Customer Bills May Pay for Intel Plant Energy
Intel is building a new computer chip plant in Licking County. However, this kind of plant will require a lot of electricity. With the increased strain on the Ohio grid, this can cause significant problems for customers. Specifically, AEP Ohio is asking for $95 million in grid improvements and upgrades to combat the increase in power usage. But who will foot the bill? Is it Intel, who will be using over a half-million homes’ worth of energy? Or will it be customers?
Intel Energy Deal Sours Some Customers
Usually, contracts require companies to pay around 40% of the upgrade costs for new infrastructure. However, Intel is working out a special deal. This deal would allow them to only supply the special circuit breakers they’ll need for the plant. Those costs total around $740,000. That leaves $94 million unaccounted for. On top of this, Intel will pay a lower transmission rate along with its other monthly charges and fees.
How Will Intel Affect Your Energy Bills?
On August 13, PUCO staff submitted their recommendation for the Intel and AEP Ohio “Reasonable Arrangement“. The agreement’s term is 20 years.
In order to deliver power to the Intel plant, AEP Ohio has agreed to build a new substation. To pay for it, customers will pay an additional 64 cents as a rider on their AEP Ohio electricity bills. That means consumers can expect to pay an extra $7.20 each year for the next two decades. That’s a total of $144.00.
However, there is an important condition in the Intel contract with AEP Ohio. Intel must pay a $94.5 million exit fee if it fails to invest $20 billion in the new facility. This includes generating over 3,000 jobs at Intel plus another 17,000 construction and support jobs in the Licking County area.
Ohio Tech Energy Use To Rise
This new Intel project isn’t the only data center project that could bring more load to the AEP Ohio grid. Amazon Web Services and Google both have operate data centers in the Columbus area which is served by AEP Ohio. Overall, AEP is now expecting a 20% usage increase across the US, where they usually expect a 1%-2% increase. And all this new demand falls on top of increasing residential consumer demand.
Additional substations and bigger power line capacity are needed to improve grid stability. So, Ohio energy customers can expect more grid improvement projects over the next four years. And yes, that probably means additional rate hike riders will appear on future bills.
More Data Center Costs Coming
Right now, the Ohio grid is struggling with the heat. So, imagine adding an additional 500,000 homes and a couple of data centers to the end of your street. Future grid improvements across Ohio are on the horizon and these should help benefit all of AEP Ohio’s customers in the long run. Of course, rates hikes are not convenient for everyone. But in this case, they are also an investment in job growth. Intel isn’t the only tech company looking at expansion in the next five years. You can expect companies like Meta, Amazon, and Google to construct more data centers and consume more energy. To keep up to date on the grid improvements in your area, check out www.ohenergyratings.com