The Keystone & The Current
Regional & National Energy Policy · Pennsylvania Focus
A PENNSYLVANIA ENERGY POLICY BRIEF · SPRING 2026 · VOL. I NO. 1
FROM THE EDITOR
Pennsylvania stands at the most consequential energy inflection point in a generation. In the twelve months running from spring 2025 into spring 2026, the Commonwealth has formally abandoned a carbon cap-and-trade program, introduced a sweeping clean-and-reliable energy package known as the Lightning Plan, absorbed record-high regional capacity prices driven by artificial-intelligence data centers, and released a ten-year roadmap for AI and energy innovation. For residents, business owners, and community leaders across the five-county southeastern region, the decisions made in Harrisburg and at PJM headquarters over the next eighteen months will shape electricity bills, local tax bases, workforce opportunity, and air quality for decades.
Section One · Context
- The Shape of the Moment
An all-of-the-above Commonwealth, suddenly forced to choose
For most of the past two decades, Pennsylvania’s energy identity was simple to summarize. The Marcellus Shale turned the state into a natural-gas giant. A legacy nuclear fleet, including Three Mile Island and Limerick, delivered reliable baseload power. The Alternative Energy Portfolio Standards Act of 2004 set modest renewable targets that the market had largely met. Electricity prices, though far from the nation’s cheapest, were stable and predictable. That era is over.
Three forces have converged to end it. First, the artificial-intelligence boom has unleashed an unprecedented wave of data-center construction across the PJM Interconnection footprint, which operates the grid for thirteen states and the District of Columbia. Second, PJM’s capacity auctions — the annual market mechanism that secures power for the next delivery year — have cleared at successive record-high prices, passing through directly to residential and commercial electric bills. Third, federal and state policy is being rewritten in real time, from Pennsylvania’s formal withdrawal from the Regional Greenhouse Gas Initiative in November 2025 to the congressional push to repeal Inflation Reduction Act home-electrification credits.
$333.44
PJM Capacity Clearing Price for 2027/28 Delivery Year, per MW-day
5,250 MW
Year-over-year peak load increase, nearly all attributable to data centers
$21 Billion
Projected consumer savings from Shapiro–PJM price-cap settlement, 2025–2027
For the Pennsylvanian reading a monthly electric bill, the result is a familiar sting: supply charges rose across every investor-owned utility service territory in June 2025 and again in June 2026, with the increases passed through from PJM’s 2024 and 2025 capacity auctions. For the Pennsylvanian watching ground break on a new warehouse near the Turnpike, the question is whether it will become a hyperscale data center — drawing tens of megawatts — or a logistics facility drawing a fraction of that.
Where we are
Pennsylvania is the second-largest energy producer in the United States and a net exporter of electricity. It is also among the slowest states in the nation at adding new renewable generation, a tension that now defines every policy debate in Harrisburg.
Section Two · State Legislation
- The Lightning Plan, Piece by Piece
A governor’s bet on an all-of-the-above grid
Governor Josh Shapiro unveiled the Lightning Plan in January 2025 at Pittsburgh International Airport and formally introduced its components in the General Assembly that April. Named in homage to Ben Franklin’s famous kite experiment, the plan is less a single bill than a portfolio of six legislative proposals, each assigned its own sponsor and committee path. Three of those proposals are particularly consequential for southeastern Pennsylvania ratepayers and developers.
House Bill 501 · PRESS
Pennsylvania Reliable Energy Sustainability Standard
PRESS would modernize the twenty-year-old Alternative Energy Portfolio Standards Act by broadening the definition of qualifying resources to include nuclear power, battery storage, advanced geothermal, fusion, and emissions-performance incentives for gas-fired generators. Proponents argue it would generate tens of thousands of construction and operations jobs while stabilizing long-term supply. Critics on the left say it dilutes the renewable share; critics on the right say it is a compliance mandate by another name.
Pending · Public Hearing Held 5/19/25
House Bill 504 / Senate Bill 504 · Community Energy Act
Shared solar and anaerobic-digester subscriptions for all ratepayers
This is the long-awaited community-solar enabling legislation. It would authorize community energy facilities — typically solar arrays but also renewable natural gas from farm digesters — that any electric-distribution customer could subscribe to, receiving on-bill credits for their share of the generation. Non-subscribers pay nothing. The House passed HB 504 on May 7, 2025 by a bipartisan 114–89 vote. Pennsylvania would join twenty-four other states and the District of Columbia with active community-solar programs.
