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Data centers singled out as a central driver of price spikes; advocates push 'pay your way' rules
Summary
Witnesses at a Jan. 26 hearing said data centers and other large loads are materially increasing capacity and transmission costs. Consumer advocates urged statutory rules to require new large users to pay infrastructure and universal-service costs; industry and PJM proposed model tariffs and procurement fixes instead.
Data centers were a focal point of the hearing as multiple witnesses linked growing hyperscaler load to higher wholesale and capacity prices and to planned transmission buildouts.
PJM's Asim Haque told lawmakers that rapid load growth from data centers is tightening the supply-demand balance and contributing to higher prices, and he described recent PJM board decisions to strengthen load forecasting and adopt a reliability backstop procurement. PJM said operational steps could include prioritizing non‑residential load to move to backup generation in the most extreme system stress to avoid residential outages.
Darryl Lawrence of the Office of Consumer Advocate said the General Assembly should adopt legal presumptions that distribution and transmission upgrades that primarily benefit data centers should be allocated to those customers. "Data centers must pay their own way," Lawrence said, proposing legislation that would require new large loads to bear the incremental costs they cause and recommending stronger security deposits and contractual commitments to ensure projects materialize.
Industry groups and the PUC supported tools to align cost-bearing with benefits but urged caution. The Pennsylvania Public Utility Commission said it is developing a model large-load tariff to prevent the socialization of dedicated upgrade costs; utilities and generators emphasized the need for clarity on cost allocation and warned that overly draconian charges could push projects to other states.
Lawmakers asked about gating demand or leaving PJM entirely; speakers said leaving PJM is feasible but risky and would require careful planning and sufficient in-state generation. PJM and witness organizations instead urged a combination of large-load tariffs, better forecasting, proactive transmission planning and long-term contracting to attract new generation while protecting residential ratepayers.
Next steps discussed include PUC rulemaking on a large-load tariff, legislative language to create a stronger legal presumption about benefit allocation for data‑center distribution upgrades, and hearings with PJM on the mechanics of the reliability backstop procurement.
