American Municipal Power (AMP) and consumer advocates from Ohio and Maryland are pushing back against proposed rates and returns tied to a major transmission project in Ohio, arguing that the plan unfairly shifts costs driven by data center expansion onto everyday ratepayers.
The dispute centers on a roughly $1.1 billion transmission project being developed by Grid Growth Ohio, a joint venture linked to American Electric Power and FirstEnergy. The project, which includes 765-kV and 345-kV lines, is largely driven by surging electricity demand from data centers.
However, despite this demand being fueled by large-scale commercial users, about 60% of the project’s costs are expected to be borne by Ohio consumers, according to the Office of the Ohio Consumers’ Counsel.
Ohio regulators have already taken steps to shield residents from the financial impacts of data center-related infrastructure. Still, advocates argue that the current proposal falls short of those protections.
The Office of the Ohio Consumers’ Counsel said the proposed formula rate lacks adequate safeguards, raising concerns that consumers could end up subsidizing infrastructure needed primarily for private-sector growth.
Additionally, the Maryland Office of People’s Counsel warned that the proposed structure includes incentives that would lead to an “impermissible transfer of risk onto ratepayers.”
The project is part of a broader regional transmission expansion plan approved by PJM Interconnection earlier this year, aimed at strengthening grid reliability amid rapidly increasing electricity demand.
At the core of the disagreement is Grid Growth Ohio’s request for a 10.8% return on equity (ROE), along with a range of financial incentives.
In filings with federal regulators, AMP argued that the proposed ROE exceeds reasonable levels based on standard methodologies.
“Grid Growth’s own filing indicates that following the Commission’s preferred approach for establishing base return on equity produces a return on equity of 10.66%,” AMP said.
The Maryland Office of People’s Counsel also criticized the methodology behind the proposal, stating that it “significantly departs from Commission precedent and norms.”
Further concerns were raised over the breadth of incentives requested by the developer.
“Grid Growth seeks a treasure trove of risk-reducing incentives — [construction work in progress] and Project Abandonment Incentives — plus regulatory asset treatment for pre-commercial costs,” the OPC said. “Redundancies and overlaps in risk mitigation efforts, either already in place or being proposed undermine Grid Growth’s requests.”
The group also challenged the proposed capital structure, arguing that utilities — due to their stable earnings and asset bases — are typically capable of carrying more debt than suggested.
“Regulated utilities can afford to take on more debt than other industries because they have large amounts of fixed assets, stable earnings, and lower risk levels,” the OPC said.
Moreover, the justification for additional incentives tied to Grid Growth’s status as a new market entrant was questioned.
“The start-up risk for Grid Growth is minimal, and the requested incentives are unwarranted,” the OPC said.
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The controversy highlights a broader issue facing U.S. power infrastructure: how to allocate the costs of grid upgrades required by energy-intensive industries like data centers.
As digital infrastructure expands rapidly, utilities and regulators are grappling with how to fund transmission upgrades without overburdening residential customers.
Grid Growth Ventures has argued that its proposed rate structure reflects financial risks associated with entering the competitive transmission space and aligns with similar frameworks approved in recent cases. The company is also seeking approval to apply the same rate model to future projects developed by its subsidiaries.
Still, critics argue that without stronger consumer protections, such proposals could set a precedent where households absorb a disproportionate share of costs tied to corporate-driven energy demand.
If federal regulators do not reject the proposal outright, AMP and other challengers are urging them to delay implementation and hold formal hearings to scrutinize the plan further.
They have also requested that the proposed May 6 effective date be suspended for up to five months, with any interim rates subject to refund depending on the outcome of the review.
Originally reported by Ethan Howland, Senior Reporter in Utility Dive.
