October 6, 2026 · ENERGY · 19,482 words · 20 speakers · 123 segments
Thank you. Thank you.
Is the room audio still off? Is the room audio still off?
It just came on, but there's quite an echo. Or rather, I could hear one person ask if the room audio is still off, but I can't hear the rest of the room.
Can you hear me, Patrick?
Yes, I can. There's an echo, but I can hear you.
Okay, so I think when we use the microphones, you should be able to hear.
Yep, there's no echo that way.
Good morning. I'd like to call this informational meeting of the House Energy Committee to order at 9.02. Steve, will you please call the roll?
Chair Fiedler. Here.
Representative Boyd. On leave. Representative Brown. On leave.
Representative Serrato. On leave.
Representative Davidson. On leave.
Representative Donahue. On leave.
Representative Friel. On leave.
Representative Girall. On leave.
Representative Ingalls. On line. I'm on leave.
Okay. I'm behind. ... ... I behind I behind There no doubt I behind Here Representative Barton On leave Representative Cook Present Representative Ham He is online Representative Kale
On leave.
Representative Kephart.
On leave.
Representative Mahalik.
On leave.
Representative Nelson.
Here.
Representative Rapp.
Here.
Representative Stamball.
Here.
Representative Williams.
He's joining us online.
Attendance is ready.
recorded. Proceeding, Madam Chair. Thank you, Steve, and thank you to our members, testifiers, and guests for attending today's informational hearing on electric reliability. Pennsylvania, as we know, is experiencing an energy crisis, and demand is rising faster than we can build new supply, with one out of every four Pennsylvania households struggling to pay their utility bills. Two weeks ago, the Pennsylvania Public Utilities Commission released an assessment on resource adequacy in Pennsylvania and the broader PJM region that paints, honestly, a very bleak picture of Pennsylvania's energy outlook. According to the report, by 2030, just over three years from now, the PJM region can expect far more service interruptions. That means blackouts and brownouts for our constituents and our districts, much more than we are currently deeming acceptable. I'm very concerned that seniors won't be able to properly heat or cool their homes because they rely on electric heat. That parents may not be able to cook meals for their children or keep their food at a safe temperature because they rely on electricity. And even things that seem impossible to imagine right now, like traffic signals going dark, making even a short trip across town a very dangerous undertaking. We will hear from our testifiers today both about the problems that we face, the expectations, and hopefully some solutions we could tackle on the legislative level. We've invited the PUC and Synapse, the authors of the report, as well as other experts to help us understand the report's findings. We need to know how accurate these predictions are and what we as lawmakers should be doing to keep the lights on. Chairman Cosler, do you have any opening remarks?
Thank you, Madam Chair. Madam Chair, I believe the report highlights what many of us have been saying for quite some time. We need sound energy policy in this state that really focuses on bringing more electricity on the grid, and the key to that is sound energy policy. So I'm looking forward to the testimony presented here today, and I want to thank all of our testifiers for joining us.
Thank you, Chairman. Today we have eight experts with us. Thank you so much to those who are able to join us in person. For panel one, we have Stephen DeFrank, Chairman of the Pennsylvania Public Utility Commission. Thank you for coming back. Patrick Knight, Vice President of Synapse Energy Economics, joining us virtually. Stephen Bennett, Senior Manager, Regulatory and Legislative Affairs at PJM Interconnection. And joining us virtually, Dr. Joseph Bowring, Independent Market Monitor for PJM. Thank you again for joining us. Please note that your written testimony is in the packets of all of the members who are here today. We look forward to your testimony and to asking questions afterwards. Chairman DeFrank, if you would please begin. We'll start with you. You may go ahead.
Thank you. Good morning, Chair Fiedler, Chairman Causer, and members of the House Energy Committee. My name is Steve DeFrank, and I have the great honor and privilege of serving as the Chairman of the Pennsylvania Public Utility Commission I appreciate the opportunity to testify before the committee today on the Commission recently issued report titled Assessing Electricity Resource Acquisition in Pennsylvania and PJM The Commission has a statutory obligation to ensure electric distribution companies furnish and maintain adequate, efficient, safe, and reasonable service for Pennsylvania ratepayers. Since the passage of the Electricity Generation Customer Choice and Competition Act, however, Pennsylvania's EDCs were required to unbundle their distribution, transmission, and generation services. Instead, for generation service, the Commonwealth now relies on the competitive power markets administered by PJM Interconnection, the regional grid operator serving 13 states and the District of Columbia, under the jurisdiction of the Federal Energy Regulatory Commission. In recent years, factors including electrification and the interconnection of new large load customers, particularly data centers, have led to rapid load growth in the region for the first time in nearly 20 years. At the same time, a long-term trend of generation retirements paired with the slow pace of new resource entry have reduced supply. In combination, these forces have caused rising prices and raised concerns about the future reliability of the PJM grid. Recognizing these trends and cognizant with the ongoing responsibility to guarantee adequate service to Pennsylvania's electricity customers, the Commission convened a technical conference on resource adequacy on November 25, 2024. Panelists, which included regulated utilities, merchant generators, legislators, consumer advocates, industrial customers, provided a comprehensive view of the challenges and potential solutions facing the electric system. On September 30, 2025, in an effort to obtain an independent assessment of PJM's forward outlook for reliability, the Commission issued a request for proposals seeking a resource adequacy consultant. The Commission received four separate bids. Each bid was reviewed by an internal team of Commission employees representing a cross-section of various bureaus and offices. The team scored each bid based on technical fitness and cost. Upon completion of this review, the Commission selected Synapse Energy Economics to complete this independent assessment. I note the Vice President of Synapse, Patrick Knight, is with us today to testify and will pick up on the testimony after I conclude here. As Mr. Knight's testimony will detail, extensive energy market modeling was conducted, which incorporated numerous variables and assumptions. Synapse's modeling produced a likely range of future grid conditions, which are thoroughly summarized in their report. The report concludes, under the most likely scenario, titled the Reference Scenario, that the reliability risk in 2030 is six times higher than PGM's planning standard. This independent, unbiased, and robust analysis is specifically intended to inform the Commission, the General Assembly, the Governor, and our counterparts from around the PGM region as we determine the appropriate policy responses to maintain an affordable and reliable electric system. I commend the committee for calling this hearing to discuss the Commission's report. I can think of no more important topic of discussion in Pennsylvania's energy landscape right now than the future of electric reliability risk outlined in this report. I welcome any questions you may have, and I would like to turn it over to Patrick and to continue.
Thank you. MS. Thank you, Chairman. You may go ahead, Mr. Knight.
MR. Thank you very much. Can everyone hear me okay?
MS. Yes, we can.
MR Excellent Thank you Chair Fiedler members of the Pennsylvania House Energy Committee thank you for the opportunity to speak today regarding the topic of electric reliability My name is Patrick Knight I a vice president at Synapse Energy Economics a research and consulting firm based in Cambridge Massachusetts I have 16 years of experience in quantitative modeling of the electric power sector, working for government agencies and public interest NGOs in nearly all of the 50 U.S. states. I'm appearing before you today to discuss the September 2026 report, Assessing Electricity Resource Adequacy in Pennsylvania and PJM, for which I was the lead author. I will describe the context behind this report, explain the methodology we used to conduct the analysis, and detail our findings. I invite you all to ask questions. First, some context. So, Synapse was contracted by the Pennsylvania Public Utility Commission in December 2025 in response to a publicly issued request for proposals. Synapse led a team of consultants, including Pennsylvania-based Mondra Energy and Aspen Technology, to conduct independent research and analysis related to load forecasts, least cost economic optimization modeling, and reliability modeling of the PJM system, including Pennsylvania. We used industry standard modeling tools, including the Encompass and Servant Power System models, to analyze a range of scenarios. Wherever possible, we relied on publicly available data published by PJM. Using these analysis techniques, we developed projections of future resources in light of different projections of electricity demand through 2040. We then assess system reliability performance from 2027 through 2030 to better understand the kind of stresses Pennsylvania's electric system and the wider PJM grid face in the near term. In this near-term reliability analysis, we focus on a reliability metric of loss of load expectation, or L-O-L-E. This metric describes the frequency of or likelihood of bulk power outages. PJM's planning criterion for this metric is 0.1, which is commonly interpreted as the system expecting an outage in one out of 10 statistical years. In both our near and long-term analyses, we modeled three different scenarios. First, the reference scenario, which relies on PJM's 2026 load forecast and reasonable middle-of-the-road assumptions regarding resource availability. This particular scenario reflects information that was available as of early 2026, reflecting the latest available knowledge of PJM programs at the time, such as interconnection key reform, resource reliability initiative, and other initiatives. Second, we modeled the worst-case scenario, which envisions a future with higher load than would otherwise be expected and more constrained resource deployments. Third, we modeled a no-new data center scenario, which models a future in which no additional data center load impacts the PJM grid in 2027 or later years. This third scenario has the same resource availabilities as the first reference scenario. Here are our key findings. We found that in both our modeled reference scenario and the worst-case scenario, PJM does not meet its planning criterion for resource adequacy in each year from 2027 to 2030. Meanwhile, in the no new data center scenario, loss of load expectation value is below or clears the 0.1 threshold. In the reference scenario, we observed a 2030 loss of load expectation value of 0.59. This is nearly six times worse than the PJM planning criterion of 0.1. This result is primarily due to large load additions stemming from data center additions, which under the 2026 PJM load forecast used in this analysis are projected to add an additional 500 megawatts of load to Pennsylvania and over 6300 megawatts of load PJM wide by 2030. we found a loss of load expectation in 2030 of 13.20. This loss of load expectation value is over 100 times worse than PJM's planning criterion, and it indicates an expectation of more than 13 days with loss of load events per year. As in the reference scenario, these reliability issues are largely due to surging data center additions. The high load forecast projects data centers will contribute over 200 terawatt hours of additional new load between 2029 and 2030 PJM-wide. For reference, the entire state of Pennsylvania's 2025 electricity demand was 150 terawatt hours. So it's about equivalent to, you know, adding more than the state of Pennsylvania in a single year. In addition, in the worst-case scenario, we see or we project that in-region generators in PJM are unable to meet between 2 and 19 percent of PJM-wide electricity between 2031 and 2040. In other words, even in a reasonable middle-of-the-road reference case, we found that the data center driven load additions and lack of resource additions will produce a bulk power system that does not meet PJM's planning reliability metric in 2027 through 2030. We also found the following. In a no new data center's future, the 2030 loss of load expectation is 0.05. This is equivalent to an expected value of one event every 20 years, or two times better than the PJM planning criterion. Between 2029 and 2030, primarily driven by data center load, the loss of load expectation increases by three times in the reference scenario and 48 times in the worst-case scenario. This 48 times increase means that PJM consumers could expect to experience less than one day with an outage in 2029 and over 13 days with outages in 2030. Between 2027 and 2030, in the reference and worst-case scenarios, reliability events, which we measured using an unserved energy metric, become more distributed throughout the year. In the reference scenario, reliability events remain most concentrated in winter morning hours but gain prevalence in winter and summer evenings. In the worst-case scenario, the peak risk hour shifts to summer evenings, but reliability events become more frequent throughout the year as data center load additions increase demand for electricity in every hour. I note that in all of our modeling, we're assuming that data centers have a relatively flat load shape and are more or less continuously requiring power from the grid at the same level. In the worst-case scenario, high load growth and constrained new resource additions produce conditions such that by the mid-2030s, hundreds of terawatt hours of load are unmet per year. Given the likelihood that neighboring electricity regions would be facing similar load and supply pressures in such a future, PJM would likely not be able to rely on neighboring regions for electricity during critical periods. PJM would instead likely face energy shortfalls in the region. Depending on the year, PJM would be unable to meet between 2 and 19 percent of electricity demand between 2031 and 2040. Our modeling finds that Pennsylvania's role as a large energy exporter is maintained in the reference scenario and the no new data center scenario. However, the total quantity of electricity exported shrinks as in-state demand grows and more resources are built outside of the state. In general, we observe that other states that have large projected increases in data center load, such as Virginia and Ohio, or relatively or comparably less expensive resources see increases in the shares of the region's generation capacity. In the worst scenario Pennsylvania is projected to become a net energy importer by the late 2030s To summarize we used industry standard quantitative modeling methods to examine the impact of varying load forecasts and resource availabilities on the PJM electric grid, with a deep dive into reliability impacts. We found that in the middle-of-the-road reference case future, PJM does not meet its reliability criterion in any year from 2027 through 2030. In a worst-case future, with even higher amounts of data center load and fewer available resources, we observe a loss of load expectation value that is 100 times worse than PJM's planning criterion. Meanwhile, in a future that assumes new data centers do not impact system demand or energy, PJM does meet this planning criterion. Thank you for your time, and I look
forward to your questions. Thank you so much for joining us. We'll hear from two more testifiers, and then we'll go to questions for everyone. Mr. Bennett, when you're ready, you may begin.
