Data centers a growing source of controversy in Ohio

Ohio is experiencing a significant data center boom, ranking fifth nationally in the number of facilities, largely due to state and local incentives like sales tax exemptions and property tax abatements. However, this growth has spurred increasing controversy among Ohioans and lawmakers. Concerns are mounting over the substantial energy and water consumption of these facilities, particularly hyperscale data centers supporting AI, which are placing a considerable strain on the electric grid and potentially increasing electricity prices for residents. The sales tax exemption for data centers, estimated at $141.8 million in lost revenue, has drawn criticism even from Republican lawmakers like House Speaker Matt Huffman and Senate President Rob McColley, who attempted to eliminate it in House Bill 96; Governor Mike DeWine vetoed the provision, but an override is intended. In response to rising electricity costs and the potential for rate-payer subsidies, Representatives Tristan Rader and David Thomas introduced House Bill 706, which proposes minimum capacity commitments for data centers and exit fees for operators ceasing operations. At the local level, communities are taking action, with Nelsonville in Athens County enacting an ordinance banning data center construction within its city limits, citing the strain on city resources and infrastructure. The Ohio House of Representatives is also considering House Bill 646, which would establish a Data Center Study Commission to analyze impacts and guide regulatory approaches, aiming for informed decisions rather than emotional responses. While some view data centers as a vital economic opportunity, others, like Molly Bryden from Policy Matters Ohio, advocate for better utility accountability to prevent cost-shifting to residential and small commercial customers.