Consumer advocates and a Pennsylvania public utility commissioner are urging state lawmakers to tax data centers and other large energy users to help lower residents’ energy bills.
Darryl Lawrence, Pennsylvania’s consumer advocate at the state Attorney General’s office, testified Tuesday at a joint hearing of the House committees on Energy and on Consumer Protection, Technology & Utilities. Lawrence said data centers are “already causing electric prices to increase for consumers,” and he’s seen proposals to improve the state’s grid infrastructure with costs “largely allocated to existing consumers — not the data centers that are causing the cost.”
“Data centers must pay their own way,” Lawrence said.
Currently, Pennsylvania has no statewide regulations overseeing the facilities that house computers and networking equipment key to cloud computing and artificial intelligence.
Public Utilities Commission Chair Stephen DeFrank said inflation, supply chain problems, growing demand and hurdles to creating more in-state energy are all contributing to a rise in average electricity prices. The cost to transmit power has also far outstripped inflation, rising from $3.50 per megawatt hour in 2001 to $17.70 in 2024. Taxing data centers, DeFrank said, could alleviate some of the expected costs required to improve Pennsylvania’s infrastructure to deal with the larger needs.
“Customers who do not benefit from these upgrades should not have to pay for the cost of the upgrades,” he said.
And Asim Haque, PJM Interconnection’s senior vice president of government and member services, told lawmakers that he’s “most concerned” about grid reliability, as the rising number of data centers is stressing his company’s system.
“We are the sort of last line of defense — from a wholesale perspective — from what could be some pretty catastrophic consequences related to potential blackouts,” Haque told members of the panel.
Haque pointed to PJM’s most recent forecast, which predicted its peak loads would drastically rise over the next 15 years, because of the expected needs of data centers.
House Democrats have proposed legislation to protect ratepayers from any cost “directly attributable” to data centers. That proposal sits with the Energy Committee.
Affordability, affordability and affordabilityThe hearing comes as Pennsylvania Democrats, who hold a majority in the state House, look to leverage the public’s negative outlook on the economyagainst Republicans in November’s midterm elections, given that the GOP holds a majority in Congress and President Donald Trump is in the White House.
“It’s not a struggle that’s new to them. People have been having trouble paying their bills for a long time,” Energy Committee Chair Elizabeth Fiedler, D-Philadelphia, said in her opening remarks. “Now, that means utilities, groceries, student debt, medical debt, housing and, of course, energy prices going through the roof.”
The construction of new data centers across Pennsylvania faces pushback from many residents concerned about rising energy costs. A December Emerson College Poll found 71% of Pennsylvanians are very concerned or somewhat concerned about the amount of electricity data centers use.
But many officials in Pennsylvania, including Gov. Josh Shapiro and his likely gubernatorial challenger this year, Treasurer Stacy Garrity, have welcomed data centers — and the expected temporary construction jobs — with open arms.
Shapiro and a bipartisan group of governors from PJM’s 13-state grid area met on Friday with President Trump and other White House officials. They endorsed a plan to extend a price cap on some PJM electricity.
“If implemented as proposed, the extended price cap would save more than 67 million consumers — including 13 million Pennsylvanians — within the PJM region approximately $27 billion over the next two years with $5 billion in Pennsylvania alone,” Shapiro’s office said in a statement. The proposal also urges PJM to hold an emergency auction where tech companies could buy power for the next 15 years. Usually, companies can bid on power for one year.
Incentivizing more energy production to meet the demands of data centers is exactly what Republican lawmakers at the House hearing on Tuesday said they wanted to see in Pennsylvania.
“We know that this is a supply and demand issue,” Rep. Martin Causer, R-McKean, said. “We know that demand is increasing rapidly here in the Commonwealth. We need policies that actually promote energy production.”
Causer did not specify whether he supports the plan proposed by Trump and Shapiro, but he did raise concerns that taxing data centers could push companies to build them in other states, costing Pennsylvania temporary construction jobs.