What does it cost to walk away from a utility contract, and what security does the utility want?
To stop other customers paying for lines built for a data centre, the AES Ohio tariff charges an exit fee: the higher of the minimum charge for at least 75% of the term and the unrecovered cost of the facilities. The customer must post collateral covering the ramp-period minimums, three years of minimums and the exit fee, as an A-/A3 parent guarantee, a bank letter of credit or cash. For a project financing that collateral is a sponsor-level cost, and the lenders need to know who posts it.
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What the filed contracts say
Contract
What the filed wording says
AES Ohio data centre tariff
After the ramp the customer may terminate on 36 months’ notice, paying the higher of 75% of the term’s minimum charges and the remaining share of the facilities’ cost.
AES Ohio data centre tariff
Collateral covers the ramp-period minimums, three years of minimum charges and the exit fee.
AES Ohio data centre tariff
It can be a guarantee from a parent rated at least A-/A3 with liquidity of ten times the amount, a letter of credit from an A-/A3 bank, or cash.
AES Ohio data centre tariff
The amount steps down each year, but the utility may revisit it if the customer’s or guarantor’s credit or ownership changes.
The filed wording
Exit Fee – After the Ramp Period, a Customer may terminate the Contract by providing the Company no less than thirty-six months’ notice. Upon termination, Customer will pay the Company an Exit Fee equal to the higher of (1) the Minimum Charge for at least seventy-five percent of the Service Term or (2) the actual costs of the facilities constructed to serve the Customer (including any AFUDC accrued) multiplied by the percentage of the Service Term remaining upon termination, including a tax gross up.
AES Ohio Data Center Tariff (Sheet D23), in the 2027–2029 rate plan settlement, Sheet D23, Minimum Contract Requirements (Exit Fee) · DPL 8-K, Exhibit 10.1
Each extract is quoted from the contract as filed with the SEC, checked against the filed text when it was added; “…” marks words left out. Filers redact commercial terms, so a [***] or [*] is the filer's, not ours. The summaries describe the wording, not how a court would read it, and each contract's defined terms and other clauses can change the effect. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
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