Ohio House Energy Committee - 6-3-2026

Holmes. Here. Matthews. Here. Rader. Here. Brennan. Here. Cockley. Here. Davila. He's excused. Fisher. Here. Glassburn. Here. Hall. Humphrey. Here. Kloppenstein. Here. Lear. Here. Lorenz. Here. Odioso. Peterson. Ray. Ritter. Here. Rob Blaisdell. Here. Rogers. Here. Salvo. Here. Sweeney. Thomas. Here. White. Here. Williams. Here.

Thank you. Welcome to committee. It's good to be here. Chair Holmes, Vice Chair Matthews, Ranking Member Rader, and members of the House Energy Committee, thank you for the opportunity to provide sponsor testimony on House Bill 736. Ohio has an opportunity to be proactive in the area of energy development that could play an important role in the future of power generation, advanced manufacturing, research, and economic development. Fusion energy is still an emerging field, but the states that begin preparing now will be better positioned to attract investment, support innovation, and build the workforce needed when this technology continues to advance. This legislation calls for a creation of a practical framework for the state of Ohio to begin that work. It requires the Director of Development to convene the Ohio Fusion Energy Working Group within one year. That group would be responsible for identifying regulatory gaps related to fusion energy and related supply chain facilities, evaluating workforce and supply chain needs, and recommending economic development strategies for Ohio. The working group would bring the right voices to the table including representatives from Development EPA Utilities Department of Health the Bureau of Environmental Health Radiation Protection, the Ohio National Guard, universities, the fusion energy industry, and the electric utility sector. The goal of this legislation is not to create a new layer of bureaucracy for the sake of it. The goal here is to make sure Ohio is asking the right questions early. What rules do we need clarified? What workforce needs should we be preparing for? What supply chain opportunities could exist here? What role can our universities, our utilities, our manufacturers, and our state agencies play in making Ohio competitive in this space? The bill also directs the Department of Development to review existing state programs that support clean energy generation and identify incentive opportunities that may benefit fusion facilities or manufacturers. That could include areas such as research and development equipment, fusion-related equipment, or workforce development grants. This is a forward-looking approach. It does not pick winners and losers, and it does not commit the state to one specific project or company. Instead, it will give Ohio a structure to study the issue, to understand opportunities, to identify barriers, and prepare for a technology that could have major energy and economic implications for Ohio in the years ahead. We have the manufacturing base, the research institutions, the skilled workforce, and the energy demand to be part of this conversation. The question is whether or not we prepare early enough to compete. So this legislation helps put the state in that position. Before I close, I just wanted to make a note. Yesterday, I had the opportunity to tour a helium fusion plant in Washington State, just outside of Seattle. And I've got to tell you guys, it was one of the most amazing things that I've ever got to see. You know, this is a complementary base load power to coal and gas with a low environmental impact and such a high rate of return from an economic development standpoint, from an energy standpoint, it could really, really position our state to be a leader. You know, it gives us the opportunity to be a front runner, and we can get other, you know, like Ohio State involved in this and a lot of parties. We've got several states across the United States that are already working on this. Virginia's one. New Jersey's one. Obviously, Washington State is one. And in my tour, you know, just to see the footprint of what we're talking about, we're not talking about giant football fields of warehouses and things like that. I mean we talking about really compressed areas You wouldn even know they were there something that you would see in a light industrial park So we really need to get ahead of this We can really capitalize on this. We can be a leader here. The supply chain issue and the competition with China is going to be really big in this industry. getting the pieces and the items that we need to facilitate the turbines and to build the energy it's something that we really should be looking to get ahead of and so what this act does is it just gathers the group and again I said you know me I'm not a red tape person I don't like adding bureaucracy but we need to have a significant meeting of the minds because this could be a really great opportunity for us So I appreciate you letting me talk about it, and I'm happy to answer any questions that you guys might have. Thank you, Mr. Chairman. Thank you, committee.

Thanks, Mr. Chairman. Thanks for bringing the bill. It's an honor to be one of the few co-sponsors of the bill with you. I've always found fusion a fascinating topic, but we know that it's really hard to do unless you're the sun. But there is some promising research. So how soon do you think, because you obviously have done more research on this than probably anybody in the room, how soon do you think we are before we can add this to Ohio's energy portfolio?

Follow-up? Follow-up? Thank you. Do you think once we get it figured out that it could put everybody in the room out of business?

Thank you Thanks Mr Chairman I don look at it as a threat I look at it as a complimentary player Yes thank you Any other All right

Yes. Thank you for the time. Yes, sir.