Thank you. There may be a slide presentation in your packet. I'll say next slide to the extent that you want to follow along, but it's not necessary.
Chair Fiedler, Minority Chair Causer, and members of the House Energy Committee, thank you for the invitation to participate in this hearing to provide PGM's perspective as it relates to preserving electric grid reliability during this period of heavy forecasted demand growth. My name is Stephen Bennett, and I serve as Senior Manager of Governmental Services at PJM Interconnection.
Next slide.
If you're looking at the slide that has PJM's region on it, you've probably seen this a number of times. We talk about the geographic space that PJM inhabits, as well as some of the statistics about PJM. But what I really want to talk about today is that the region that PJM serves is currently navigating one of the most complex operational and economic transitions in its history. For nearly two decades, the PJM footprint benefited from a surplus of installed capacity and an era of relative stability for the electric grid. Today, those conditions have fundamentally changed. The PJM region is now faced with a convergence of three structural forces that have pushed the system into disequilibrium. An unprecedented surge in demand driven by the rapid expansion of large load data centers and broader economy-wide electrification. The accelerated retirement of dispatchable generation due to environmental policy and economics. And significant supply chain and permitting frictions that have extended the time required to bring new resources online. The result is a transition from an era of managing surplus to an era of managing scarcity. one that is anticipated to persist for some time based on current projections, because new generations simply cannot be built fast enough to offset the combined effect of retiring supply and surging demand.
Next slide.
It's a reminder that PJM is a mission-driven organization, one that serves the public interest as a FERC-authorized Regional Transmission Organization, or RTO. We are clear about our priorities. Reliability is our north star. People and businesses in the PJM region depend on us to keep the lights on, and we exist to uphold that trust.
Next slide, please.
You may have also seen this slide, which depicts the growing load forecast published by PJM on an annual basis. So the x-axis is the year of electricity delivery. The y-axis is the predicted load in megawatts, and each line represents the year in which the load forecast was made. And obviously our load forecasts go into the future. The PJM annual load forecast issued in January of 2026 so the dotted line that has the highest amplitude confirms the trend of significant growth in electricity demand over the next 20 years It's worth noting that this forecast includes substantial demand increases when compared to the forecast issued just a few years ago, showing how quickly these industry dynamics are accelerating. Demand increases in PJM are, again, being driven primarily by data center proliferation. Next slide, please. According to the 2026 forecast, PJM expects its summer peak to climb about 85,000 megawatts to 241,000 megawatts over the next 15 years. The current record summer peak for the PJM footprint occurred this year at 168,000 megawatts. While winter peaks remain slightly lower, the forecast shows winter closing the gap in peak electricity use, estimated at 224 megawatts by 2041. PJM's record high winter peak occurred last January when we served 143,000 gigawatts. So the point here being that this is unprecedented. At no time in our industry have we ever seen load growth at this velocity.
Next slide, please.
the coming wave of macro load is fundamentally different from the residential and commercial load that define the grid of the 20th century hyperscale data centers are unprecedented in their scale with individual facilities approaching the size of traditional power plants or in some cases even small cities the uniqueness of this type of load combined with the scale of load growth presents a generational opportunity to rethink not only the solutions to the resource adequacy problem, but also the problem itself. Consequently, PJM is undertaking a wide range of efforts to analyze, optimize, and enhance our processes and procedures to keep pace with this paradigm-shifting moment. Next slide, please. Load forecasts are the fundamental building blocks upon which resource adequacy and grid reliability are built. The PJM capacity market is designed to procure accredited capacity to meet the needs defined in the load forecast. Additionally, the load forecast is the primary input, is one of the primary inputs in the regional transmission expansion plan, the process by which PJM plans regional transmission needs. Given the importance of the load forecast, the PJM board of managers directed PJM to improve the existing load forecasting process and methodology. These improvements including adding steps for state review of large load additions, addressing duplicative requests for large load additions, the use of additional third-party and consultant review, as well as an overall increased transparency in the load forecasting process. Next page, please. PJM recently filed at FERC its proposed framework to connect new data centers and other large load customers that bring their own power supplies, consistent with the ratepayer protection pledge. PJM's proposal would establish a new interim resource adequacy service, or IRAS, for those new large load customers who do not bring their own power supply. When electricity supply on the grid approaches dangerously low levels, a new emergency procedure would notify utilities to reduce or transfer the electricity demand from new large load customers ahead of any action that would serve to shut off traditional customers, including residential customers. Next slide, please. This model is consistent with the ratepayer protection pledge introduced in March 2026 and recently expanded in July 2026, which states that new large loads will build bring or buy the new generation resources and electricity needed to satisfy their new energy demands paying the full cost of those resources whether by building or buying from new or otherwise additive power plants, because it advances self-sufficiency and protects Americans from high prices. Next slide, please. PJM proposed the reliability backstop procurement to secure new eligible capacity resources. The RBP is a one-time transitional measure to safeguard resource adequacy, support IRAS, and allow time for broader review of market fundamentals. The process is proposed to work in tandem with ongoing bilateral contract matchmaking already underway to facilitate the voluntary arrangements between new supply resources and new large load customers. The Federal Energy Regulatory Commission, or FERC, on September 29th issued an order on PJM's proposed RBP, where they approved in part and suspended in part. And now, rather than holding this auction in this year, we look to hold the auction in early 2027.
Next slide, please.
Since 2020, PJM has processed more than 500 gigawatts of projects through its transitional queue and newly implemented interconnection cycle. To date, this has resulted in over 100 gigawatts worth of projects with signed interconnection agreements. PGM is doing everything in its power to bring more supply online to meet these increasing load forecasts.
Next slide, please.
However, we are already looking to reform our queue process further to enhance the interconnection queue by integrating transmission service for large loads into the process. The principles here are to consolidate generation and merchant transmission interconnection along with the transmission necessary to interconnect large load, preserve the first ready first serve paradigm to make sure that ready readiness requirements are included, create an optimized transmission plan that delineates the driver of need, which may be available for more precise cost allocation, and to ensure that developers can use the transmission system in a reliable manner by establishing clear technical requirements.
Next slide, please.
PJM launched an effort to rethink the future of its wholesale markets with the publication of a report called Powering Reliability Through Market Design. The report, frankly, assesses the current industry landscape of high prices, burgeoning electricity demand, and reluctant investors, and catalogs the foundational decisions that will be required of industry and government to meet those challenges long term. The long and short of it is that PJM is looking at every process, everything that we do, markets, planning, operations, to meet this paradigm-shifting moment. I thank you for the committee's engagement and I look forward to your questions.
Thank you so much and I know members will have questions very, very soon. We've got one more testifier on the first panel. Dr. Boring is the independent market monitor for PJM and he's joining us virtually. Thank you for joining us again and you may begin when you're ready.
Thank you. Can you hear me okay?
Yes, we can.
