State House Approves Commonwealth’s First Major Data Center Regulatory Framework; Measure Faces Uncertain Path in Senate
Pennsylvania House Bill 1834 (as amended, Printer’s No. 3061) represents the Commonwealth’s first comprehensive legislative framework specifically addressing the regulation of large-load electricity users, with a particular focus on commercial data centers with peak demand of 25 megawatts or greater.
03.26.26
The legislation passed the Pennsylvania House of Representatives on March 24, 2026, by a vote of 104–95, with unanimous support from Democratic members and near-uniform opposition from Republican members, with only two Republican members joining in support. The bill now advances to the Republican-controlled Pennsylvania State Senate, where its ultimate passage remains uncertain.
The legislation is designed to promote continued economic development while safeguarding electric reliability, protecting existing ratepayers from cost shifting, and advancing Pennsylvania’s clean energy objectives. To implement these goals, the bill grants broad authority to the Pennsylvania Public Utility Commission (PUC) to regulate interconnection, service terms, cost allocation and operational requirements for large-load users, and establishes a strict prohibition on any subsidization of associated infrastructure or system costs by residential or small commercial customers. Utilities are required to fully assign or allocate all costs attributable to data center demand, including transmission, distribution and capacity-related investments to the large-load customer, supported by cost-of-service studies to ensure appropriate rate design over the life of the service arrangement or infrastructure.
The bill further imposes significant financial, contractual and operational safeguards intended to mitigate utility and ratepayer exposure to stranded costs and project risk. These include minimum service terms, financial security requirements such as letters of credit, load ramp-up obligations and early termination or exit fees. To preserve grid reliability during peak conditions, the legislation authorizes interruptible service tariffs and requires large-load users to curtail usage or rely on on-site backup generation prior to any impact on residential or small commercial customers, along with enhanced disclosure obligations regarding backup generation capabilities and coordination with regional transmission organizations. In addition, interconnection approvals for new or expanded facilities may be conditioned on participation in demand response programs or demonstration of incremental energy resources sufficient to offset projected load growth, with expedited review available for qualifying clean energy-backed projects.
In furtherance of clean energy and public benefit objectives, the Act mandates that large-load users procure at least 25% of their electricity from renewable sources and encourages the development or procurement of “clean firm” energy, including nuclear, hydroelectric, geothermal and renewable resources paired with storage, with limited alternative compliance mechanisms available. The legislation also establishes two new funding mechanisms: a Data Center Low-Income Home Energy Assistance Program (LIHEAP) Enhancement Account to expand energy assistance—including summer cooling support—for low-income households and a Pennsylvania Energy Independence Account to fund local energy infrastructure projects, including grants and loans, with a portion of funding directed to host municipalities and counties. Finally, the Act requires PUC filing and review of all large-load service agreements, imposes disclosure and anti-circumvention provisions, and mandates annual reporting to the General Assembly. Collectively, House Bill 1834 establishes a detailed regulatory regime intended to balance the growth of energy-intensive development with system reliability, cost equity and long-term energy policy objectives in the Commonwealth.
The zoning and land use attorneys at Klehr Harrison are actively pursuing entitlements for data center projects throughout Pennsylvania. Our firm will continue to closely monitor ongoing legislative developments and consider how potential legislation may affect pending projects, zoning ordinances, comprehensive plans and long-term development strategies. We will continue to provide updates as more detailed legislative proposals emerge.
Co-authors Matt McHugh, partner, and Leonard Altieri, associate, are members of the zoning & land use practice at Klehr Harrison.