There you go. Chair Holmes, Vice Chair Matthews, Ranking Member Rader, and members of the House Energy Committee, my name is Kim Boyko, and I'm a partner with Carpenter Lips. I am here today on behalf of the Ohio Manufacturers Association to testify in opposition to House Bill 706. The OMA is a mission-driven organization comprised of Ohio's manufacturing leaders, many of which are Ohio's largest energy consumers. OMA has approximately 1,300 members of all sizes, many with multiple facilities and multiple meters in the state. It's impossible to competitively operate a modern manufacturing facility without affordable energy and advanced technologies. Simply stated, Ohio is very important to Ohio's manufacturing competitiveness. Ohio's energy policy has historically been grounded in principles of cost causation and non-discriminatory treatment among customer classes. Sub-House Bill 706 moves away from this framework by selectively targeting a single industry based primarily on its business activity. creating discriminatory policies that target one industry simply based on its end use of electricity opens the door for future efforts to penalize other industry sectors or types of customers, including manufacturing. Today, the focus may be on data centers, but tomorrow the same rationale could easily be applied to other large users. Once specific industries are allowed to be carved out for disparate treatment based on business activity, it creates uncertainty for all large employers and weakens confidence in Ohio's competitive markets. Businesses make long-term capital investment decisions. They need assurance that the rules will not change arbitrarily based on political pressure or evolving public narratives. Public policy should encourage economic growth and investment across sectors, not artificial creation of winners and losers. Additionally, the tariff structure approved by the Commission, which is the basis of this piece of legislation, is currently under appeal at the Supreme Court of Ohio. Given the ongoing judicial review, it would be premature and inappropriate to codify the tariff into statute before the legal process has completed. Moving forward with legislation, while the matter remains pending risk undermining the integrity of the appellate process and could ultimately conflict with the court's final decision. It is also important to understand the broader consequences associated with the tariff structure before you. As implemented by one utility, the tariff framework has enabled utilities to significantly inflate future electricity demand projections associated with data center development by about 40% per data center. Inflated load forecasts have real consequences to Ohio's consumers. They're submitted to PJM, and they're used in transmission planning and capacity market procurement decisions that directly affect all customers' costs. PJM has generally accepted utility-authored forecasts despite a track record of overestimations by the utilities. When projections are later revised downward, customers do not receive refunds for investments that have already been made. The upside goes to the monopoly utilities and their transmission affiliates. The downside lands on Ohio's consumers. Another key concern that OMA has with House Bill 706 is that it could actually increase costs to other customers in several ways. It could increase transmission costs if the baseline transmission upgrades are triggered in the planning of these forecasts. It creates upward pressure on transmission rates if data center interconnection costs are 100% socialized to all customers as supplemental transmission projects. It inhibits the data center tariff from protecting other classes of rate payers, including residential, secondary, which are small businesses, and primary service classes. As the minimum demand provision that you've read a lot about only creates a protective effect for other customers within the same rate class. It is unclear how the monies referenced in 49-34-07 would flow back to all customers and through what mechanism. OMA also has some other concerns and questions regarding some of the provisions. We're concerned about allowing utilities to request recovery of undefined cost through a cost recovery mechanism. What costs may a utility request in this legislation? There are also references to project delays. Delays by who? Are we talking about the customer delay or the utility delay? We've seen a lot of utility delays over the years. And will that utility then be held accountable for their delay? We're also concerned about the risk of cross-subsidization of funds between distribution and transmission utilities. For example, what costs are you trying to recoup? Transmission build-out, dedicated transmission facilities built by a distribution utility, or facilities built by transmission utilities authorized by PJM? Will the refunds referenced in the bill offset the transmission costs for each utility, or will they be maintained in a regulatory asset for the benefit of the distribution service? Is the reference to unrecovered netbook value in the bill referring to the distribution utilities netbook? We're also concerned about giving unfettered discretion in the rulemaking process. Under your bill, will the PUCO be allowed to prohibit data centers in the future? We're also concerned about requiring the PUCO to approve every agreement. If the Commission approves a tariff, it is unnecessary to require them to approve every contract. Electric service agreements and letters of authorization are entered into regularly by new customers between the customer and the utility without the intervention of the PUCO We also concerned about undefined terms And lastly, we're concerned about this issue being addressed by the Federal Energy Regulatory Commission and PJM currently. PJM has stated that large load additions in the PJM's construct is 50 megawatts. Yours is 25 megawatts. Those inconsistencies and what happens in the future are a concern to us. The OMA encourages this committee to reject energy policy that authorizes discriminatory treatment of businesses based on the business activity. To that end, we have provided an alternative approach which promotes competitive markets and furthers the principles embodied in House Bill 15. And that alternative approach is attached to my testimony, and it would require the commission to reject rate designs that are discriminatory in nature, not based on cost causation principles, and that are based purely on a business's classification of their end use of electricity. Discrimination tariffs risk discouraging investment, harming Ohio's business and climate, and sending a signal that industries can be singled out based on shifting political narratives. Ohio's economic growth depends on maintaining an environment where all industries are treated fairly under a consistent, predictable regulatory framework. Thank you. That concludes my testimony, but I'm happy to answer any questions, as always.

