The Federal Energy Regulatory Commission in December issued an order accepting a transmission construction service agreement between AES Ohio and Amazon Data Services that is tied to a large data center to be constructed in Ohio.
On October 23, 2024, AES Ohio filed an executed Transmission Customer New or Upgraded Service Construction Service Agreement by and between AES Ohio and Amazon Data Services, Inc.
AES Ohio stated that the CSA is a bilateral agreement between AES Ohio and Amazon governing the construction of new transmission facilities that are necessary to provide retail and transmission service for the first phase of a proposed Amazon data center to be located in Jefferson Township, Ohio, with an expected commercial operations date of September 15, 2026.
AES Ohio states that Amazon will be an AES Ohio retail customer that will not take transmission service under a PJM Interconnection tariff but will be served exclusively under AES Ohio’s existing state-jurisdictional retail tariff as a high voltage, end-use customer.
However, AES Ohio stated that the CSA is nonetheless being filed under FPA section 205 because “its provisions may be construed as affecting rates and practices for FERC jurisdictional transmission service.”
AES Ohio explained that it serves certain customers at high voltage delivery points under its Public Utility Commission of Ohio-jurisdictional Tariff — Electric Distribution Service -- High Voltage (Tariff 22).
Under Tariff 22, AES Ohio passes through to its customers the transmission charges incurred for service to those customers under the PJM OATT pursuant to its Transmission Cost Recovery Rider (TCRR).
AES Ohio notes that the arrangements addressed in the CSA do not involve co-location of the data center with any generating facilities.
OCC Protest
In a protest filed at FERC in November, the Office of the Ohio Consumers’ Counsel said that AES Ohio’s agreement to seek rolled-in rate treatment for the costs of Network Upgrades is based on a vague and undefined “understanding” that the Data Center will achieve commercial operations and maintain Minimum Load for at least ten years.
OCC argued that the CSA is unacceptably ambiguous and the Commission should require AES Ohio and Amazon to amend the CSA to unequivocally state that the Network Upgrade costs will be exclusively collected by AES Ohio through TCRR charges to Amazon regardless of whether “the load associated with the New Customer Facilities reaches the Minimum Load.”
OCC stated that, consistent with Commission policy, any TCRR charge increases resulting from the Network Upgrade costs should be allocated to Amazon, and the Commission should require the CSA to include specific language to preclude shifting Data Center costs to AES Ohio’s residential consumers.
OCC asserted that there is no evidence that Ohio consumers other than Amazon have any need for, or receive any direct benefit from, the proposed new Network Upgrades.
FERC Order
FERC in December accepted the proposed CSA, effective December 23, 2024, as requested.
Addressing the concerns OCC raised in its protest regarding the appropriate allocation of Network Upgrade costs, “we find that issue is not before the Commission in this proceeding,” FERC said.
The CSA “only sets forth AES Ohio’s intention to seek rolled-in rate treatment in a future filing with the relevant state or federal agency. OCC may raise its concerns in those future proceedings, and we note that our action here does not impact or pre-judge any future determination regarding Network Upgrade costs,” it said.
“We note, however, that the CSA includes numerous clauses addressing a variety of specific scenarios to ensure that Amazon would be responsible for all project costs in the event the project is terminated, does not reach Minimum Load, or does not operate for at least 10 years.”
In a concurrence to the order, FERC Commissioner Mark Christie said he was concurring “solely because, as today’s order points out in footnote 50. the clear intent of the parties is for Amazon Data Services, Inc., not other consumers, to pay for the costs of the Transmission Customer New or Upgraded Service Construction Service Agreement.”
He said that “On that core principle I agree with the Ohio Consumer Counsel. Moreover, that principle should apply regardless of the rate treatment used to implement this CSA.”
