BETHLEHEM, Pa. — Pennsylvania utility regulators have approved a settlement in PPL Electric Utilities' base rate case that will modestly increase residential bills.
But more significantly, it will reshape how costs are assigned in response to rapidly growing electricity demand from large users such as data centers.
The Pennsylvania Public Utility Commission on Thursday voted 5-0 to approve a settlement that reduces PPL’s original revenue request more than $80 million while still letting the utility raise distribution rates to fund system upgrades and reliability investments.
For residential customers, the decision translates into a 3.23% increase beginning July 1.
A typical household using 1,000 kilowatt-hours per month will see bills rise about $6.48.
'Large-load' customer class
Regulators and parties in the case emphasized that the more consequential element of the settlement is the creation of a new "large-load" customer class.
The class is designed to address the growing impact of data centers and other high-demand facilities on the electric grid.
The facilities can require substantial, sustained power loads that drive significant infrastructure investments, including upgraded substations, reinforced distribution lines and expanded system capacity.
Regulators said the new rate structure is intended to ensure those costs are not broadly shifted onto residential customers — a worry as the data center debate carries across the Lehigh Valley and beyond.
In Allentown, that debate dominated discussion for more than three hours Wednesday as City Council held a public hearing on proposed regulations for data centers.
That came a week after the Upper Macungie Township Zoning Board voted to deny a request to allow a massive data center at the former Air Products headquarters to move forward.
And plans recently changed for the massive data center complex, known as Project Atlas, proposed across the street from Parkland High School in South Whitehall Township.
On June 11, the township planning commission will hear the latest on a project for which the original plan called for six buildings totaling 5,038,100 square feet on a 410-acre parcel of underdeveloped farmland.
New documents on the township website now show three data center buildings, one administration building and one warehouse building.
Under the approved settlement, large-load customers such as data centers would face new tariff requirements, including long-term service commitments of at least 10 years and minimum usage guarantees tied to their grid demand.
The provisions are intended to align infrastructure costs more closely with the customers driving the need for expansion, regulators say.
'Critical investments to strengthen reliability'
The settlement also establishes a mechanism beginning in 2027 that will direct $11 million annually in low-income assistance funding to come from large-load customers through a non-bypassable charge — a move regulators said will help reduce costs for residential ratepayers.
The settlement "significantly reduces the company’s original request while also securing meaningful commitments related to reliability, customer service, low-income assistance, and accountability."PUC Chairman Steve DeFrank
The settlement "significantly reduces the company’s original request while also securing meaningful commitments related to reliability, customer service, low-income assistance, and accountability,” PUC Chairman Steve DeFrank said in a news release.
DeFrank called it a balance between affordability and the need to maintain a modern electric system.
The commission also approved provisions requiring PPL to file annual reliability reports tracking infrastructure investments, outage performance and system improvements tied to storm hardening and grid modernization.
PPL said the rate increase is driven by continued investments in reliability, including replacing aging infrastructure, strengthening poles and wires, expanding tree-trimming programs and deploying automated grid technologies intended to reduce outage duration and improve restoration times.
“The commission has taken deliberate steps to ensure that the costs created by new load and generation patterns — including the unique demands of large data centers — do not fall unfairly on existing rate payers."PUC Commissioner Kathryn Zerfuss
The utility also highlighted expanded customer assistance measures, including enhanced low-income programs, expanded payment flexibility and elimination of reconnection fees for eligible customers.
“This strong outcome supports our commitment to deliver safe and reliable electric service,” PPL Electric Utilities President Christine Martin said in a separate release.
“It enables us to continue making critical investments to strengthen reliability… while expanding protections and support for the customers and communities we serve.”
The settlement includes a two-year “stay-out” period in which PPL cannot file another base rate case, providing rate stability through 2028.
Commissioners also modified aspects of the settlement related to agricultural biogas customer-generators, clarifying they will not be treated as large-load facilities.
“The commission has taken deliberate steps to ensure that the costs created by new load and generation patterns — including the unique demands of large data centers — do not fall unfairly on existing rate payers," PUC Commissioner Kathryn Zerfuss said Thursday before the vote.
"This settlement certainly represents a shift toward that same approach.”
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