Thank you, Chair, so much. Thank you for coming in today. Two quick questions, if I may, Chair. First one, so looking over, and unfortunately on our tablets we don't have, I didn't print out the dash three version, but I do have the comp doc and the comparison. And the very last kind of comp comparison, and this was one of the recommendations that you all gave us in terms of some of the changes from the dash two to the dash three, but we made sure, it says here, for example, provides that PUCO cannot approve any reasonable arrangement under current law that would conflict with the bill's provisions prohibiting recovery of distribution, transmission, generation costs from other customer classes. So I thought we had clarified that customer class aspect. Is it your understanding in the dash three than that we have not?

Follow-up? Thank you, Chair. Thank you for that. We'll definitely take a look. I guess more of a broad general question. My understanding we've had PGM come in, they've pointed to the AAP tariff. We've had the Trump administration actually come in. They've pointed to this. We've tried to model this bill after that tariff with changes for the whole state. I guess is your contention more so that the focus on just the data center side could lead to a slippery slope for manufacturers, or is your contention much more on the policy side, and the policy itself has not worked despite those two groups, for example, sharing that it has been a success?

Representative Rader.

Yes, actually, OMA, oh, excuse me, chair, through the chair representative, OMA's energy group is appealing that decision at the Supreme Court, yes.

Through the chair, representative, OMA has members that are various data centers. For instance, a lot of retail manufacturing have data centers. So there are a lot of different types of data centers that I don't think people appreciate, but it takes a data center to do receipts for Walmart. I mean, so a lot of manufacturers have their own data center processes, and then we have vendors and affiliate members and yes, we have some data centers that are members.

Chairman, representative, absolutely. Okay, that makes sense.

Thank you, Mr. Chair. Thank you. Representative Klopfenstein.

Chair, Representative, I mean, that's the problem is that one of our guiding principles in energy policy is not being followed. There's not any cost of service study is what we've called it to see what the cost causation is for data centers. We've asked for that. We've asked for it in the AEP proceeding. We've asked for it in other proceedings. And there has not been any cost of service study to determine what the actual cost is. I will tell you, except for maybe a handful, I think I've been told in central Ohio, maybe two or three, most of the data centers are on transmission service only, so they don't pay distribution charges. So any kind of regulatory liability about it's not related to distribution. It's related to transmission, and we haven't figured out what those costs are or what costs data centers are actually inflicting on the electric grid. You know, we're large users of energy, just like data centers, most of the manufacturers are. and, I mean, they're willing to pay their fair share. We just would like to know what that is and what the cost is being put on these data centers or any other large user. I mean, OMA proposed a tariff that was a large load addition, more similar to the PJM, where it didn't talk about the end use of electricity because if you have a 50-megawatt steel company coming in here, you're going to have the same issues as a 50-megawatt data center. So we think that you could create a large load addition tariff. It should just be not discriminatory against a specific business activity.

Chair, representative. So it's the cost to the system. So it's not the data center cost. It would be the transmission owner or the electric utility to do, utilities usually file in their rate cases a cost of service study, and it says what costs are attributed to each class of customers. It says what the residential cost is, what a secondary commercial customer is, what a primary commercial customer is, what an industrial customer is. So we've asked the PUCO to order the utilities to provide a cost of service study so we can figure out where those costs are and who's inflicting the costs on the system. And by the way, it's my understanding that many of these data centers have already agreed to pay all of these costs. So if you can show the costs that they've inflicted on the system, they will pay them, and there is no need to have some of these rate-making debates.

Thank you. Okay. Okay. Rep.

Chair, Representative, there's a whole host of things we can do. And if you recall about a year and a half ago, before the data center narrative started popping up, we were right here having the same discussion that the sky was falling and there was no generation. So we're right back here. It's just the villain is somebody different. Now it's data centers. and data centers have stepped up and they said that they would pay their fair share. And what the manufacturers are asking is that we do that in an organized way and that we make sure it's the right way. And we've offered various avenues to do that. One avenue was through the PUCO rate making process. We asked through the rate cases to do a cost of service study to see what the costs are. Then you set a rate that based on their costs that are inflicted on the system and then you make them pay that rate of what they impose on the system and you take it away from everybody else that they not causing that cost So we asked for it in that We've asked the commission to look at load forecasting. The load forecast that the utility provides PJM is directly responsible for creating and establishing the transmission facilities that need to be built in the state of Ohio. So we have asked them to look at that and to make sure that it's an accurate forecast. It's not an estimate that counts for five speculative loads for each data center. And we've asked for them to take that into consideration. So we did it on that front. We've also asked the legislature to, well, we will be asking the legislature, which I think you're going to hear about a piece of legislation that's trying to focus on forecasts and making sure that the load forecasts are accurate and that PJM only uses the accuracy of that forecast. We also think that there's a lot of work to do at the Federal Energy Regulatory Commission, and there's a lot of work to be done at the PUCO. I actually, or I mean, excuse me, PJM. I have in my possession, this is the principles that were signed by the governor, and this includes Governor DeWine. And here, what one of the guiding principles was supposed to do is identify data centers as posing a risk to PJM's ability to procure adequate capacity. The principals further recommend that given this potential risk, the cost to procure new capacity should be ultimately allocated to new data center loads that have not otherwise procured capacity or agreed to be curtailable. So what that means is both the Federal Energy Regulatory Commission and PGM have recognized that if a data center, any large user, agrees to do on-site generation, take themselves off the grid, or agrees to be curtailed during peak hours and takes themselves off the grid, that they should not be subjected to some of these tariff provisions and requirements that are being studied. So the federal and the PJM answer is to make sure that you are addressing when they're not willing to take themselves off the grid or they're not willing to self-supply. But it also says you should have non-firm load contracts. And before deregulation, we used to have non-firm load contracts, and those have gone away. So the utility could take somebody off if you had a non-firm load, and you got a discounted price for having a non-firm load. And so that's one of the things. And in the PJM letter that was dated January 16, 2026, that I think you all have seen, it also says similar things about defining the large load as 50 megawatts, load forecasting improvements it recommends. Nobody's talking about this load forecast improvements or it's not being implemented. And then it's also talking about bring your own new generation and that if they do bring their new generation, then they shouldn't be subject to some of these provisions. So we've suggested all of these kind of different tacks in a way to get at this issue.

