Public Utility Commission Sets Guidelines for Data Centers to Protect Residential and Small-Business Customers

May 14, 2026

— Jeff Ward, Lehigh Valley News Briefs

The Pennsylvania Public Utility Commission is preparing to deal with the energy needs of data centers as it predicts an unprecedented surge in demand for electricity.

The PUC said Wednesday that under its framework for big electricity customers, costs for “large load” customers such as data centers will not be shifted onto residential and small-business customers. The PUC says big developers should be financially responsible for projects that are delayed or abandoned, and that information about big projects be public.

“Pennsylvania is confronting a level of electric load growth that has not been seen in generations, driven largely by data centers and advanced manufacturing,” PUC Chairman Steve DeFrank said in a press release. The PUC regulates utilities, trying to balance the needs of customers (price) versus companies (profit).

Data centers are huge warehouses of computers that serve Big Technology customers’ demand for Artificial Intelligence. They are not a new concept, as server farms have been around for decades, but data centers can be bigger and require more energy to run, and water for cooling.

PPL Corp., the Allentown-based utility company, is in talks with all big data-center companies, Chief Executive Vincent Sorgi said last week during a conference call.

PPL has just set a new electricity rate starting June 1 and has a plan to raise the cost of distribution in July.

Among the big companies that build or use data centers are Amazon, Microsoft and Google. The centers contain immense depositories of data, along with computing power for Artificial Intelligence. In many towns, residents have asked for laws to limit or bar the construction of data centers.

Disclosure: I own shares in PPL, Amazon and Google.

Here’s a link to the PUC statement and below is a cut-and-paste version:

PUC Releases Final Order Establishing First-of-Its-Kind Large Load Model Tariff Framework

Published on 5/13/2026

Filed under: Electric

PUC Releases Final Order Establishing First-of-Its-Kind Large Load Model Tariff Framework

 Comprehensive framework addresses data center growth, grid reliability, and ratepayer protection

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) has released its Final Order establishing a first-of-its-kind model tariff framework for large load customers – including rapidly expanding data centers – marking a major step in the Commission’s ongoing effort to manage unprecedented electricity demand growth while protecting existing utility customers.

The Final Order follows the Commission’s April 30 public meeting vote adopting a modified framework for large load customers after more than a year of hearings, stakeholder engagement, public comment, and technical review.

“This is one of the most important infrastructure and consumer protection issues facing utility regulators across the country,” said PUC Chairman Steve DeFrank. “Pennsylvania is confronting a level of electric load growth that has not been seen in generations, driven largely by data centers and advanced manufacturing. Rather than waiting for these challenges to overwhelm the system, this Commission chose to lead. This Final Order establishes a thoughtful framework that supports economic development, strengthens transparency and planning, and protects existing ratepayers from bearing the financial risks associated with unprecedented new demand.”

The model tariff is intended to guide Pennsylvania’s electric distribution companies (EDCs) as they evaluate and serve large load customers whose electric demand may significantly impact infrastructure planning, system reliability, and customer costs.

Key Elements of the Final Order

The Final Order establishes guidance in several major areas, including:

• Large Load Thresholds – Applying tariff provisions to customers exceeding 50 megawatts (MW) individually or 100 MW in aggregate.
  
• Cost Responsibility Protections – Reinforcing cost causation principles to help ensure that large load customers are responsible for infrastructure and interconnection costs associated with serving their projects, reducing the risk of shifting those costs onto existing residential and small business customers.
  
• Collateral and Financial Security Requirements – Requiring financial protections, including deposits and collateral, intended to mitigate stranded costs from projects that are delayed, abandoned, or fail to meet projected demand.
  
• Interconnection Study Timelines – Establishing expectations for utilities to complete interconnection studies within six months, improving transparency and predictability for project development and grid planning.
  
• Contract Terms and Exit Provisions – Providing guidance related to load ramping schedules, minimum contract terms, and customer exit provisions to support long-term cost recovery and system stability.
  
• Public Interconnection Queue Transparency – Requiring utilities to maintain public-facing information regarding large load interconnection requests and study status.
  
• Customer Self-Construction Options – Allowing large load customers to self-construct certain infrastructure upgrades, subject to utility, safety, reliability, and regulatory standards, with the goal of improving project flexibility while insulating ratepayers from unnecessary costs.

The Commission’s Final Order also incorporates revisions adopted through Chairman DeFrank’s motion at the April 30 public meeting, including enhanced guidance regarding Contributions in Aid of Construction (CIAC) and cost allocation principles associated with large load interconnections.

The Final Order and model tariff framework will serve as guidance for future utility tariff filings and related proceedings before the Commission.

The PUC’s Final Order is available on the Commission’s website at: https://www.puc.pa.gov/pcdocs/1929842.pdf.

The full PUC case docket, including all comments submitted in this case, is available at: https://www.puc.pa.gov/docket/M-2025-3054271

About the PUC

The Pennsylvania Public Utility Commission balances the needs of consumers and utilities; ensures safe and reliable utility service at reasonable rates; protects the public interest; educates consumers to make independent and informed utility choices; furthers economic development; and fosters new technologies and competitive markets in an environmentally sound manner.

Visit the PUC’s website at puc.pa.gov for recent news releases and video of select proceedings. You can also follow us on X, Facebook, LinkedIn, Instagram and YouTube. Search for the “Pennsylvania Public Utility Commission” or “PA PUC” on your favorite social media channel for updates on utility issues and other helpful consumer information.