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The Pennsylvania Public Utilities Commission (PUC)  issued a final order reflecting the Motion of Chairman DeFrank adopted at the Commission’s April 30 Public Meeting re Interconnection and Tariffs for Large Load Customers.

As previously reported, Commission held an En Banc Hearing In re: Interconnection and Tariffs for Large Load Customers on April 24, 2025 in response to recent impacts of data center growth within the Commonwealth of Pennsylvania, the PJM Interconnection, LLC (PJM) region, and nationally, with data centers, utilities, and ratepayer advocates discussing the value of new load, economic incentives and jobs, infrastructure, and rates.

On November 6, 2025, the Commission issued, for comment, a Tentative Order with a proposed model tariff for Large Load Customers.

Excerpts from the Order:

“Overall, there was broad consensus regarding the fundamental principle of cost causation and the need to protect ratepayers from unreasonable cost shifting. There was general agreement that Large Load Customer guidance is needed in the areas of interconnection costs, interconnection studies, minimum contract terms, exit fees, and collateral, among other areas. Upon due consideration of the record evidence in this case, we issue this Final Order and model tariff in the attached Appendix.”

Appropriate MW Size Designation for Large Load Tariffs in Pennsylvania

“We proposed a threshold for a Large Load Customer of 50 MW individually and 100 MW in aggregate. Comments regarding the 50 MW and 100 MW threshold varied. Environmental stakeholders and Large Load Customers, as well as Walmart, KEEA, and Duquesne, generally support the Tentative Order’s proposal of the MW threshold. Some state officials, EEE, and OCA support lowering the proposed thresholds, while IECPA, PPL, FirstEnergy, and EAP support either raising the proposed thresholds or leaving the MW threshold to utility discretion. We will maintain the proposed 50 MW and 100 MW levels as we find these levels to be reasonably calculated to appropriately capture Large Load Customers with a significant impact on the grid in a nondiscriminatory manner. We concur with NRDC and Earthjustice’s joint comments asserting that a threshold higher than 50 MW may fail to capture customers whose consumption poses challenges to Pennsylvania’s grid. Comments in support of a lower threshold generally provide reasoning related to smaller EDC peak loads or potential federal, DOE and NERC levels. We recognize there may be variations based on EDC configuration, but we are setting guidance in this model tariff for the EDCs that serve the bulk of the jurisdictional electric customers in Pennsylvania. Further, federal or industry levels are still in the formation stage and do not provide us with definitive guidance at this time.

In addition, we proposed that utilities retain authority over applying the model tariff to customers below 50 MW. There appears to be stakeholder agreement over the Tentative Order’s proposal for utilities applying the model tariff to customers below 50 MW. Therefore, we will maintain this guidance in the model tariff. We concur with EAP that this will allow smaller utilities, as well as other large utilities, a method to ensure the grid can accommodate the net realizable load and avoid potentially significant impacts on the entire grid.

Finally, we proposed the exclusion of behind the meter generation from the threshold calculation. As there were no adverse comments, we find that the exclusion of behind the meter generation in the threshold calculation to be reasonable.”

General Definitions

“We proposed that this tariff be applicable to Large Load Customers based on individual and aggregate MW thresholds with existing Large Load Customer contracts continuing to be addressed using the EDC’s existing tariff requirements. Multiple stakeholders have suggested revisions and/or sought clarification regarding the Tentative Order’s definition of a Large Load Customer. We are persuaded by the viewpoints of stakeholders that additional language of the tariff’s applicability is necessary. We agree with comments filed by PECO, Duquesne, EAP, and DCC, clarifying that the Final Order will be applied to new large load interconnections (new customers and new incremental load of existing customers) after its effective date. We assert that “grandfathering” existing Large Load Customers under the EDC’s current tariff requirements is consistent with large load tariffs adopted in other jurisdictions. However, we also note that existing Large Load Customers should have the option to enter into this tariff’s provisions under EDC discretion on a case-by-case basis.

Numerous stakeholders have also suggested revisions and/or sought clarification regarding various terms and definitions within the model tariff in the Appendix. We are persuaded by the viewpoints of stakeholders that additional language within the Appendix is necessary.

We proposed an aggregate definition based on factors including, but not limited to, premises sharing one or more of the following: common owner(s), a common parent company, common local electrical infrastructure, and common control. Comments from state officials, Earthjustice’s joint comments, FirstEnergy, and DCC have generally expressed support for the Commission’s aggregation definition proposal. However, PennFuture, OCA, Walmart, Duquesne, FirstEnergy, DDC, and Google have suggested modifications to the aggregation definition. We find the comments constructive; however, we maintain that the model tariff should provide broad guidance. The items suggested are specific in nature and better suited to be vetted in an actual EDC tariff filing or rate proceeding.”