Through the chair, representative. I actually don't. I'll have to respectfully disagree with you on that. We have manufacturers that have behind-the-meter generation all the time. They're adding it. They're adding fuel cells. They're adding natural gas turbines. They're adding solar. They're adding wind. They're adding a lot of different things in order to take themselves off the grid, to relieve themselves of all these distribution riders and all the transmission riders and the transmission costs because all of those are calculated on a KWH basis. So any reduction in their load alleviates the costs in other areas. So for the most part, that's how it works. So, you know, we have a lot of manufacturers that are currently looking to add generation. So I don't see it as kind of a quick fix. I see it as a long-term solution for these. And you can look at all of the tech geniuses talking about the data centers being in the sky and the universe and all these will be powered by the sun. I mean, there is going to be, there should be self-sufficient data centers, and I think that's where we're going.

Chair, Representative, that's a great question. I actually looked this up. Currently, AEP has one in place, a tariff that's very similar to what you have. First Energy was just ordered by the commission to file one by June 12th. AES, in its pending rate case, was recommended by the staff in the staff report to file a data center tariff, and they didn't even propose it in their application. So the commission seems to be moving forward with these data center tariffs, and there's a valid order of the commission, and until the Supreme Court of Ohio overrules that order or remands it back to the commission, they're moving forward. So I don't think that this bill is needed because I think the commission is doing tariffs. I mean, when has the General Assembly actually spoken and put legislation in place about a tariff? I don't recall that ever happening. The commission's always the body that has the jurisdiction to put tariffs in place. So I don't think it's needed. I think the commission is doing it, and I think that then we'll have the regional transmission organization putting their own rules in place, and then we're going to have the Federal Energy Regulatory Commission speaking to this. And they're really looking at the non-firm load piece and the behind-the-meter generation. So I think there's more to come. Follow-up?

Right.

I don't think there was a question pending, but as all of you know, I used to work there. I love the PUCO, so I practice in front of them every day, so I would never say that I don't love what they're doing.

Thank you, Mr. Chairman. Hi, Ms. Boyko. Good afternoon. So if two customer classes present materially different risks to the grid and to rate payers, why should they necessarily be treated identically?

Quick follow-up. Follow-up. Thanks.

Chair, Representative, I would ask, first of all, what costs? What are you talking about? If you're talking about the transmission upgrade, those, remember, are not just given to Ohio customers. Those are spread about the region. Anybody that benefits from any generation that's going to be put on the grid or anybody that's going to benefit from a new transmission line that goes in, those costs are spread out among the region. So I would ask you what costs. But I would say that each, before the tariff even came in place in AEP's territory, each utility has an electric service agreement, and they have a letter of authorization. The letter of authorization has a load ramp period in it. It has contribution and aid of construction in it. It has all the costs that any customer has to pay. And they do pay those, and they have to pay them before they can get connected to the system. So those costs are already paid for. So any upgrades that the distribution utility has to do for a substation or any transmission-type facilities that are offered by the distribution utility, they already have to pay all those up front. And then the electric service agreement and the letter of authorization also have in it collateral requirements. It makes them pay. It makes them enter a long-term contract. It has the load ramp. It has a minimum demand billing in it. So it already has all those things. So that's why I say, what cost are you referring to? And if we can get into that and talk about where those costs are being incurred, then absolutely, if any large customer causes costs on the system, they should have to pay for it. Nobody's saying that. We're certainly not saying that. Thank you.

Committee, any further questions? Seeing none, thank you very much.

We'd now like to call as an arrested party, Ms. Leah Calips-Clark. From the Ohio Electric Cooperatives, thank you. Welcome to committee.

Thank you, ma'am. Committee, any questions? Ranking member Rader.

