COLUMBUS, Ohio — Ohio lawmakers have introduced legislation that would create new statewide requirements for large data centers, including long-term power purchase commitments, minimum billing thresholds, and financial guarantees designed to protect other electric customers from potential cost shifts.
House Bill 706 was introduced Feb. 17 and would enact new sections of state law, establishing minimum standards for data center customers in Ohio.
The proposal defines a data center as a facility primarily used for electronic data processing and storage with an aggregate monthly maximum demand exceeding 25,000 kilowatts.
Under the bill, electric distribution utilities would be prohibited from recovering distribution, transmission, or generation costs associated with data center customers from other ratepayer classes unless the Public Utilities Commission of Ohio determines the recovery is “just and reasonable”.
Utilities would bear the burden of proof in demonstrating that any agreements or cost-recovery mechanisms would not increase rates for existing customers.
The legislation would also bar utilities from providing electric service to or building infrastructure for a data center customer that has not met the bill’s requirements.
Among the new requirements, data centers seeking electric service would be required to enter binding agreements with utilities that include minimum demand commitments, long-term service contracts, exit fees or liquidated damages, and collateral or financial guarantees.
For facilities that reach full commercial capacity, the bill sets a minimum billing demand of at least 85% of contracted capacity and requires contracts to run no less than 12 years, including any approved ramp-up period of up to four years.
Before construction begins on transmission or distribution infrastructure dedicated in whole or in part to a data center, the Public Utilities Commission would be required to ensure that the customer provides financial assurance — such as letters of credit, collateral, or affiliate guarantees — sufficient to cover unrecovered infrastructure costs and exposure tied to early exit or downsizing.
The bill further provides that any exit fees, forfeited collateral, or unused-capacity payments collected from data center customers must be credited to retail customers in the next available rate period or deferred as regulatory liabilities for their benefit. Utilities would be barred from retaining those funds as earnings.
Within six months of the bill taking effect, the Public Utilities Commission would be required to establish uniform statewide standards governing load study deposits, queue position forfeitures, processing methods, and aggregation of affiliated projects for queue priority.
Supporters say the measure is intended to ensure that rapidly expanding data center development does not shift infrastructure risks or stranded asset costs onto residential and small business ratepayers. The bill has been assigned and is in the early stages of the legislative process.