Great. So I appreciate the opportunity to testify before you today. So as indicated, I'm the independent market monitor for PJM. We have three basic functions. One is to monitor the activities of every market participant in PJM, including the RTO itself. A second is to oppose market rules to improve the functioning of the market. And the third is to report on the markets. And we have extensive reports posted on our webpage. The Pennsylvania PEC reliability study confirms our view and analysis of the current state of reliability in PJM. It emphasizes, and we think correctly, that the source of the issues is uniquely the addition of data centers, a massive addition of data centers in PJM over the last few years is the source of the problem. And I think that the report ultimately highlights that. This is, as many say, a paradigm shift. This is not just supply and demand. This cannot be addressed simply by saying, well, it's just demand is going up. We need to figure out how to meet supply. It's not a standard market design issue. It really is a paradigm shift, and it needs to be addressed that way. It's a policy issue, and it does require significant changes in the way that PGM approaches meeting demand. And not only is it correct that PGM is expected to be short, PGM, under the last three capacity market auctions, is already short for the 26, 27, 27, 28, and 28, 29 delivery years per the cleared auction results that have already occurred. And coming at it from another perspective, rather than somebody looking at reliability, the impact of data centers on the cost to customers has been massive. Over the last four auctions, the impact of data centers alone has added to the cost of capacity $29.4 billion. That's almost half of the total cost of capacity. It's not only an increase in cost to all customers, it's a windfall to existing generators. The so-called collar, which has been referenced, reduced the impact by about $26 billion, but nonetheless, the net impact was still almost $30 billion on customers. Our view of the solution is that data centers need to pay their own way. I think that's broadly accepted as a policy objective, but it's not currently being implemented, and PGM's proposals do not get us there. So when I say that, I mean that data centers should not be allowed to interconnect to the EDCs, to the utilities, to PGM, unless they have a plan to bring their own new generation. What's happened over the last few years and is continuing to happen is that we're adding significant amounts of data centers without matching supply. Not surprisingly, that's driving up the cost of capacity, but it's also driving up the cost of energy and driving up the cost of transmission. This past summer, we hit the highest peak load in the history of PJM. and that load was met only by the inclusion of capacity resources, but also resources that are not capacity resources in PJM. We believe that data centers should be required to have bilateral contracts with generators, which limit the risk of either the data center not arriving or the generation not arriving to the data centers and to the generators, rather than imposing that risk on all customers. We believe that if data center loads are going to be added without generation that they need to be subject to curtailment and curtailment by PJM not by individual states or not just in general and not in any undefined way but in a very clear defined way data center by data center We believe ultimately that there does need to be a bifurcated market There needs to be a separate capacity market for data center until that can be fully integrated into PGM, which could take as long as 15 years. So there does need to be a separate pricing for data centers. They should pay the full cost of new capacity. And that's really the only way to get to a supply-demand balance. We do not think that PGM's current proposals, whether it be the backstop auction or the IRS, it was just referenced, will get us there. In our view, the RBP, the so-called backstop auction, leaves a significant amount of data center demand in the capacity market, which will continue to inflate prices. It imposes risks on both EDCs, that is the local utilities, as well as their customers. and it does not apply clear rules under PGM's direction for curtailment when curtailment is necessary to maintain reliability. Under the PGM's proposals, significant data center load remains in the forecast and continues to affect PGM prices. So again, I thank you for the opportunity to discuss these issues we have I apologize for not providing written material we have hundreds of pages of written material I will figure out a way to get you the relevant information in writing but that concludes my comments thank you
happy to take questions thank you so much and with that we will move to the questions from the members. I'll start with one. Chairman DeFrank, thank you so much for joining us today. We'll start with the softball. Not really. Given Pennsylvania's participation in PJM, how do you think the General Assembly could best coordinate with other PJM states to address these challenges? We've heard many very, very serious predictions, and I know some members are going to ask questions about those. But big picture, what do you think we could do to better coordinate with lawmakers in other states, if anything? So thank you for the question. I think
we already started doing that. When you guys required us to look at load forecasting for PJM, we've entered MOUs with other states in the PJM footprint to share the load forecast for their regulated utilities that we would not have access to. This is an effort to try to find duplication in the large load world where one data center may be looking at multiple locations. We're counting that data center one, two, possibly three times when it's only one data center. We're trying to figure out what's repetitive projects. Therefore, we can get an accurate load forecast. That's just one thing that we've been doing. I think that folks are looking at potentially putting into statute our large load model tariff. I think that would be helpful. You know, anything that requires increased generation or for a data center to bring their own generation. I will point out that one thing in our study, and the one scenario is a no new data center scenario. A no new data center scenario would be a scenario in which data centers bring their own power. because a data center would not be taking existing capacity off the grid. In those scenarios our grid actually becomes more reliable So our point is there is a way of doing this to integrate data centers and actually have a more reliable grid Thank you Chairman
Chairman Causer.
Thank you very much, and thank you to you gentlemen for your testimony. Where do you start? It's a pretty grim situation from the sounds to hear testimony saying about how we've always been a leading exporter of energy to a point where we could be an importer. That's alarming to many of us. Obviously, the talk about bring your own power for data centers has been around for a long time, and conceptually many of us certainly agree with that. I guess my question is relative to the need to get more power on the grid from your perspective, what is the fastest way that we can get more power on the grid? We obviously can't control what happens in other states and their policies, but we can have an impact in Pennsylvania. What's a step that we can take to really get more power on the grid that makes a true difference? So I think one of the things, and the federal government has some movement in legislation last week, but we've heard a lot of people talk about permitting reform. I think that the interconnection cue that Steve talked about in his testimony, we have to make sure that results in steel into ground, that this is not just interconnection on paper, that we're actually building something. That's the most important thing. I think permitting reform is something that can go a long way in, again, bringing those projects to fruition. I don't know if there's anything you wanted to add to that
No, actually I would echo that 100%
Permitting and siting are two of the most frequently cited reasons for projects That are moving forward through our process And the friction is not there It's actually once they get their agreement Actually being able to put the steel in the ground that the chairman referenced So permitting, siting, coordination with the federal government And then as much as you can streamline and make efficient here I understand that there are concerns about local control, and so that's not an easy thing to do, but it is certainly helpful. I think the other thing that just comes to mind is policy certainty. I mean, one of the things that Pennsylvania has going for it is you've restructured your energy markets, so you have the ability to leverage the energy market. So policy certainty, that will allow investment. So as we reform our market to send better and more precise price signals so investors know that if they want to invest in Pennsylvania, that they have the policy certainty to do so.
Thank you very much.
Could I add a comment?
Yes, go ahead.
So the premise is that data center load is going to come, and then we have to figure out a way to make it easier for generation to be added. But the premise is not necessarily correct. So we believe, and unfortunately, bring your own new generation while people talk about it. It's actually not the current policy. So while we continue to allow data centers to be added, we're not matching that with the generation. So our view is that the real source of the problem is allowing the data centers to be added without that generation. So if you impose that requirement, that gives the data centers and the generators a huge incentive to meet the load. But if you continue to add data center load without generation despite all the good intentions about how to make generation easier to build we going to have a mismatch for the foreseeable future Thanks Thank you Next question we take from Representative Venkat
Thank you. My question is for Mr. Knight from Synapse Energy. In the reference scenario, reliability risk becomes six times the PGM standard by 2030. which interventions such as accelerated power additions or demand side measures would have the greatest impact on improving that outcome? And the reason I ask this question is I think we just saw there was a response from the PUC. There was a response from PJM. I don't want to say pointing fingers at each other, but, you know, it seems like we're having a little bit of conflict here as to what we should be doing in the General Assembly or what policy interventions will make a difference? And I'm curious for you as the person and the organization that did this report, what recommendations you would make in this regard?
Yeah, of course. That's a great question. I mean, from a modeling perspective, it's all kind of the same. Reductions in load are just as advantageous or valuable to improving reliability as resource additions provided the timing that the resources are available, you know, works out and is matching the critical hours. So, you know, we didn't actually look at specific policies to ameliorate these issues, but we did look at, you know, what would happen in the face of different levels of load and generation. And they're really both important. so um since you didn't look at specifics i guess i would throw it back to the representatives from
the puc and from pjm um you know we're staring i think there's an agreement on this committee and from the testimony that we're staring at a hole as of 2030 and that this is going to be an accelerating problem. Is the answer from a policy perspective mandates related to large load customers having their own energy? Is it something with getting rid of the queue and PJM that we've heard about in many hearings? Is it something with the grid and integration across states? We need specific recommendations here for us to take legislative action.
Yes. All those things work. You need increased generation, bottom line. You need increased generation. And when Steve talked about citing, for instance, to Chairman Couser's question, you know, preemption, I know that's a difficult topic, but, you know, we preempt casinos, We preempt some farming operations. We preempt all utility operations. We do not preempt generation. So, you know, communities can stop generation from coming online. I think that's an important conversation to have here because we need increased generation. And whether that increased generation comes in the form of bilateral contracts, if that generation comes in the form of new PPAs, If that generation comes in the form of an actual new generator sitting next to a data center, whatever way that is, those all fit the answer. So there's several different ways of addressing your question, and I think they all work. But the bottom line is, at the end of the day, we need increased generation.
Yeah, I, again, would echo what the chairman said. And I think an important point here, and the gentleman from Synapse made it as Well, reducing demand and increasing generation in this particular case have the same impact. So in the event that it's possible to increase things like virtual power plants or demand response, energy efficiency, things of that nature, that's as valuable to some extent as valuable as adding a new generator. Again, to the chairman's point, we need new generation. If we're going to continue to build data centers at this level and at the velocity that we're building them, we need new generation. So the question becomes, in the past, a lot of the energy policy was, in a sense, fossil or renewable. And I think with data centers, the energy policy is fossil and renewable. They should not be in conflict. We need both types of generation to meet this moment. So if the question is, should we continue to build data centers, the answer must be that then we need to bring all sorts of supply online, or at least all sorts of supply that meet the overall policies of the state that will then support data centers. The last thing I'll say is the question was what should we do to meet this moment? And the IMM, Dr. Bowering, indicated this idea of preventing data centers from interconnecting unless they bring their own generation. That is certainly a solution, but I do want to make it clear that PJM has neither the authority or jurisdiction. We do not have the jurisdictional authority to make that restriction. That would actually be a state-level decision. PJM does not have the authority to restrict or prevent retail-level load interconnection anywhere in our footprint, including the Commonwealth of Pennsylvania. So to the extent that that becomes a possible solution, that would be something that each individual state would have to decide as their policy going forward.
If I could just add, the fundamental question is about who's bearing the risk and the cost of adding data centers. We're not opposed to data centers. Our view is that data centers should simply pay their own way and not be subsidized by other customers. So we don't agree with what PGM just said about jurisdiction. We believe that it could be a condition of the reliability assurance agreement that every data center that's added is required to have a bilateral contract to account for its own generation. I'm hearing things in the background. I'm not sure if that's just me.
So thank you. Thank you. Next question is from Representative Cale. Thank you. Thank you, Madam Chair.
