PA Environment Digest Blog: PUC Invites Comments On Proposed Model Tariff To Balance A.I. Data Center Growth And Ratepayer Protection

On November 22, the Public Utility Commission published notice in the PA Bulletin inviting comments on a Tentative Order proposing a statewide model tariff to guide utilities on how large electric customers connect to the grid and share costs responsibly. (formal notice)

The deadline for comments is December 22-- 30 days from this notice.

This action marks another step forward in the Commission’s continuing process to address the growing impact of data centers and other energy-intensive users across Pennsylvania’s electric grid.

“Pennsylvania has a real opportunity here – if we get it right,” noted PUC Chairman Steve DeFrank. “Today’s tentative order is about welcoming investment and jobs while making sure existing customers aren’t stuck with the bill. We’re proposing clear, transparent rules that help interconnect large loads quickly and responsibly – protecting reliability, preventing cost-shifts, and avoiding stranded costs. I urge all parties to bring us practical, balanced feedback over the next 30 days so we can finalize a durable approach that works for everyone.”

Highlights of the Tentative Order

-- Defines large-load customers and aligns Pennsylvania’s approach with emerging practices across the PJM region.

-- Strengthens protections for existing customers through cost-causation measures — including contributions-in-aid-of-construction, tiered collateral, and minimum contract terms.

-- Encourages large-load customers to contribute toward programs that support low-income customers.

-- Encourages faster, more transparent interconnections through clustered study timelines, optional independent studies, and limited customer-built upgrades meeting utility standards.

-- Incentivizes flexibility by providing rate options for customers willing to accept interruptible or flexible service during peak system demand.

Click Here for a copy of the Tentative Order and Model Tariff.

Read the entire PA Bulletin Notice for instructions on submitting comments.

Comments By The Commissioners

On November 6, the Commission voted 3 to 2 to publish the Order for comment. The split vote was unusual on a major and Chairman Stephen DeFrank called it “absolutely unfortunate.”

In a written statement and comments at the Commission meeting, Commissioner John Coleman said although the Tentative Order addressed many of the issues raised to the Commission on large loads, “in some areas, it appears that the proposed language is overly prescriptive and may be counterproductive to the provision of adequate, reasonable, and efficient service to prospective customers.”

As an example, he said the Order “carves out a ‘requirement’ that large customers make significant financial contributions to “hardship funds” on an annual basis as a condition for receiving and maintaining public utility service.”

“While the Public Utility Code includes provisions requiring the funding of customer assistance programs,” Commissioner Coleman said. “I am not satisfied that the Commission has the legal authority to require contributions to hardship funds as a condition to obtain or maintain public utility service.”

He also expressed concerns about provisions requiring that electric distribution companies “shall file with the Commission, on a confidential basis, a compliance report…” detailing various information regarding the following items:

-- Revenues collected from large load customers;

-- Distribution system impacts;

-- Curtailment enforcement; and

-- Equity and outreach to certain classes of customers.

“Such a requirement attempts to establish a binding norm outside of the rulemaking process and thus denies interested stakeholders appropriate notice and an opportunity to be heard.”

Commissioner Coleman also noted a pending rulemaking by the Federal Energy Regulatory Commission on large load customers expected to be finalized in April may have an impact on the Tentative Order.

“There is significant concern on the part of state [utility] commissions that such a rule may preempt state regulation of the issues reviewed at this docket.

“I am aware NARUC [National Association of Regulatory Utility Commissioners] will be considering a draft resolution on this rulemaking at its next annual meeting.

“It would be unfortunate if overreaching by states contributed to the loss of jurisdiction over these very important issues.

“I welcome comments on whether the Commission should stay final action at this docket until FERC concludes its proceeding.”

“In conclusion, while I do not support all the provisions of the Tentative Order or proposed tariff, I look forward to reviewing the comments filed in response to today’s Tentative Order and will continue to monitor pending legislation or any other matter coming before this Commission that pertains to the underlying issues,” said Commissioner Coleman.

