AEP Ohio flags cryptocurrency miners as it proposes tariffs, discounts for data centers

View a video showcasing TeraWulf's nuclear-powered Bitcoin mining facilities in the video player above.

COLUMBUS, Ohio (WCMH) -- As AEP Ohio applies with a state regulator for tariffs and discounts for business customers' increasing electricity demand, it has mentioned that cryptocurrency miners are moving into its service area.

AEP Ohio's Vice President of Customer Service Lisa Kelso highlighted the clients, more commonly known for mining Bitcoin, as she described a shift toward IT industries -- miners and data centers included -- becoming the utility provider's "largest load."

"Because cryptocurrency mining is an energy-intensive process that consumes significant electricity and creates a large amount of heat, Ohio’s cooler climate for much of the year is attractive to miners who need to cost-effectively keep their computers operating at moderate temperatures," Kelso wrote. "Multiple cryptocurrency miners have located on or near former utility generation station sites that have been abandoned after deregulation in Ohio because access to transmission capacity is readily available and cryptocurrency mining sites do not need to be near other load or population centers."

Kelso's testimony was part of AEP Ohio's request for two new tariffs, one targeting data centers with more than 25 megawatts of demand and the other focusing on cryptocurrency miners with more than one megawatt of demand. The power company argued it needs them to pressure the two types of customers to use a promised level of electricity if AEP Ohio builds nearby infrastructure to meet their power demands.

The data center tariff would apply a "minimum billing demand of no less than 90%" of its contract capacity, or highest monthly transmission billing demand. The tariff targeting crypto miners would change that percentage to 95%.

Large-scale operations, similar to the nuclear-powered farm connected to Ohio State's president, are basically a necessity for mining Bitcoin, the oldest and most valuable cryptocurrency. In these facilities, specialized computers perform the complex math calculations required to run the network's transactions in exchange for Bitcoin to call their own.

NBC4 asked AEP Ohio's communications team for more information about the miners that Kelso mentioned in five separate paragraphs. They would not share the total number of clients in that category but described them in smaller terms.

"The growth in data center power demand in Central Ohio is driven mainly by data centers engaged in 'non-crypto' activities such as cloud computing and artificial intelligence, not by data centers engaged in cryptocurrency mining operations. … Less than 10% of this increased power demand in Central Ohio is from data centers AEP Ohio knows to be conducting cryptocurrency mining operations," a spokesperson wrote. "Outside of Central Ohio, AEP Ohio has signed ESAs approximately 200 MW of power demand from cryptocurrency mining operations."

To put that amount in perspective, 200 megawatts of power demand is equal to the miners' facilities drawing a maximum 200,000 kilowatts of power at any given time. AEP Ohio has said in the past that its average residential customer -- currently seeing their highest bills in a decade -- uses 1,000 kilowatt-hours of electricity in a month. But it's not possible to do a direct comparison, because the two types of customers have very different bills. Kilowatts are not the same as kilowatt-hours.

"AEP Ohio’s residential customers have energy (kWh) charges but do not have demand (kW) charges," a spokesperson wrote. "For very large customers like data centers that shop for energy supply … their charges from AEP Ohio are predominantly demand (kW) charges with only a small energy (kWh) component."

Separate from mining companies, researchers have already voiced environmental concerns about data centers' similar electricity usage. Ohio State University professor Jeff Bielicki said a “typical” data center can consume between 10 and 50 times the energy of a commercial building, per unit of area, or “about 16,000 60-watt light bulbs per square meter.”

At the same time that AEP Ohio filed for the new tariff, it separately applied to give a secret discount to Amazon as it ramps up building $7.8 billion worth of data centers in central Ohio. The application discloses that Amazon is already running a hidden number of data center campuses in Hilliard, Dublin and New Albany, and their discount would be applied in two phases.

During the first phase, for each data center that "reaches and maintains a monthly peak load" of a hidden amount in megawatts, Amazon will get a secret percentage discount on bills to each of those campuses. For each new data center campus that Amazon starts powering, the percent discount would increase. But besides this deal, AEP Ohio expects Amazon to pay all charges and riders, including tariffs.

The discount moves into a second stage once Amazon deploys a "battery storage system" at one of its local data center campuses. The campus will then lose the first-stage billing discount and decrease the secret percentage for the other campuses, but AEP Ohio would then calculate that battery-backed data center's transmission charges based on its "network service peak load value."

AEP Ohio's communications team declined to share any details about the discount beyond what was in the documents.

"Competitively-sensitive and confidential information, including the information you are requesting, was filed under seal in the Amazon Data Services (ADS) proceeding based in part on ADS’s statement that its competitors could use this information 'to ascertain one of the most critical cost components for data center operations, which is energy, and thus place ADS at a competitive disadvantage in the global cloud computing market,'" a spokesperson wrote.

The pair's application for the secret discount comes on the heels of Amazon earning a 30-year tax break from New Albany City Council. For the first 15 years, its data centers in the area will be exempt from 100% of their property taxes.

Amazon's $7.8 billion investment will expand its Ohio data center presence through 2030. It's among a litany of tech companies to gather around Intel's coming semiconductor fabrication plant. Next door to Amazon's existing New Albany data centers, Microsoft spent nearly $57 million on property that county commissioners theorized will become the same. Google has piled on with two data centers as well, one in Columbus and one in Lancaster.

Another $1 billion data center is also on the way from Washington D.C.-based DBT-Data. QTS out of Kansas is also putting $1.5 billion down to build one of its own in New Albany as well.

View Kelso's testimony on cryptocurrency miners here, and AEP Ohio and Amazon's application for a discount here.