24-0734-EL-AEC

The main stakeholders in this docket (PUCO Case No. 24-734-EL-AEC) regarding the reasonable arrangement between Ohio Power Company (AEP Ohio) and Intel Corporation are:

- Ohio Power Company (AEP Ohio): Applicant, proposing the special rate and infrastructure arrangement for Intel.
- Intel Corporation: Applicant, seeking favorable utility rates and infrastructure for its new semiconductor manufacturing facilities.
- Ohio Consumers’ Counsel (OCC): Represents residential utility consumers. OCC supports the joint application, highlighting benefits to consumers, economic development, and job creation 1, 2.
- Ohio Energy Group (OEG): Organization of large industrial energy users, including Intel as a member. OEG supports the application, citing the historic scale of investment and job creation 3.
- PUCO Staff: Conducted a review and recommends the Commission approve the proposed reasonable arrangement, subject to certain clarifications on cost recovery and reporting requirements 1.
- General Public: At least one public comment is on record, but no explicit position is described in the provided excerpts 4.

Summary of positions:
- In favor: AEP Ohio, Intel, OCC, OEG, and PUCO Staff (with clarifications).
- No explicit opposition appears in the provided excerpts.

There is no evidence in the excerpts of any stakeholder formally opposing the proposals in the docket. Most stakeholders either support or recommend approval with suggested clarifications.

Key financial and timeline risks and concerns discussed in this docket include:

- Intel announced a two-year delay in construction of its Licking County semiconductor facility due to competitive market and geopolitical concerns. This means the Green Chapel Station, built by AEP Ohio to support Intel, will be completed and ready for service but will not be supplying power as originally scheduled in August 2025 1, 1.
- The delay alters the initial assumptions of the reasonable arrangement, creating unforeseen cost recovery issues for AEP Ohio. Specifically, once construction is complete, regulatory accounting rules typically require that capitalization of allowance for funds used during construction (AFUDC) ceases. Since Intel will not be taking service as planned, AEP Ohio cannot place Green Chapel Station in service or recover costs through its Distribution Investment Rider (DIR), resulting in unrecoverable financing costs and ongoing financial loss for AEP Ohio unless regulatory relief is provided 1, 1.
- To address this, AEP Ohio and Intel are seeking approval for continued capitalization of AFUDC during the delay period, so AEP Ohio can recover its costs as originally planned once Intel takes service. While this increases total project costs, AEP Ohio completed Green Chapel Station under budget (final cost of $84.7 million, $10.4 million less than estimated), mitigating some financial risk 1, 1.
- Intel has reaffirmed its long-term commitment to the Ohio fabs, but the delay introduces uncertainty about the timing and eventual realization of the anticipated economic and operational benefits 1, 1.

The docket regarding the Intel-AEP Ohio reasonable arrangement identifies several areas of growth and outlines key considerations for each:

1. Semiconductor Manufacturing and High-Tech Industry Development
- Growth Area: Intel's establishment of state-of-the-art semiconductor manufacturing facilities in Licking County, Ohio, is projected as a catalyst for high-tech industry growth in the state, with the creation of a "Silicon Heartland" region.
- Key Considerations: The arrangement is designed to fulfill Intel’s unique, large-scale and high-quality electricity needs—up to 500 MW—requiring customized infrastructure (the Green Chapel Station) and specific power quality standards. This supports further phases of investment and additional fabs. The arrangement is justified as not discriminatory due to the singular nature of Intel’s investment and needs 1, 1.

2. Economic and Workforce Development
- Growth Area: The project is expected to generate tens of thousands of jobs, both directly (around 3,000 Intel employees with $405 million projected annual payroll) and indirectly, through construction, supply chain, and ancillary economic activity. Substantial economic benefits are projected, including billions in economic activity and support for thousands of Ohio households.
- Key Considerations: The economic impact includes increased labor income, household support, and long-term regional benefits. Annual reports from Intel will track direct employment, payroll, and third-party entities using the facility’s capacity. The arrangement is seen as facilitating Ohio's competitiveness in the global economy and promoting job growth and retention 2, 1.

3. Education and Talent Pipeline
- Growth Area: Intel is investing $50 million in partnerships with Ohio educational institutions to build a workforce pipeline, including scholarships and workforce programs, supporting thousands of students.
- Key Considerations: Building a skilled talent pool is integral to sustaining high-tech sector growth and maximizing the benefits of Intel’s presence. This enhances Ohio’s attractiveness for future high-tech investments 1.