Chairman Holmes, through Representative Rader, thank you for the question. I think that does make a lot of sense. Now, I'll break it down a little bit more. it is very complicated how some of these transmission costs are caused and charged. There are large regional type costs that can be spread across the entire region. There are more supplemental costs that are paid kind of by the zone. That is a smaller location, smaller area. So certainly some of these costs do get spread across 14 states. Some of them are spread across smaller zones, smaller areas, including primarily, let's say, Ohio. I think because of the way transmission costs are caused and some of the ways that they are charged, it's very important to make sure that the costs, these revenues, these protections we're asking for are applied in the same way. And yes, there may be some other people from other states that would get some benefit, but mainly it's going to benefit, I think, Ohioans. Like, for example, I mean, maybe there would be some, there probably would be some people in some of the other AAP Ohio's, parts of the AAP Ohio zone that would get a benefit, maybe somebody in Indiana. But the point is that 7 to 10 percent of those costs will be paid for by the municipalities and the cooperatives. And a resolution that leaves us out and gets us stuck with the bill, like I said, that could be hundreds of millions of dollars is just not a tenable solution. So I don't think we want to take a position that would say, we in no way want to help anyone in other states, and as a result we're going to leave out the co-ops and the munis and not protect them in a resolution like this. Again, I think data centers are extremely unique. This is kind of a sea change, what's happening with data centers. They're presenting very unique problems and challenges, but also opportunities for the grid. And I think we need to make sure that we're taking a unique and a very protective approach for all customers. And the way to do that is to make sure that we're taking the costs that are being caused or the transmission costs and we're setting those off in the way that they are being caused. That's very helpful.

I do think that – oh, sorry. Chairman Holmes, through Representative Raider, thank you for the question. I do think that data centers are unique. I think that their loads are unique. I think that they are presenting very unique challenges to the system. I do think that unique data center tariffs are necessary to address these unique concerns. And I will say, again, because data centers are causing costs that are going far beyond just the one retail utility that is serving them, it's really critical that the protections do the same. And without doing that, we're not going to have an equitable solution. We're going to leave Ohio consumers unprotected.

Representative Klofenstein

Thank you for the question, Chairman Holmes, through Representative Klopfenstein. I think that's a difficult question. I think that there are steps that the utilities can take to address these issues individually through their tariffs. I think the Federal Energy Regulatory Commission is doing things to address these issues. The DOE about eight months ago directed the Federal Energy Regulatory Commission to do something about data center loads and large loads. They directed them to do something to make sure they can interconnect quickly and to make sure that they're not shifting costs. Data centers, as we've seen, have made a commitment to not shift costs. So far, we haven't seen the Federal Energy Regulatory Commission act. We haven't seen what they will do, and they may do nothing. So it may be that the PUCO will step up and do things, and it may be that the legislature has a role as well. What we think is critical is that whatever the legislature does, that they do make sure that all Ohio customers are protected, Because without that, we really want to make sure that electric cooperative members are not left holding the bag on these significant risks. Follow up.

Chairman Holmes, through the representative, thank you very much for that question. I think that it's both the scale of individual data centers as well as the number of them that is very unique here. As far as I'm aware, before hyperscale data centers, one of our largest loads in the state of Ohio was ORMET and it was about 500 megawatts. We're seeing hyperscale data centers that are regularly over 1,000 megawatts, 2,000 megawatts. We've seen the announcement for a 10,000 megawatt data center load. These are extremely large loads that are creating impacts, like I said, that are going far beyond the individual utilities that we're seeing and that are having very broad impact. So I do think that it's a different type of customer and it's a different type of impact that requires unique solutions.

Chair. Thank you so much for your testimony coming in today. Kind of piggybacking off of I guess question, thinking about the last testimony, you had mentioned that in your testimony essentially this bill takes care of that. If the load doesn't show up, disagree over, and thank you for the draft language and hopefully we can get to a place. But essentially we take care of if they don't show up. But the last testimony, the question of essentially larger than realistic estimates and that issue of cost. Do you see that maybe taking a step back from your co-op lens? Do you see that as an issue? And if so, do we address this? Or is there something else that needs to happen in terms of that estimate aspect?

Committee, any further questions? Okay, seeing none, thank you. Committee, we'd like to pause right now on House Bill 706. We would like to resume the third hearing of HCR 35.

And what is the pleasure of the committee?

Will the clerk please call the roll?

Okay, with a vote of 13 yes and 4 no, the bill passes.

We would now like to resume House Bill 706. And we'd like to call Joe Price. And everyone needs to sign this.

