Pennsylvania utility regulators are taking a closer look at a question households have been asking for years — why utility bills keep rising, and who stands to benefit when demand surges.
In Pennsylvania, that review is colliding with another growing concern — the rapid expansion of energy-hungry data centers that push costs even higher for customers, WHYY News reported.
Here's what to know
At its September public meeting, the Pennsylvania Public Utility Commission unanimously approved two new steps targeting rising utility costs, utility profit practices, and growing pressure on the power grid.
One action creates a Ratemaking Working Group to review how profit is built into utility rate increases, how charges can be adjusted outside formal rate cases, and whether greater openness is needed around so-called "black box" settlements.
The second directs commission staff to revisit Pennsylvania's emergency electric load control rules as demand for power continues to rise.
PUC Chairman Steve DeFrank acknowledged that customer bills for electricity, water, sewage, and gas have spiked due to a broad set of challenges affecting utilities.
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"The utility industry has experienced significant and continued turbulence in recent years, driven by high inflation, trade tariffs, increased customer account arrears, forever chemicals, lead lines, plastic pipe, supply chain constraints, data center development, global conflicts, and electrical reserve margin shortages," DeFrank noted.
"Many of these circumstances led to an extraordinary increase in the number of proposed rate increases filed with the commission," he added.
DeFrank said the move stemmed from Gov. Josh Shapiro's budget address in January.
"The governor asked the commission to scrutinize utility spending to ensure each customer dollar is well spent," DeFrank explained.
Data centers have also become a separate focus for the commission, following Shapiro's Aug. 18 executive order on the issue.
The agency said a conference will explore whether the cost of serving major new electricity demand could be shifted onto customers who did not create that growth.
More background
Investor-owned utilities do not earn their returns from the gas or electricity commodity itself.
Instead, they earn profits from regulator-approved infrastructure spending, including pipes, wires, treatment systems, and other system upgrades.
Many of those projects address required needs.
Water companies, for instance, may have to install PFAS filtration, while other work can include replacing lead lines and making broader safety and reliability improvements.
PFAS are often called "forever chemicals" and have been associated with serious health problems, including some cancers.
That means more construction and upgrade work can translate into higher utility earnings, even as customers struggle with the size of their monthly bills. Because distribution utilities hold monopoly positions in their service territories, the commission must approve any rate increase.
PJM Interconnection has warned projected demand in 2028-2029 could outpace available power supplies, creating blackout risks if usage exceeds what the system can provide.
What's being done?
The new Ratemaking Working Group is expected to include utilities, consumer advocates, small-business advocates, state government and General Assembly representatives, industrial energy users, low-income advocates, and other stakeholders.
DeFrank stated that the group will consider whether Pennsylvania's ratemaking system should be updated for what he called "dynamic times."
Among the ideas being discussed is pulling the ROE decision out from the rest of a rate case. DeFrank also proposed tying ROE to benchmarks like water quality, safety performance, or reliability instead of treating it as a mostly fixed expectation.
PUC Vice Chair Kimberly Barrow said she wants utilities to provide "empirical evidence that justifies an ROE higher than the average broader market cost of capital."
By updating its emergency load-control regulations, the state is trying to prepare for a future in which rapidly rising electricity demand — especially from large new facilities — could intensify questions over grid stress, utility response, and who should bear the costs.
"So just the fact that that data exists means that we have to take a critical look at the underlying framework with which we set rates," Barrow observed.
Where can I learn more?
The debate in Pennsylvania is part of a much wider effort to determine how rising power demand and utility spending will affect monthly bills.
At the state and federal levels, officials are also weighing stronger disclosure rules, new customer protections, and closer scrutiny of how data centers strain the grid.
• In Pennsylvania, lawmakers now require exact water and power use figures from data centers each year.
• In New Jersey, regulators are targeting utility profits and grid projects as demand climbs.
• Federal regulators are moving to shield households from high bills as data centers strain grids.
• In Kentucky, a congressman urged utilities to not saddle ratepayers with data center costs.
• Across U.S. power markets, advocates are sounding the alarm over utility spending of electric bill revenues.
What Pennsylvania is wrestling with is playing out elsewhere, too. These stories better show the policy choices that could decide who ends up paying as electricity demand keeps climbing.
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