Passed House · Senate Pending
PA EDGE Tax Credit Reform
Reliable Energy Investment Credit — up to $100M per facility, three years
Established in 2022 and never drawn upon, the Economic Development for a Growing Economy credit is being restructured around reliable-energy investment. The House has passed the reform. The Governor’s office projects billions in previously-stranded private capital could now move toward in-state generation, including gas combined-cycle plants, small modular reactors, and advanced storage.
Passed House
What the Lightning Plan does not do
It does not restore a binding carbon cap. It does not set a date-certain for any coal-fired plant closure. It does not restructure the capacity market — that authority belongs to PJM and the Federal Energy Regulatory Commission, not Harrisburg. Pennsylvanians looking for carbon policy will not find it in the Lightning Plan; they will find generation, permitting, and consumer-protection reform.
Status at press
Two components — the PA EDGE Tax Credit revamp and the Community Energy Act (HB 504) — passed the House in May 2025. HB 504 awaits Senate action. PRESS (HB 501) remains in committee after a May 2025 public hearing.
Section Three · Enacted Law
III. Pennsylvania Leaves RGGI
A cap-and-trade program dies in budget negotiations
The Regional Greenhouse Gas Initiative is a multi-state compact among certain Northeastern states that operates a cap-and-trade market for power-sector carbon emissions. Under a 2019 executive order from former Governor Tom Wolf, Pennsylvania’s Environmental Quality Board finalized the regulation in 2022. The Commonwealth Court enjoined it in 2023. The Shapiro administration appealed. The state Supreme Court heard oral arguments in May 2025. A decision was expected.
It never came. During a 135-day budget impasse that ran into November 2025, Governor Shapiro agreed to abrogate the RGGI regulation as a negotiating concession. The Fiscal Code amendments in HB 416 repealed 25 Pa. Code Chapter 145. The next day, the Commonwealth filed applications to discontinue its appeals. On January 6, 2026, the Supreme Court dismissed the case as moot.
“Pennsylvanians today — and generations to come — have a right to clean air, pure water, and to the preservation of our environment.”
— PA Constitution, Article I, Section 27 (the Environmental Rights Amendment)
The same budget package that ended RGGI expanded the SPEED Act (Streamlining Permits for Economic Expansion and Development), originally passed in July 2024. Three new permit categories now fall under SPEED’s third-party-reviewer framework: air-quality general permits and plan approvals outside Philadelphia and Allegheny counties, a set of water-quality general permits, and storage-tank permits under 25 Pa. Code Chapter 245. The same legislation sets thirty-day DEP decision deadlines for certain categories. For developers of solar, gas, and storage projects alike, the practical effect is faster permitting certainty — a long-standing demand of both the building trades and the clean-energy industry.
Electricity Load Forecast Accountability
Less noticed in the same budget bill was a provision granting the Pennsylvania Public Utility Commission new authority to review and validate the load forecasts that utilities submit to PJM. The policy rationale is to prevent the double-counting of speculative data-center demand that can inflate capacity prices for every ratepayer in the state. The rule codifies transparency; it does not cap what hyperscalers can request.
Key date
November 12, 2025 — Governor Shapiro signs SB 160 and HB 416, the 2025–26 budget package. The Fiscal Code amendments legislatively abrogate Pennsylvania’s RGGI regulation effective immediately. On January 6, 2026, the Pennsylvania Supreme Court formally dismissed the pending appeals, ending a four-year legal saga.
Section Four · Regional Grid
- The PJM Capacity Problem
Why your bill is rising even though nothing on your meter changed
The PJM Interconnection runs an annual base-residual auction that secures generating capacity three years forward. For the 2024 auction covering the 2025–26 delivery year, the clearing price jumped from $28.92 per megawatt-day the prior year to $269.92 — a more than nine-fold increase. For 2026–27 it cleared at $329.17. For 2027–28, the auction held in December 2025 cleared at $333.44 — the ceiling of the price cap that Governor Shapiro had negotiated with PJM in January 2025.
Without that cap, analysts at PJM estimated the 2027–28 price would have reached approximately $530 per megawatt-day, an additional sixty-percent rise. The Federal Energy Regulatory Commission approved the Shapiro settlement in April 2025, establishing a $175 floor and $325 cap (implemented at $333.44 including the reliability adder) for the 2026–27 and 2027–28 auctions. That cap expires after the 2027–28 delivery year. The next auction, for 2028–29, is scheduled for June 2026.