4. Infrastructure and Utility Development
- Growth Area: Construction of new, specialized electric infrastructure (Green Chapel Station and transmission lines) tailored for Intel’s operations.
- Key Considerations: The costs (estimated at $95.1 million) will be recovered through AEP Ohio’s Distribution Investment Rider (DIR) and Customer Investment Advance Charge (CIAC), impacting residential consumer rates. The arrangement includes mechanisms for cost recovery, auditing, and provisions if Intel terminates the agreement before the full $20 billion investment is made 3, 4.

5. National Security and Supply Chain Resilience
- Growth Area: Onshoring semiconductor manufacturing to the U.S. reduces reliance on foreign suppliers and enhances national security.
- Key Considerations: Intel’s investment aligns with federal priorities and is supported by CHIPS Act funding, as well as state and local incentives. The presence of domestic semiconductor production is positioned as critical for supply chain stability 3, 1.

Each identified area is coupled with considerations regarding infrastructure investment, regulatory compliance, economic impact, workforce development, and long-term strategic benefits to both Ohio and the broader U.S. economy.

Key events and submissions in this proceeding include:

- July 19, 2024: Intel Corporation and Ohio Power Company (AEP Ohio) filed a joint application for approval of a reasonable arrangement with the Public Utilities Commission of Ohio (PUCO) 1.
- July 26, 2024: The Office of the Ohio Consumers’ Counsel (OCC) sought intervention in the proceeding, with motions and comments due within 20 days of the application filing 2, 2.
- September 4, 2024: PUCO issued a Finding and Order approving the joint application for a reasonable arrangement between AEP Ohio and Intel Corporation 1.
- April 2025 (originally scheduled): Completion and operational readiness of the Green Chapel substation to support Intel’s facilities, per the initial project timeline 3, 3.
- August 2025 (revised): Anticipated completion and readiness (but not service) of the Green Chapel substation, following adjustments due to Intel’s construction delay 3, 3.
- Annual reporting: Intel is required to provide an annual compliance report to AEP Ohio and PUCO staff by April 30 of each year after the contract’s effective date 4, 5, 5.

Notably, Intel announced a two-year delay in its construction schedule at the Licking County site, affecting the timeline for when the Green Chapel station will begin serving load 3, 3.

This docket (Case No. 24-734-EL-AEC) concerns the joint application by Ohio Power Company (AEP Ohio) and Intel Corporation for approval of a "reasonable arrangement" under Ohio law to support Intel’s construction of two semiconductor manufacturing facilities in Licking County, Ohio.

Key points:
- Intel is investing over $20 billion to build the facilities, which is the largest private sector investment in Ohio's history. The project is expected to create more than 20,000 jobs in Ohio, including 3,000 direct Intel jobs (average annual pay: $135,000), 7,000 construction jobs, and over 10,000 indirect/support jobs. The facilities are projected to generate $6.45 billion in annual economic activity once operational 1.
- AEP Ohio will construct a new substation (Green Chapel Station) to serve the facility. The estimated cost is $95.1 million. Normally, Intel would pay 40% of such line extension costs and 100% of any "premium services." Under the arrangement, Intel will only pay for special circuit breakers ($740,000), with the rest recovered by AEP Ohio from ratepayers via the Distribution Investment Rider (DIR). For a typical residential customer, this will add about 64 cents per month to bills, decreasing over time as the asset depreciates 1.
- The arrangement allows Intel to be served at 34kV but pay as though it were a transmission voltage customer, resulting in significant cost savings for Intel versus standard rates 1.
- The arrangement is set for 20 years after Intel commences operation of the facility 1.
- The proposal aims to facilitate Ohio’s global economic competitiveness, job growth, and supply chain security in alignment with state policy 2, 3.
- The Public Utilities Commission of Ohio staff, the Office of the Ohio Consumers’ Counsel (OCC), and the Ohio Energy Group (OEG) all supported approval, citing substantial economic and strategic benefits. OCC noted some ratepayer cost impacts but agreed the benefits outweigh the costs. Public comments included both support and opposition regarding rate impacts 2, 4, 5, 6.
- The Commission approved the arrangement on September 4, 2024, finding it reasonable, in the public interest, and consistent with Ohio law 2.

In summary: The docket documents regulatory approval for a special electricity rate arrangement to support Intel’s massive semiconductor investment in Ohio, balancing economic development with moderate costs to other ratepayers.