By Lauren Jessop, Contributor, of The Center Square
Republished by Travels With The Post
(The Center Square) – The potential growth of data centers and industrial facilities in Pennsylvania could boost the state’s economy, but it also has utility officials weighing new regulations. Their intent: to manage surges in electricity demand, prevent grid overloads, and protect ratepayers from unfair cost burdens.
The Pennsylvania Public Utility Commission (PUC) looks to address challenges posed by the rapid growth of large load customers, particularly data centers. It’s conducting a series of public hearings aimed at developing a model tariff to guide interconnection and rate structures.
The commission heard testimony April 24 from electric distribution companies, data center operators, and statutory advocates. Participants underscored the need for transparent, equitable policies to maintain grid reliability, protect existing ratepayers, and enable economic development.
Vice Chair Kim Barrow expressed cautious optimism. She cites challenges such as base load requirements, climate-driven super-storms, infrastructure limitations, and unprecedented demand growth, especially from data centers that can draw as much power as a mid-sized city. Meeting them would require thoughtful regulatory approaches and “radical transparency,” Barrow says.
What Data Center Panelists Say
Representatives from Amazon Data Services, Google, Vantage Data Centers, and the Data Center Coalition emphasized the need for tariffs that are fair, transparent, and grounded in cost-causation principles.
Their recommendations so far include:
- Reasonable interconnection timelines: 3–6 months for studies, 12–18 months total; transparent and predictable interconnection processes;
- Flexible financial security requirements based on project risk;
- Long-term contracts with provisions for load ramping schedules; and
- Recognition of customer-owned infrastructure and the prioritization of new generation co-location projects.
“When customers bring their own new generation alongside the new load, they are not simply adding demand,” stated Vantage Data Centers’ Vice President of Utility and Regulatory Shawn Smith. “In reality, they are helping to offset their own load, improving system resiliency, and reducing net stress on the grid.”
Distribution Companies’ Suggestions
Electric distribution companies, represented by Duquesne Light Co., First Energy, PPL, and PECO, echoed many of the data center providers’ recommendations. They also support requiring co-location projects for large load customers.
Their suggestions include:
- Clear guidelines on cost recovery and customer-funded infrastructure;
- Interconnection processes that protect existing customers from potential stranded costs;
- Prefer a policy statement over a strict model tariff to allow for innovation and adaptability; and
- Require large load developers to bear the cost of studies and infrastructure investment.
C. James Davis, director of rates and energy procurement at Duquesne Light, noted that a single data center could account for 30% of the current peak load in its service area.
Similarly, four of these projects could raise PECO’s overall peak demand by 3.8 gigawatts, according to Richard Webster, PECO’s vice president of regulatory policy and strategy. He says it represents nearly a 40% increase in demand on the company’s distribution system.
Government Advocates’ Opinions
Statutory advocates testifying included the Office of Consumer Advocate and the PUC’s Bureau of Investigation and Enforcement. They concurred with many recommendations from the previous two panels and supported the development of a model tariff. They stressed any framework must protect existing customers from stranded costs and unfair costs shifts.
They also urged that the tariff allow case-by-case flexibility while maintaining uniform standards for transparency and accountability.
Allison Kaster, chief prosecutor for the Bureau of Investigation and Enforcement, noted that data centers often require large water supplies for cooling. That could impact system pressure and water source reliability, particularly in light of recent droughts and usage restrictions in Pennsylvania.
“Therefore,” she adds, “it is important not to lose sight of the other potential impacts on Pennsylvania’s utility customers.”
With Challenge Comes Opportunity
PA PUC Chairman Stephen DeFrank said the agency will continue to gather input and collaborate with stakeholders as the commissioners consider whether to move forward with a model tariff or issue a broader policy statement.
“This is a challenging issue,” said DeFrank, “but with great challenge also comes great opportunity.”
He added that the commonwealth is well situated to meet the needs of this new industry, and they will work together to address these challenges in a meaningful way for the benefit of ratepayers in Pennsylvania.
“If we are able to attach these facilities to the local distribution system,” DeFrank adds, “all benefit.”
Top photo by Andrey Metelev on Unsplash, used by Travels With The Post under license
Gavel logo from Getty Images on Unsplash+, used under license
About The Center Square
The Center Square is a unit of the Chicago-based Franklin News Foundation. The foundation is a provider of news coverage of all 50 states, and operates a national news bureau in Washington DC. Articles from The Center Square and selected by The Post Publications are those considered most relevant to our audiences. They are republished with permission.
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