Welcome to committee. Good evening. Chairman Holmes, Vice Chair Matthews, Ranking Member Raiders, members of the House Energy Committee, thank you for the opportunity to testify. Here's an interested party on 706.

as the legislation would be as well. So PUCO deserves a lot of credit for being a leader on that issue, and customers should be grateful. I know we are. OEG supported the creation of that data center tariff at PUCO, and we do believe that all the utilities should have the same or similar type tariffs to protect customers. So we are an interested party today and not a proponent, and I'll tell you why. It's because the current sub-bill has one significant flaw, although we think it's likely unintended. The language in the sub-bill would provide a blanket exemption from the consumer protections in the bill for all the data centers that are in existence prior to the enactment of this bill. I just gave you a really big number. So there's a lot of folks that would be exempt from the consumer protection of the bill. From that standpoint, that would be a step back from the good work the PUCO did. So we think you should eliminate that exemption. So for your consideration we attached language that would do that to my testimony at the end It really important though we don want to punish data centers The rates we establish for them should not be punitive But it also definitely fair to require them to pay their fair share of the system and having a blanket exemption will get in the way of that. And then one final point, the first witness hit on this, so I want to address it. It's a criticism I've heard before. It's that having a data center-specific tariff is discriminatory, And discrimination is a bad thing, so that's wrong. We shouldn't allow that. That argument was made before PUCO, and it was rightfully rejected by PUCO, and it would be rightfully rejected by the General Assembly if I could urge you to do so. And I'll tell you why. Rate making, so electric rate making and any rate making for utilities, it's an economic issue and a technical issue. It's really a math problem. It's not a civil rights issue. Rate making can be boiled down to this. who's going to pay what costs and under what terms. Ohio does not outlaw, so Ohio law already exists on this subject. It does not outlaw discrimination. What it says is it outlaws undue or unreasonable discrimination. In other words, you can discriminate when you're setting electric rates as long as you have a good reason to do it. And let me give you some examples of ones that already exist and have been in existence for quite some time. We currently have special rates for schools, churches, county fairs, hospitals, electric heating, plug-in electric vehicles, commercial high-load factor customers, low-income residential service, residential energy storage, outdoor lighting, street lighting, traffic lighting, private outdoor lighting, cogeneration, and more. So this idea that you can't discriminate is just not consistent with the way the world works at utility commissions throughout the country, including Ohio. So we think data centers are a unique type of load. I heard the questions earlier. They're unique both in their magnitude, absolutely massive. Some of these are orders of magnitude bigger than my biggest members that are steel mills and auto companies and all this. They're just massive, and the proliferation is something we've never seen. Remember, we had 20 years of flat or declining load growth, so no demand increase, basically, completely flat from until about a few years ago. And now we're seeing just exponential growth unseen before, and the system's not really designed for that, and that's what this data center tariff is getting at, specifically at transmission. There was also comments made about capacity and energy prices in PJM. Unfortunately, we're going to have to go fight those issues at PJM and FERC to deal with those, but those cost increases are certainly happening as well. Customers are feeling the pain. But back to the original point, given the uniqueness of data centers, it's very reasonable to have a data center-specific tariff. If we had an epidemic of shoe stores coming to Ohio, driving the demand on the grid to a level we'd never seen, we might be here discussing a shoe store tariff, but that's not what we're seeing today. So that's my testimony. I'd be happy to answer any questions. Yes, thank you.

Thank you, Chair. So let's get back to the question then. Do you feel tariffs are appropriate done through the legislature?

Okay. Committee, any further questions? Yes, Rep. Glassburn.

Chairman, Representative Glassburn, that's a good question. And on the transmission side, like I said, when there's no, so this initial wave of data centers that were built, there was already existing capacity on the transmission system. So when they came, great. It's just more people paying into the same essential cost that we have, and it's going to lower everyone's bills. So we didn't hear a lot about this until recently. There's been data centers that have been up and running, I think, at least 10 years in Ohio. It's this new wave of new transmission that needs to be built to serve them. And what the PUCO tariff does is protect on that initial wave. If the data center says they're going to come, we build it, they don't come, then the data center is still going to have to pay for it. That protects the other customers. This bill and that data center tariff protect against that. Or, like I said, we also want to have a separate rate class for the data center so that we can assign costs to them. Like you said, the data centers went to the White House very publicly and said, hey, we don't want to charge any other customers. We want to pay our fare in total way on this thing. It gets more complicated, much more complicated at PJM. Basically, and I can provide the committee with some information when we're finished here with the pricing, but you have different buckets that make up the bill that you ultimately pay each month for your electricity. You have generation, which is the largest component. that's PJM, it sets those markets, et cetera. That has gone up. And why has that gone up? Those prices are set by supply and demand. And when you have more demand on the system, the price goes up until we get, and that's why it's so important. That's why your work on House Bill 15, the best solution to more demand is more supply. And that's how you'll get the price to come down, at least Adam Smith says so. And then you've got capacity as well. Capacity is the payment. Think of it like a retainer that we pay to the power plants so that if we need them and we call on them to turn on, they must pick up the phone, they must turn their power plant on, and they must stay on until we tell them to turn off. That's what the capacity market's for, to make sure we have enough power to meet demand, come hell or high water, whatever happens. And so that is going to undergo currently a lot of debate at PJM over how they should handle that. what the various governors of PJM states every single one in the White House, which I was shocked. Find another issue where you can get all those people to agree on something. Very difficult. But they all agreed we need to do something, and what they called for was a one-time emergency auction. They said, listen, we haven't seen load growth like this ever before. Let's hold an emergency auction to get more power plants, and then once we get those power plants, we'll assign those costs to the data centers. The details on that is, of course, going be important. We're still waiting on how that's all going to shake out, but that make them pay for it will be important. But again, that's going to be something outside of your hands. You can certainly influence it by interacting, and you've done a good job interacting with PJM and putting pressure, but that'll be a big decision. But this last bucket here on these transmission, that's how you protect on transmission, is this type of tariff. Thank you, Mr. Chair.

