FirstEnergy Proposes Novel Ohio Data Center Tariff Requiring Competitive Retail Supply
Following a directive from the Public Utilities Commission of Ohio (PUCO), FirstEnergy Corporation’s (NYSE: FE) Ohio electric distribution companies (EDCs)—Ohio Edison, Cleveland Electric Illuminating, and Toledo Edison—filed a proposed Data Center Tariff (Schedule DCT) on June 12, 2026, under Case No. 26-0697-EL-ATA.
The tariff is designed to protect residential ratepayers from the immense grid upgrade costs associated with surging AI data center load, but it has ignited a fierce regulatory battle in August 2026 over the role of competitive retail energy markets and default utility service.
Core Terms of the Proposed Schedule DCT
Similar to the landmark AEP Ohio data center tariff approved in July 2025, FirstEnergy’s proposed Schedule DCT seeks to shift the risk of speculative AI data center projects back onto developers through strict contractual commitments:
- Capacity Commitments: Data center customers must commit to a 10-year term and pay a minimum monthly bill equal to the greater of their actual electricity consumption or 85% of their contract capacity, regardless of usage.
- Financial Assurances: Developers must post significant upfront collateral to cover the costs of local grid upgrades, preventing stranded costs if a project is canceled or delayed.
- CRES Requirement: In a novel departure from other data center tariffs, FirstEnergy proposes that all Schedule DCT customers must procure their generation supply from a competitive retail electric service (CRES) provider, completely excluding them from the utility’s default Standard Service Offer (SSO).
The Standard Service Offer (SSO) Default Battle
The requirement that data centers buy power exclusively from competitive retail suppliers has divided the energy sector, culminating in a series of major PUCO filings in August 2026.
Constellation's Opposition
On August 7, 2026, Constellation Energy (NASDAQ: CEG)—the nation's largest independent power producer—filed a formal opposition to FirstEnergy’s proposal. Constellation argued that Ohio law (R.C. 4928.041) mandates that electric utilities make the default SSO available to all consumers, without class-based exclusions. Constellation warned that if a competitive retail supplier defaults, a data center would be left without any power supply, violating the utility’s statutory duty. Constellation demanded that PUCO reject the CRES-only rule and require FirstEnergy to provide an SSO default service for data centers, procured through a competitive bidding process.
As Constellation stated in its filing:
"Ohio law... mandates the availability of the SSO to Ohio consumers as well and does not limit its availability to just certain classes of customers... The Commission should require Schedule DCT to ensure that the SSO will be provided to the data center customers upon a supplier’s default."
Retail Energy Suppliers' Support
In contrast, the Retail Energy Supply Association (RESA) and IGS Energy filed comments supporting FirstEnergy’s CRES-only mandate. They argued that forcing data centers into the competitive market shields standard default-service ratepayers from the massive price spikes and risk premiums of serving high-load data centers.
To resolve the default service issue without exposing residential customers, IGS Energy proposed a market-based Supplier of Last Resort (SOLR) monthly referral program. Under this model, if a data center's retail supplier defaults, the customer would be placed in a "round-robin" assignment to a registered competitive supplier's standard monthly rate, keeping the utility and its default ratepayers completely out of the transaction.
FirstEnergy's Defense and the AEP Ohio Spot-Market Model
On August 28, 2026, FirstEnergy’s EDCs filed a response urging PUCO to approve Schedule DCT as filed and defer the default service debate. FirstEnergy argued that default service involves distinct market-design issues that should be addressed in a separate, dedicated application which the company plans to file in "due course."
Meanwhile, the Environmental Law & Policy Center suggested that PUCO adopt the default service framework recently approved for AEP Ohio. Under the AEP model, if a data center's retail supplier defaults, the utility temporarily serves the data center using power purchased directly from the PJM spot market (shielding other default customers from price spikes) while a custom, data-center-specific SSO procurement is organized. PUCO Staff has indicated it is unopposed to applying this spot-market default model to FirstEnergy's utilities.
Market Context
FirstEnergy (NYSE: FE) is facing severe capital expenditure pressure to upgrade its transmission and distribution grid, carrying $28.98B in total debt (5.3x Debt/EBITDA) and posting a negative free cash flow of -$353.0M for the quarter ending June 30, 2026. Constellation (NASDAQ: CEG), with a $100.89B market capitalization, is aggressively defending its access to direct, high-volume retail transactions with hyperscalers.