Tuesday’s hearing of the House Energy and Consumer Protection committees focused on data center costs.
HARRISBURG, Pa. — The Pennsylvania House Energy and Consumer Protection committees held a joint hearing focused on rising energy costs and how the General Assembly can help make electricity more affordable for consumers on Tuesday.
Lawmakers heard testimony from PJM representatives along with regulators and advocates, with much of the discussion centering on the rapid growth of energy-hungry data centers and who should bear the costs associated with them.
Pennsylvania Consumer Advocate Darryl Lawrence told lawmakers that data center projections made up for 40% of PJM’s capacity auction in December, leading to both higher costs and infrastructure projects to bring more power to the area, paid for by consumers.
He went on to say that he believes data centers must not be allowed to shift their massive energy costs onto everyday ratepayers.
“I strongly recommend that this body vote in favor of legislation to ensure that any new data centers in Pennsylvania must pay for any and all costs that they are causing that would not have been needed, but for the presence of a data center,” Lawrence said.
State Rep. Tom Mehaffie (R-Dauphin) said he shares concerns about affordability but warned that pushing too many costs onto data centers could drive investment out of Pennsylvania.
“If they’re guaranteed and they’re going to pay their own way, and they don’t get that, we’re just chasing them to another state,” Mehaffie said. “Now, that’s a loss of jobs — really good jobs.”
Mehaffie’s district includes Three Mile Island, where the revived nuclear plant to power Microsoft data centers is set to bring thousands of jobs back to the area.
He said the competition to attract data centers is not just global, but a race among all 50 states. He argued Pennsylvania must incentivize new power generation to increase supply and lower costs overall.
“We need to incentivize. We need to look at ways to bring generation here,” Mehaffie said. “It’s going to help this grid, lower our cost on the supply-and-demand side and make that happen.”
Lawrence said that he acknowledges the competitive pressure, but that Pennsylvania’s advantages make it unlikely that data centers would abandon the state if required to cover the costs they create.
“Pennsylvania is well-positioned with the amount of natural resources we have, strong transportation networks, strong transmission electric infrastructure already and the skilled workforce that we have,” Lawrence said. “It would be better for everyone involved with the data centers located here.”
State Rep. Pat Gallagher (D-Philadelphia) said that energy bills are rising across the state, including in his own district.
“It’s on the uptick,” he said. “I got my bill the other day before I came up here, and it was probably about a 20% increase. It’s devastating.”
Gallagher said data centers are playing a growing role in increased demand, particularly as Pennsylvania shifts from being a net exporter of energy to buying power from third-party markets.
“The data centers are causing some spikes in usage,” Gallagher said. “We weren’t expecting as much usage, and now, we’re trying to figure out how to manage them better and regulate them to a point where it’s not going to cause ratepayers to pay more.”
The hearing came as Gov. Josh Shapiro joined the governors in PJM 13 state footprint at the White House last week to sign a statement of principles to support reforms such as additional power auctions and making data centers pay for their power.
While Gallagher said he is open to possible statewide regulation of data centers, he emphasized that any solution must be able to pass both chambers of the legislature and receive support from Gov. Shapiro.
“What can we get done in both the House [and] the Senate and that the governor can sign off on to move this forward?” Gallagher said. “We need to be able to come up with a plan that both chambers can agree on and that’s going to satisfy the governor’s agenda to lower rates.”