This microphone isn't the best one to have, I guess. So in this discussion on reliability, it's been quite a magical experience the last number of months. And we have been hearing people point fingers at people. We've been pointing fingers at people. I feel like every hearing we're looking for a new boogeyman. Today's boogeyman is the data centers. I've heard PUC is the boogeyman. I've heard PJM is the boogeyman. I've heard utility company CEOs as the boogeyman. And I just think we have to have a real candid conversation within this building that if we want to find the boogeyman, all we need is a mirror. All we need is to look at ourselves in Harrisburg and look at the decisions that we have made over the course of the last 10 years as it relates to energy policy And we have been talking today about having a supply issue This isn a surprise This isn something that all of a sudden it's like, oh my goodness, we need more supply. There's these new data centers coming. No, I got into office in 2018. I was elected in office. Right out of the gates, when the governor entered into, Governor Wolf, entered into the regional greenhouse gas initiative, we were raising the alarm bells then. We were saying this is going to be a reliability issue, and this is going to be an affordability issue. We need more generation. We are in the Commonwealth of Pennsylvania, where we have all of this ability to generate. We have all this supply with natural gas, with coal, but we don't want to use it because we want to hamstring it with energy policy. Green energy policy has gotten us here. And the reason I want to keep saying that, and I say that all the time, is because we're going to keep making the same mistakes going forward if we don't recognize what got us into this situation in the first place. And Mr. Bennett, I'd like to ask you a question in particular. I think it was in 2024, you had mentioned that the Biden administration cool power plant rules that were put into place were going to have a devastating impact on generation as it relates to coal fire generation, while the Trump administration actually ruled those regulations back. And now we have a governor in the Commonwealth of Pennsylvania who's claiming he cares about affordability, who's claiming he cares about
reliability, is going forward. Representative Kale, do you have a question for one of our guests?
is going forward and is actually pursuing litigation to prevent those regulations from happening. My question to you, Mr. Bennett, is does PJM still hold that these regulations being in place will hurt our ability to generate energy as it relates to coal-fired plants?
I think it's a so again right now we need generation if we're going to continue to build data centers at the velocity and just the amount of load that we need generation and that generation right now needs to come from a mixture of fuel types. So, you know, it becomes, it's part of a very complex policy decision weighing environmental policy, economic development policy, technology policy, and all of the policies around energy and, you know, permitting and siding. Each state can look at the combination of what's most important to them and decide how to leverage each component to get to the state's priority. If all coal plants came off of the grid right now, that would increase the disequilibrium we have. So Pennsylvania and other states have to make a decision about what is the priority. Do they want maximum generation and the impacts that come from that? Do they want maximum economic development through data centers and what comes through that or do they want to try to find some balance between all of them and instantiate instead and create statutes that support those those about that
balance thank you for your response mr Bennett our next question is from representative Boyd thank you oh I have one of those too My question is also for Mr Bennett
The picture that you painted for us in your testimony was that PJM is successfully managing the challenging circumstances, and then we heard from our independent market monitor and Mr. Knight from Synapse that the situation is much more dire. Is there a reason or do you think that there's a reason that the forecasting of these blackout events or these, you know, events that would brown or blackout is overstating the problem?
I don't know that I would say it's overstating. And to the extent that my testimony indicates that we are categorically successfully navigating this, I think then my testimony is a little bit – I have to look at that. Because while we are doing everything that we can, I don't know that we know with 100 percent surety that we are successfully navigating this. To the IMM's point, our last several capacity auctions have fallen short of our reserve margins. And so just empirically right there, I think it's indicative that in this paradigm shifting moment, we are not 100% successfully navigating it. We are trying to look at everything that we're doing. We're trying to optimize all of our processes to get to that point. I think the report that Synapse did is an important indicator of the severity of the potential of the problems. I think the one thing that's difficult for anybody, Synapse, us, anyone, is that it is a very fast-moving environment. So the load forecasts that Synapse used very reasonably for the report are about to change in a few months. We're seeing changes to how data centers are being built. We're seeing transmission owners, utilities, change their forecasts, sometimes up, sometimes down. So the rapidity at which the data that any analysis will be based, how fast it changes, makes it very difficult to pin down specifically whether or not this report is indicative and predictive or simply a harbinger of the need to work together to find the solutions. And if I could just add to that, that's something that we're working with other states as well. For instance, as Steve said, you know, an EDC from Indiana does not give the same information as an EDC from Pennsylvania. All that information is then going to PJM, but it doesn't match. It's not apples to apples comparison. So I think we all have to look at the same kind of apple and turn those into PJM. The other thing I want to point out is that PJM is currently looking at a market reform proceeding. I think that we've had two, arguably three, capacity auctions that have failed to procure to the reserve margin. I think that's indicative of this capacity market. This market was not designed to address load growth how we're seeing it. The previous low growth in the previous 20 years has been 1% or 2% annual, sort of slow, steady, chugging along. And that's what that market produces, a reliability in that sense. When you have drastic increases in low growth overnight, I think we see that that market construct is not probably the best construct to deal with that kind of low growth. And that what I think PJM as well as states are looking at is what kind of market does capture that sort of low growth Thank you both We have a few more minutes until we go to our second panel so we take questions up
until 10 o'clock. And our next question is from Representative Nelson.
Thank you, Madam Chair. I appreciate the testimony both online and those that are here and really want to maybe build on some of the earlier discussion and questions related to Mr. Bennett you had mentioned about projects actually getting across the finish line in the in the extended delays you know since Governor Wolf's executive order I think it was in October of 2019 there has not been a lot of new generation in in Pennsylvania that's more of a mr. DeFrancq situation I think maybe two plants you know one hickory was scheduled to come online just after that I have I mean it's a just a small graphic of 11 major projects many of them that was Renovo that was in Venergy we had Homer City plants that were cancelled in the queue that would have brought new power there's a lot of discussion about data centers and I think the reality is data centers are going to continue to to come. But as we look at data center energy consumption versus other states in PJM, who is the larger taker? When we discuss about Pennsylvania ratepayers paying more because of subsidizing, my understanding, when we look at states like Delaware, 65 percent, Maryland, 45 percent. Virginia, 30 percent. New Jersey, 20 percent. Who is costing Pennsylvania rate payers more? These states that are taking our energy and driving up our prices or the forecast of data centers to be built? Mr. DeFrank.
I think that's a market question. I was going to answer a different part of that. But in terms of who's driving up costs, I don't know that it's the individual policies. I think it's a load forecast, and it's the need for that load forecast. I think when you look at individual policies, you look at the supply end, and that may be limiting supply coming online. So what's driving up costs? I think, you know, Steve could better answer this question. I believe it's probably the load forecast. The fact that we're not getting new generation online is probably a policy point that you talked about. That's just my opinion.
Mr. Bennett.
Thank you. And to the extent that the IMM may also want to respond to this, because really, you know, the IMM has done empirical analysis around the cost drivers that we're currently facing. And the conclusions, as I understand them, and Dr. Bowring can comment, is that right now the most significant driver on costs across the PJM region are data center. and, again, the paradigm-shifting amount and speed to market that we're seeing from the load increases. And the fact that, again, in PJM, in 2023, PJM published a paper where we saw the beginning of this trend. That was only three years ago. And we've gone from a period of time where PJM was known to have surplus capacity. In fact, we were often criticized for having too much. And in three years, we've gone from surplus to scarcity. So it really is the velocity. The speed to market that these data centers need are not well matched for the way we build generation.
I just want to clarify. So you're saying that proposed data centers are consuming more electricity than the state of Virginia, Maryland, and Delaware. The amount of electricity that those states are taking is less than data centers that are proposed to be built. That does not seem logical to me. I understand the forecast, and forecast drives price, but consumption also drives price. And you're saying that data center consumption is a larger impact than the consumption in these taker states.
That's not my intention. I'm not trying to say that, and I don't know even factually if that's true or not true. it's a little bit of a it's a little bit of a different comparison the load forecast from data centers are across our entire region the fact that there are exporter states and importer states and pjm it's it's a longer discussion but i will say it like this some of the generation built in pa was built in pa because it was the right place to build something that can serve those other states That's the benefit of a regional market is that you can pick a place that's best to build and then serve the entire market, including Delaware, Maryland, or whatever states might be listed as an importer state. So it's a little bit of a different kind of comparison. It all contributes, but right now, again, according to the IMM's assessment, is that data centers are the single most impactful driver of cost right now.
Yeah, Mr. Knight, did your assessment consider the power consumption of other states against the power consumption of data centers?
Our analysis does consider the power consumption of all of the states in PJM, alongside all of the existing data center load, as well as future forecasted data center load additions and load growth from those other states. So when we're performing electric power sector modeling, we're modeling each one of the zones within PJM, which might be entirely within one state or might overlap between states, and thinking about all of the power generators across the region and all of the load changes across the region, including the data centers and all the rest of the load.
Thank you, Madam Chair. Thank you.
So, and if I could just add, so.
Yes, you may briefly. Sure, of course. Go ahead.
Agreeing with both the prior speakers, it's it's PGM is a regional market and there are many producer net producer states and many net demand or states. But the market works together and the way the capacity market has always worked is that every state and consumers across the entire footprint pay for their capacity to the capacity market. So to the extent there's more generation in Pennsylvania, they're receiving revenues from other states. But it is clear that what's changed, the system was in balance and would remain in balance without data centers. So not demonizing data centers, but simply as a fact about what's actually happened. It's the increase in data center load that has resulted in the current set of issues.
Thanks. Thank you. And our last question for the first panel due to time will be from Representative Barton.
Thank you Chair Fiedler So the reoccurring theme we have here is demand skyrocketing energy demand record demand growth And the answer, bottom line, is we need more baseload generation. Isn't it that simple? Isn't it that simple? And Mr. Bennett, you spoke about policy certainty allows investment. So uncertainty, is it fair to say these aren't your words? Uncertainty will require people not to invest. Can we say that's what happened at Homer City? Can we say that's what happened when there's uncertainty? And specifically in the case of Homer City and other projects that didn't happen, when you have a looming regional green gas initiative over your head or policy like that that's going to stop investors from putting money into plants. It's going to stop that baseload energy. And who wants to build? Who wants to build a new power plant when we have that uncertainty? So my question is, we need action. There's a lot of talk here, and that's not your fault. That's our fault, right? And Representative Cale mentioned earlier, we need to look in the mirror. I agree. You know, Chair Fiedler, thank you again for this day today and this panel. And you referenced, actually, the legislature interacting with other states. and that's important, but we don't need to be a backstop. We can lead from the front. We're Pennsylvania. We're the number two energy natural resource in the United States of America. We got Michael Jordan sitting on the bench. That's what we're doing here. So I guess my question is, and suppose it wasn't data centers. Suppose data centers didn't exist. Now they do. But suppose they didn't. Don't we need more generation anyway? Doesn't it make sense to build more generation? The problem is we need baseload generation. So given the reliability, there is reliability issues. There's reliability problems that we're facing. It's a fact. As soon as next year. What's action? What are the next steps? And maybe these aren't questions for you. But what should we as legislators take to address this issue? What incentives do we offer? How do we make this happen? Because we're done with talk. We've got to do something.
