Part of the agenda featured the independent PJM Market Monitor, the PA Office of Consumer Advocate and the PA Utility Law Project.
These witnesses offered their comments on how A.I. data centers have already caused a $16.6 billion surge in electric prices paid by ratepayers in the PJM service area and outlined the adverse consequences of not taking effective action to protect ratepayers as part of data center development.
They also offered remarkably similar solutions--
-- 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
PA Environment Digest is highlighting their testimony because it is critical the public understand these impacts to cut through the hype surrounding the stampede to develop these facilities.
PA Consumer Advocate
Darryl Lawrence, PA Consumer Advocate represents the interests of Pennsylvania utility consumers before the Pennsylvania Public Utility Commission, federal regulatory agencies, and state and federal courts.
What If Legislature Fails To Act?
Rep. Mandy Steele (D-Allegheny) asked each of these three witnesses what if the General Assembly fails to act to protect ratepayers.
Lawrence said-- “We certainly need legislative action in this case.
“And as [PUC] Chairman DeFrank had said, even when the PUC rolls out their model large load tariff, it's not going to have the force or effect of regulation and it's not going to have the force or effect of a statute or a state law.
“And we definitely need that in order to curb some of these potential price increases.”
Consumer Advocate Testimony
Good afternoon, Chair Fiedler, Chair Causer, Committee members. I'm Darryl Lawrence. As you know, I'm the consumer advocate of Pennsylvania.
I thank the chair and the Committee members for holding these hearings on commercial data centers, providing the opportunity for the OCA to engage in these important policy discussions.
The introduction of large-scale data centers in Pennsylvania represents opportunities and challenges.
If introduced and implemented in a thoughtful and considered manner, the economic benefits for Pennsylvania could be substantial.
Conversely, without sufficient safeguards for ratepayers, data centers could create substantial upward pressure on electric rates in this Commonwealth.
Such an outcome would be untenable, as Pennsylvania ratepayers are already seeing increased electric rates due to many factors, including a substantial reduction in the available generating capacity as compared to the forecasted load increases.
Together, and working with all other stakeholders, I believe these challenges can be met.
With that, the OCA offers the following on House Bill 1834.
Paying More For Less Reliable Supply
The importance of large data centers on the economy and the reliability of electric system and the affordability of electric rates cannot be overstated.
Reliable, reasonable, and affordable electric utility service is fundamental to public health and safety and foundational to economic growth and development in the Commonwealth.
However, Pennsylvania utility consumers are facing the risk of having to pay more for less reliable electric utility service in the near future due to projected shortfalls in electric supply.
To provide context for my testimony, there are three key assumptions I wish to bring forward as further supported by Appendix B attached to my testimony.
Explosive Growth In Demand
First, as discussed extensively this morning, there are predictions of explosive growth in demand in the PJM region, specifically PJM predicting by 2030, 30 out of 32 gigawatts of forecasted new load being attributable to data centers.
If the forecasted data center loads are actually realized, the volume of demand that, for instance, PPL's utility system serves, is expected to triple in size over the next 10 years.
Demand Outstripping Supply
Second, data center demand is currently outstripping existing and forecasted supply.
Without intervening solutions at the regional and state level, one predictable outcome, and an outcome that PJM has expressed concern over, is that PJM will be forced to call mandatory curtailments, meaning blackouts for Pennsylvanians and other consumers within the region.
All Parts Of Ratepayer Bills Will Increase
Third, Pennsylvania utilities consumers electric bills could increase as a result of this supply inadequacy problem.
All components of a consumer's electric bill: generation, capacity, transmission and distribution could all be affected.
To avoid a reliability crisis and a rearranging of the deck chairs, the Commonwealth can and should legislate to address the meaning of a utility's obligation to serve.
Recognizing that large loads are retail consumers and acknowledging both the broad state police powers of the Commonwealth over retail service, as well as the limitation of states’ powers under the Federal Power Act.
House Bill 1834, while as drafted is good, can go even further to protect Pennsylvania residents and businesses.
Primary Goal - Avoid Blackouts
It should be the primary goal of this legislation that Pennsylvania residents and businesses will not experience blackouts because of PJM-directed mandatory curtailments due to this accelerated explosive growth into data center demand.
The OCA recommends two critical backstops be added to House Bill 1834.
One, to ensure the continued provision of reliable electric utility service for existing customers.
And two, to marry the state's authority with existing PJM operations and administrative constructs, as well as with any potential changes adopted at the PJM level to address the resource adequacy problem.
I'll now turn to a specific discussion within an existing framework of House Bill 1834.
PUC Regulations Needed
As stated, the OCA supports House Bill 1834's recognition of the importance of having PUC regulations to protect electricity customers from paying to recover potential stranded costs, supports the key provisions in 3A, B, and section four.
These requirements are necessary to mitigate potential price increases.
While the PUC has opened a docket to address these issues and utility tariffs, we believe this legislation is required because it mandates the PUC to act by regulation.
The OCA strongly encourages that regulations be promulgated on this topic for the purpose of regulatory certainty.
We have also offered some structural substantive revisions to strengthen these important consumer protections of this bill.
