Dive Brief:
- The Pennsylvania Public Utility Commission voted unanimously Thursday to approve two motions that could impact data center development and ratemaking in the state.
- One directs PUC staff to propose updates to the state’s rules for emergency curtailment, and to organize a technical conference on cost allocation for data centers. The other sets in motion the creation of a working group to examine “potential improvements” to the commission’s ratemaking processes with a focus on transparency and affordability.
- The votes came after an August PUC report projected that the state faces industrial load growth of 18.56% over the next five years, driven “primarily” by PPL Electric Utilities Corp.’s large-load forecast. The same report said electricity usage declined from 2024 to 2025. “The combination of rapid load growth and tightening resource adequacy conditions requires us to carefully examine whether our existing regulatory framework is sufficient for the challenges ahead,” PUC Vice Chair Kimberly Barrow said in a Thursday release.
Dive Insight:
The PUC’s report called the impact from data centers and other large loads, in both Pennsylvania and the PJM Interconnection’s overall footprint, “significant.”
“An insufficient level of construction of electric generation and continued retirement of base load electric generation is resulting in the need for stakeholders such as policy makers, regulators, utilities, and generation owners, to work together to ensure the continued reliable operation of the [bulk electric system],” the report said.
In a Thursday release announcing the PUC’s decision to weigh reliability and cost allocation issues, the commission said the action “comes amid growing concern about the balance between rapidly increasing electricity demand and the resources available to serve that demand across the PJM Interconnection.”
“PJM's July 2026 capacity auction identified a system-wide reliability shortfall of 6,831 megawatts for the 2028-29 delivery year,” the PUC said. “Pennsylvania's existing regulations provide a basic framework for electric utilities to manage load during pre-emergency and emergency conditions. The Commission will now examine potential updates to provide greater and more consistent direction concerning the order, criteria and applicability of curtailment.”
The PUC’s Law Bureau and Bureau of Technical Utility Services will present a tentative order outlining proposed changes to the state’s load management framework for the commission to consider at its Oct. 1 meeting, the PUC’s release said. If the commission approves the order, it will be made available for public comment, and the commission will aim to vote on it at its Jan. 28 meeting.
The “rapidly changing landscape” for utility costs, including data center development as well as inflation and infrastructure needs, has “increased pressure on utility costs and contributed to a significant number of proposed rate increases,” said the PUC release about the ratemaking order.
”Our responsibility is to make sure every dollar recovered from customers is carefully scrutinized while ensuring utilities can make the prudent investments necessary to provide safe, reliable service,” PUC Chairman Steve DeFrank, who submitted the motion, said in a release.
The Ratemaking Working Group will consider whether return on equity issues “could be addressed through periodic, sector-specific cost-of-capital proceedings rather than litigated separately in individual utility rate cases”; ways to improve transparency in rate cases around issues including ROE; and whether the ROE used for Distribution System Improvement Charges could be calculated in a more formula-based way, the PUC said.
The group “will be managed by the PUC’s Office of Executive Director and include representatives from consumer and small business advocates, utilities, state government and the General Assembly, industrial energy consumers, low-income advocates and other stakeholders,” the PUC said.
After the commission publishes an order formally establishing the group in the Pennsylvania Bulletin, “designated stakeholder groups” will have 30 days to submit nominations. The commission plans to announce full membership 15 days after that, and then the working group will start developing a report and recommendations for the commission to review, the PUC said.
The commission will also weigh large load cost allocation issues at a technical conference this fall, according to a PUC release, giving “an opportunity for utilities, consumer advocates, large-load customers and other stakeholders to examine how costs associated with large new loads are identified and allocated, including potential impacts on customers who are not contributing to that new demand.”
