Pennsylvania must act now to protect customers from data center energy costs

Pennsylvania is on the cusp of a major wave of data center development. These facilities promise economic growth, but they also bring enormous electricity demand that is already driving up energy costs for everyday Pennsylvanians. Without strong safeguards, those costs will continue to shift onto customers who neither caused the problem nor have any way to protect themselves.

This risk is not theoretical. Large load customers, including data centers, are already increasing electricity prices as utilities spend billions of dollars on new infrastructure to serve them. Without updated regulatory protections from the Pennsylvania Public Utility Commission, those impacts will only grow as more data centers come online.

Customers shoulder costs they didn’t cause

Residential and small business customers do not choose where data centers locate or negotiate interconnection agreements. They cannot redesign the grid or opt out of paying for utility investments. Yet under current practices, they can still be left holding the bill when large load customers trigger expensive grid upgrades.

This is precisely the sort of imbalance the PA PUC exists to address. We are relying on the Commission to do what only it can do: protect customers and ensure rates remain just and reasonable.

A welcome step forward

The good news is that the PA PUC recognizes the challenge. In its recent Tentative Order on interconnection and tariffs for large load customers, the Commission acknowledged that historical approaches no longer work in a world of modern, massive electricity users like data centers.

Most importantly, the PUC correctly recognized a key reality: large load customers will disproportionately consume the benefits of grid upgrades built to serve them. That insight matters, because it undermines the historical assumption that those costs should be broadly shared by all customers.

The Order takes several important and laudable steps. It suggests that large load customers should take greater responsibility for the costs of transmission upgrades built to serve them. It also recommends that these customers contribute to utilities’ low-income assistance programs – an essential protection given rising energy costs hit low-income households first and hardest. Advocates have been pushing for this latter reform for years, and it’s exciting to see the PA PUC take concrete steps to make it a reality.

What we recommend

Environmental Defense Fund filed detailed comments to strengthen customer protections while safeguarding grid integrity, treating large load customers fairly, and preserving flexibility for future improvements. Our most significant recommendation is simple and essential: the PA PUC should establish a clear, bright-line rule that large load customers must pay for the utility costs they incur.

The Order contemplates allocating costs based on an assessment of who benefits from data-center-triggered transmission upgrades. In theory, that sounds reasonable. In practice, it could lead to unpredictable, non-uniform, and unjust outcomes. Estimating future benefits is subjective, resource-intensive, and vulnerable to pressure – especially when large customers have a strong incentive to minimize their apparent share.

Our alternative is clearer, fairer and easier to administer. If a data center triggers new utility costs, that customer should be responsible for covering them. This approach would streamline cost-allocation rules, reduce disputes, speed project timelines, and – most importantly – help ensure ordinary ratepayers do not get stuck paying for infrastructure they do not need and did not request.

We also recommend additional rule improvements to bolster customer protections and increase data transparency. Strong reporting requirements and public access to aggregated data are essential for accountability as the state of Pennsylvania navigates this rapid load growth.

Setting the rules is a first step

The PA PUC’s ruling on these comments will mark an important milestone, but it will not be the end of the process. The Commission’s decision will establish a model tariff – but it will not automatically require utilities to adopt it. Instead, the real impact will take shape in future, utility-specific proceedings where these rules are put into practice.

EDF will be fully engaged every step of the way. We will continue working alongside our partners across environmental, consumer, and customer-protection organizations to advocate for rules that treat all customers fairly – not just the largest and most powerful ones.

Pennsylvania has a clear opportunity to get this right. With thoughtful action now, the PA PUC can support economic development while protecting customers from unjust energy costs.