PAs Potential Data Center Mirage--and Your Electric Bill

When Pennsylvanians open their electric bills this summer, few realize that the price they will pay may be inflated not by the energy they use – but by energy that may never be used at all.

Last week, in a little-noticed hearing in the Pennsylvania state legislature, a stunning admission came to light: Pennsylvania’s electric utilities may be double – and even triple – counting the number of data centers and other large energy projects projected to come online in the Commonwealth.

These potentially inflated figures, fed to PJM – the regional grid operator responsible for managing the electricity supply for Americans in over 13 states – have contributed to sharply revised projections for energy demand. But what happens when those projections are wrong?

Artificial demand leads to artificially high prices. And Pennsylvanians could foot the bill.

PJM’s recent forecasts predicted a dramatic surge in electricity usage across the Mid-Atlantic, largely driven by the anticipated explosion in data centers to power artificial intelligence, cloud computing, and digital storage. Pennsylvania was pegged as a hotbed of this growth – ostensibly due to its location, land availability, and historically lower energy costs. But there’s a catch: the actual data center demand may not be what it is reported to be.

In testimony this week, it was revealed that multiple electric utilities may be counting the same prospective data centers more than once across various forecasts.

Interconnecting to the grid, particularly for data centers or large industrial users, can take years pending on the ability of an electric utility to move at the speed of the free market. Each Pennsylvania electric utility has a monopoly over specific geographic territories in Pennsylvania.

Essentially, data centers are venue shopping to see which electric utility can move the most expeditiously to connect a new facility to the grid. 

One electric utility’s speculative inquiry becomes another’s pending application and yet another’s infrastructure justification. In other words, venue shopped projects may be treated as certainties. And those potentially inflated assumptions are making their way up the chain – straight into the energy market pricing model.

The result? PJM believes it must plan for an energy-hungry future that may never arrive. To do so, it greenlights transmission projects, capacity procurements, and grid reinforcements based on potentially inflated figures. Those costs don’t disappear – they’re passed on to ratepayers in the form of higher bills. What should be a cautious, sober infrastructure planning process becomes a speculative game of "what if" – with consumers holding the bag.

Let’s be clear: Pennsylvania does need modern infrastructure, and it does need to attract data centers and other high-tech industry. But good policy isn’t built on mirages. This moment reveals something deeper – something systemic: the lack of an organized process in how electric utilities report future demand, the opaque nature of grid forecasting, and the way energy markets can be distorted by hype.

This is not a small problem. Pennsylvania ranks 31st nationally in energy according to U.S. News and World Report, despite sitting atop more natural gas than Saudi Arabia has oil. One of the biggest reasons? Grid reliability and cost. Between 2018 and 2023, Pennsylvania electric customers faced rate hikes that outpaced nearly every neighboring state.

This isn't just a matter of economics – it’s a matter of trust.

Energy policy should be driven by real data. If electric utilities are allowed to report speculative projects as locked-in growth, it creates perverse incentives. It greenlights potentially unnecessary transmission costs. It blocks smaller, more cost-efficient energy solutions. And it squeezes families, manufacturers, and small businesses at a time when affordability is already under siege.

The legislature must now act. First, it should mandate a full audit of pending data center projections submitted by electric utilities. Second, it should direct the Public Utility Commission to revise how future demand is counted and reported – ensuring that only substantiated, contractually committed projects are used in demand forecasting. And third, it should insist on transparency from PJM about how those projections influence price-setting and capital deployment.

Pennsylvania has an opportunity here – to restore credibility in its energy planning and to protect ratepayers.

There’s a broader lesson too: the AI boom, the digital transition, and the so-called Fourth Industrial Revolution will bring real change – but they will also demonstrate the bureaucracy of the past may not fit the market of the future.

In the end, energy markets must be built not just for what’s coming, but for what’s real.

Otherwise, we may be paying real prices for imaginary demand.