Shapiro Proposes Data Center Development Standards

Energy is a main focus in Pennsylvania Gov. Josh Shapiro’s fiscal 2026-27 budget proposal, as he continues to push to keep electric rates down for residential customers while also encouraging economic development.

Part of his $53.2 billion budget proposal addresses the development of data centers in the state, which have become an increasing concern to communities and the primary source of surging electric demand. That has sent costs across the PJM regional electric grid up, and raised  residential utility bills substantially over the past several years.

Shapiro has been a proponent for encouraging data center development and said in his budget proposal that the state is “uniquely positioned” to be a national leader due to its abundant energy resources, as well as its skilled workforce, and well-respected research institutions.

“At the same time, Pennsylvanians have raised concerns about the impact large-scale data center development could have on communities, utility bills, and the environment,” he noted. Shapiro is proposing data center development standards that would protect energy and water resources, require transparency and community engagement, and guarantee local jobs and community benefits.

As part of that plan, data center developers would be required to bring their own power generation or fully fund new generation to meet their power requirements without driving up costs for other utility customers. Projects would also be subject to strict water conservation standards. Data centers are energy-intensive and require large amounts of water to cool equipment.

Only projects that meet those standards would receive state backing, including permitting certainty and access to tax and financial incentives.

Shapiro, who has been for several years been pushing PJM to make reforms to speed up new generation projects to meet rising demand, while extending a cap on the price it charges for wholesale electricity, again echoed those concerns and called on PJM to make those changes.

In addition, he announced that he has created an energy watchdog position to examine utility rate requests, and called on the Public Utility Commission to look closely at utility spending and the amount of profit being baked into their rates. He also called again for passage of his Lightning Plan of energy initiatives.

Whether any of his proposals actually become law is up to the Legislature, which will now begin debating the multi-faceted proposal. A final budget must be adopted by June 30, although last year’s budget was not passed until November, after a 135-day impasse.