I'll take that. I think that we've heard all along here, you need a comprehensive energy plan. I mean, this state has not had a comprehensive energy plan in over 20 years. As you pointed out, Representative, we are the number two energy state in the country, and we don't have a comprehensive energy plan. So that's the first and foremost. We talk about increased generation. You're absolutely right. I think you really have to talk about a preemption and siting or something with generation because we need it. This entire grid needs increased generation. So there has to be a way of siting generation if the local community doesn't want it. I mean, we do that with transmission. we you know we have preemption with transmission but we don have it with generation so i think that an important point um i think anytime you look at a comprehensive energy plan something like siting will be a component to that So that the two things to start off with that I would say that we can do here Requiring you data centers to bring their own generation I think is important. And I switched my position on that. Two years ago I would have said connect them. We'll figure it out later. We're seeing numbers here. Two capacity auctions have happened where we missed a reserve margin significantly. It wasn't close. I mean, we missed a reserve margin 6, 8 gigawatts, I believe, right? I mean, it was significant. We're seeing all those things happen. That's what caused me to change my position. I think data centers are an incredible opportunity, but we have to get it right. it right. If we don't manage it and put our heads in the sand, we will have disaster. I grew up in southwestern Pennsylvania. I talk about the coal industry all the time. That's an industry that gave families in my area an opportunity that they never would have had otherwise. But I also grew up with some of the ramifications of that. I grew up next to, you know, Orange Creeks and things like that. I am well aware of acid mine drainage. And so that's some of the effects of that because it wasn't well planned. Here, it's going to be much different because if we don't have this well planned, we're not talking about Orange Creeks. We're talking about lights going out. That's the ramifications here. So we have to get this right. This is an incredible opportunity, but we have to address the problems that we're faced with.
Thank you for the question. Thank you, Chairman, for the response. I think, Mr. Bennett, I think you were the one who said that this is unprecedented, and we have seen load growth at this velocity, and then we also have really a generational opportunity. So while the predictions are very dire and very serious, I do think you all have presented us with a lot of food for thought, some legislative ideas, and we're committed to doing the work.
So thank you so much to the first panel for joining us. We appreciate it. If members of the second panel could please come up, we will quickly try to change.
Yes, he can't be here. Sorry, I didn't tell you that.
Thank you. All right. Good morning. Thank you so much to our second panel for joining us. We appreciate it. Joining us for the second panel will be four guests, Andy Tubbs, President of the Energy Association of Pennsylvania, Glenn Thomas, President of GT Power Group, and Evan Vaughn, Executive Director of Merrick Action. Also joining us online is Patrick Cicero of Council for the Pennsylvania Utility Law Project. Please, testifiers know that all members have the information and the testimony in their packets, so feel free to summarize and we will get to questions Mr Tubbs when you ready thank you for joining us again and you may begin Thank you Chair Feehler and Chair Kouser and the members of the committee EAP has been before you a number of times this year and we appreciate the conversations that this committee has led
including this important conversation today. It was great to be in the audience for that first panel and sort of set it up. So I think there's a lot of things that I don't want to rehash and recover because I think the sense that we all have here is that it's a really important conversation that we're having, is that we have what many have said is unprecedented demand and the need for solutions to get that generation online. And I think that we all collectively, and I think the Rosane F. Kael made some really good points about finger-pointing and the lack of productivity in doing so, is trying to find solutions that we all can get behind that are going to support the customers. Because at the bottom line, if you think about all the issues that we're talking about today, We're talking about markets. We're talking about market structure. It all comes down to the customers because at the end of the day, the customers are the ones who end up paying the bills that support all of this here. It's the generation being built. It's the transmission to deliver it. It's the distribution utilities. So it's all one big part of the solution that we need to come together on. So I think the one thing I would say about the Synapse study is I appreciate the commission undertaking it. I think the Commission has stood up in a role that's very important in this state because Pennsylvania, and at the end of the day, as Mr. Bennett made his points earlier, is they don't have the authority. FERC doesn't have the authority. Pennsylvania owns resource adequacy. It is a Pennsylvania question. It's a Pennsylvania solution. And I would say that the Synapse study in many ways confirms what the electric distribution companies have been reporting for years now, is that we're seeing demand that's outpacing supply. And I don't think this is, I'd probably be remiss to say that this isn't all about data centers. Data centers definitely take up the air in the room in whatever room we're in these days. But we needed generation before. We need more generation to come online, and we need solutions to that. We have manufacturing growth. We have power plants that have been up and running for decades, and it's time for us to look for new solutions. So I think we've been talking about what those solutions are. We definitely need baseload generation, but we also need other sources to come online. But I think what we saw in the CENAP study is that we're just not seeing the supply hit where we need it to be at the moment. And I think we've done a lot of conversations in the last year about the load forecast, and they are vitally important to the process. And I think Act 45, that was approved last session, codified a lot of the work that was already being done by the commission. They issued their first report this past June. And I think that report is really enlightening that the utilities were doing the work that they were supposed to do. But I think there are conversations that we need to have about making sure that we're reporting data similarly. And I think that the problem with load forecasts, it doesn't stop at the borders. It is not just a Pennsylvania issue. We are part of an RTO of 13 states in the District of Columbia. It is a bigger issue than just Pennsylvania inside our borders. But I think what you're seeing is when we do our load forecast, and I said this when I testified before, is you run the risk of being wrong either way. If you under-forecast and you're not getting enough built, there's a reliability issue. And if you over-forecast and you over-build, it's unnecessary costs that are being placed upon customers. And I think that we are seeing adjustments, and I think we are seeing, you know, utilities working with PJM and the Commission to get that right. And I think that's an important process that needs to continue with some of the points that the commission identified in its most recent report. When we talk about the costs that we've seen in the capacity market, the last three cycles, I mean, those are all costs that are being paid by customers. Those are all being, when customer bills go up in June and December, when the price to compare is adjusted for those customers that are not shopping, those costs are being reflected from, I mean, being passed on by your utilities through the bill to the customer. The utilities get the phone call because we're the ones who are serving the bill, And I get that. But those dollars are being then collected and then passed on to the generators. And I think what I'm saying here is, you know, and you read my testimony, we're not advocating for any change to the competitive market. We're not advocating for generators to be regulated. I think it would be useful to ask generators some questions. You know, where are you in the process? Right now you have seen profits increase significantly in the last three years. You have made those collections. And those are existing generators. There's – you know, those signals are trying to incent new generation to come online. What's the holdup? Is it more – is it higher capacity payments? Is that cap really what's holding you back? Is it supply chain issues? Is it the cost of trying to get a turbine? That's all gone up. There's a lot of questions, and I think we should be asking questions about what's it going to take to get that done. If we need more generation, let's have an honest conversation about what's holding back shovels getting in the ground and putting generation where we need it. And it should be here in Pennsylvania and not relying it to be built in other states. I think that, you know, I said earlier, I think permitting supply chain and financing are important conversations. But I think what we have here is when you have – it's the way the market is set up. And, again, I'm not advocating for change, but I think I'm looking for transparency. As in Pennsylvania, I said to you when we talked in January at the affordability hearing, is that your utilities are 100 percent accountable to the General Assembly and to the Commission. Everything that we do is regulated. We don't have that on the supply side. So we don't have that visibility that we have in other states. And I think that are vertically integrated. I'm not advocating for that, but I think we just need to ask some questions on transparency. What are you doing with the profits? What are your plans to invest those profits back in Pennsylvania? Because Pennsylvania customers are giving it to you with the expectation that generation will follow. And if it's not following, what's holding it back? and what I've said in my testimony is I think the commission has some authority right now without existing legislative or regulatory changes I think we haven't done integrated resource planning in Pennsylvania but I think the commission in current statute has the ability to ask some questions about suppliers and to get some more details and some more information about what to do so I think I'll conclude because I know we have a lot of questions but I think we just need to support what the commission's been doing if you look at what your commission has done They have done the model tariff. They have done the synapse report. They have worked with us on load forecasting. They have proceedings on curtailment and cost allocation. The EAP supports the concept of bring your own new generation. It has to be new and additive because otherwise it's not solving the problem. We support transparency on where the capacity payments are going and how it's being used. Speed and siting and permitting, 100%. And it's not just on generation. I think we have issues across the board. I mean, it's difficult to build anything anywhere at this point, regardless if it's a data center related or not. And I think we need to have some conversation about what it's going to take to get it done. We do have an energy advantage here in Pennsylvania. We have the Marcello Shale. We have gas below our feet that is abundant. I just think we need to really come together, focus on the issues. And honestly, Glenn and I talked about it last night. It a time for us to come together and figure out an energy plan that makes sense for all of us and keeping the customers always foremost in our minds Thank you Thank you so much Mr Cicero when you ready you may begin
