PJM Part 4: Who’s Really Paying the Price?

Here we go again…

If you’ve been following this series, you know how much the growth of data centers is reshaping electricity markets in Pennsylvania. Beyond the technical charts and market filings, there’s a very real question at the heart of this debate: how much are regular people paying for all this growth, and why?

Pennsylvania has become a kind of battleground. On one side, you have the push for economic development, big tech companies, a boost for the fracking industry, and shiny new data centers. On the other hand, families and small businesses are watching their electricity bills climb, often without seeing any direct benefit from these massive energy users. It’s easy to get lost in the numbers, auctions, and tariffs, but the truth is this is about people, communities, and fairness.

In recent months, Pennsylvania’s energy scene has been full of moves that affect both reliability and bills.

• In May, the U.S. Department of Energy issued an emergency order allowing certain generators in PJM to run longer to keep the grid stable, and later permitted large operators to run generators during “grid emergencies.”
• In September, PPL Electric filed for a major rate increase at the Pennsylvania Public Utilities Commission (PUC).
• The PUC proposed a large-load tariff to make sure big energy users, like data centers, pay for the infrastructure they rely on. In December, FERC directed PJM to revise its rules for these large loads and co-located generators.
• Early in 2026, PJM filed to extend the price collar for future capacity auctions and added proposals for faster interconnection and reliability improvements following pressure from 13 governors, including Josh Shapiro.

Old Power Generation and Increased Air Pollution

The U.S. Department of Energy issued an emergency order in January of 2026 to allow large electricity users with onsite backup generators- like data centers- to run them during grid emergencies.

While the stated goal of the emergency order is to prevent power shortages, the order has serious implications for communities near these facilities.

Why is this concerning?

Many data centers rely on large banks of backup generators intended for short-term use during power outages or periodic testing.

Under the emergency order, these facilities could be asked to run their generators for extended periods to reduce the electricity they draw from the grid during times of system stress.

Because data centers often operate dozens of generators at a single site, running them simultaneously can significantly worsen local air quality for nearby neighborhoods. Residents living close to these facilities may experience the impacts of increased generator use even though the operations they support are not essential in the same way as hospitals or other critical infrastructure. When hospitals run backup generators, it’s to keep life-saving equipment operating during outages. Data centers, by contrast, use generators to maintain digital services rather than prevent immediate risk to health and safety. 

The larger issue

This approach not only shifts the burden of maintaining grid reliability onto the communities surrounding these facilities but also creates pockets of extreme emissions impacting local communities. Rather than curbing electricity use at energy-intensive data centers or requiring them to operate only with the cleanest, most efficient means available, the emergency measure allows them to continue operating loud, dirty, underregulated generators while nearby residents bear the consequences.

PJM responses and orders

Large load tariff

PJM recently outlined additional steps in its efforts to manage rapidly growing electricity demand from very large users, such as data centers. Alongside changes to auction pricing and interconnection timelines, PJM is continuing to develop a large-load tariff framework to address how new “mega-loads,” often hundreds of megawatts at a single site, connect to the grid and pay for the infrastructure they require.

In theory, the tariff is meant to ensure that these projects cover the costs they create, including transmission upgrades, reliability risks if projects are delayed or canceled, and the planning challenges that come with such sudden demand. However, many of the details are still evolving, and from a community perspective, there are real questions about whether the proposal goes far enough.

Data centers are moving through the development pipeline much faster than the grid can realistically plan for, and without clear cost protections, communities and ratepayers could still end up absorbing the risks and system upgrades tied to these projects.

As it stands, we are awaiting language from the Public Utility Commission (PUC) on the finality of this Large Load Tariff framework.

Reliability backstop option

PJM is exploring a “Reliability Backstop Auction” to encourage additional power generation as electricity demand rises, especially from large new data centers. The idea is to strengthen incentives for building new plants, since the current market tends to reward existing generators more than it supports new supply.

Why does this matter to everyday people? Even if new plants are built, local communities may see little direct benefit. Residents could still face high bills and reliability challenges if the underlying grid constraints aren’t addressed.

But this proposal may only solve part of the problem.

Even if developers are willing to build, many projects are stalled by transmission limits, costly grid upgrades, and long interconnection queues. At the same time, the market is increasingly shifting toward power plants built primarily to serve individual data centers rather than adding broadly available capacity for communities across the grid.

Without addressing those underlying grid constraints, the risk is that new incentives will produce more power tied to big tech and data centers while the broader system and the communities that rely on it continue to face reliability and affordability challenges.

The short of the situation is that PJM has either volunteered or been ordered by the Executive, FERC, and the 13 Governors/states of its market to develop solutions to the issues it has created in its poor management of the grid. The lack of interconnection reform over the last 4 years, the reliance on older modeling to inform grid development, and the insistence on catering to all data center projects create a “market” where reliability, affordability, and timely solutions for anyone who is not a data center have gone out the window.

What this means for families and small businesses is simple: without real reforms, the costs and risks of an overloaded grid fall on those already paying the highest price for electricity.

Price collar agreement

Lastly, PJM recently extended the price collar agreement for another two years. The collar sets minimum and maximum prices in capacity auctions, helping to prevent extreme swings in electricity costs. This protection is meant to shield everyday families and small businesses, even as large users like data centers continue to expand rapidly.

PPL Rate Case: A Real-Time Warning

From a community perspective, PPL Electric Utilities’ rate case raises serious concerns about fairness and priorities. This is a real-world example of how PPL Electric Utilities and other entities can push data center-driven costs onto consumers. 

The company is asking the Pennsylvania Public Utility Commission to approve a $356 million increase in distribution rates, which would raise the company’s annual revenue by about 8.6% and add roughly $13 per month to a typical household’s bill if approved. PPL argues the increase is necessary to modernize the grid, strengthen infrastructure against severe weather, and expand automation and “smart grid” technology to reduce outages. The company has also sought permission to increase the cap on how much of those infrastructure costs it can pass directly to customers through their bills. But many of these justifications fall apart when you look at who actually benefits from the grid expansion happening across the region.

Electricity demand is rapidly rising due to data centers, requiring massive upgrades to substations, transformers, and transmission lines. In fact, data center projects have already driven hundreds of millions of dollars in grid connection costs in Pennsylvania alone.

Yet under the proposed rate structure, residential customers and small businesses would face some of the largest increases, while the largest industrial users would see far smaller increases or, in some cases, even reductions. That means everyday ratepayers could end up financing the infrastructure needed to serve some of the region’s biggest corporate electricity users.

For communities, that raises a fundamental question: why should households and small businesses be asked to pay more for a grid increasingly built to support the explosive growth of big tech and data centers?

Grid investments that primarily enable massive new electricity demand should be paid for by the companies driving that demand, not shifted onto families already struggling with rising utility bills. Without stronger protections in this rate case, there is a real risk that Pennsylvania communities will be asked to subsidize the power needs of some of the largest corporations in the world. 

Pennsylvania can’t wait

The story is clear: Pennsylvania’s electricity system is being reshaped by big tech and massive data centers while families and small businesses are paying the price. From emergency generator orders to rate hikes and incomplete reforms, the burden is falling on communities, not the corporations driving demand. Now more than ever, Pennsylvanians need to raise their voices, demand accountability, and fight for a grid that works for the people, not just for big tech and ultra-wealthy companies.