FirstEnergy Proposes Novel Ohio Data Center Tariff Requiring Competitive Retail Supply

FirstEnergy Proposes Novel Ohio Data Center Tariff Requiring Competitive Retail Supply

As major utility companies across the United States scramble to manage the unprecedented electricity demand of AI data centers, FirstEnergy Corporation’s (NYSE: FE) Ohio electric distribution utilities have proposed a highly unusual regulatory mechanism. On June 12, 2026, Ohio Edison, Cleveland Electric Illuminating Company, and Toledo Edison Company jointly filed an application with the Public Utilities Commission of Ohio (PUCO) for a new Data Center Tariff (Schedule DCT) under Case No. 26-697-EL-ATA.

Unlike other regional data center tariffs—such as the pioneering framework approved for American Electric Power (AEP) in Ohio (see American Electric Power Right-Sizes Ohio Data Center Pipeline Under New Tariff Framework)—FirstEnergy’s proposal would completely bar data centers from receiving standard utility generation service, instead requiring them to procure their power directly from the competitive retail market.¹

Key Provisions of FirstEnergy’s Schedule DCT

FirstEnergy’s proposed Schedule DCT is designed to protect residential ratepayers from the immense costs of upgrading generation and grid infrastructure for data centers. The tariff features several unique and strict requirements:

• CRES Provider Mandate: All qualifying data center customers are required to take generation service from a competitive retail electric service (CRES) provider rather than the utility's Standard Service Offer (SSO). This shifts the risk of power procurement entirely to the competitive retail market.
• No Minimum Load Threshold: Unlike AEP Ohio’s tariff, which only applies to loads of 25 MW or greater, FirstEnergy's Schedule DCT has no minimum load threshold, capturing all data center accounts.
• Contract and Billing Terms: The tariff mandates a 10-year term with a ramped contract load. Minimum billing is set at the greater of actual demand or 85% of contract capacity.
• Collateral Requirements: Data center developers must provide significant financial collateral to protect the utility and its ratepayers in the event of default or project abandonment.
• Transmission Exclusion: New data center loads are excluded from FirstEnergy’s transmission-billing pilot program to prevent shifting transmission upgrade costs to residential bills.

Constellation Energy Leads Market Opposition

The proposal to force data centers into the competitive retail market has triggered a major battle among independent power producers and retail suppliers. On August 7, 2026, Constellation Energy (NYSE: CEG) filed formal opposition with PUCO, objecting to the competitive supply mandate.

Constellation argues that Ohio law mandates the availability of the Standard Service Offer (SSO) to all consumers without exception, and that the tariff fails to provide a safety net if a retail provider defaults:

"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."

Conversely, the Retail Energy Supply Association (RESA) and retail marketer IGS Energy have filed comments strongly supporting FirstEnergy’s competitive mandate. IGS Energy has proposed a market-based Supplier of Last Resort (SOLR) monthly referral program to serve as a backstop in the event of a retail provider default, keeping data centers out of the utility's regulated SSO. IGS also urged the PUCO to require FirstEnergy to assign customer-level PJM Reliability Backstop Obligations (RBO) to data center accounts, ensuring that PJM's emergency reliability procurement costs (see PJM Board Deploys and Accelerates Reliability Backstop Procurement and IRAS Frameworks) are paid directly by data centers rather than socialized across the grid.

Next Steps and Regulatory Timeline

The PUCO officially deemed FirstEnergy’s application complete on July 1, 2026. The PUCO Staff Report is scheduled to be filed by November 30, 2026, with staff and intervenor testimony to follow. This timeline pushes a final PUCO ruling on Schedule DCT into early 2027.

FirstEnergy (NYSE: FE) Financial Profile

FirstEnergy’s push for ratepayer-protective tariffs comes as the utility manages a substantial $28.98 billion debt load (5.3x debt-to-EBITDA) and an aggressive capital expansion plan. As of August 10, 2026, FirstEnergy has a market capitalization of $27.47 billion and trades at $47.47. In its Q2 2026 earnings report, the company beat expectations with an EPS of $0.50 (vs. $0.49 estimated) on $3.68 billion in revenue. However, its massive grid investment cycle resulted in a negative quarterly free cash flow of -$353 million, as capital expenditures of $1.34 billion outpaced operating cash flow of $989 million. The utility's financial health is closely tied to successfully connecting its rapidly expanding data center queue (which grew 50% in Q2, as detailed in FirstEnergy Data Center Contracts Surge 50% in Q2, Igniting West Virginia Ratepayer Backlash) without triggering ratepayer revolts.