Topics The Bill Should Address
Again, while the OCA broadly supports House Bill 1834, I do wish to raise three priority topics that House Bill 1834 should address.
One, protecting reliable electric service for existing Pennsylvania residents and businesses.
Two, mitigating price increases for utility consumers.
And three, protecting the Commonwealth's natural resources.
On a continuation of reliable electric service to existing customers, two talking points are shaping the narrative in these important policy discussions that I will address.
Being An Exporter Of Electricity Doesn’t Help PA
The first is that Pennsylvania is the next exporter of generation supply.
This talking point, while true, creates the impression that Pennsylvania can handle the data center demand and even avoid the severe consequences of a regional supply shortage, meaning rolling blackouts.
The truth is, being an exporter of power will not help Pennsylvania consumers in most situations when mandatory curtailments are called by PJM.
In emergency conditions, meaning where on a regional basis there is insufficient generation supply to meet the region's electricity demand, PJM's obligation and primary concern is to address the regional needs of the grid, which does not include state boundaries or solely focusing on the Commonwealth of Pennsylvania.
PJM, Federal Action Needed
The second point is that utilities have an obligation to serve and that many of the risks and concerns that Pennsylvania is facing must be solved by PJM or at the federal level.
While it is true that utilities have an obligation to serve under the Public Utility Code, that obligation is neither absolute nor at any cost.
But it's also true that Pennsylvania's restructured state and that the Federal Power Act provides a bright line division between state and federal jurisdiction.
The states nevertheless have broad authority under the Federal Power Act to protect retail customers to avoid emergency conditions and during emergency conditions.
So the OCA has proposed numerous revisions to House Bill 1834, as we've already talked about.
Set Conditions For Connecting Centers To The Grid
Number one, recommended backstop. Number one is to regulate the condition of no data center interconnection.
The OCA recommends that House Bill 1834, section 3B be modified to provide the PUC with the explicit authority to define conditions under which a data center, as new load, is permitted to connect to the electric distribution system.
This would put the electric distribution companies or the EDCs in a role akin to a traffic cop, to enforce the speed or pace at which this new retail load can be interconnected to utility systems to ensure the protection of the public's utility, continued provision of reliable electric service to existing customers, a statutory obligation.
More specifically, for new interconnection of data centers and from incremental additions of load associated with the data center that's already connected.
Interruptible Service For Centers
If there is a supply shortage or resource inadequacy as shown by PJM, consistent with widely understood resource adequacy criterion, conditions shall be imposed by PUC regulation the EDF tariff as follows: to require a commercial data center to take electric distribution service on an interruptible basis under an interruptible rate established by the public utility's tariff and the commission.
Backup Generation Other Than Diesel
I understand we had heard discussions this morning about data centers having backup generation, that generation being diesel generation for the most part, and I will get to more of this in a moment.
However, I believe numerous other options exist for companies that are on the cutting edge of technology.
I'm somewhat disappointed that the only backup generation we can think about are diesels, right?
There are numerous companies out there that are on the cutting edge of providing large-scale natural gas generation that does not include building a generation facility.
There are also companies out there that are currently producing units that actually transform natural gas into electricity without ever actually burning the natural gas itself through chemical processes.
So, I think there's a lot more to think about in backup generation besides just diesels that I'm sure no one really wants to run.
Bring Their Own Generation
So two, to permit a commercial data center to take firm electric distribution service on the condition that the commercial data center has procured additional generation that is either A: constructed and operable prior to or upon delivery of power to the data center. B: co-located or located electrically close to the commercial data center, or C: meets or exceeds the fully anticipated load of the commercial data center, plus its associated RTO [Regional Transmission Organization] reserve margin.
Voluntary Curtailment Participation
Three, to permit a commercial data center to take firm electric distribution service on the condition that to meet or exceed the fully anticipated load of the commercial data center plus its reserve margin, the commercial data center certifies its direct participation in an RTO voluntary curtailment program in which its load would be curtailed as a pre-emergency condition and our procurement of additional demand response resources in an RTO zone.
Or four, any combination of one to three above.
Set Curtailment Priorities In An Emergency
A recommended backstop. Number two is that utility curtailment priorities during emergency conditions need to be set.
Data centers receiving power while neighborhoods and businesses are blacked out should not be an acceptable outcome.
Data centers are sophisticated, well-funded, and can therefore secure their own behind-the-meter power supply to operate during emergency conditions and even in non-emergency conditions, as Dr. Bowring [Independent PJM Market Monitor] just talked about, the OCA fully supports the idea of what Dr. Bowring has testified to this morning.
Bringing their own generation is certainly an optimal outcome in this proceeding.
The OCA applauds this bill for recognizing that by requiring the PUC to promulgate regulations addressing curtailment or some or all of the commercial data center's load during emergency conditions.
However, this bill must go even further to protect existing consumers from blackouts caused by data center demand exceeding available supply.
If PJM calls an emergency manual load-shedding event pursuant to their Manual 13 after PJM allocates manual load shedding amounts to the EDCs, the EDCs must comply with that mandate.
However, how the EDCs comply for non-critical retail load falls under state jurisdiction. States have the say over which non-critical retail load gets curtailed first and or the use of rotating curtailments.