Thank you, Chair Fiedler, Chair Causer. My apologies for not being able to be there in person today. I teach a class on Tuesday, Thursday, and didn't want to risk not getting there in time, so I'm appearing virtually, but always like to be with you. You can, the first three slides are merely kind of informational. If you want to move to the second slide, it talks about the Utility Law Project. Many of you know that. It's my privilege to kind of be affiliated with the Utility Law Project. We are a legal aid office working on behalf of low and moderate income Pennsylvanians. But Tabitha, if you want to move to the fourth slide, please, that way. Next one, yeah. So I think these two graphics really encapsulate or these two cartoons really encapsulate some of the concern that we have. You know, you have data centers that are trying to plug into a grid that is too small to accommodate them. And you have customers who
really like to utilize the tools that data centers enable but don't really understand the connection between the use of those tools and their electricity bills. And the problem that we face now is that if Pennsylvania does not act, I don't think the consequences are going to be evenly distributed. And that's really what I'm going to focus on, the consequences of the failure to act. The PUC commissioned this analysis, and to all of the conveners who've testified today, to their credit, what this shows is that with this onboarding of large load growth, data centers combined with constrained new supply are really creating this energy shortage. And the electricity debate can become very quickly overly technical with load forecasts, capacity markets, interconnection queues, loss of load expectation. And those details do matter tremendously. But the fundamental question I think that this committee and the General Assembly should wrestle with is who bears the cost and risk if we fail to plan or we don't act? In my view, if Pennsylvania does nothing, it's consumers who are bearing the risk. And that risk is not going to fall evenly across all consumers. I think the consequences will fall hardest on households who have the least ability to absorb them, seniors on fixed incomes, families with young children, people with disabilities, people who use electrical medical equipment, and working families already deciding which bills they have to pay and which can wait. If you move to the next slide, please. So this data has been going over a little bit. This is a chart that shows these high load growth. I won't spend a lot of time on this because other presenters have talked about it. But we really have these projections of astronomical growth. That gray bar at the bottom is the business as usual case for data center electricity usage in the PJM region as well as the Pennsylvania region. And the red bar is kind of that high load, low supply scenario. And the blue is the kind of like reference case scenario that was discussed. If you move to the next slide, please. So in context, right, you know, a 100-megawatt data center uses about 876 gigawatt hours of electricity per year, which is 876 million gigawatt hours. That's equivalent to about 89,000 homes for one full year, right? So the context for this matters because if you move to the next slide, we have this warning about what an unreliable system looks like. And these numbers have been talked about 13 days 34 hours 132 times worse than PGM reliability planning criteria This is not by the way a prediction about what will happen It not a prediction that customers are going to lose power 13 times It really a regional reliability measure. But if it comes true, if in fact this were to come true and all of that were concentrated on residential customers, which we know is not true, but it gives some context for this, you'd have about 18 million households without power for one hour if all that fell on exclusively on residential customers. I think that's a way to kind of contextualize what some of this harm might look like. If you move to the next slide, please. So this morning, the two charts that were from the PUC study show really high capacity prices, which is the chart that is on the left-hand side from figure seven and really high energy prices as well. So again, the blue line at the top is that high load, low supply. The middle line is a reference scenario. And the lower line is the kind of no new data center scenario. What I think is important to understand is in the short term, these scenarios are very similar. If you look at the capacity prices in any event. These scenarios are extraordinarily similar. You see very high capacity prices through 2030 until we get out of this shortage. The energy price side is different though, and that makes up the really significant part of the bills that translate down to residential consumers, whether they're on default service or whether they're shopping with a competitive supplier. Next slide, please. So, and the next one, I apologize for the title slides. So what are the current capacity prices? The dark blue lines are the capped prices of the last three capacity auctions. The light blue are the kind of uncapped, what they would have been. You heard Dr. Bowering make an estimate of $26 billion. There's also estimates out there about $30 billion in savings from that cap. But I think the reality is that you have really high prices at this $325 per hour capacity price. And if you refer back, we don't have to go back now, but if you refer back a couple slides ago until we saw those charts, you're seeing prices that are double that, right, $700 in the capacity market. in terms of costs. And as Dr. Bowering noted, you have about $29 billion of costs PJM-wide that have been assessed to and assigned to consumers solely as a result of kind of data center load growth. That stays significantly elevated. And I want to talk about what those capacity prices as well as high energy prices have actually meant for Pennsylvania consumers. So if you go to the next slide. As Andy pointed out, we really have lots of data about what the the prices are for folks on default service, but not a ton of data on how this translates for folks under retail supply contracts. But if you look at the PIA power switch and other retail supply contracts, you see prices that are fundamentally consistent with these prices. December 2024 is my reference case. That was really before a lot of this data center load got baked in. That was the price to compare in that first column. And then June 2026 was the last time the price to compare changed. It's going to change again in December of 2026. And if you look at the delta, the increases in cost, they range from as low for UGI Electric as 18.6% to as high as 52% for Citizens, some of our smaller electric distribution utilities. But really, we're ranging 20, 25, 30% for the kind of large electric utilities Again it important to contextualize as Andy noted that this is not profit to the EDCs These are costs that are being passed through They don make any money on this But it is felt the real impacts are real impacts felt by consumers And these 500 and 2,000 kilowatt hour references are monthly increases. 500 is roughly base load. 2,000 is roughly somebody who heats with electricity. But these are real increases for consumers. And if we move to the next slide, I'll show you how that aggregates itself over the course of the year. This is the same information except for the average usage, not $502,000. This average usage comes from the Public Utility Commission's rate comparison report. And what it shows is the overall cost increase annually, the FAR column at average usage based on the— This is just the increase in costs between December of 2024 and June of 2026 because of those increased capacity and energy costs, not just capacity costs. We're talking about $1.2 billion, almost $1.3 billion in increased costs annually overall at average if all residential customers of each of the major electric distribution utilities used the average usage. This is a low estimate because it doesn't include the small EDCs, and it doesn't include unregulant, you know, municipal customers, and also doesn't include all those customers who were kind of, you know, well, it doesn't include municipal customers. So, you know, we're talking about billions of dollars of increased costs for a less reliable system, right? And that really is what we're talking about. So if you go to the next slide, I wonder if we want to contextualize what this might mean for low and moderate income families. Why does this matter? It matters deeply for Pennsylvania households. Next slide, please. Pennsylvania families are already under strain. We have 16.5 percent of all electric customers are confirmed low-income customers. That is, they have household income at or below 150 percent of the federal poverty level. Of all the electric terminations in 2024, 40, almost 42 percent were for low-income households, despite them comprising only about 12.25 percent of customers. And according to recent data from the Energy Information Agency, about 42 percent of households report extraordinary difficulty paying their bill. And so this is, you know, a pretty significant problem about financial strain that households have under existing rates that will be exacerbated under higher cost scenarios. If you move to the next slide, putting aside economic reasons why someone might lose their electricity, when we have a loss of electricity as a result of blackouts, which could be projected through the Public Utility Commission's analysis, these outages won't be felt evenly. You know, households with savings, well-resourced households have generators or batteries or alternative lodging, stock pantries, money to replace spoiled food. Long-term households typically, although not exclusively, have none of those things. A senior using oxygen equipment or a person relying on dialysis-related equipment or refrigerated medication, a family with an infant in a weather-related emergency is really going to be out of luck depending on what their household income is. We have a client at the Utility Law Project who is in her late 80s, and they lost power in her building, and it was a high-rise building, and they had to evacuate, and they had to take the stairs, and there were three cardiac events as a result of this power outage, right? So as a result of these things, there are real human consequences that occur as a result of kind of unexpected, unanticipated loss of load. Recall that during those high, low, low supply scenarios, there's gonna be a both summer evening when it's hot, and winter morning when it's very cold peaks, which are the really fragile components of our system. And losing air conditioning is not merely uncomfortable for older adults, infants, people with disabilities. It can be devastating or it can be very dangerous. During winter mornings, electricity that is essential for heating systems, circulation pumps, electric space heating can cause cascading consequences for families. So these emergencies, I think, are going to, like, inequitably impact Pennsylvania families. Next slide, please. This is another representation of kind of the termination-related issues. We already have devastating amount of utility terminations, and if you overlay that with loss of service related to unanticipated outages because of shortages across the grid, you create scenarios where families are going to be kind of consistently out for long periods of time. And again, given the unequal access to, like, backup supply as well as the inability to kind of mitigate that hardship, there's pretty significant concern about this. If you move to the next slide, please. So this utility insecurity is devastating, right? This is for households who kind of lose system, lose electricity or any utility services sort of economic consequences. But the impacts also affect households as a result of these kind of loss of load events that occur resulting from unanticipated loss of load blackouts, right? So these create pretextual reasons why landlords could evict, right, in a variety of circumstances. They create family disruption, health outcomes for families as well. I have a couple other slides that I don't have to go through, and you can take the slides down. They're in your deck. There are resources that are available for you. And of course, there's always an opportunity to reach out to me in my office. I look forward to questions about this. I really just wanted to contextualize how the concern of the inaction, the fundamental question that faces Pennsylvania policymakers are what are we going to do about this? And the failure to act will have consequences to your constituents. And those consequences will fall inequitably on the most vulnerable of them. I look forward to answering any questions that you have and discussing this further when we get to that point. Thank you so much, Mr. Cicero. We will have questions for everyone in just a few moments, but first we'll go to Mr. Thompson. Thank you for being here.
