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Choice Utility Which Divested Generation Receives PUC Approval To Own & Operate "Natural Gas Powered" Generation
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In separate orders adopting similar reasoning, the PUC of Ohio granted AEP Ohio's applications for approval of agreements with two large customers under which AEP Ohio will own and operate two natural gas-powered generation systems (fuel cells) to be located at two customer data center locations
Specifically, under a then-existing statute allowing a utility to construct renewable generation at a mercantile customer site (R.C. 4928.47(A)), AEP Ohio has received authorization from PUCO for separate agreements to own and operate behind-the-meter fuel cell systems to serve separate locations housing Amazon Data Services, and Cologix Johnstown (a data center operator)
Each fuel cell system will use natural gas to generate electricity using solid oxide fuel cells, which qualify as a renewable resource under statute. The size of each system was filed on a confidential basis. AEP Ohio said that the systems will not export any power to the grid
See our prior story here for more details on the proposed agreements
Various parties, including retail suppliers, had objected to the proposed agreements, arguing that the agreements conflict with, and must be subject to, AEP Ohio's corporate separation plan and related prohibitions on utility generation ownership and the provision of competitive retail electric service
Opponents argued that the language of R.C. 4928.47 only allows a utility to "construct" a renewable generation facility for a mercantile customer, but that the statute does not allow the utility to own or operate such generation facility
PUCO denied these arguments, finding that the agreements, including the utility's ownership of the generation, are authorized under R.C. 4928.47 as it existed at the relevant time, and, on a grandfathered basis, under newly enacted HB 15
PUCO said, "The Commission finds that AEP Ohio’s application is consistent with the plain language of R.C. 4928.47. As noted above, R.C. 4928.47 permits an EDU to enter into an agreement, subject to Commission approval, having a term of three years or more with a mercantile customer for the purpose of constructing a customer-sited renewable energy resource in this state that will provide a material portion of its electricity requirements. The statute also provides that any direct or indirect costs associated with the customer-sited renewable energy resource will be paid by the EDU and mercantile customer."
"After careful consideration of all the language of the statute and the responsive comments submitted by interested stakeholders, we note that there is very little ambiguity in regard to the ultimate objective of this statute. However, as explained further in this Finding and Order, even if there is ambiguity as alleged by some parties in this case, the legislative intent is easily discerned by various factors, including the General Assembly's recent passage of energy legislation," PUCO said
PUCO said that while OMAEG, RESA, OCC, and One Power argued that the statute merely permits an EDU to construct, but not own, the underlying generation asset, "this reading of the statute ignores all but the word 'constructing.'" PUCO said that additional statutory language contemplates that a relationship between the utility and the customer may go beyond simply "constructing" the generation asset, such as statutory language establishing protections to assure that ratepayers won't be assigned costs related to "infrastructure development or generation" as a result of the agreement, as PUCO said that such protections would not be needed if the utility's role was limited to construction
PUCO said that the specific authorization for utilities to own the renewable generation under R.C. 4928.47 supersedes the general prohibition on the utility provision of competitive retail electric service under R.C. 4928.17 and the attendant corporate separation plans. As a result, such utility ownership need not be subject to, or approved through, a change in a utility's corporate separation plan
PUCO concluded that R.C. 4928.17, governing corporate separation, only generally prohibits EDUs from participating in competitive retail electric service unless approved by the Commission as part of a corporate separation plan, "whereas R.C. 4928.47 specifically addresses the type of contractual arrangement at issue in this proceeding."
"R.C. 4928.47 was enacted in 2019 while R.C. 4928.17 was enacted in 2000. Accordingly, under R.C. 1.51 and 1.52, as well as applicable Supreme Court of Ohio precedent, if there is any discrepancy between R.C. 4928.47 and R.C. 4928.17, then R.C. 4928.47 must control as the more specific and later-enacted statute," PUCO said
Finally, PUCO noted that, as previously reported, HB 15, as enacted, repealed 4928.47, but in doing so specifically provided that EDUs, "may supply behind the meter electric generation service provided the facilities the utility intends to use to supply that service were filed with the Commission pursuant to this section," prior to March 31, 2025. The two AEP Ohio applications were filed before such date
PUCO did order periodic audits to ensure that other customers are not directly or indirectly bearing the costs of the agreements. PUCO said that concerns that other ratepayers may be harmed due the agreements' impacts on AEP Ohio's borrowing costs are speculative at this time, but PUCO stressed, "AEP Ohio has committed to 'making ratepayers whole' if an adjustment becomes necessary and the Commission will allow for routine audits to ensure the Company is remaining true to its word."
Case No. 25-0133-EL-AEC, 25-133-EL-AEC -- Amazon
Case No. 25-0134-EL-AEC, 25-134-EL-AEC -- Cologix Johnstown
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May 28, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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