Currently, the hierarchy of load shedding involves a distinction between critical and non-critical load.
As the OCA have said, we believe critical loads such as residential, human needs customers, small businesses certainly should be one of the last entities to be curtailed.
However, we would say to the extent a certain amount of commercial data center load provides support to critical energy infrastructure or serves other national security needs, that specific load should be identified, designated as critical retail load and separated for the purposes of curtailments from the remaining commercial data centers.
And this really goes to an issue that was discussed somewhat earlier today, and I think it's something that certainly the OCA and maybe all of us would benefit from learning more about as to the individuality of data centers.
So we're building a data center to make sure that people can stream Netflix and Hulu and Disney 24/7 a day, and that's 90% of what they do.
Are they also handling financial transactions, banking and all other forms, or do we have a data center that is solely delegated to whatever the Department of Defense would have them be doing at that particular time?
These are distinctions that I think we need to know more about and find out more about, and probably from the data center developers themselves.
Click Here for copies of written testimony.
Click Here for Part I of the hearing video - industry, business, unions, PUC, utilities
Click Here for Part II of the hearing video - Independent PJM Market Monitor, Consumer Advocate, PA Utility Law Project
Click Here for House Energy Committee summary.
Rep. Elizabeth Fiedler (D-Philadelphia) serves as Majority Chair of the House Energy Committee and can be contacted by calling 215-271-9190 or click here to contact. Rep. Martin Causer (R-Cameron) serves as Minority Chair and can be contacted by calling 717-787-5075 or by sending email to: mcauser@pahousegop.com.
Data Center Stampede Trampling PA Ratepayers:
-- 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]
-- PA PUC To Take Up Model Tariff For Connecting Large Load/A.I. Data Centers To The Electric Grid At Nov. 6 Meeting; Other Changes Needed [PaEN]
-- PUC Votes To Suspend, Investigate PPL Electric's Proposed 7%, $356 Million Rate Increase [PaEN]
NewsClips On House Energy Committee Hearing:
-- WITF: PA House Committee Considers Shielding PA Ratepayer’s Wallets From A.I. Data Center Energy Costs
-- WHYY: PA Legislation Aims To Protect Ratepayers From A.I. Data Center Energy Strain, Costs
-- WESA - Rachel McDevitt: PA Lawmakers Consider Rules For A.I. Data Centers; Industry Warns Of Over-Regulation
-- Tribune-Democrat: PA Lawmakers Weigh Economics, Grid Failure As Regulations Considered For A.I. Data Centers Energy Use To Prevent Further Electric Cost Spikes [PDF of Article]
Resource Links - A.I. Data Centers:
-- Gov. Shapiro: PJM Electric Grid Operator Is 'Not Working Anymore,' 'I Won't Stand For A Status Quo That Perpetuates Slowdowns And Rising Costs’ [PaEN]
-- What The A.I. Data Center & Energy Summit Missed: Exploding Electricity Demand Already Raising Prices - Ratepayers Need Protection; No Longer An ‘All Of The Above’ Energy Strategy [PaEN]
-- What The A.I. Data Center & Energy Summit Missed: It’s Deja Vu - False Promises, Dirty Power - Our People And Communities Deserve Respect [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]
-- Senate Hearing: To Communities Facing Rapid A.I. Data Center Development: Review Your Zoning Ordinance NOW, Before It's Too Late To Have Meaningful Siting, Mitigation Conversations [PaEN]
-- Senate Hearing: DEP Primer: Recurring Challenges Of A.I. Data Centers: Frequent Site Plan Changes, Inconsistent Zoning, Outdated Sewage Facilities, Limited Community Outreach [PaEN]
-- Senate Hearing: Susquehanna River Basin Commission - A.I. Data Centers Have A Dramatic Demand For Water, And The Potential To Be Among The Largest Water Consumers In The Basin [PaEN]
-- Shapiro Administration: PJM Regional Electric Grid Operator Passed Over Qualified Candidates Suggested By A Bipartisan Coalition Of Governors To Fill Vacant Board Seats [PaEN]
-- Team PA Releases PA Energy, Data Center, A.I. RoadMap, Includes ‘Aggressively Streamlining Permitting,' Establishing Regional Permitting Commissions [PaEN]
-- Inside Climate News: Shale Gas Was Supposed To Lower PA Electric Bills, Instead They’re Higher Than Ever And About To Get Worse [Due To LNG Gas Exports, A.I. Data Center Demand]
-- WESA - Rachel McDevitt: PJM Grid Operator Eyes Reliability Amid A.I. Data Center Boom, But Advocates Say Cost Concerns Remain
-- Guest Essay: Rewriting The Energy Story — Together - By Stephen M. DeFrank, Chairman, Pennsylvania Public Utility Commission [PaEN]
-- PUC: Brace For Higher Electric Bills As A Result Of Soaring Power Use; Consumers Should Review Energy Options [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]
Related Articles This Week:
-- In Case You Missed It: A.I./Data Center Articles - NewClips From Last Week - October 27 [PaEN]
[Posted: October 23, 2025] PA Environment Digest
No comments :
Post a Comment