In the Tentative Order, we proposed that the contract term includes the load ramp period and the initial contract term, in which the initial contract term begins after the completion of the load ramp period. We agree with OCA and EAP that clarification is warranted regarding the terms “Contract Term,” “Initial Contract Term,” and “Load Ramp Period.” We will modify our proposal to clarify that the minimum initial contract length, which was proposed to be 5 years in the Tentative Order, should begin after the ramp-up period concludes. This revision allows EDCs to conduct a revenue review of at least five years during which the large load is at its Contract Capacity. We note that we expect a sufficient amount of collateral, CIAC, and/or exit fee to cover the costs resulting from the addition and/or exit of the Large Load Customer, protecting customers from cost-shifting.

In addition, we proposed a contract notice period of no later than three years and an exit fee notice period of at least 42 months in the Tentative Order. We acknowledge comments filed by Constellation and PECO and will clarify that the notice period described in the “Terms of Contract” section of the model tariff refers to the terms and conditions of the tariff after the initial contract length of five years, in which the Large Load Customer will still be connected to the grid after leaving or modifying its contact, such as adjusting its Contract Capacity. The notice period in the “Exit Fee” section of the model tariff refers to the scenario when the Large Load Customer disconnects or leaves the grid. While we acknowledge the differences between the two notice periods, we propose that both notice periods should be set at 48 months. We find it prudent to align both notice periods with the PJM load forecast for the delivery year. We also concur that this provides an adequate amount of time necessary to inform any relevant parties and conduct any required engineering studies.”

Deposits, Financial Security or Collateral from Large Load Customers

“We proposed that financial security should be sufficient to cover the cost of any Large Load Customer’s share of network upgrades for which the Large Load Customer is the majority beneficiary and that will be partially allocated to other customers of the EDC. The proposal for the financial security was not opposed. Therefore, we find the proposed collateral requirement reasonable and maintain the requirement in the model tariff we are adopting.

Many environmental stakeholders and I-CPIE oppose the Tentative Order’s proposal of identifying the “majority beneficiary.” Only Constellation expresses support for the proposal, advocating for the use of risk-based flexibility. Some stakeholders propose a presumption that the Large Load Customer is the majority beneficiary, stating that determining the majority beneficiary requires an unreasonable degree of utility discretion. I-CPIE proposes that financial security should be based on the percentage of use estimated to be needed rather than a majority beneficiary criterion, arguing that the provision will not align with cost causation principles and will lead to cost shifting if the Large Load Customer receives just below the majority. We agree with the comments that characterize the “major beneficiary” proposal as uncertain, difficult to quantify and in need of greater stakeholder vetting. We agree that such a proposal would be better resolved in a rate proceeding or formal tariff filing instead of being addressed in the model tariff.

Finally, we proposed that any financial security or collateral provided should be reduced or refunded over time as load ramp milestones are met and facility costs are paid. OCA, Constellation, and Amazon support the Tentative Order’s proposal, agreeing that the proposal will minimize risks on customers and potential overcollection from EDCs. PECO and EAP express opposition, stating that the proposal introduces risks due to changing creditworthiness and premature exits that may lead to costs that are shifted to 29 other customers. We are not persuaded by stakeholder comments to modify our proposal. We find that the proposal reasonably promotes economic development and reduces risks on customers and potential overcollection from EDCs. While we acknowledge the concerns of PECO, NRDC, and KEEA regarding stranded costs, if the reduced or refunded collateral is properly calculated by the EDC, there should be little or no stranded costs. Therefore, we expect that if there is not enough remaining collateral, CIAC, and/or exit fees to cover the costs resulting from the entrance and/or exit of a Large Load Customer, it is the responsibility of the utility to address these costs in a way that reduces the chance that there will be stranded costs.”

Contributions in Aid of Construction (CIAC)

“Regarding Contributions in Aid of Construction, our Tentative Order sought input on the allocation of costs for network upgrades. The questions of CIAC and cost allocation for network upgrades are fairly settled with respect to investments that solely benefit a single customer – the beneficiary pays. Network Improvements that have broader benefits to the grid as a whole are generally socialized across the rate base, at least in part. And when upgrades occur on the transmission rather than the distribution system, questions of state versus federal jurisdiction arise.

The FERC established a seven-factor test to differentiate between distribution and transmission system assets in FERC Order 888. Transmission tariffs and rates fall under federal jurisdiction and are the purview of FERC. Regulation of retail customers, however, falls under state jurisdiction. As NRDC noted in its comments, the Commission has jurisdiction over interconnection for retail customers within the Commonwealth, regardless of whether the interconnection is to the distribution or transmission system.

