A major Ohio electric company wants to get into the nuclear business. And over the long term, its proposal could leave customers footing the bill. 

American Electric Power, headquartered in Columbus and serving customers in 11 states, has been pitching state lawmakers on its proposed legislation. The company has a powerful statehouse influence, and its CEO met with Gov. Mike DeWine several times last year, according to a spokesperson for the governor. 

Since the early 2000s, Ohio has “deregulated” its electric system, meaning distribution utility companies like AEP cannot directly own power plants and other generation assets. This prevents them from passing associated costs on to customers. Instead, generation is left to competitive markets, where developers (not ratepayers) absorb all the risks and all the profits.

But draft legislation obtained by Signal Ohio would let companies like AEP own nuclear plants. This would be a tectonic shift in Ohio’s energy markets, and a reflection of the strain the data center boom has put on the electric grid. 

For at least 20 years after the proposed law would take effect, those utility companies would need to find a customer to cover all costs associated with a given nuclear plant and commit to buying its power – sources say this would likely be a data center. But after that 20-year period, utilities could pass those costs on to customers. That means ratepayers would be on the hook for any “prudently incurred” economic losses. 

It’s a big ask that would move Ohio off its ongoing course of deregulation of the electric grid, and it comes as AEP has been publicly considering moving its headquarters out of Columbus, which includes a massive skyline-level corporate logo that anchors one of the city’s most popular viewpoints. 

Dan Tierney, a spokesperson for Gov. Mike DeWine, said it’s the possible exodus of AEP from Columbus that was the main focus of the governor’s recent meetings with company CEO William Fehrman, though it’s possible other topics were discussed.

“Would other policies have come up? Possibly, maybe likely,” Tierney said. “But the governor recalls more of the discussion being AEP remaining in Ohio.”

Why does AEP want in on nuclear? Data centers

Electric costs have been rising in Ohio thanks to an influx of energy-intensive data centers behind the artificial intelligence boom, according to Scott Blake, a spokesperson for AEP. And it’s happening as older generators like coal-fired power plants retire. “Advanced nuclear,” Blake said, is a possible path forward. 

“The generation increases Ohioans see on their electric bills are directly due to an imbalance between the supply of energy and demand for it,” he said. “Allowing electric distribution utilities like AEP Ohio to build generation that aligns costs with data centers would help alleviate that imbalance for Ohioans.”

The ‘advanced nuclear’ refers to small modular nuclear reactors, a far smaller and cheaper approach to nuclear power. However, no such reactors exist in the U.S. today, and even rosy predictions say they won’t until 2030. 

Several critics of the proposal provided a copy of a draft circulated by Rep. Adam Mathews, a Warren County Republican who works as a lawyer but is also licensed as a nuclear engineer. Mathews declined to get into specifics of the legislation, noting that multiple drafts are in circulation and the version provided may not be up to date. 

But the goal, he said, is to ease the load on an overstressed grid and bring more nuclear power to Ohio. And he was adamant that customers won’t pay. 

“Any legislation introduced would ensure that ratepayers would not be on the hook,” he said in an interview. 

The politics of nuclear power have an ugly history in Ohio. 

The state’s only two nuclear plants – the Davis Besse in Ottawa County and Perry in Lake County – have in some ways driven the state’s energy policy over the decades. In 2019, enacted statehouse legislation would have forced customers to pay $1.3 billion over several years to cover the plants’ economic losses. Federal prosecutors said the legislation only passed because of what they called a $60 million bribe paid by FirstEnergy, a Northeast Ohio electric utility, in the biggest corruption scandal in state history. 

Ex-Ohio House Speaker Larry Householder is serving a 20-year prison sentence and two FirstEnergy executives are currently on trial for bribery in connection with the bill.

While AEP wasn’t accused of any criminal wrongdoing, it was a supporter of both Householder and HB6. That’s in part because the bill codified a separate bailout for a coal plant that’s mostly owned by AEP and cost customers hundreds of millions over a decade. AEP agreed to pay $19 million to the U.S. Securities and Exchange Commission to settle allegations that it lied to shareholders when the company distanced itself from its financial support of a Householder-controlled nonprofit in the days after the FBI arrested him.

Critics call ratepayers propping up nuclear a ‘terrible idea’

Representatives of the environmental, manufacturing, private generation and ratepayer advocacy sectors all said that allowing utility companies back into nuclear generation is a terrible idea. 

“We’ve seen this movie before,” said Ryan Augsburger, president of the Ohio Manufacturers’ Association, in an interview. “To allow a utility to own generation would be to foist the risks onto captive customers.”

His comments come as the OMA has been accusing utilities, specifically AEP, of inflating the added energy demand of data centers in order to pad the costs they charge customers. 

Utility companies can already own generation assets through their subsidiaries so long as they follow certain corporate separation rules, according to Todd Snitchler, who runs the Electric Power Supply Association, which is composed of private power developers. This legislation is just a play to pin those costs on customers, he said. 

The Ohio Consumers’ Counsel, a state agency that represents residential ratepayers’ interests, said its officials aired their concerns with Mathews. 

“With lives of upwards of 60-plus years, that is a lot of risk and costs passed onto utility consumers,” said spokesperson Merrilee Embs. “In the current deregulated market in Ohio the risks and costs of generation are borne by independent power producers. We prefer that model as when utilities get involved, that generally translates to costs to consumers.”

As written, the bill would likely open advantageous financing terms, given the certainty of ratepayer backing, for utilities to cover the up-front costs of building new nuclear facilities, according to Nolan Rutschilling, the managing director of energy policy with the Ohio Environmental Council. 

He noted the bill comes as the 20th century utility model is disrupted by “distributed” energy like solar, wind, and battery storage devices, and “behind the meter” models where some gas companies build and own their own power plants. These are all threats to the status quo.

“They’re doing what they know how to do, capture customers and capture costs,” he said of AEP. “There’s just no way this doesn’t raise folks’ bills.”

Shopping the legislation around 

Mathews declined to get into specifics on the bill. So too did Sen. Jerry Cirino, a Lake County Republican and senior member of the high chamber, who’s said to be working on a similar proposal. 

“We’re talking about it in the Senate,” was all he’d say in an interview. 

A source who asked not be named provided a copy of a document in circulation among state lawmakers seemingly explaining the bill, titled: “Executive Analysis: Utility-Owned Nuclear Generation Legislation.” It says the bill is designed to “insulate” customers from risk under the bill by requiring a finding of statewide need for new power before giving utilities a license, requiring a market test to ensure a project’s viability, and requiring a creditworthy buyer.

“In short, the legislation enables nuclear development only if the market – not ratepayers – is willing to pay for it,” the document states.

The documents’ metadata states it’s authored by Bill Byers, a prominent Columbus lobbyist who represents AEP, among others. He’s one of 11 AEP lobbyists registered with the state, on a team that includes an ex-lawyer for the current Speaker of the Ohio House, Matt Huffman, and an ex-chief of staff of DeWine. 

The bill has at least one powerful opponent: Huffman, a Lima Republican. He poured cold water on the idea in a press conference Wednesday. 

“I’m not in favor of going back to a time when ratepayers pay the costs of any company,” he said. 

The bill isn’t the only possible public money flowing into the nuclear sector. DeWine, in October, announced a $100 million economic fund via JobsOhio, the state’s economic development arm, aimed at natural gas or small modular reactor nuclear power.

Andrew Tobias contributed reporting.