In January 2026, all thirteen PJM-state governors — Republican and Democrat — signed onto a set of principles with U.S. Energy Secretary Chris Wright and Interior Secretary Doug Burgum calling for a two-year extension of the price cap through the 2029–30 delivery year, along with a fifteen-year revenue guarantee for new generation built through a proposed “reliability backstop auction.” The principles also call on PJM to allocate the incremental costs of data-center load to the local utilities serving those centers.
The data-center question
PJM’s own reporting attributes roughly 5,100 megawatts of its most recent 5,250-megawatt year-over-year peak load increase to data-center demand. In Pennsylvania alone, announced private-sector commitments exceed one hundred ten billion dollars, anchored by a twenty-billion-dollar Amazon Web Services investment and a further ninety-billion-dollar portfolio unveiled at the Pennsylvania Energy and Innovation Summit at Carnegie Mellon University in July 2025. Microsoft’s announced partnership to restart a Three Mile Island reactor is the most visible of several behind-the-meter generation deals pairing hyperscalers with nuclear assets.
Legislative response is scattered across bill numbers. In the Senate, Senator Marty Flynn has circulated a co-sponsorship memo for a comprehensive data-center regulatory framework requiring large-load users to bear the costs they impose on the system. In the House, HB 2150 would require annual energy- and water-consumption reporting by data centers, with penalties for non-compliance; it passed the House Energy Committee on March 2, 2026. Neither bill has become law at press time, but the direction of travel is clear: Pennsylvania will enact some form of large-load cost-allocation rule within this session.
Why it matters locally
Capacity charges typically account for roughly a quarter of a commercial energy bill. Residential customers see the effect through supply-rate adjustments, which rose across PECO, PPL, and FirstEnergy territories in the June 2025 and June 2026 rate-change cycles.
VOICE FROM THE REGION · SMART ENERGY INITIATIVE OF SOUTHEASTERN PENNSYLVANIA
“After years of seeing flat energy demand, the rise of AI and the need for data centers has pushed demand to new levels that are unprecedented.”
At the Smart Energy Initiative’s 13th Annual Energy Briefing, held February 11, 2025 at the Chester County Economic Development Council in Exton, PECO President and CEO Dave Velazquez and PJM Senior Vice President Asim Haque delivered a shared message to more than fifty regional business and community leaders: the surge in electric demand is real, it is structural, and it requires focused and flexible policy to build and maintain capacity. Founded in 2007 as an Industry Partnership of the CCEDC, SEI exists to provide exactly the kind of regional workforce and business development the next decade will demand — spanning energy efficiency, geothermal, solar, natural gas, microgrids, and hydrogen working groups.
SEI’s public position on the moment is straightforward: Pennsylvania’s path forward is not a single technology but a coordinated portfolio. Reliability, affordability, and emissions progress are not in opposition; they are three legs of the same stool. Utility reinvestment, transparent load forecasting, skilled workforce pipelines, and sensible permitting reform are the preconditions for every other outcome on the policy table — community solar, baseload nuclear, behind-the-meter generation, or otherwise.
SEI is a program of the Chester County Economic Development Council · Funded in part by the PA Department of Labor & Industry and the Chester County Workforce Development Board
Section Five · Federal Backdrop
- Washington’s Shadow
Federal policy now sets the tempo for state action
Three federal threads matter for Pennsylvania ratepayers in 2026. First, the House-passed Homeowner Energy Freedom Act proposes to repeal several Inflation Reduction Act home-electrification and residential clean-energy credits. If enacted, Pennsylvania households currently planning heat-pump retrofits, residential solar installations, or induction-stove replacements would lose meaningful federal tax incentives on a compressed timeline. Pennsylvania’s community-solar bill, HB 504, is partially designed to fill that gap by pairing lower-income subscribers with clean-energy generation at no upfront cost.
Second, federal permitting reform. The SPEED Act is the most significant NEPA amendment in a generation, proposing clearer limits on required environmental-effects analysis and narrower judicial review. A companion push is underway in the Senate. Governor Shapiro, together with Oklahoma Governor Kevin Stitt, co-chairs the National Governors Association’s Permitting Working Group, which in October 2025 sent a thirteen-governor bipartisan letter to congressional leadership urging action. The state-level SPEED expansion Pennsylvania enacted in November 2025 is, in effect, a preview of what a federal reform would feel like across the Commonwealth’s larger projects.
Third, federal support for extending the PJM price cap. The January 2026 principles document signed by all thirteen PJM-state governors and the Trump administration’s energy and interior secretaries sets the stage for a federally-backed mechanism to absorb the cost pressure of the next two capacity cycles. Whether that translates into FERC action in time for the June 2026 auction is the single most consequential open question for Pennsylvania residential bills in 2027.