In response, Chairman DeFrank said, “I think that there are a lot of things we can come to an agreement on, but as Vice Chair Barrow pointed out, I got the four-page statement 45 minutes ago [from Commissioner John Coleman], so it's hard to come to agreement when you don't know until you're walking into a meeting.”
“When we talk about the hardship funds, I do want to point out that the [price] increases in the [PJM] capacity market…we've had a 900% increase in one auction,” said Chairman DeFrank. “The whole concept is lower-income individuals are going to have a harder time making ends meet, even more so than today, once we have data centers come in and are absorbing that load.”

“We've seen huge increases in the capacity market, and that's because we don't have our arms around load forecasts, and that's one of the things,” said Chairman DeFrank. “There's a bill over [in the General Assembly] that does that, that puts that power in our hands. We have an RFP out that looks at a load forecaster. The Commission has been moving in this direction on a number of fronts.”

“This is not the final order, but we think we have a good start to this document here, and I think it could get better. There's no question about it,” said Chairman DeFrank. “Again, I think this is a big day for the Commission. I commend staff, commend Pat Shaughnessy from my staff who worked on this, and that's all I have.”

Statements By Commissioners

-- Chairman Stephen M. DeFrank

-- Vice Chair Kimberly Barrow

-- Commissioner Kathryn L. Zerfuss

-- Commissioner John F. Coleman, Jr.

PUC Background

In March 2025, the Commission launched a proceeding to examine the grid impacts of data-center growth and other high-demand electric users, followed by a hearing in April 2025 that brought together utilities, consumer advocates, industry stakeholders, and members of the public.

The Tentative Order adopted today reflects that input and outlines a model approach that utilities can use to help ensure timely, transparent, and fair interconnection of large loads, while protecting existing ratepayers and preserving long-term system reliability.

Documents related to this Order can be found at PUC Docket: M-2025-3054271

Click Here for a copy of the PUC announcement.

Other Needed Actions

Witnesses at an October 22 House Energy Committee hearing on regulating A.I. data centers to protect ratepayers from higher costs and grid reliability from the surging energy demands of data centers, called for legislative action to--

-- Require data centers to bring their own generation - PJM Market Monitor, PA Consumer Advocate, PA Utility Law Project

-- Authorize the PUC to set conditions for allowing centers to be served by the grid - PA Consumer Advocate, PA Utility Law Project

-- Require center contributions to Universal Service Assistance Programs and LIHEPA to reduce the impact of electricity prices increases on lower income ratepayers - PA Utility Law Project

-- Need to prioritize existing loads and ratepayers on the grid - PJM Market Monitor, PA Consumer Advocate, PA Utility Law Project

-- Require centers to take electrical service on an interruptible basis during supply shortage periods - PA Consumer Advocate, PA Utility Law Project

-- Authorize the PUC to set power curtailment priorities - PA Consumer Advocate, PA Utility Law Project

-- Encourage backup generation at centers other than diesel to reduce environmental impacts - PA Consumer Advocate

Resource Links - A.I. Data Centers:

-- PUC Approves Proposed Model Tariff For Public Review To Balance A.I. Data Center Growth And Ratepayer Protection [PaEN]

-- Data Center Stampede Trampling PA Ratepayers Part I: PA Utility Law Project - Utility Terminations Up 30% Already; Prioritize Existing Loads; Centers Need To Help Pay For Utility Assistance [PaEN]

-- Data Center Stampede Trampling PA Ratepayers Part II: PA Consumer Advocate - PUC Should Set Conditions For Centers To Be Served By The Grid; Set Power Curtailment Priorities [PaEN]

-- Data Center Stampede Trampling PA Ratepayers Part III: PJM Market Monitor - Data Centers Have Cost Existing Ratepayers $16.6 Billion Already; Centers Should Bring Their Own Power Generation To Prevent More Large Price Spikes [PaEN]

-- PJM Electric Auction Impacts: 1 In 5 PA Households Report Problems Now Paying Energy Bills; Electric Utility Shutoffs Up 38.1% So Far This Year [PaEN]

-- PJM Electricity Auction: PJM Lost 2.8 Gigawatts Of Power Due To Reduced Reliability Rating Of Natural Gas Power Plants; Could Gain 12.2 Gigawatts By Increasing Reliability From Less Than 75% Now To An Achievable 90% [PaEN]

-- Environmental Justice: What Happens When A.I. Data Centers Come To Town? -- Environmental, Economic, Grid Impacts [PaEN]