One hearing was held by the House Consumer Protection, Technology and Utilities Committee [watch video here] and a joint hearing was held by the Senate Consumer Protection and Professional Licensure and Environmental Resources and Energy Committees [watch video and read testimony here].
Jason Staneck, Executive Director for Governmental Services at PJM, told the committees the unprecedented increases in demand for electricity they are seeing-- “It’s not people.”
“Number one head and shoulders above any other customer is data centers. So it's for everything from bitcoin mining, to generative artificial intelligence, to cloud computing, to just maintaining the consumption of all the devices, the average household now has 21 connected devices.”
“And we see that everywhere, it's become a global arms race for A.I.”
“Nobody was discussing the advent of artificial intelligence and the rise of data centers two years ago. So our projections were off.”
Staneck noted the PJM Reliability Resource Initiative just selected 51 “shovel-ready” projects that will bring 9,300 MW of power to the grid by 2030 to help meet this rising demand. Read more here.
At the same time, Staneck also said for the first time its energy peak forecast for the summer shows available generation capacity may fall short of required reserves in an extreme weather scenario. Read more here.
PJM’s last capacity auction in July 2024 for delivery in 2025-26 resulted in a dramatic increase in electricity cost from $28.91/MW-day to $269.92/MW-day-- a 933% increase. Read more here.
Future capacity auctions for delivery in 2026/27 and 2027/28 can still see more increases, but will have a price cap of $325/MW-day and a floor of $175/MW-day as a result of a settlement PJM entered into as a result of a lawsuit brought by Gov. Shapiro. Read more here.
The Independent Fiscal Office reported in February Pennsylvania exported 87 million MW hours of electricity to other states and net exports increased by 24% from 2019 to 2024 and produced 18% of the total generation of the PJM region in 2024. Read more here.
House Committee
Rep. Alec Ryncavage (R-Luzerne) said, “You alluded earlier in your testimony that Pennsylvanians are facing a crisis right now.
“[On] one hand, our ratepayers lack the ability to flip the light switch on and have the lights actually come on. And on the other hand, we are facing a price crisis.
“You said earlier that the result of your last capacity auction resulted in a 29% increase to costs that are going to be pushed onto ratepayers.
“The most scathing piece of all of this is when we had our last capacity auction, and we realized that there was an issue with reliability on the PJM grid.
“There was enough energy in the queue [of potential energy projects waiting for PJM approval] to take care of that reliability, and the fact that we didn't bring them online in a fast way is leading our ratepayers to have to pay a 29% increase.
“And now you're talking about fast-tracking projects and you're talking about projects that are in the queue, but I have to ask you, how long will it take those projects that are being fast-tracked or are in the queue to be adjusted for in the future capacity auctions?
“We have another capacity auction coming up here just in a couple months. When are we going to start to see this graph curve [to get ahead of demand]?”
[PPL also announced on May 1 its electricity rates will increase 15.9% starting June 1 due in large part to “regional market factors.” Read more here.]
Staneck said, “That’s a great question, representative.”
“[It takes] approximately five years to build a new natural gas [power plant]. So, the RRI [Reliability Resource Initiative] projects, we hope that they're all online or at least most of them are online by 2030, five years from now.
“As you noted, the capacity market is a three-year forward market. So there's a bit of a delta between the three and the five years.”
“Everything that's in the queue is effectively on paper still. It's literally paper,” Staneck explained.
“The projects that have not been developed yet, that's why we were thinking the RRI was a one-time only opportunity to allow these projects to advance in the queue to get the capacity prices more in check.
“And we're hopeful that we'll begin to see the fruits of that in the next upcoming auctions, but I can't guarantee that. PJM does not raise prices or lower prices. It runs a market.”
Staneck noted the Midwest grid operator just held a capacity auction last week that set a price of $666/MW-day.
“It shows you that PJM, Pennsylvania, the Mid-Atlantic is not alone in trying to resolve the appetite for power that we're having and the lack of capacity that we have, but we're doing everything possible to clear the queue down to zero,” said Staneck.
Rep. Ryncavage responded by saying, “PJM should take responsibility for the fact that my ratepayers, my businesses, and my consumers, including myself and everybody else on this panel, is going to see a 29% increase to their electric bill starting next month.”
