Dive Brief:
- Despite cutting its large load forecast from 30 GW to 13 GW through a new data center tariff, American Electric Power’s Ohio utility is still inflating its demand forecast, driving up capacity and transmission costs, according to the Ohio Manufacturers’ Association.
- In a report released Thursday, the OMA called on the Public Utilities Commission of Ohio to investigate utility load forecasting for data centers as well as what the trade group says is AEP Ohio’s overforecasting for small business customers.
- AEP Ohio contends its data center tariff protects existing customers from the costs of adding data centers to its system and also drives more accurate forecasts. “We are in the process now of updating our forecasts to report only the load that data center owners have signed contracts for,” an AEP Ohio spokesperson said in an email. “Under the terms of the tariff, data center owners are also required to post collateral to protect other customers from being saddled with infrastructure costs in the event data centers do not operate or do not use as much energy as they thought they’d need.”
Dive Insight:
Amid wide-ranging data center demand forecasts, the OMA report adds to the debate over how much data center load will actually be built and how it will affect customers’ electricity bills.
“Customers are being asked to pay for a future that may never arrive,” Ryan Augsburger, OMA president, said in a press release. “Speculative forecasts are being treated like guaranteed demand, and paper demand is driving real costs. Before families and employers are forced to fund billions of dollars in new power projects, the assumptions behind those decisions should be tested, transparent and accountable.”
Ohio Consumers’ Counsel Maureen Willis, the state’s ratepayer advocate, echoed Augsburger’s comment.
“Consumers are already feeling the strain of higher electric bills, which makes careful, independent review of utility forecasts more important than ever,” Willis said in a statement. “Overestimating future demand risks saddling consumers with unaffordable and unnecessary costs.”
The OMA contends that AEP Ohio’s data center tariff — approved by the Ohio PUC in July — resulted in AEP inflating its load forecast given to the PJM Interconnection by at least 3.3 GW.
AEP Ohio bases its data center load forecast on data centers that have asked for an interconnection engineering study, which the utility currently puts at 13 GW, according to the report. The utility then multiplies that amount by a “minimum demand ratchet,” which increased to 85% in its new tariff from 60%, the OMA said.
The minimum demand ratchet sets a monthly minimum charge for parts of a customer’s power bill and does not reflect PJM’s load forecast methodology, the trade group said. AEP Ohio fails to adequately fine tune that forecast to reflect data centers that drop out of the interconnection process, according to the OMA.
AEP Ohio’s PUC-approved data center tariff may be “legitimizing” inflated load forecasts at the PJM Interconnection, which may later be cited by the Federal Energy Regulatory Commission, the North American Electric Reliability Corp. and the U.S. Department of Energy, according to the OMA.
“Multiple regulatory agencies’ use of utility load forecasts can create an echo chamber that legitimizes the untested information,” the trade group said.
PJM last year used a tighter vetting process for reviewing utility large load forecasts and has said it may refine its oversight more this year.
Ohio state Sen. Mark Romanchuk, R, said Thursday he plans to soon introduce a bill that would bolster PUC oversight of utility load forecasts and require an alternate forecast from a third party.
Ohio isn’t alone is grappling with utility demand forecasts.
Pennsylvania in November enacted the Load Forecast Accountability Act, which requires the Pennsylvania Public Utility Commission to validate load forecasts utilities send to PJM.
And a bill is advancing in the New Jersey Assembly that aims to improve the accuracy and oversight of utility load forecasting.
“Inaccurate forecasts can result in either insufficient capacity, increasing the risk of brownouts and blackouts, or inflated capacity purchases that drive up costs for ratepayers,” Assembly Democrats said in a Jan. 5 press release.
