The provisions included in the pending rate case settlement aim to protect residential and small business customers from the costs of building new facilities.
A recently proposed Pennsylvania rate case settlement includes provisions to shield residential and small business customers from subsidizing the costs of building new data center facilities.
The agreement is the first of its kind in the Commonwealth, where concern over electricity prices relating to data center construction have grown.
Data centers can require massive amounts of energy to power their servers that generate artificial intelligence. As supply diminishes, electric bills may rise for customers in the surrounding area.
The lack of infrastructure to connect the data centers to the grid is also a factor driving up electric costs in Pennsylvania. Current rules in the state say 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 a collective benefit.
The settlement is between PPL Electric and more than a dozen intervenors that include state consumer advocates and community groups.
The settlement creates an entirely new customer rate class for large load data centers. It protects residential ratepayers from stranded costs if an operator decides not to complete a planned facility.
The new classification would apply to new facilities that would use more than 50 megawatts at peak demand. It would also include multiple facilities with a combined peak demand of at least 75 megawatts within a 10-mile radius.
Under the settlement, the high usage customers would also need to commit to operating for 10 years, or face penalties.
“This is designed to reduce the risk that other customers could be left paying for infrastructure costs if a large customer scales back or exits after only a few years,” said PPL spokesperson Dana Burns in a recent email.
If the settlement is approved, PPL would also be the first utility to require large-load data centers to contribute to a pool of funds that helps low-income customers. The Customer Assistance Program and the Low-Income Usage Reduction Program aims to provide assistance to those customers.
“This new rate class will provide $11 million in support for the residential low-income program, helping reduce costs for residential customers, and includes safeguards to manage increased demand from large load customers,” said a statement from PPL.
The settlement is subject to approval by the Pennsylvania Public Utility Commission.