Chairman, Representative Glassburn, I don't think this would impact that. Customers like this is specifically on transmission, which is the one bucket of cost. The capacity peaks, so the hottest hours, I think the peak last summer hit the highest. I've been doing this for at least a decade, and it hit 161 gigawatts on a summer day last night. It was either in July or June, probably at 4 o'clock in the afternoon when everyone's air conditioner was running high. It hit 161 gigawatts. I haven't seen it that high as long as I've been doing this. To the extent that we can encourage folks to get off the system during that, that is good. I think the data centers will already be able to do that, and largely because when you shop for electricity, all big customers shop if they can, if they're in the distribution utilities, and the data centers can shop, and if they choose, they can receive capacity as what's called a pass-through, meaning, hey, I'm going to personally manage this, and it means I'm going to eat what I kill. If I'm able to successfully predict when the peak's going to be and I'm successfully shift my demand during that hour, I'll save money. If I fail, I'm going to get a big bill. If I'm running all out during the hottest hour of the year, I'm going to get a big surprise. So I think that this bill will not hinder that.

Thank you, Chairman. Appreciate your testimony. So one of the things that keeps coming up is absolutely no one, to my knowledge, or what you've said, predicted this rate load growth. So by putting this bill forward and codifying rate making, is this going to come back and bite us? instead of letting PUCO do what they do best, is set the regulating instead of trying to do that legislatively?

Confusion. As well, yeah. So is it possible that something will change?

Follow-up? So just a simple question.

All right, committee, any further? Thank you very much. Thank you. We'd now like to bring Mr. Spencer Derig from Ohio Environmental Council as proponent testimony.

Welcome to committee. Thank you so much, chairman.

Yes, thank you, sir. Thank you very much. Committee, are there any questions? Ranking member of Raider.

Through the chair to the representative, absolutely. The main concern here is that we currently have a piecemeal approach where AEP Ohio has gotten one tariff passed and maybe First Energy is being directed to create a different one. Perhaps in the future, Duke Energy and others will be creating their own. The reality here, though, is that we need a standard across the state of Ohio that protects all consumers, and it's also very important that that standard is set by the legislature so that the PUCO certainly can still have the right to go above that floor, but having that floor of protection across the state ensures that regardless of whether you live in Fulton County or Seneca County or anywhere in between, you're going to be protected against these data centers shifting their costs onto you and your bills.

Thank you, Chair. Thank you for coming in. Do you think that the tariffs could serve as the backstop protection in the rules? Is that a piece of it, or is that a whole separate thing?

Chair, may I do a quick follow-up? I think I was not clear. I guess what I'm wondering is if we have to have rules related to the backstop procurement, would the tariffs – is that what you understood me to ask? would the tariffs be a part of those and could the PUCO just create in the rules that the tariffs

Appreciate it.

Thank you.

