PA Environment Digest Blog: Sen. Yaw Bill To Subsidize Building Only Natural Gas Power Plants To Help Meet The Energy Demands Of A.I. Data Centers; Continues ‘One Of The Above’ Energy Policy

On December 8, Sen. Gene Yaw (R-Lycoming) announced the introduction of Senate Bill 1106 that would have taxpayers subsidize building only natural gas power plants costing $400 million or more with tax credits lasting 22 years.

Sen. Yaw said in his announcement of the legislation-- “Pennsylvania stands at a critical crossroads. Our electric grid is experiencing the most rapid demand in decades, yet we continue to retire reliable power sources faster than we can replace them.

“By modernizing the EDGE [Economic Development for a Growing Economy] Program, we can encourage the development of dispatchable, always-on power sources that are essential for grid stability.”

Sen. Yaw noted recent announcements underscoring Pennsylvania’s ambitions to become a national leader in artificial intelligence also brings with it a dramatic surge in electricity demand, as data centers and computing facilities require continuous, uninterrupted energy supply.

By restructuring the EDGE program, Sen. Yaw said, his bill would give developers the long-term certainty and financial tools needed to invest in energy projects that strengthen grid reliability and help power Pennsylvania’s future.

Senate Bill 1106 was referred to the Senate Finance Committee for consideration.

Click Here for Sen. Yaw’s announcement.

PA Overreliant On One Fuel Now

The latest Pennsylvania Electricity Update in February from the Independent Fiscal Office reports Pennsylvania’s electricity grid is dependent on one fuel for 60% of the state’s electricity generation-- natural gas-- followed by nuclear power-- 31%, coal-- 5% and 4% from other sources.

As Sen. Yaw himself has said in public hearings, Pennsylvania needs baseload electric generation fueled by a diverse mix of fuels to remain stable. Read more here.

“I think about five years ago I toured with the Committee, the PJM site in Valley Forge. And I know one of the comments made at the time was that Pennsylvania had almost a perfect energy mix at that time,” said Sen. Yaw.

"We were about a third, a third, a third [in sources of fuel to generate electricity-- coal, natural gas and nuclear].”

“We didn't have any reliability issues at all.” Read more here.

Rep. Thomas Mehaffie (R-Dauphin) questioned the reliability of natural gas power plants at a House hearing in May, especially during recent winter experiences-- “[Natural] gas is not baseload power.

“Baseload power means that you have ample fuel supply for over three months. So coal and nuke are the only two that are baseload power on demand.

“And I get there's plenty of gas out there, but that's all on demand. They can shut it off and turn it on as they want, but that fuel supply is not there for them.

“As you know, when residential fuel is needed in the winter, the commercial properties are shut off by the gas companies, and that is a major problem when we come into these winter functions. That is not on demand.

“Gas is great. I'm not saying it's bad. I'm just saying it is not baseload power.” Read more here.

Patrick McDonnell, President & CEO of PennFuture, said, “We find ourselves at another pivotal juncture as the Commonwealth faces urgent challenges to improve grid reliability and mitigate skyrocketing electricity bills." Read more here.

“In a matter of weeks, many Pennsylvanians will see their bills increase by as much as 15 percent.

“This is due, in large part, to our overreliance on fracked gas for more than half of our energy production."

“In recent years, gas has seen its market prices rise higher and higher while it has also been deemed less and less reliable by PJM—the regional transmission organization responsible for Pennsylvania’s grid.

“The fallout of Winter Storm Elliott in December 2022 and other events, where we saw significant forced outages at gas plants, demonstrated the fossil fuel’s unreliability during times when residents and businesses are most in need.

“These events forced PJM to re-evaluate the reliability of all resources, downgrade the ability of fracked gas to capably perform during all weather conditions, and sent prices in PJM’s capacity market to levels never seen before— totaling costs of nearly $14.7 billion for 2025 – 26 compared to only $2.2 billion for the previous year.

“This astronomical increase in capacity prices is now being passed on to residents across the Commonwealth." Read more here.

Evan Vaughan, Executive Director, Mid-Atlantic Renewable Energy Coalition, said “Meeting demand will require deploying newer, more efficient energy resources at-scale to complement Pennsylvania’s existing generation fleet.

“There are nearly 9,600 MW of solar, wind and storage capacity already in the PJM queue in Pennsylvania."

“Enhancing Pennsylvania’s diverse electricity mix with additional zero fuel cost resources will help stabilize electricity prices for consumers.

“Given the scale of new electricity demand projected in PJM, it is reasonable to anticipate significant fuel price volatility for years to come unless more solar and wind projects are deployed.

“The benefits resulting from energy source diversification to include additional reliable clean energy sources does not diminish the role of other Pennsylvania energy sectors.” Read more here.

Gov. Shapiro’s EDGE Tax Credit Proposal

In May, the House passed House Bill 500 (Inglis-D-Allegheny) -- the Pennsylvania Economic Development for a Growing Economy (EDGE) Tax Credit plan proposed by Gov. Shapiro as part of his Lightning Energy Plan. Read more here.

The Lightning Plan proposes several tax credit modifications to ensure businesses can actually take advantage of the credit to create jobs, innovate, and grow our economy, among them is the Reliable Energy Investment Credit to support adding electric generation facilities of 25 MW or more of clean, reliable, and affordable energy sources to the grid.

“Clean” energy sources are defined as sources like wind, solar, nuclear, geothermal and hydroelectric that emit 100 pounds or less of carbon dioxide equivalent per megawatt-hour of generation.

House Bill 500 is now in the Senate Finance Committee.

(Photo: The $1.5 billion 1,483 MW Lackawanna Energy Center natural gas power plant in Lackawanna County. In November, DEP issued an air quality permit for a 4.5 GW natural gas power plant dedicated to serving the 3,200 acre Homer City A.I. data center campus in Indiana County.)

Resource Links - Energy Affordability:

-- PUC: Most PA Electric Utility Consumers To See 3.7% To 10.6% Increase In Electricity Prices During The Next 3 Months Starting Dec. 1 [PaEN]

-- PUC Chairman Highlights 'Extraordinary Challenges' Pennsylvania Families Are Facing This Winter With Energy Bills And His Appreciation For Groups Providing Assistance [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]

Resource Links - Who Pays:

-- PUC Invites Comments On Proposed Model Tariff To Balance A.I. Data Center Growth And Ratepayer Protection [PaEN]

-- Post-Gazette - Anya Litvak: PUC Proposes Special Treatment For A.I. Data Center Power Connections To Contain The Cost Burden On Existing Ratepayers [PDF of Article]

-- NRDC: PJM Grid Members Fail To Recommend Any Of 12 Proposals To Prevent Existing Electric Ratepayers From Bearing The Costs, Reliability Risk Of Soaring A.I. Data Center Energy Demand [PaEN]