Pennsylvania Lawmakers Propose Special Electricity Rate Category for Large Data Centers

New Legislation Targets Data Center Energy Costs

Pennsylvania lawmakers are considering a bill that would establish a specialized electricity rate category specifically for data centers, according to legislative documents. House Bill 1834, introduced by Representative Robert Matzie, would create protections for residential and commercial utility customers against subsidizing the substantial energy infrastructure required by large-scale data facilities.

New Legislation Targets Data Center Energy Costs
Key Provisions of the Proposed Legislation
Renewable Energy Requirements and Low-Income Support
Industry Response and Concerns
Pennsylvania’s Data Center Market Context
National Trend in Data Center Regulation

Key Provisions of the Proposed Legislation

The proposed legislation would apply to data centers with a capacity of 25 megawatts or more, sources indicate. Under the bill’s language, public utilities would be prohibited from passing along the costs of new generation facilities and transmission infrastructure to general ratepayers. Analysts suggest this measure directly addresses concerns about residential customers subsidizing industrial-scale energy users.

“A public utility may not recover from ratepayers, whether through base rates, riders, surcharges, or any other ratemaking mechanism, costs that are directly attributable to the provision of electric service to a commercial data center,” the proposal states, according to the legislative text.

Renewable Energy Requirements and Low-Income Support

The bill would mandate that at least 25 percent of electricity supplied to data centers under contract come from renewable sources, the report indicates. Additionally, the legislation would require data centers to contribute to the Low-Income Home Energy Assistance Program based on their peak energy demand. Facilities using 100MW or more would reportedly pay $500,000 annually into the program.

During legislative hearings, several stakeholders expressed concerns that the renewable energy requirement could challenge energy affordability, according to meeting transcripts. The debate reflects broader tensions between environmental goals and economic considerations in energy policy.

Industry Response and Concerns

Data center industry representatives have voiced significant concerns about the proposed legislation. Dan Diorio, vice president of state policy for the Data Center Coalition, argued that the bill would impose “disparate treatment on the data center industry without verifiable cost-based reasoning,” according to his testimony.

Diorio further suggested that the legislation’s “prescriptive” language would prevent the industry from effectively deploying capital for clean energy initiatives, potentially hampering environmental progress while adding regulatory burdens.

Pennsylvania’s Data Center Market Context

Pennsylvania represents one of the larger data center markets in the United States, with data centers playing an increasingly important role in the state’s economy. According to industry mapping services, Pennsylvania currently hosts 97 operational data centers, primarily concentrated in the Philadelphia and Pittsburgh metropolitan areas. Major operators in the state include Iron Mountain, EdgeConneX, Ark, DataBank, Equinix, and 365 Data Centers.

National Trend in Data Center Regulation

Pennsylvania’s proposed legislation follows similar actions in other states addressing data center energy consumption. Earlier this year, Ohio’s Public Utility Commission approved a new rate class requiring data centers to pay for portions of their energy infrastructure regardless of actual usage. Similarly, Oregon legislators passed measures ensuring data centers and cryptocurrency operations cover their fair share of new power plant and transmission line costs.

The Pennsylvania Public Utility Commission would gain authority to establish development guidelines and evaluate data center contracts’ impact on the PJM grid and ratepayers if the bill becomes law. This expanded regulatory oversight represents a significant shift in how the state manages energy-intensive industrial users.

The legislation, introduced by Representative Robert Matzie, continues through the legislative process with committee review and potential amendments expected in the coming months, according to statehouse observers.

References

This article aggregates information from publicly available sources. All trademarks and copyrights belong to their respective owners.

Note: Featured image is for illustrative purposes only and does not represent any specific product, service, or entity mentioned in this article.

Six years after being turned down by multiple VC firms for being “too technical,” Tim Chen has built one of the industry’s most successful infrastructure-focused funds. His technical background, once seen as a liability, has become his competitive advantage in the AI boom.

The Unlikely Rise of a Technical VC

Tim Chen’s journey into venture capital began with rejection, according to reports from GeekWire. Six years ago, multiple Seattle venture capital firms turned him down, with one consistent criticism: he was “too technical” and “too nerdy.” Today, that same technical background has become his greatest asset as he runs Essence VC, one of the most sought-after startup funds in technology.