Case Study: Ohio's 85% Minimum Usage Rule

How PUCO's landmark tariff change reshapes data center economics and creates a new underwriting paradigm for AI infrastructure investments.

Executive Summary

• December 20, 2024: Ohio Public Utilities Commission (PUCO) approves AEP Ohio's data center-specific tariff
• Core requirement: 85% minimum monthly usage (load factor) for facilities >25MW
• Term structure: 12-year commitment with 4-year ramp-up period
• Impact: Transforms project economics, requiring new risk models for intermittent AI workloads

The 85% Rule Explained

Under the new tariff, data centers must maintain 85% utilization of their contracted capacity every month. This means:

• A 100MW facility must consume ≥85MW average monthly
• Penalties apply for underutilization
• No banking or averaging across months
• Applies to both new builds and expansions >25MW

Financial Implications

For Operators:

• Forces "always-on" workload strategies
• Increases pressure to co-locate diverse workloads
• May accelerate shift to nuclear/renewable PPAs
• Creates arbitrage opportunities for flexible compute

For Investors:

• Changes DCF models (higher fixed costs)
• Increases counterparty risk on tenant mix
• Values operational flexibility differently
• May compress returns on pure-play AI facilities

Contagion Risk

Ohio's move signals a potential wave of similar regulations:

• Virginia: Considering similar measures amid grid strain
• Texas (ERCOT): Exploring time-of-use penalties for low utilization
• PJM-wide: Potential for ISO-level adoption by 2026
• International: Ireland, Singapore watching closely

What This Means for Your Portfolio

The 85% rule fundamentally changes the risk profile of data center investments. Traditional models assuming 60-70% utilization are now obsolete in Ohio.

GreenCIO tracks these regulatory shifts in real-time, mapping them to your specific exposures and providing early warning on contagion risk across markets.