AEP Ohio says its new tariff requires new data center customers to pay a minimum of 85 percent of the energy "they say they need" (?) each month, even if they use less, to cover the cost of the infrastructure required to bring electricity to those facilities" (article below).
They also assert that that is dramatically slashing the utility's data center pipeline that's straining the grid.
While this "sounds encouraging" for small business and residential AEP Ohio ratepayers, how does a minimum energy charge of 85% of "required" electricity in any way offset AEP's 10.5% guaranteed Return on Equity (ROE) on Transmission investment, and 9.8% on Distribution, paid to its shareholders? Those are not energy costs, those are infrastructure costs.
And we're also not even discussing potential increased Capacity Payment costs from grid operator PJM Interconnection, of which the last two years have risen tenfold.
T&D charges, not energy (actual consumed electricity) are the largest part of an electric bill, and the largest costs being foisted on ratepayers to benefit data center owner/operators, because data centers require major T&D upgrades, which are then up-charged and socialized across the entire utility footprint. Who benefits? The data center owner/operators (e.g. Amazon Web Services, Google), and the shareholders of utilities.
Energy (kWh) charges are simply passed through anyway, except in cases of demand charges.
While there are benefits from this for load forecasting, those will mostly go to PJM, to develop market demand curves and for resource adequacy planning.
For "ordinary" ratepayers, this looks like smoke and mirrors.