The ten-year roadmap
In September 2025, Team Pennsylvania released the 2025 Pennsylvania Energy, Data Center and Artificial Intelligence Roadmap, a bipartisan ten-year planning document that proposes up to five regional “innovation corridors” — likely to include central Pennsylvania and the Lehigh Valley — pairing energy generation with AI and data-center development. The roadmap is the first attempt in the Commonwealth to treat energy policy, workforce policy, and technology policy as a single coordinated portfolio. Its fate depends on legislative buy-in, which will be tested through the 2026–27 budget cycle.
To watch
The federal SPEED Act (H.R. 3898 in the 119th Congress) passed the U.S. House on December 18, 2025 by a vote of 221–196. It proposes significant reforms to the National Environmental Policy Act, aiming to compress federal environmental reviews and narrow judicial remedies. Senate action is pending.
Section Six · For the Community
- What Pennsylvanians Can Do
The policy is written in Harrisburg. The consequences land here.
For facility managers, the immediate priority is visibility. Capacity charges are forecastable but volatile, and the single most effective hedge is submetering — understanding circuit-level consumption so that peak-load management actually responds to the bill structure. Building automation, demand-response participation through a qualified curtailment service provider, and careful interval-data analysis will produce meaningful savings in the 2026–27 and 2027–28 delivery years regardless of which bills in Harrisburg become law.
For homeowners, the Community Energy Act would for the first time give renters, condominium residents, and households with unsuitable roofs a path into solar economics. If HB 504 clears the Senate — the advocacy coalition behind it believes it can during the fall 2026 session — Pennsylvania will follow Maryland, New Jersey, New York, and twenty-one other states into community-solar reach. Until then, existing federal residential credits remain in place, though the Homeowner Energy Freedom Act’s trajectory makes 2026 a decision year for any household on the fence about electrification.
For municipal officials, the decision in front of you concerns zoning. Data-center projects across the country are increasingly being stopped at the municipal level, not the state level. Pennsylvania’s township supervisors associations have begun issuing model zoning templates; the most useful of them treat data centers as a distinct land-use category with site-plan review thresholds tied to megawatt demand, noise, and water consumption rather than lot area alone. HB 2150’s reporting requirements would give those municipalities a factual baseline they currently lack.
For the next twelve months
Four dates merit marking. The June 2026 PJM base residual auction for the 2028–29 delivery year will indicate whether the price cap’s influence can be sustained or whether data-center demand overwhelms the market regardless. The fall 2026 Pennsylvania legislative session will decide the fate of HB 504 and HB 501. The 2026 general election will seat representatives who will author the 2027–28 state budget — the next plausible vehicle for carbon, large-load, and community-energy policy together. And across every month of the year, PECO, PPL, and FirstEnergy will file their rate cases with the PUC; those proceedings are where the words enacted in Harrisburg become the numbers printed on your bill.
Pennsylvania has always been a paradox — a state that invented the American oil industry, built the first commercial nuclear plant at Shippingport, and holds the constitutional Environmental Rights Amendment in its founding charter. The next eighteen months will ask whether that paradox can hold when artificial intelligence, climate liability, ratepayer patience, and industrial opportunity are all arriving at once. The short answer is that it can, but only if the civic infrastructure — the trade associations, the chambers, the regional industry partnerships like SEI, the municipal boards, and the informed household — remains engaged. The policy is complex. The stakes are not.
A note on engagement
State Senate committees hold public hearings on most Lightning Plan components. The PUC’s proceedings on utility rate cases, load forecasting, and consumer protections are open to formal intervention and public comment. Local municipal zoning decisions on data-center and solar development are often decided by fewer than a dozen votes.
ABOUT THIS BRIEF
The Keystone & The Current is a Pennsylvania-focused energy policy brief prepared for community leaders, business owners, and engaged residents across the Commonwealth, with particular attention to the five-county southeastern region. Reporting as of April 2026. Legislative statuses change; consult the Pennsylvania General Assembly (palegis.us), the PA Public Utility Commission, and PJM Interconnection for current filings.
SOURCES & FURTHER READING
Governor’s Office of Pennsylvania · Pennsylvania General Assembly · PJM Interconnection · Federal Energy Regulatory Commission · Pennsylvania Capital-Star · Utility Dive · Smart Energy Initiative of Southeastern PA · Chester County Economic Development Council · Solar United Neighbors · K&L Gates and McNees Wallace & Nurick client alerts · Team Pennsylvania 2025 PA Energy, Data Center and AI Roadmap.
