AEP Ohio and Intel are asking state regulators to sign off on an agreement they've reached in which AEP will provide a load of electricity to Intel's 1,000-acre site in Licking County that is so vast it could run up to 450,000 homes.
AEP Ohio will provide 500 megawatts of electricity to the site where Intel is spending $28 billion to build two factories, according to the agreement that the two companies filed with the Public Utilities Commission of Ohio .
The electricity will run the two factories and other operations around the plant.
"The proposed arrangement supports the clear state policy of encouraging the development of high-tech manufacturing in Ohio and encouraging Intel, in particular, to locate its new facilities in Licking County," the companies said in the filing. "By approving the proposed arrangement, the commission adds its voice to the chorus of federal, state, and local policymakers recognizing that the new Intel facilities are vital not only for their profound economic benefits but also for the serious national security and supply chain concerns that are addressed through the onshoring of semiconductor manufacturing."
The companies made the filing under a provision in state law that allows for a "reasonable arrangement" that supports Intel's investment and, along with it, promotes economic development and job growth in Ohio. In return, Intel pays a modified rate for electricity. The filing didn't say how much Intel will pay for power.
It's been a tool used in the past in Ohio, including by Amazon as part of its expansion of its data center operations in central Ohio.
Intel's project is expected to create 3,000 jobs with an annual payroll of $405 million. It also is expected to create several thousand construction jobs. The $28 billion investment is the biggest economic development project in state history.
As Intel ramps up work on the site, it's overall business is struggling. The company on Thursday reported weak financial results and said it will be cutting more than 15% of its workers, or nearly 19,000 jobs.
Intel hasn't given a precise date for when the factories will open . The semiconductor company has said such projects can take as long as five years to complete from the time it breaks ground, which was in September 2022.
"We appreciate the collaboration with AEP," Intel said in a statement. "This rate agreement will not only facilitate Intel's commitment to creating thousands of well-paying jobs but also ensure continued investment in Ohio's future. We look forward to the Public Utilities Commission of Ohio's review and the positive impact this will bring to our community."
Ohio Consumers' Counsel Maureen Willis welcomed the proposal.
“Intel's economic development proposal filed with the PUCO is a good one," she said in a statement. "With limited costs charged to utility consumers and its huge economic boost to Ohio’s economy, it’s a win-win for Ohioans.”
Data centers spurring huge demand for electricity from AEP
The filing comes as AEP is seeing the biggest surge in demand for power in decades, driven by big growth from data centers.
In Ohio, AEP has said demand for power from data centers is so strong here that in coming years, electricity usage in central Ohio will be similar to that of all of Manhattan.
In the case of the Intel site, 500 megawatts would be enough to power the 275,000 single-family homes in Franklin County and then some, based off estimates of power consumption.
Last week, AEP said in its second-quarter earnings call that it is forecasting a more than 40% increase in the demand for power by the end of the decade for its 11-state footprint, and that demand for power from commercial customers increased 12.4% over the past year, driven by growth in Ohio and Texas.
"While we certainly encourage innovation when it comes to meeting the energy needs of our customers, data centers included, I want to emphasize that it is critically important that costs associated with these large loads are allocated fairly, and the right investments are made for the long-term success of our grid," interim AEP CEO Ben Fowke told analysts on a conference call.
Intel, AEP agreement will allow AEP to meet power demands at the site, companies say
"The proposed arrangement will allow AEP Ohio to meet those needs through an economical solution that willpromote Intel’s continued investment in Ohio and demonstrate that Ohio is open for business forhigh-tech manufacturers," the PUCO filing said.
The filing said Intel's project comes with unique energy demands in terms of the size of the load coupled with the need for quality power to operate technical and sensitive semiconductor manufacturing equipment.
Beyond the factories, the site will include other operations such as office, air separation machines, a water recycling facility and data centers.
AEP Ohio plans to build a new station called the Green Chapel Station that will serve the Intel area and will connect to AEP Ohio's existing transmission network. AEP Ohio said it will but two new transmission lines with a design that allows more power to be delivered.
AEP Ohio is estimating the cost of building the station at $95.1 million.
As part of the agreement, Intel would be required to file annual reports with the PUCO until Intel's investment in the factories exceeds $20 billion.
If Intel requires more power than 500 megawatts the company will have to curtail demand on site or come up with another way to get more power, the filing said.
If Intel's promise to invest $20 billion comes up short or if terminates the deal, it will be responsible for paying the cost of the Green Chapel station.
mawilliams@dispatch.com
@BizMarkWilliams
This article originally appeared on The Columbus Dispatch: New Intel, AEP Ohio deal reveals how massive the power demand is for chip maker
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