Pa. electric utility agrees to data center protections for ratepayers

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In an effort to tackle rising electricity rates connected to the expansion of data centers, a recently proposed Pennsylvania rate case settlement includes provisions to protect residential and small business customers from shouldering the burden of costs associated with building the new facilities. Consumer advocates say it could serve as a model for reining in rising rates across the state.

One way data centers have caused electric bills to rise for everyone is simple supply and demand. The data centers require enormous amounts of energy to power their servers and generate artificial intelligence and that, combined with diminishing supply as older power plants shutter, is a large component of rising electric rates.

Capacity auctions, organized by the regional grid operator PJM Interconnection have also impacted rates. PJM says the skyrocketing capacity costs, which are also passed through to customer’s bills, have been caused by data center demand.

In 2023, when the auction aimed to secure enough power for delivery in 2025, the price topped out at $28.92 per megawatt-day. The next year, that price had skyrocketed 860% to $269.92 per megawatt-day. The most recent auction in December 2025 reached the cap of $333 per megawatt-day, and did not secure enough power to insure there would not be blackouts. Those capacity costs will continue to raise electric bills.

Another factor driving up rates is the need for more infrastructure to connect the data centers to the grid. Current Pennsylvania rules regarding utilities hold that when a large customer needs additional power lines or substations to send energy to their site, those costs are shared by all customers as long as there is some collective benefit. Consumer advocates say that charges passed on to residential ratepayers in the past from this new infrastructure have been minimal.

But the growth in planned data centers could cause those costs to balloon. Building new transmission and distribution lines to serve the high voltage facilities can be very expensive. At the same time, advocates say there are few guardrails in place to protect residential and other smaller-load customers from unknowingly footing the bill for new infrastructure that provides no widespread benefits beyond the needs of a particular facility.

“Affordability is a critical issue so many of us face, and rising utility rates are a big part of the challenges to keeping a roof over our heads,” said Rev. Gregory Edwards, director of the climate justice group POWER Interfaith, in a statement. The organization is a party to the case as part of a larger coalition of environmental groups known as the Energy Justice Advocates.

“This settlement … protects against possible future increases driven by AI data centers by requiring data centers to pay their own way, rather than leaving residential customers holding the bag,” he wrote.