Rep. Danilo Burgos (D-Philadelphia), Majority Chair of the House Consumer Protection, Technology & Utilities Committee, said "You stated that people aren't the problem, but yet somehow people continue to carry the load of the payments.
“Our communities like mine and Rep. Ryncavage and across Pennsylvania are going to be hurt with this increase of demand in the future, and I hope that the PJM will consider-- reconsider the way they allow projects to come online.
“Being as though what you stated that either it was lack of financing, or what other excuses that private entities came up with [for not bringing new electric generation online], hopefully will not happen in the future because our communities cannot afford it.”
Senate Committee
During the Senate hearing, Sen. Katie Muth (D-Chester) noted “Please correct me if I’m wrong, there's nothing in any law, statute, regulation, rulemaking policy within PJM that says that residential and critical infrastructure, electric grid needs have to be fulfilled [first] and insured prior to the approval of these giant power-using projects like a data center.”
“If we have constituents that ask us, "Well, it takes three days to get our power back on after some sort of weather incident, or we're getting notifications in the summer to-- 'Conserve energy'."
“I just don't think that it's fair for residential ratepayers to compromise their power and electric reliability for the sake of a for-profit entity [data center].
“I mean, like dialysis machines, hospital equipment. I mean, just things that people literally need to thrive and survive, including air conditioning in the summer.”
Public Utility Commission Chair Steve DeFrank responded by saying if the data center is located “behind the meter” served by its own power plant that will fall under the PJM and Federal Energy Regulatory Commission.
If the data center is in front of the meter, then data centers and people would be just like any other utility customer
“[So] you’re a senior citizen customer versus Google?” said Sen. Muth.
Chair DeFrank added that data centers may have the ability to load shift.
“The filing that's currently pending at Susquehanna [for a data center], that full build out for the current filing is 480 megawatts. That's larger than the load of the city of Pittsburgh.
“So the advantage of that is, while that creates a challenge of serving it, it also creates an opportunity when we have those high peak demands systems, and we've asked that of data centers this, Google, for instance, if you're operating six data centers, are you able to power one down at times of a grid emergency, or stress on the grid? And the answer is yes.
“So just think, we can take a “City of Pittsburgh” off the grid like that. So that's the advantage of a data center is, the very challenge that it creates is also a bonus in trying to deal with that load,” said Chair DeFrank.
Sen. Muth responded, “But there's nothing in the law that says operator data center, Google, whoever, if we need what you just described, you're saying they said they can do it. There's no requirement currently under our Pennsylvania rules and regulations, laws, whatever?”
Staneck said, “This load shifting or load flexibility is something that the industry is looking at, PJM is looking at right now. We've recognized that there is the potential for cost shifts [who will pay for that shift].”
Sen. Muth concluded, “It does end up down to the ratepayer. And so, is it a place where now electricity for humans to live in their homes just to be able to stay alive, is you're competing as a ratepayer with the for-profit private entity [data center]?”
Sen. Gene Yaw (R-Lycoming), Majority Chair of the Senate Environmental Resources and Energy Committee, shared similar concerns.
“Along the lines that Sen. Muth said, one of the issues that we've talked about is, I want to encourage generation capacity here, but I also want to serve the ordinary people, like everybody here.
“A.I. and data centers are great. I encourage them if we can find a way that they... and what they seem to be doing now is, they're enhancing their own power, so that they have a reliable source, they do it themselves.
“If we have some incentive for generation to come here, I want to make sure that generation goes to the, I can't think of a better word saying other than to say the ordinary people, the residential customers, and that they, quite honestly, can't take advantage of some incentive to come here and build for the limited use of an A.I. center.
“We're looking at that, and we're concerned about that.”
Sen. Yaw questioned Cory Hessen, CEO of the Homer City Redevelopment organization about their intention to serve “ordinary people” and data center needs.
The Homer City project intends to develop a 3,200 acre campus on the site of a former coal-fired power plant and construct 4.4 gigawatts of natural gas-fired electric generation in Indiana County. Read more here.
“We intend to generate about 4.4 gigawatts of generation on the site. We don't intend to have load from data center customers to be at that complete level, so not at 4.4 gigawatts,” said Hessen.
“Our vision at this point in time is it'll be an in front of the meter solution where we'll have supplying the megawatts to the grid and our behind the meter customer will be getting a differential.
“So think of it this way: if we're going to generate 10 megawatts, our customer is only going to use 7, so there'll be 3 extra megawatts to go out on the grid,” said Hessen.
