Consumer advocates warned a panel of Pennsylvania House members on Wednesday that Commonwealth residents will continue to bear the burden of rising electricity costs unless policymakers take steps to regulate a growing number of new data centers.
Patrick Cicero, counsel at the Pennsylvania Utility Law Project, said data center developers are not paying their fair share of energy demands.
“We think cost-causers should pay, and there’s a direct line between who’s causing these costs,” Cicero said. “And they’re simply not paying right now because of our policy that currently exists.”
Pennsylvanians have already paid for about $16.6 billion worth of electricity “purely as a result of data center load,” according to Joseph Bowring, an independent market monitor at grid operator PJM.
Those comments came toward the end of a more than three-hour hearing of the House Energy Committee. Members were discussing a bill introduced by Rep. Robert Matzie, D-Beaver, that would allow the Public Utility Commission to establish rules and guidelines for the development of data centers.
Matzie’s legislation would also shield ratepayers from paying any cost “directly attributable” to a data center’s electricity use.
Currently, Pennsylvania has no statewide regulations overseeing the facilities that house computers and networking equipment key to cloud computing and artificial intelligence.
Witnesses at Wednesday’s hearing included data center developers and trade organizations to business leaders and watchdog groups, with much of the discussion focused on the broader impact data centers have had on Pennsylvania’s electrical grid.
Here are some key takeaways:
‘The iceberg’Stephen DeFrank, chair of the Public Utility Commission, said Pennsylvania is facing a shortage of electricity that worsens by the day. He said identifying how large that shortfall may be is the first step to addressing it.
“We have an iceberg coming towards us,” DeFrank told the lawmakers. “We can’t steer away from the iceberg if we don’t know how big the iceberg is.”
PJM projects that data centers will add nearly all of the 32 gigawatts of demand on the state’s power grid by 2030.
Republicans, like ranking member of the committee Martin Causer, of McKean County, said lawmakers need to focus on increasing energy production from natural gas and other resources available in Pennsylvania.
“We need to make sure that we’re not selecting certain energy sources over others, because that will limit our opportunity,” Causer said.
Economic growthWitnesses whose organizations benefit from data center development said Matzie’s proposal is too restrictive.
Dan Diorio, vice president of state policy at the Data Center Coalition, said the bill could stifle economic growth because it “imposes disparate treatment” of developers. He also said the bill “usurps the necessary authority, flexibility and discretion” of the Public Utility Commission over utility rates.
Diorio pointed to a PwC study — commissioned by his organization — to highlight the positives of data centers. Researchers found that in 2023, data centers provided more than 18,000 direct jobs statewide and contributed more than $1.36 billion in state and local tax revenue.
Energy Committee Chair Elizabeth Fiedler, D-Philadelphia, credited data centers for bringing tax revenue and other economic benefits to neighboring communities, but she noted the costs to regular utility customers.
“We know at the same time, from experts, that (data centers) also demand massive amounts of energy,” she said, “and we need to be sure that growth in this sector doesn’t come at the expense of families and small businesses back home — people who are already struggling with rising utility bills.”
Matzie’s bill would require data centers that demand at least 25 megawatts of power to contribute annual payments to the federally funded Low-Income Home Energy Assistance Program. The payments would begin at $250,000 annually and rise depending on megawatt usage.
Green powerA major sticking point for some business representatives was the portion of Matzie’s bill that would require a minimum of 25% of the electricity used by a data center to be generated by renewable sources.
That request is unreasonable, according to Rob Bair, president of the Pennsylvania Building and Construction Trades Council.
“These aren’t all cookie-cutter,” Bair said, noting that the area surrounding a data center may not be suitable for solar panels or wind mills.
Even Darryl Lawrence of the Pennsylvania Consumer Advocate, who stressed his support for residents’ access to clean water and air, said the renewable energy component of the bill is “likely unworkable.”
‘Speculative bubble’?Fielder said she’s heard and is concerned about a “speculative bubble” in the data center industry — where the rapid demand for data centers ends, leaving abandoned projects across the state.
Diorio denied that one exists.
“Right now we are not building fast enough to meet the demand curve that we are on, and so data centers are looking to build out as quickly as they can to meet that demand,” Diorio said.