for consumers and the state’s ability to attract high-tech jobs. The Buckeye Institute argued that if Ohio continues with policies seen as unfriendly to data centers, these companies may choose to invest elsewhere.
“Aswin Prabhakar, an economic research analyst at The Buckeye Institute and the author of Undermining Ohio’s Competitive Edge, said, “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. 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 policy brief identified four main concerns: AEP’s pricing model includes an 85 percent minimum demand charge, lengthy contract terms, and steep exit penalties that could drive large users out of state; punitive terms might push data centers to generate their own power rather than use AEP services; a two-year moratorium imposed by AEP in March 2023 gave the company leverage over new customers; and neighboring states are actively courting investments while Ohio debates tariffs.
AEP’s plan was approved by the Public Utilities Commission of Ohio but is being challenged in court by the Ohio Manufacturers’ Association Energy Group.
According to the official website, The Buckeye Institute depends on private funding from individuals, corporations, and foundations. The organization has offices on Capitol Square in Columbus, Ohio. It works to promote free-market public policy through research, data analysis, and policy development. While focusing on issues within Ohio, it also promotes free-market ideas nationally. The group aids policymakers with research and data to advance free-market principles and is classified as a nonprofit under section 501(c)(3) of the Internal Revenue Code.
The broader implications of this case could influence how other states approach similar utility tariffs and impact where technology companies decide to locate their operations.