“Based on the design work that we're working on with potential customers, we are accepting opportunities that would have a maximum capacity for those data centers at substantially less than our complete generating output.
“So we don't anticipate that they would ever go all the way to the maximum generating of our particular site,” explained Hessen.
Sen. Yaw pressed Hessen to be more specific in the “extra” that would go to the grid.
“We're still in confidential negotiations at this time, so I can't give you an exact answer, but I would say 75% is a fair number [to be used by the data center, behind the meter],” responded Hessen.
Dale Lebsack, Chief Fossil Officer for Talen Energy, told the Senate Committees because the cost of building new electric generation is so high, the days of building a merchant power plant without a high-load customer (like a data center) may be over.
“The cost of new generation is quite a bit higher than it was even five years ago. So by bringing customers to the Commonwealth, who have the ability to pay higher rates, you can create an opportunity to bring those generating assets on the grid and offset some of those costs to lower what the net impact would be to all customers out on the grid.
“There would be no case that I could imagine where my financial colleagues would consider a fully merchant asset being put onto the grid at this point in time.
“We don't think it's cost-effective unless we have a customer who's willing to pay their fair share of those costs.”
Hearing Materials
The House Consumer Protection, Technology and Utilities Committee video of the hearing is available here.
The joint hearing by the Senate Consumer Protection and Professional Licensure and Environmental Resources and Energy Committees video is available here along with written testimony.
(Photo: Proposed Homer City Data/Power Plant Campus in Indiana County.)
NewsClips:
-- Post-Gazette - Anya Litvak: NRG Buys 5 PA Gas Power Plants To Meet ‘Supercycle’ Of Demand By Data Centers; Refitted To Run As Baseload Plants
-- Post-Gazette - Ford Turner: PA Regional Power Grid Operator Sees Manageable Summer Peak Load, But A Slight Risk Of ‘Running Short’
Resource Links - Grid:
-- PJM Interconnection: 51 Generation Projects, 9.3 GW To Move Forward To Address Near-Term Electricity Demand Growth-- 39 Upgrades, 12 New Construction [PaEN]
-- PJM Releases List Of 51 Fast Tracked Power Projects To Provide 9.3 GW Of Power-- 7 In PA With Power Potential Of 1.2 GW [PaEN]
-- PPL Residential Electric Price To Compare To Increase To 12.491 Cents/kWh On June 1, Up From 10.771 Cents-- 15.9% [PaEN]
-- North American Electric Reliability Corp. Files Proposed Cold Weather Standard To Improve Reliability For Natural Gas-fired, Other Electric Generators [PaEN]
-- PUC Invites Stakeholder Comments On The Issue Of The Adequacy Of Electricity Supplies In Pennsylvania [Background On Issue] [PaEN]
-- 30 Stakeholder Comments Received By PUC On Adequacy Of Electricity Supplies In Pennsylvania; Increasing Natural Gas Power Plant Reliability To 90-95% Would Mean No Imminent Capacity Problem [PaEN]
-- House, Senate Members Introduce Gov. Shapiro's 'Lightning' Energy Plan To Lower Energy Costs, Create Jobs, Protect Pennsylvania From Global Energy Instability [PaEN]
-- PA Ranks 49th In US For Renewable Energy Growth; Delays In Adding Clean Energy To The Grid Will Cost Electric Ratepayers Billions [PaEN]
-- New Report: Fixing PJM’s Broken Electric Generation Approval Process Can Lower Energy Costs, Create Jobs Across The Mid-Atlantic [PaEN]
-- DEP Releases 2024 Climate Change Action Plan Update; 2024 Climate Impacts Assessment Report [PaEN]
-- Pennsylvania’s Electric Grid Is Dependent On One Fuel To Generate 59% Of Our Electricity; Market Moving To Renewables + Storage [PaEN]
-- Gov. Shapiro: FERC Approves Settlement With PJM To Prevent Unnecessary Prices Hikes, Save Consumers Over $21 Billion On Electric Bills [PaEN]
-- PA Senate Republican Leader: ‘Every Consumer Of Electricity In This Commonwealth Is Going To Pay More;’ ‘What You’re Going To Face Is Going To Be Really Unpleasant’ [PaEN]
[Posted: May 12, 2025] PA Environment Digest
No comments :
Post a Comment