Pennsylvania’s Next AI Data Center May Be Won or Lost Before the Interconnection Application is Filed

For decades, proceedings before the Pennsylvania Public Utility Commission (PUC) have provided the forum in which utilities, ratepayers, consumer advocates, businesses, and other stakeholders shape the tariffs, rules, and rates governing electric service. Every affected party has the opportunity to participate by intervening in those proceedings.

What has changed recently is the significance of those proceedings for developers of artificial intelligence (AI) data centers, large-load customers, and municipalities. As utilities respond to unprecedented load growth, issues that directly affect project development — i.e., interconnection requirements, cost responsibility for system upgrades, customer classification, electric service agreements, and reliability obligations — are increasingly being addressed through tariff revisions and rate case settlements.

Recent proceedings before the Pennsylvania PUC demonstrate that utilities are actively reevaluating how large-load customers connect to and use the electric grid. While each case presents utility-specific issues, several common themes are providing a road map for how Pennsylvania’s regulatory framework is likely to evolve as demand for electric infrastructure continues to accelerate. (PPL Electric’s Base Rate Case, Docket No. R-2025-3057164; UGI Base Rate Case, Docket No. R-2025-3059430; UGI Default Service Plan Petition, Docket No. P-2024-3049343; and FirstEnergy Pennsylvania Electric Company Default Service Plan Petition, Docket No. P-2026-3060298)

Waiting Until Your Project Is Ready May Be Too Late

Many developers become involved only after selecting a site and submitting an interconnection application. By then, however, many of the governing rules have already been established through tariff revisions approved in prior PUC proceedings.

Increasingly being decided in PUC proceedings and not during individual project negotiations are questions such as:

• Who pays for dedicated substations and distribution upgrades?
• Will financial security or revenue guarantees be required?
• What happens if a project is delayed or constructed in phases?
• How will large-load customers be classified for tariff purposes?
• What contractual commitments will utilities require before constructing infrastructure?

Developers, municipalities recruiting economic development projects, and large industrial customers all have a direct stake in those decisions.

Timing matters. In most Pennsylvania PUC proceedings, petitions to intervene must be filed within 20 days of the PUC’s order instituting the proceeding unless a later filing is permitted for good cause. Developers, municipalities, and other stakeholders should monitor proposed tariff filings and rate cases closely, as the opportunity to participate can pass long before a project enters the utility’s interconnection queue.

For organizations evaluating significant infrastructure investments, participating in a proceeding can be substantially more effective than attempting to challenge a tariff after it has been approved or negotiating around standardized tariff provisions once a project enters the interconnection process.

Looking Ahead

Pennsylvania is well positioned to capitalize on growing demand for AI infrastructure, but the regulatory framework governing large-load interconnections is evolving just as rapidly as the market itself.

Organizations considering significant electric infrastructure investments should monitor PUC proceedings as closely as they monitor site selection, permitting, and financing. The legal and commercial terms governing a future interconnection may be established months, or even years, before a project enters the utility’s queue.

Whether evaluating a proposed tariff, considering intervention in an ongoing proceeding, or negotiating utility service for a large-load project, early participation can provide opportunities that may not be available once the regulatory framework has been established. Please reach out to the author or a member of our Data Centers team if you have any questions or need assistance.