Testimony to the House Energy Committee on HB 706
Chairman Holmes, Vice-Chair Mathews, Ranking Member Rader, and members of the House Energy Committee, thank you for the opportunity to submit proponent testimony on behalf of House Bill 706 (HB 706), which would prevent cost-shifting onto other ratepayers by establishing a statewide data center tariff.[1] My name is Molly Bryden, and I am the Climate & Sustainability Researcher with Policy Matters Ohio, a nonprofit research institute working to build a more vibrant, equitable, inclusive, and sustainable Ohio.
HB 706 includes many measures under a data center tariff, applicable to data centers with peak monthly demand of 25 MW or more. Under HB 706, data centers would be required to pay for at least 85% of their projected energy demand, similar to the data center tariff approved in AEP Ohio’s service area.[2] HB 706 additionally includes cost recovery mechanisms and parent company guarantees to prevent cost-shifting, statewide standards for load study payments to support responsible, informed infrastructure investment decisions, and minimum contract terms, among other protective measures.
Importance of ratepayer protections under HB 706
Ohio’s working families should not be responsible for the growing costs associated with unprecedented electricity load growth driven by data centers. The statewide data center tariff that would be established by HB 706 can ensure that data centers cover costs associated with investment in infrastructure upgrades needed to connect them to the grid. Data center tariffs, or large-load tariffs, can additionally mitigate the risk of stranded assets if data centers consume less energy than originally anticipated, if they do not build at a proposed site, or if the company ceases operations in Ohio.
Ohio is seeing a surge in data center projects exceeding 100 megawatts (MW), ranging up to 10 gigawatts (GW)[3] – the latter would require more electricity than all residential ratepayers in Ohio, combined, while the former corresponds with the demand of more than 70,000 households.[4] In addition to putting immense strain on the grid, data centers’ skyrocketing electricity demand has severe implications for climbing energy costs faced by residential and small commercial ratepayers.
Over the last decade, average monthly electricity costs for residential ratepayers in Ohio have increased by 34.9%, despite a modest decrease in demand (-9.3%). While data centers are not solely responsible for skyrocketing energy costs, the pace and scale of their growth – within the state and regionally – could have severe consequences in the absence of robust ratepayer protections.
According to PJM’s 2026 load forecast report, summer peak load in the transmission zones served by AEP and AES[5] is expected to increase by 5.3% and 5.2% per year over the next decade,[6] respectively – the 3rd- and 4th-highest load growth rates among the 22 transmission zones in PJM’s territory.[7] And this growth is rapidly accelerating: Just five years earlier, AEP and AES projected an annual growth rate of 0.4% between 2022 and 2031.[8]
Typical ratepayers are bearing the costs of resource-intensive data centers connecting to the grid and seeing their household energy bills rise. After the results from PJM’s 2024 capacity auction went into effect, the average residential electricity bill among Ohio ratepayers in July 2025 was $214, a 25.7% increase from the previous year, the third largest increase in the country.[9] At the same time, there has been a surge in supplemental transmission projects proposed to PJM’s Transmission Expansion Advisory Committee by transmission utilities serving Ohio linked to customer service requests for new or additional load on the grid.
Supplemental transmission projects — electrical grid upgrades initiated by an individual utility company — have a range of drivers, though data centers are part of an uptick in investment driven by large load customer service requests. Costs are often allocated solely to the transmission zone where the project is located, which are then recovered from the utility’s rate base. Since transmission costs are spread across all ratepayers, Ohioans need stronger guardrails to ensure that the costs of supplemental transmission spending driven by data centers’ load service requests are allocated accordingly.
Already, keeping up with rising energy costs has been a significant challenge for a substantial share of Ohio households. A family’s energy burden, or the percentage of household income spent on home energy costs, is considered high if their utility bills make up 6% or more of their income. Considering the average monthly residential electricity bill in 2025 ($149.90), electricity alone was unaffordable for households with a monthly income of $2,498.41 or less (or an annual income of $29,980.89) – representing 15.7% of Ohio households.[10] Without meaningful ratepayer protections, data centers’ soaring electricity demand could continue to drive energy costs up, imposing undue energy burdens on even more Ohio families.
