Water World: What Was Negoitated Between Local Communities and Data Center Developers
Vol. III, No. 344 - A Look at How Water Costs Could Impact Everyday Ratepayers Thanks to New Data Centers in Piqua and Sidney
How Piqua and Sidney Are Managing Data Center Water Demands — And What Ratepayers Should Know
Sidney and Piqua have both approved development agreements tied to large data center projects, and both deals include commitments around water and wastewater infrastructure. For most residents, the key question is practical: what happens to the water system, and what does it mean for the bills already being paid?
Why water matters in these deals
Data centers require millions of gallons of water per day, mostly for cooling. The Miami County region sits on one of the largest aquifers in the country, which helps explain why it is becoming a hub for this kind of development. But these projects are not arriving into a neutral environment — they are connecting to systems that existing ratepayers already support, and that context shapes how the agreements should be read.
Where both cities start
Before considering data center impacts, both Sidney and Piqua already charge above-average water and sewer rates. For a typical residential user consuming 22,500 gallons over three months, Sidney charges $395.84 combined — about 17.2% above the $337.75 regional average. Piqua charges $551.34 combined, about 63.2% above the regional average, with water rates alone running 76.1% higher than the regional norm. That baseline matters when evaluating how each city structured its data center water commitments. Below, you can see the water and wastewater costs for typical households from data collected last year by the City of Piqua.
Sidney’s capacity reservation approach
Sidney’s agreement with Amazon Data Services includes an impact fee structure tied to reserved but unused capacity. AWS reserved 1.0 MGD of water capacity — about 14.3% of Sidney’s 7 MGD system — and 0.39 MGD of wastewater capacity. The city charges AWS standard rates for actual consumption, plus an additional fee for the unused portion of what it has reserved.
In practical terms, if AWS reserves capacity but uses only a fraction of it during cooler months, Sidney still collects a fee on the unused share. The impact fee adjusts automatically when standard rates change, and the city reviews and recalibrates the structure every three years based on actual usage. AWS funds all connection infrastructure at its own expense.
Piqua’s infrastructure investment approach
Piqua’s agreement with J5 LLC takes a different path. There are no capacity reservation fees — J5 pays standard industrial rates for actual consumption only. However, J5 agreed to fund $51.4 million in infrastructure improvements, including $44.5 million in construction costs for new water mains, a 1.5 million gallon elevated storage tank, a 4.0 MGD booster pump station, and expanded wastewater collection lines.
J5 reserved 2.0 MGD of water capacity — nearly 30% of Piqua’s 6.75 MGD permitted intake — and 1.0 MGD of wastewater capacity. The agreement prohibits Piqua from charging rates higher than its lowest industrial rate and bars the city from creating fees that apply solely to the data center.
The tradeoff residents should understand
These two approaches represent a genuine policy choice, and neither is without tradeoffs.
Sidney’s impact fee model addresses a specific risk: a large customer that reserves substantial capacity but uses only part of it, leaving other ratepayers to cover the fixed costs of idle infrastructure. The three-year review mechanism gives the city flexibility to adjust if actual usage differs from projections. The downside is that it requires ongoing administrative attention and could complicate the developer relationship if fees grow significantly.
Piqua’s model front-loads the public benefit through infrastructure. The $51.4 million in developer-funded improvements are real and significant — they help Piqua build toward the 7 MGD system it has long planned for, and they do so without drawing on ratepayer funds. The tradeoff is that once the capacity is reserved, the city has limited tools to recover costs if the facility uses well below its reservation for extended periods. Using Sidney’s methodology as a rough benchmark, a similar capacity fee structure applied to Piqua’s larger 2.0 MGD reservation could generate substantial ongoing revenue — though whether that revenue would have been achievable in Piqua’s negotiating environment is a separate question.
What residents should ask going forward
Both cities made a bet that a large data center will be a net positive for their communities. The question worth watching over time is whether the actual usage patterns match the assumptions built into each agreement — and whether the pricing structures hold up as those patterns become clear.
For Piqua residents already paying above-average rates, the most important near-term question is whether the infrastructure investment J5 is funding will eventually help spread fixed system costs across a broader customer base, bringing rates closer to regional norms. For Sidney residents, the question is whether the impact fee structure gets adjusted appropriately as AWS’s actual footprint becomes better understood.
Neither agreement is simple, and both carry real consequences for the communities that signed them. The best outcome in both cases is full buildout on the developer’s side and transparent reporting on the public side — so residents can see whether the trade they were promised is the trade they are actually getting.
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