New State Budget Requires Data Center Reporting, Leaves Larger Questions for Later

Pennsylvania's new state budget, signed by Governor Josh Shapiro this month, asks data centers to start showing their work, but leaves the harder decisions for another day.

The mandatory reporting requirement, included in the budget's Fiscal Code Bill, requires data centers with a peak demand of 10 megawatts and above to track their energy and water usage and submit that information to the PA Department of Environmental Protection (DEP) on an annual basis. The provision is entirely a data-collection measure, aiming to provide the state with baseline metrics to accurately track usage as artificial intelligence development continues to expand. Data collected will help with understanding the strain on energy and water systems and direct where intervention may be necessary to keep pace. The first reports are due July 1, 2027.

The same Fiscal Code Bill carries two related measures that affect electricity transmission at data center sites. The first mandates that companies which apply to site transmission lines must evaluate advanced transmission technologies (ATTs). Advanced transmission technologies, as defined by the U.S. Department of Energy, are hardware and software solutions that improve the capacity, efficiency, and reliability of the existing transmission system. The second measure gives state regulators more visibility into the load forecasts that utilities submit to PJM Interconnection, the regional grid operator that serves Pennsylvania. Utilities must provide the PUC, Office of Consumer Advocate, and other state entities access to certain large-load contracts and commitments that shape those forecasts, helping the Commonwealth better understand how data centers and other major electricity users may affect future grid needs and costs.

Notably absent from the final budget was any change to the state's sales tax exemption for data centers, which remains in place. The exemption relieves certain sites from the 6 percent sales and use tax on computer, networking, and server hardware. The exemption was a hotly contested topic of debate within the state House, which passed several bills and other measures to repeal or restrict the exemption, none of which advanced in the Senate.

The stakes are rising as legislators continue to debate how the state should approach data center and other AI-related development. At the same time, Pennsylvania households have been facing higher electricity supply costs. In June 2025, state regulators reported residential Price to Compare increases of roughly 5 to 16 percent across major electric utilities. Those increases affected default-service supply rates, rather than total household bills, but still contributed to rising monthly costs for many customers. A later adjustment on December 1, 2025 brought another increase for Duquesne Light customers in the Pittsburgh region, further sharpening concerns about how new large electricity loads could affect grid costs over time.

Household electricity costs have been climbing over the same period. State regulators reported residential Price to Compare increases of 5 to 16 percent across major utilities taking effect in June 2025, followed by another round on December 1, when Duquesne Light, which serves the Pittsburgh region, rose 10.6 percent. Customers who absorbed both rounds have seen their supply rates climb sharply over the course of the year.

Demand for data centers continues to rise with electricity prices. The July 2025 Pennsylvania Energy and Innovation Summit, held in Pittsburgh, drew more than $90 billion in announced data center and energy investments, with projects spanning the state.

For now, the reporting requirement will give the Commonwealth a baseline to work from, though many questions that will shape the coming decade of development remain in debate in Harrisburg.