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HB 706

Impose certain minimum requirements on data center customers

136th Legislature (2025-2026) Introduced by Munira Abdullahi and 18 co-sponsors

The bill limits data center cost recovery by EDUs, requires PUCO-approved, long-term binding agreements with minimum billing demands and financial assurances to shield other ratepa

Referred to committee
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Bill Summary · HB 706

HB 706 (Ohio, 136th General Assembly) — Summary

Main purpose and intent

  • Establish minimum requirements for data center customers and restrict how electric distribution utilities (EDUs) can recover data center-related costs from other customer classes unless PUCO (Public Utilities Commission of Ohio) approves such recovery as just and reasonable.
  • Ensure data centers enter specific agreements and provide financial protections to safeguard other ratepayers, with PUCO oversight and approval.

Key provisions and changes

  • Definitions (Sec. 4934.01)

    • Data center: centralized facility used for electronic information services (management, storage, processing, dissemination) with >25,000 kilowatts monthly max demand.
    • Data center customer: a customer or group of affiliated customers owning/operating a data center.
    • EDU: electric distribution utility (as defined in existing law).

  • Cost recovery prohibition (Sec. 4934.02)

    • EDUs may not recover distribution, transmission, or generation costs related to a data center from other customer classes unless PUCO determines the recovery is just and reasonable.
    • Before approving any data-center-related agreements or cost-recovery mechanisms, PUCO must determine that such approval will not increase rates for existing customers; EDU bears the burden of proof.

  • Preconditions for service/investment (Sec. 4934.03)

    • EDUs cannot serve or invest in infrastructure for a data center that has not complied with the bill’s requirements (Secs. 4934.04–4934.07), subject to PUCO approval.

  • Binding commitment requirements (Sec. 4934.04)

    • Data center seeking service must sign a binding commitment with the EDU, subject to PUCO approval, including:
    • Minimum demand/usage commitments (in addition to other requirements),
    • Long-term service agreements,
    • Exit fees or liquidated damages,
    • Collateral, guarantees, or other financial assets.

  • Minimum billing demand and terms (Sec. 4934.05)

    • Data center customers must enter an agreement for a minimum billing demand to support infrastructure planning and cost recovery.
    • PUCO will determine: minimum billing demand, contract terms, ramp periods, any financial assistance, and other reliability/asset-protection terms.
    • For data centers at full commercial capacity, the minimum billing demand must be at least 85% of contracted capacity, and the contract term must be at least 12 years (including ramp periods up to four years).

  • Financial assurances (Sec. 4934.06)

    • Before constructing data-center-dedicated transmission/distribution facilities, the data center must provide financial assurance to protect other customers from premature exit, downsizing, default, or reduced service.
    • Acceptable forms: exit fees/liquidated damages, letters of credit/cash collateral, parental/affiliate guarantees.
    • Assurance must cover unrecovered net book value of dedicated facilities, minimum billing exposure, and any applicable exit fees.

  • Biennial review (Sec. 4934.07)

    • Financial assurance must be reviewed and adjusted at least every two years to reflect remaining unrecovered investment and exit/downgrading risks.

  • Minimum standards; potential for stricter rules (Sec. 4934.08)

    • The listed requirements are minimums; PUCO can impose stricter requirements as needed.

  • Credit to retail customers (Sec. 4934.09)

    • Exit fees, collateral forfeitures, or unused-capacity payments collected from a data center must be credited to retail customers in the next rate period or deferred as regulatory liabilities. Utilities cannot keep such revenues as earnings.

  • PUCO rulemaking (Sec. 4934.10–4934.11)

    • PUCO must establish uniform statewide standards within six months of the act’s effective date on:
    • Load study deposits (including nonrefundable components),
    • Queue-position forfeitures for milestones,
    • Processing order (first-come/first-served or tranche-based),
    • Aggregation of affiliated projects for queue priority.
    • These rules are exempt from certain regulatory-restriction limitations.

  • PUCO authority preserved (Sec. 4934.12)

    • Nothing in the chapter is meant to restrict PUCO’s authority to make reasonable arrangements between utilities and customers or other parties under existing law.

Who and what would be affected

  • Electric distribution utilities (EDUs): Prohibited from charging other customers for data center-related costs unless PUCO approves; must implement binding agreements, minimum billing demands, and financial assurances; must credit certain revenues to retail customers.
  • Data center customers (and affiliated groups): Required to enter PUCO-approved binding commitments, meet minimum billing demand, provide financial assurances, and accept long-term contracts with exit fees/guarantees.
  • Public Utilities Commission of Ohio (PUCO): Responsible for approving agreements and cost-recovery mechanisms, determining rate impacts, and issuing uniform statewide standards for interconnection queues and related processes.
  • Ratepayers/retail customers: Protected from bearing data-center-specific costs; eligible for credits or regulatory liabilities related to data-center exit fees and related charges.

Procedural and timeline aspects

  • PUCO must issue uniform statewide standards within six months after the act’s effective date (details on load deposits, queue rules, processing, and affiliate aggregation).
  • Financial assurances must be reviewed and updated at least biennially.
  • The act sets minimum terms (e.g., 85% minimum billing demand at full capacity; 12-year minimum contract) but allows PUCO to impose stricter requirements.
  • Exit fees and related charges collected from data centers must be credited to retail customers in the next rate period or held as regulatory liabilities.

Fiscal and administrative impact

  • The Ohio Legislative Budget Office projects minimal administrative cost impact on PUCO, expected to be manageable within existing resources.
  • No direct state or local government fiscal impact beyond PUCO's routine regulatory activities is anticipated; the primary effect is shifting cost risk away from general ratepayers and onto data centers through approved agreements and protections.

Notes: This is the introduced version (as of February 17, 2026) and reflects proposed framework for data center cost recovery and customer protections.

Compiled from official sources — confirm details with the bill’s official record.

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