Intel and AEP Ohio are asking state utility regulators to approve a proposed agreement for how the electric company will charge the semiconductor manufacturer for electricity once operations start in Licking County. AEP Ohio plans to spend $95 million to upgrade the grid so Intel can operate at their planned levels.
The plants will need up to 500 megawatts of electricity, the equivalent of power needed for 500,000 homes. It's a big increase in an area that was previously farmland, several miles from AEP's transmission grid. The project will need new transmission lines and a new substation.
Companies that require new infrastructure typically have to pay 40% of the cost of extending electrical services, according to the application. That would be $38 million dollars of the total $95 million in buildup.
But this deal would allow Intel to pay for only the $740,000 of special circuit breakers the project requires. It also states Intel won't be on the hook for any of the construction costs in future extensions.
Intel would pay monthly fees, including a $3,600 customer cost, and the transmission rate for electricity, which is lower than residential or manufacturer rates in the state.
The plan is to have AEP's 1.5 million customers pay the rest of the $95 million cost through a rider that is tacked onto consumers' bills, at first. It would eventually be folded in to customer distribution costs.
It's uncertain what effect that would have on individual bills. It will depend on customer usage and be stretched out over time.
JP Blackwood with the Ohio Consumers' Counsel said their initial calculations show monthly bills might go up $0.50 or $0.60 if the deal is approved.
The application was filed in July.
The agreement is being supported by the Ohio Consumers' Counsel, which is typically one of the strongest voices of dissent when a utility wants to charge Ohio consumers more for electricity.
Blackwood said this arrangement is reasonable. And that the 3,000 permanent jobs and the $20 billion investment Intel is promising is worth the cost to consumers.
"It's a game changer. Creating 3,000 jobs isn't just creating 3,000 jobs. You know, those 3,000 workers have to get their hair cut. They have to buy groceries. Jobs create jobs. And this is great economic development for the region and for the state, and consumers are going to benefit from it," Blackwood said.
If Intel's investment doesn't reach the promised $20 billion, the company would have to give AEP the $94 million, or the cost of the electric infrastructure investment.
The project is supported by the federal CHIPS Act, which gave Intel $8.5 billion for projects in Ohio and three other states and a 25% tax credit. The state is giving the project numerous tax breaks and funding road, water and wastewater infrastructure for the site.
AEP Ohio declined a request for an interview. Their spokesman sent this statement in an email:
"AEP Ohio is proud to be a partner in the largest economic development project in Ohio history. The rate agreement filed today is tied to Intel meeting commitments to bring thousands of new good paying jobs to Ohio, in addition to the thousands of workers who will help build these new state-of-the-art facilities. The arrangement allows Intel to maintain their pace of investment in our state during the construction and initial production phases. The PUCO will review the proposed arrangement and issue a decision before any changes take effect."
Meanwhile Intel says it is cutting 15% of its huge workforce — about 15,000 jobs — as it tries to turn its business around to compete with more successful rivals like Nvidia and AMD.