Thomas. Thank you. Thank you, Chair Fiedler, Chair Causer. It's good to be with you this morning discussing these issues. Really appreciate the invitation, the opportunity to be here. It's also great to share the dais with my fellow panelists here and see Professor Cicero virtually. First slide, please, if we could. You heard a lot of testimony this morning. One of the advantages of going towards the latter half is I can pick and choose what to comment on. So I'll probably skip over a few things that have already been addressed and maybe focus and drill down on a few things that I think could use some more explanation. But if we could go to the next slide, I'm going to try to make this as simple as possible. I think it was Representative Barton earlier trying to make this as simple as possible, and I'm going to try to do the same. These energy issues are enormously complex, but at the end of the day, PJM is really a supply and demand proposition. So really when you're thinking about policy and how to respond, it's really important to look at both sides of the equation. What does the supply side situation look like going forward, and what does the demand side situation look like going forward And as an overall observation I absolutely agree that we need more generation Demand is going up at rates that we haven seen today But what I would suggest particularly as relates to the Synapse study, is, you know, I'm not maybe in the spot where we're in a dire situation. There are a lot of things in place that give me a little bit more comfort looking forward. I think there's opportunities to improve what we're looking at on the demand side through load forecasting. And I also think from a supply side situation, we're seeing a lot of activity that's given me optimism that the situation can be addressed. Don't get me wrong. We've got a lot of work to do, both here in Pennsylvania and in other states, but I think there's a path forward here that can work as long as we continue to, like I say, remain focused on both the supply and the demand side. So let's talk about the demand side first if we go to the next slide. You heard a lot about load forecasting today. And the Pennsylvania General Assembly in 2025 passed the Load Forecasting Accountability Act, Act 45. as Andy made reference to, as the chairman made reference to, great piece of legislation, really put Pennsylvania in the lead when it came to load forecasting regionally. Other states, I think there's five other states that are now looking at similar legislation. I believe Maryland already passed it. At least one other state already passed it. But, you know, the idea that utilities and the commission should be communicating on what they're giving to PJM in terms of load forecasting has been critically important. But why do we care so much about the load forecast? And there's two main reasons. We've talked a lot about the capacity market, but I want to talk about transmission maybe a little bit more. So PJM in the capacity market looks out three years forward and says, how much power are we going to need? And then procures commitments to get that power in the current year. So here we are in 2026. Under normal circumstances, we'd be looking out at 2029 saying, how much power do we need? And getting commitments to procure that power. PJM uses the load forecast to determine how much power they need to get in those out years. And you've already heard about a couple auctions clearing short. Well, the megawatts that they're short now has been reduced because of subsequent adjustments to the load forecast. So getting that load forecast is really, really important for the capacity market's sake. What probably has not gotten enough attention is the transmission conversation, because PJM uses the load forecast, the long-term load forecast, to plan the transmission system. And here they're looking 20 years out, okay? So PJM is making certain assumptions about supplies, certain assumptions about demand, looking 20 years forward. And if, you know, the forecasts are wrong in those out years, you're building the transmission system the wrong way. And, yes, we have a generation issue now, but the next issue, and I'll get into some of the generation numbers, There's an awful lot of generation in the queue. It's going to require an awful lot of transmission to support that generation when it comes online. And I know those are tough issues for you all locally. But my point is to get low forecasting is both important on the generation and the transmission side. And I think there's work to be done in both those spots. So let me just maybe get a little, we go to the next, okay, we're on the next slide. Get a little bit PJ and weedy here. I really resisted the temptation to do so, but I think it's important for the committee to sort of understand how PJM does its load forecast. And I would highly recommend maybe a separate hearing on how PJM does their load forecast and how it works. But each year, PJM publishes the load forecast going 20 years ahead. So in January of 2026, they put out their 20-year load forecast for all to see, and it includes load projections for each of those 20 years moving forward. Then, subsequent to that, they do what are called large load adjustments. So the utilities come to PJM and say we either got to increase our projection or lower projection based on the demand we seeing on the system and the proposed interconnections And the trend has been and I note this in the last slide, and let me actually go to the next slide, the trend is emerging that as we get closer to the delivery year, as we get closer to the actual year when the power is going to be needed, the load forecast is going down and the actual demands on the system are going down. So what I have on this slide is a comparison of what we thought was going to come on the system in 2025, in January 2025, compared to what we think is coming on the system in January 2026. And you can see some pretty significant reductions that have occurred from 2025 to 2026. We'll see what 2027 looks like in January. But these are real numbers. Like take 2029, for example, a 4,600 megawatt reduction in the 2029 load forecast. I mean, that's about six Three Mile Islands, right, that we're reducing the load forecast by. The other thing I would say, just in general as it relates to load forecasting, and the Synapse report honed in on this. The Synapse report basically accepted the 2026 load forecast as their reference case. And they see a huge spike in the 2030 area. Well, a lot of the demand is getting pushed back, if you will. And the other thing that's happening is the utilities submit different information on those out years versus the near years. So there's really a lot of reason to maybe drill down a little bit deeper on this load forecasting and understand what's going on here. And like I said, Pennsylvania's done a really good job. Annie's members have done a good job. People are getting more sophisticated, and I think there's an opportunity to get even more sophisticated. Because like I said, I look at numbers like this, and here's like a bigger drill down between the years, and you can see the comparisons. These are the large load adjustments I mentioned. So these, like I said, demand is still going up. I don't want to lose sight of the fact that I'm not trying to say demand is not going up. It most certainly is. But it may not be going up at the pace, and to use Stephen's word, velocity, that maybe the Synapse report suggests. So let's go to the next slide. I mentioned the Load Forecast Accountability Act. Again, good work by this committee, good work by the General Assembly to get this done. It was passed last June. The PUC issued its first report in June of this year. And one thing I'll just make out maybe as a personal observation, like when I was on the commission in the early part of the century, there was a lot of conversation about load forecasts, right? I mean, it was just 1% a year. It wasn't a big deal. It just, we were chugging along. It was really heartening to see the PUC and the PUC staff really issuing a very, comprehensive and sophisticated report about load forecasting. Chairman DeFrank has some of his best people on this case over there. He understands the importance. You heard that from him today, and it's great to see so much attention being paid to this at the commission. But one of the things that they report recognized is everybody does it differently to a certain extent in terms of what's counted, what's not, both in Pennsylvania and outside of Pennsylvania. And I think Andy might have mentioned it too. Like there is an opportunity, I think, to maybe flesh out some best practices here, create some standards, because like I said, Pennsylvania was in the lead when it passed this law last year, a year and a half ago. I think there's an opportunity to take it to the next step and maybe create some regional models as it comes to what is appropriate techniques for forecasting load that can be relied upon both in the short term for those capacity markets. But yeah, like I said, I'm really worried about the transmission piece that is coming And like I said those are 20 projections that we need to have some confidence in Next slide Steven mentioned this as well PJM is definitely stepping to the plate They have done some really interesting things in this regard I just reclude the links and not summaries, because these are like deep dive nerdy things about ramp rates. The other thing I'll mention, because Synapse mentioned it as well, the Synapse study assumed that the data centers are running full out all the time, demands on the system. And as we learn more about data centers and actually how they operate on the system, and this is what that second piece, the Charles River Associates piece, is getting at that PGM is working on, we're realizing that the behavior of the data centers in the market might not be linear. They have different load profiles. They have different needs at different times. They have the ability to be flexible, ship computing to other places. So I think there's more to understand there about just how these data centers are interacting with the market. And like I said, PJM is working on that. I commend those links or, like I said, possibly the subject for the next hearing. So that's the demand side. So let's transition to the supply side because, yes, we absolutely 100% need new generation. And if you look at the next slide, these are PJM's most recent numbers as it relates to projects in the queue. And you can see in cycle one, these are projects that submitted themselves into the queue in April of this year. There's 200 gigawatts of power. The entire PJM system right now is 168. Okay, so more than double the capacity is out there and available to come online under the right circumstances. That number's been reduced a little. It's closer to 170 right now. But now all 170 gigawatts in the queue have a financial consequence for withdrawing from the queue. So these are pretty serious projects that are moving forward. There's a map there. We'll get into the Pennsylvania-specific numbers in a minute. But my point is, on the supply side, we are seeing a lot of activity, probably more than I've ever certainly seen in my career. If somebody would ask me to guess these numbers, I would have bet the under on all these numbers two years ago. The other thing I'll mention is, too, there are shovels moving in Pennsylvania and other places. I mean, there's 1,800 people working in Homer City right now moving dirt to get that plant online. Three Mile Island, the Clean Energy Center, dirt's moving there. Limerick has an upgrade coming. Beaver Valley has an upgrade coming. There's other generation projects that are moving through the process. So the shovels actually are moving. The power is not to market because it takes time to build this stuff, but we are seeing the shovels moving and anticipate that power coming online. Now, if we go to the next slide again, this is the Pennsylvania-specific numbers. You can see the number of about 40 gigawatts. And again, this is just what's in the queue being studied right now. It doesn't count the 100 gigawatts that Stephen mentioned already being through the queue. So there's a bounty of generation that is out there. As you can see in Pennsylvania, it's a lot of natural gas. A lot of it probably in Representative Cale's district. He probably – okay, all right. Montgomery County, not so much. But Philadelphia, I'm sorry. But anyway, lots of activity in Pennsylvania for sure. Like I said, the Southwest, there actually was a terrific article on the Pittsburgh Post-Gazette. I'm sure you saw it where they detailed all the projects going on in Southwest Pennsylvania. So there is a lot of activity out there. Again, this is – not all these projects will be built. And I don't want to give the impression that they all will be built, that they will not be built. But my point is there is enormous opportunities for data centers who want to contract for new generation. Here's 200 gigawatts in PJM, 40 gigawatts gigawatts in Pennsylvania that is available to cut a deal with to get new generation built. So from a supply side, you know, that's why I'm optimistic that if we can get these deals done, we will see the generation come online. So just to wrap up with the last slide, I just covered the first bullet point, encourage new large loads to contract with new supply. You heard the PUC's position on that. You heard Chairman DeFranck say he's changed his position. There are a lot of opportunities out there. I mentioned generation. I mentioned transmission. Like I said, I do worry about the transmission conversation that's coming. And to the extent the committee wants to look forward and think about issues, I would definitely put transmission on that list because it's going to require an awful lot of transmission to support this generation. Stephen Bennett touched on the pending FERC matters. If I could just make one comment about their IRIS proposal, the PJM IRIS proposal, interim resource adequacy service. It's before FERC right now. We're expecting a decision on this next week. But if approved, what this would set up is a structure where if you are a new large load, PJM will allow you to come on the system. But if the system is going short, you would be curtailed first, if directed so by the Pennsylvania Public Utility Commission. So there is a step in here before the dire scenario where the data centers would be getting off the system. Like I said, FERC has not approved this yet. I want to be clear on that. I do not know if they will approve it, but that is the idea behind it. Load forecast accountability, I touched on that. Like I said, I think there's an opportunity for Pennsylvania to take it to the next step. And then just finally stay committed to the competitive market. Look at the activity we're seeing in Pennsylvania. We have a huge surplus here in Pennsylvania. I do not believe in my lifetime we will be importers of electricity. So, you know, I'll stake my claim. That'll be my hot take for the morning. And with that, I appreciate the opportunity to be here and would be happy to answer any questions.
Thank you so much. I know we're short on time, but Mr. Vaughn, if you could go ahead when you're ready.
