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PUC flags resource-adequacy risk from rapid data-center growth; proposes planning, tariffs and coordination with PJM
Summary
Pennsylvania PUC Chairman Steve DeFrank told lawmakers the commission is studying resource adequacy after a volatile PJM capacity auction and expects action on large-user tariffs, load forecasts and other measures to manage rapid demand growth from data centers.
Steve DeFrank, chairman of the Pennsylvania Public Utility Commission, told the House Consumer Protection, Technology and Utilities Committee that the PUC is actively studying resource adequacy after PJM Interconnection’s July 2024 capacity auction drove a sharp rise in capacity prices.
DeFrank said drivers for higher capacity costs include projected load growth from data centers supporting artificial intelligence, electrification and vehicle adoption, retirements of conventional generation, and new PJM auction parameters. He told the committee one estimate discussed at the technical conference put data-center demand at roughly 16% of total electricity demand by 2039.
To respond, the PUC convened a technical conference on resource adequacy in November 2024 and has received roughly 30 formal comments. DeFrank said likely next steps include rulemakings or proceedings on a ‘‘large user tariff’’ to encourage in-front-of-the-meter connections, updated electric distribution company (EDC) load projections, time-of-use rates, energy-efficiency measures, and promoting long-term power-purchase agreements to support new generation. He emphasized the PUC’s limited direct jurisdiction over generation in Pennsylvania’s restructured market but said the commission can require EDCs to ensure safe, reliable delivery to their customers and is rebuilding internal resource-planning capacity to evaluate PJM projections.
DeFrank described ongoing engagement with PJM, the Federal Energy Regulatory Commission, and the Organization of PJM States (OPSI). He noted PJM’s new ‘‘RRI’’ queue for shovel-ready interconnection projects, which had its first application period and already attracted roughly 25 gigawatts of applications; DeFrank said that sort of queue could speed transitions of some retiring plant sites to new resources. The chairman also said one EDC expects more than 100% load growth over five years at a system that currently serves about 7 gigawatts and expects to reach about 16 gigawatts.
Ending: Committee members urged continued hearings and coordination with PJM and other stakeholders. Lawmakers said Pennsylvania risks losing economic opportunities tied to data centers unless the state addresses baseload and generation-availability questions; DeFrank recommended a mix of planning, procurement changes and market engagement rather than outright moratoria on data center development.