Chair Holmes, Vice Chair Matthew, Ranking Member Rader, and members of the House Energy Committee, thank you for the opportunity to provide interested party testimony on House Bill 706, Substitute Bill Version 3. My name is Maureen Willis, and I serve as the Director of the Ohio Consumers Council, the state agency charged by the General Assembly with representing the interest of 4.5 million residential utility consumers. OCC advocates on matters affecting affordability, reliability, and transparency of utility service. This year marks OCC's 50th year of service to Ohio consumers. At the outset, I want to be clear. Ohio can welcome data center investment without shifting costs to Ohio families. Those goals are not in conflict. In fact, responsible growth depends upon getting that balance right. Ohio is experiencing extraordinary electric load growth driven largely by data centers. That growth brings opportunities for jobs, tax revenue, and economic activity. But it also raises an important question for policymakers and regulators, and that is, who will pay for the extraordinary new demand that requires substantial system investment? For residential consumers already facing affordability challenges, the answer must be straightforward. Costs should follow cost causation. Residential consumers across Ohio are already struggling with rising utility costs. Many households are making difficult choices between paying for electricity, groceries, medication, and housing. Policies that shift the cost of concentrated or speculative electric demand onto captive residential customers are neither fair nor sustainable. HB 706 takes important and necessary steps to address this concern. This bill recognizes the basic principle of utility regulation. When exceptionally large electric loads require significant new investment in generation, transmission, or distribution infrastructure, the customers driving those costs should bear the responsibility for them. Ohio consumers have seen the consequences of stranded utility costs before. If utilities build facilities, substations, or other infrastructure to serve exceptionally large customers, and those customers later reduce demand, delay projects, or leave the system, the remaining customers should not be left holding the bill. HB 706 appropriately establishes minimum standards for data center arrangements using the PCO's existing data center tariff framework. The bill reflects several important principles that balance an economic growth with consumer protection including long customer commitments financial assurances associated with the extraordinary infrastructure investment stranded cost protections, clear cost allocation, and safeguards against cost shifting to other consumers. These protections create greater certainty for utilities and data centers while helping to protect households and small businesses for major cost exposure that they did not create and cannot reasonably absorb. Some have raised concerns earlier, OMA, that a tariff structure specifically addressing data centers constitutes unlawful discrimination. OCC respectfully disagrees. Data centers are not similarly situated to traditional industrial customers. They can involve unprecedented electric demand, substantial water usage, dedicated substations, significant transmission upgrades, and large-scale infrastructure investment. Data centers typically run at near maximum capacity all day, every day, giving them a load profile that differs from most other large load consumers. As data centers' demand increasingly reaches hundreds or even thousands of megawatts, Ohio faces regulatory questions of extraordinary scale. Recognizing those unique characteristics through tailored tariff treatment is not discrimination. It is sound regulation based on cost and system impacts. House Bill 706 also appropriately recognizes the essential role of the Public Utilities Commission of Ohio. The PCO must retain the authority to determine whether proposed arrangements are just, reasonable, and in the public interest. Transparency, accountability, and rigorous review are especially important when utilities seek specialized arrangements involving customers whose electric demand can rival that of entire cities. At the same time, OCC respectfully offers several recommendations to strengthen the legislation. First, OCC supports the recommendations of Mr. Price on behalf of OEG, and that is there should be narrow clarification to the bill's grandfathering provision to ensure that HB 706 fully achieves its intended consumer protections while recognizing existing contractual arrangements. As currently drafted, the grandfathering language may be interpreted too broadly and could unintentionally exempt existing data center customers from important consumer protections contained elsewhere in the bill. Such an outcome would undermine one of the bill's central objectives, and that is protecting existing customers from bearing cost created by extraordinary new electric demand. A targeted fix is available. The only provision that should be grandfathered is revised code section 4934.08, which addresses construction arrangements and reflects the terms that are likely already negotiated in the existing agreements between the electric distribution utilities and the data center customers. Preserving those construction agreements and their related commitments appropriately recognized reliance interests associated with previously executed agreements. And why is this so important Why is grandfathering so important Because of the number and the size of the already signed data center contracts According to AEP supply data the potential grandfathered contracts account for 17 megawatts So that means 17,000 megawatts of these contracts would not be subject to protective consumer provisions that HB 706 embodies. At the same time, all other protections as established in HB 706 should apply to all data center customers, including these existing facilities. Those protections, including safeguards against cross-subsidization, cost recovery based on cost causation, and requirements governing exit fees, collateral forfeitures, or unused capacity payments remain essential to protecting all Ohio consumers. Second, OCC recommends consideration of a meaningful bring-your-own-new-generation or credible supply planning framework for extraordinary new data center demand. This doesn't mean that data centers must operate independently of the grid. Rather, data center customers should demonstrate a credible plan for how their extraordinary incremental demand will be served without undermining affordability or reliability for existing customers. Such planning could include long-term purchase power agreements, dedicated generation, storage investment, firm supply commitments, and meaningful demand flexibility. The central question should remain simple. Does the proposal meaningfully reduce reliability and cost risks for existing customers? It should. Growth works best when it is sustainable. Ohio should absolutely compete for investment, innovation, and jobs, but economic growth is strongest when it's built on fair rules, responsible planning, and consumer protections that prevent households from bearing risks that they did not create. For these reasons, OCC supports House Bill 706 and respectfully encourages continued refinement to ensure strong consumer protections remain central to Ohio's energy future. With that, it concludes my testimony. Thank you for the opportunity to testify, and I would be happy to answer any questions you have.

Thank you, Chairman. A question specifically to grandfathering. How do you grandfather, well, first of all, speed to market and time to market is critical to any industry.

Representative White.

Representative Brennan.

Yes, Rep. Blasper.

Committee, any further?

Do you have a follow-up? No? Okay. Okay. All right. Thank you. Seeing no further questions. Thank you, ma'am. Thank you very much for coming in. Committee, I'd like to point out one piece of written only proponent testimony from Molly Bryden at Policy Matters Ohio. And then final comments. So we will not have committee next week. So this is the, but we will pick up in November. Demand response is something we can continue to work on. But other than that, I really appreciate everyone staying in and the additive questions and this group effort and nonpartisan effort. It's the biggest deal for all of us. So if there's no other business coming before the committee, seeing none, the House Energy Committee is adjourned.