Thank you, Chair Fiedler, Chair Couser. I appreciate you having me here today. I'm going to try to land this plane in a way that makes sense, focus on outcomes and actions the legislature can take. Just quickly to start with, I'm Evan Vaughn, Executive Director of Merrick Action. We represent utility-scale wind, solar, and storage developers on our operators, manufacturers. As I look at the Synapse report, I really agree with the overall direction of the report. We are facing a reliability and an affordability challenge that needs to be taken head-on, including by actions from this legislature. I also agree with many of the comments that Mr. Thomas made, you know, representing a similar sector to me, but just broader, including some of the thermal generators. One of the things that nobody's really said here today, but I think sticks out from the Synapse report, is that even under the no data center scenario, there are still assumptions of deployment of resources to get to that we don't have to worry about reliability concern. And frankly, between now and 2030, almost all of those resources are solar storage and onshore wind. You know, that model is selecting those resources because, as a capacity expansion model does, they are seen to be the most cost-effective resources to come on in that time frame. So, you know, as we talk about what the resource mix going forward should be, certainly we need the baseload that's on the grid today, but we shouldn't neglect a diversified, all of the above resource mix going forward. And there's not an insubstantial amount of capacity the report is calling on. It three to seven gigawatts of solar and storage and some onshore wind So as we look to meeting that demand what the legislature can do it also really important to understand that what's in the queue today is not guaranteed to come out of the queue, and those assumptions are not guaranteed to come true. So that does mean I think this legislature needs to take action to make sure those wind, solar, and storage resources, and then eventually in the 2030s, other resources like gas come online. the three challenges i primarily see that can cause a stumbling block for these projects are financing siting and transmission i'll be real brief on transmission because i think glenn thomas covered it well but there is a transmission shortfall projects are dying when they get out of the queue because the cost to upgrade the system is too high right now competitive generators pay all of the cost of upgrading the system and so that can kill projects that are otherwise viable. The second issue, siting, I want to say that I think the consideration of Representative Steele's bill is a step in the right direction. You know, the PUC executive director, rather, chair talked about preemption. We're not necessarily recommending that step at this stage, but standardizing siting like Senator Yaw's solar decommissioning bill, that's the kind of thing that can help these projects have more certainty. And then finally, what I want to spend the bulk of my time on is financing. So there's all these projects in the queue that you've seen. Why are they not getting built if demand is so high? And it's a little counterintuitive. So you see these high prices and you say, well, that's a bonanza, right? These developers can make so much money by serving that demand. The problem is these are basically 30 to 50 year assets. And it's really difficult under conditions of uncertainty. And this is frankly the most uncertain time I've seen in my 11, 12-year career to make these investments. And so does that mean ratepayers have to hold the bag? No. But it does mean that these projects need more revenue certainty in order to be constructed. And so what that could look like, the Representative Rivera storage bill that the House just passed, you know, with bipartisan support, I'd notice, that is the kind of bill that orders a procurement to go forward for resources to help meet these reliability needs. There's still some details, I think, on that bill to be worked out in the Senate, but that's a good example of what the legislature has already done and could build on for other resources. The last thing I'll say is, you know, to finance wind and solar projects, there's also a real opportunity to look at some of the default service and to hedge consumer exposure to these cost increases by long-term contracts for wind and solar. Wind and solar do have very cheap costs, even without the federal tax credits. And so if you lock in prices for consumers for some percentage of their exposure, you can get a good price locked in for that 20-, 25-year time horizon, which, as we all know, long-term mortgage is easier to budget for than short-term spikes and drops in your costs. And so with that being said, I'm happy to answer questions. I do want to give time for questions, and I will be happy to delve into more details. My comments were quite long and written comments, so I encourage you to read them. It goes into a lot of detail on this stuff. So thank you. Look forward to questions. Thank you so much. I know we've got about eight minutes. I have one quick
question for you, Mr. Vaughn, and then I'm going to turn it over to members. I'm sorry that you may have felt pressed for time in your remarks, but do you have any, you mentioned Representative Rivera's battery bill and a few other things. I'm very proud of the work that this committee has done, and we work very hard to try to find bipartisan consensus. Are there other legislative ideas that you have that you think we would be wise to look at or other states that you look at as sort of a north star on energy policy that we might want to look at
Yeah. I mean, I think in short, you know, finding a way to get the Senate on board with the storage bill, really important. Like the longer that those projects don't have that certainty for revenue certainty, you know, they're going to die on the vine essentially coming out of the queue. And again, those are projects that make sense to focus on because they're what's viable over the next five years, essentially.
And then the siting side of things, I think that would be number two, is there's got to be something done to answer the question, how do we make sure we get enough energy online to keep the lights on, when right now the decision lies with all these different local government officials who have reasonable concerns about projects, but their decision-making framework does not align with following these broader trends. Their decision is very local in nature. And so balancing that somehow, whether it's their standards or some kind of state siting board, I think that's how you get more certainty around projects moving forward. Thank you. And I do agree. I think siting will be probably one of the biggest challenges that we'll really need to address head on in 2027. And I personally also do believe, as you said, that renewable energy will play a really key piece in helping us very, very quickly get more energy online. With that, I'm going to go to member questions. Is that right? uh... chairwoman rap thank you chairman uh... direct money uh... question to mister tubs and also commenting uh... because of mister bennett's uh... one of his statements regarding fossil fuels and renewables uh... just so that you know it was tons i come from warren county home of oil gas really i do have a hydro plant uh... which is the storage in in Warren County which I've been through several times very impressive so mr. Tubbs you talked about the importance of natural gas resources and how they can be leveraged to meet short-term need for more generation and our natural gas utility members stand ready to support those efforts talking to a lot of my folks in my district, I know that is true. But they are stopped in their tracks mostly by regulations, permitting, and everything that our state agencies place in front of them. And I've been on this committee for 20 years minus two years because of circumstances in the committee arrangements. the information that we learned today was somewhat overwhelming to an extent, but with the data centers and everything else in Pennsylvania, the information was very much appreciated. So because of your questions, and I believe that years past, some of the decisions we made are the result of what is happening today because we have left behind a lot of the production of oil and gas. And so that is why, in my opinion, clean natural gas, by the way, one of the cleanest energy, why we find ourselves in the predicament that we are in today. So, sir, here's the question. Yes. How important do you think it is having reliable baseload generation, like coal or natural gas on the grid to shield Pennsylvania's from the impacts of a high loss of load expectation. And as I said Mr Bennett also mentioned fossil fuels But how important do you think the baseload generation relying on natural gas is
I appreciate the question. And I'll begin with saying that I grew up in Starbrick. So I am a Moran County born and raised. Oh, okay.
I think I know your parents.
Yes, you do. And I appreciate the question. I think it's vital. I think the Energy Association has come out and said that we need new baseload generation. And natural gas, we're blessed in Pennsylvania with a resource that is vital to the future. With that said, we have also come out and said that we are not opposed to other technologies. We think battery storage, wind, solar, and others all have a place. But I don't think that replaces baseload generation for dispatchable needs. But I think it's an important conversation. with the demand that we're seeing, we're going to need all these resources. And I do think, you know, we've heard from the prior panels that policies from other states and policies internally can make decisions, can impact how investments are made. But, you know, in short, it's mandatory. But I think we're going to need everything to come to bear to meet the need that we have going forward.
Thank you, Mr. Tubbs. Thank you, Madam Chair. Thank you. A few minutes remaining. We've got two member questions. Let's see if we could do them. Representative Boyd.
Thank you. This is always like a PhD level education at these hearings and I appreciate everything and it's very it's a lot to think about but every time I hear everybody say bring your own or etc. the non-renewables is not really bringing your own it's just using it faster so whenever we use it faster I understand that you're saying not in your lifetime but what about my kids what about our grandkids, right? We have to think about those. And I can't help but think, and maybe, Mr. Vaughn, you can answer this, is we've had a lot of federal policy changes, too. How have federal policy under this administration impacted our renewable generation? Like, how is that being
affected? Yeah, it's a great question. It's certainly impacted that environment of uncertainty that I talked about. I mean, let's not forget, when we talked about how we got into this hole today, I really don't think it's productive to talk about, you know, this resource versus that resource because, I mean, look, frankly, the Trump administration tanked seven gigawatts of offshore wind that had that been coming online today, we would have had seven gigawatts of 65 percent ELCC capacity factor resource. So, you know, the federal uncertainty has, I think, cut both ways, you know, acknowledging that it would have been a difficult environment to invest into gas under, you know, carbon emissions rules, irrespective of the value of those rules. So I think that, you know, one thing this committee should keep in mind is as we look in the long-term planning, and I think the PFC committee chair raised this, long-term planning is really important. We don't want to get into a situation where consumers who are still paying for natural gas, by the way, to heat their homes and all that, are seeing higher fuel prices because all the data centers are bringing all their own gas generation. We need to diversify. PJM is already heavily relying on gas, and I'm not saying that's going to change. But adding more doubling down does add risk. Pipelines can freeze. There can be cyber attacks. You can have gas shortages. And so all those things should be kept in mind, not saying don't build gas, just saying be thoughtful about it and balanced. But if I could just add, too, I mean, we're seeing a lot of activity in Pennsylvania already on this front. And because Pennsylvania is a competitive state, consumers can choose where they get their power from. And many of the data centers are funding the up rates. Well, I mean, there's at least three examples in Pennsylvania where data center developers are funding up rates to nuclear facilities, adding carbon-free electricity. the grid. So you can do that in Pennsylvania. You can do that at your home. You know, you could buy 100%. You could have 100%. Well, you might be able to. I don't know what, I don't know if that could pass. I know there's 100% renewable option, you know, for your home. So maybe.
Thank you all. Representative Cahill, 1059. You may go ahead.
I'll be very, very brief. Thank you, Madam Chair. One thing that I've heard out of these hearings that I think is actually a piece of constructive, tangible legislation we can have going forward is there seems to be uniformity that permitting reform would be something that would benefit the entire industry across every spectrum, whether it's with new generation plants, whether it's with solar, whatever it is. So that's something I think we should take away in a bipartisan sense and say, hey, we could accomplish something good here. But I have a question especially for you, Mr. Thomas. A lot of talk about bring your own energy, gas turbines come in different areas. A concern I have is, okay, so bring your own energy. You're building your own gas turbine. Is this going to hurt the material supply for turbines being built for the grid? Even though it's good that they're bringing their own energy, my question is, what's the backlog like with this? Because I heard five years in some cases and I just curious what the impact is on that Yeah I mean this is a global issue you identifying here It not just the Pennsylvania or even a PJM issue But yes I mean
there is a high demand for turbines right now. I will say there are turbines out there. People have them in their possession or looking where to deploy them and they're choosing between Pennsylvania, Texas, Ohio, other places, depending on various factors, including permitting and things like that. So there are people out there that have turbines and can deploy them. I agree though, if you're getting in line right now, yes, you're probably waiting five years or somewhere in that neighborhood. But a lot of people are already in line waiting and a lot of people already have them or just trying to figure out where to deploy them. Thank you. Thank you. That's a good question.
Thank you so much to all of our testifiers today. We have learned a lot. Many of us have taken copious notes on both sides of the aisle and we most certainly will be in touch. So thank you so much for your commitment to this. And with that, it is 11.02 and this hearing of the Energy Committee is complete. you