A proactive capacity commitment framework under HB 706
Integrating a capacity commitment framework — a contract model devised by Google — into large-load tariff policy can enhance protections for residential and small commercial ratepayers. Effective capacity commitment frameworks embedded in agreements between data center customers and utility companies feature several elements,[11] included in HB 706:
- Minimum billing demand: Data center tariffs often include minimum billing demand requirements, or capacity commitments, requiring a data center to pay for a specified percentage of its anticipated electricity demand to prevent cost-shifting if actual usage is lower. The data center tariff under HB 706 would require data center companies to enter into binding agreements with their respective utilities to pay for at least 85% of their contracted capacity.
- Up-front financial commitments & financial assurances: HB 706 requires data centers companies to provide up-front financial commitments to mitigate duplicative load requests, which can overinflate load forecasts and drive up capacity costs for all ratepayers, even if speculative load growth doesn’t materialize. HB 706 would also require financial assurances from data center customers’ parental or affiliate companies, including exit fees and assurances for companies’ liability to cover costs if a subsidiary company’s data center operations go under or downsize. Importantly, HB 706 would require data center customers to enter into binding agreements with their utility assigning costs associated with infrastructure investment to respective data center customers, before construction commences. By tying contract requirements to infrastructure planning, HB 706 would effectively protect other ratepayers from potential risks of overbuilding infrastructure associated with planned data center projects.
- Minimum contract terms requirements: HB 706 would set minimum contract terms of at least 12 years, to prevent cost-shifting, reduce stranded asset risks, and improve long-term load forecasting. HB 706 additionally establishes load ramp timelines up to four years to align new generation capacity additions with data center load growth, improving energy system planning and mitigating stranded infrastructure costs.
HB 706 is a commonsense piece of legislation that would insulate Ohio ratepayers from the growing costs of data centers’ grid impacts. The data center industry is an incredibly resource intensive, heavily subsidized industry. Data center companies can and should be responsible for covering the full life-cycle cost of electricity generation, transmission, and distribution infrastructure needed to meet their energy needs. We urge the committee to approve HB 706 to advance a comprehensive policy agenda that centers Ohioans’ needs over those of profit-driven corporations.
Thank you for the opportunity to provide proponent testimony on behalf of HB 706. I am happy to answer your questions.
[1] House Bill 706 Documents, Legislation Text & Analysis as Introduced. The Ohio Legislature, 136th General Assembly.
[2] Data Center Tarriff. AEP Ohio.
[3] For example, Cologix began construction on an AI data center with 120 MW of capacity, and the U.S. Department of Energy recently announced plans for a 10 GW data center in Pike County. According to the Data Center Proposal Tracker, a citizen-led platform that crowdsources data on U.S. data centers, proposed data centers in Ohio would have a cumulative demand of 17.6 GW, while the FracTracker Alliance’s U.S. Data Centers Tracker, a separate source, estimates 28.1 GW in speculative load growth associated with planned data centers in Ohio.
[4] Electric Power Monthly, Electricity sales to ultimate customer by state and sector (retail sales of electricity, January-December, 2025), Energy Information Administration, 2025.
[5] The AES transmission zone covers Dayton and parts of Western Ohio. AEP’s transmission zone spans Central and Southeast Ohio, along with parts of Northwest Ohio and several other states. See the map of PJM zones for details.
[6] PJM Forecasts & Reports, 2026 Long-Term Load Forecast. Table B-1: Summer Peak Load (MW) and Growth Rates for Each PJM Zone and Geographic Region (2026-2046). PJM Interconnection.
[7] PJM Interconnection is the regional transmission operator that serves Ohio, along with all or parts of 12 other states and Washington, D.C.
[8] PJM Forecasts & Reports, 2021 Load Report (Previous Reports). Table B-1: Summer Peak Load (MW) and Growth Rates for Each PJM Western and PJM Southern Zone, Geographic Region and RTO (2021-2031). PJM Interconnection.
[9] Electric Power Monthly, Electricity sales to ultimate customer by state and sector (number of customers, average price, revenue, and mega-watthours of sales), Energy Information Administration.
[10] “Income in the Past 12 Months (in 2024 Inflation-Adjusted Dollars),” American Community Survey, ACS 1-Year Estimates Subject Tables, Table S1901, U.S. Census Bureau.
[11] “At the Crossroads: A Better Path to Managing Data Center Load Growth,” Table 1: Core elements of a capacity commitment framework (page 18), by Mckenna Beck and Jackson Morris. Natural Resources Defense Council, September 2025.