Several commenters, including members of the General Assembly and the OCA, suggested that the Commission take a broader view of cost causation principles when allocating costs. Specifically, the OCA suggested the use of a “but-for” cause test. By this standard, if a Network Improvement would not have been needed “but for” the interconnection of the Large Load Customer, then the costs of the upgrade would be allocated to that customer irrespective of whether other customers would benefit from it.

We would also note that while it was specifically on the issue of increased capacity and generation costs, this but-for test would also align with the statement of principles agreed to by the governors of the thirteen states that comprise PJM Interconnection, which stated that state utility commissions should use their authority to allocate all costs necessitated by new large loads to those customers and to protect existing ratepayers.1 Other commenters, including Senator Lindsey Williams, PennFuture, CAUSE-PA, and TURN recommend adopting a rebuttable presumption that assumes all costs associated with interconnecting a Large Load Customer are solely for that customer’s benefit.

However, Large Load Customers may be concerned about paying costs of current planned improvements that are needed for an aging grid. Yet, these same customers have also indicated their support for paying for infrastructure improvements they are requiring, or CIAC.

We believe both sides have a valid argument, however we are ultimately persuaded by the arguments of the OCA and others regarding cost causation. Therefore, if a Network Improvement would not have been needed “but for” the interconnection of the Large Load Customer, then the costs of the upgrade should be allocated to that customer irrespective of whether other customers would benefit from it. In such instances, the EDC should assess a CIAC for Large Load Customer additions to recover all distribution and transmission costs necessary to interconnect the new Large Load Customer. The only exception to this should be for any upgrades or additions that were already planned by the EDC pursuant to a Commission-approved Long-Term Infrastructure Improvement Plan (LTIIP) before the Large Load Customer requested service. Future network improvements made to interconnect these Large Load Customers that would not have been made but for the interconnection of these customers should be paid by the Large Load Customer in the form of CIAC. Given the unprecedented nature of this load growth, we find that the Commission’s approach to cost allocation must adapt to shield ratepayers from socialization of costs that are properly attributed to Large Load Customers while protecting the Large Load Customer from paying for previously Commission-approved LTIIP planned improvements.

Additionally, we requested comments concerning voluntary CIAC as well as its validity and appropriateness. We agree with PECO and EAP that special treatment for projects able to make a voluntary CIAC contribution in exchange for expedited load queue consideration and/or load interconnection would be a departure from the Commission’s long-standing commitment to non-discriminatory service and would likely lead to disputes. Therefore, the model tariff will not include language that Large Load Customers provide voluntary CIAC contributions in exchange for expedited load queue consideration and/or load interconnection.”

Minimum Contract Terms

“In the Tentative Order we found there is broad consensus supporting minimum initial contract terms and exit fees to ensure cost recovery and system stability. We have proposed additional contract terms for Large Load Customers that intend to ramp-up load requirements over time. We invited comments on the five-year minimum initial contract length tentatively selected, as well as the proposed contract terms for a ramping customer.”

“We proposed a five-year minimum initial contract length in the Tentative Order. There is consensus from commenters opposing the Tentative Order’s proposed five-year minimum contract length with the two most common recommendations being 12 years (to align with the contract term in other PJM states) and 20 years (to align with the useful life and cost recovery periods of the infrastructure constructed to serve Large Load Customers). Other stakeholders recommended minimum contract lengths ranging from 5 to 15 years, while Exus, some EDCs, and EAP advocate for utility discretion to determine minimum contract terms based on each customer’s individual characteristics on a case-by-case basis.

“We maintain our decision to require a five-year minimum initial contract length. We note that some comments for longer contract terms may be addressing the general contract term, including the ramp period, and not just the initial contract length. We find that this minimum initial contract length is reasonable given recent industry trends. Our proposal allows EDCs to conduct a five-year revenue review during which the large load is at its Contract Capacity. This also aligns with the principles of cost causation and avoidance of cost shifting and cross subsidization. However, we are persuaded by the viewpoints of the Shapiro Administration, Duquesne, and EAP that the Commission should emphasize that actual contract terms should be based on the time until the cost of utility investment to serve the Large Load Customer has been fully repaid to prevent cost shifting to other customers. Therefore, we adopt this recommendation in addition to the minimum initial contract length of 5 years.”

Interconnection Studies and Interconnection Agreements

“We proposed a maximum timeframe of six months to complete interconnection studies unless there are exigent circumstances. CFPPA, Mainspring, Invenergy, Constellation, Vistra, Amazon, and DCC support the Tentative Order’s proposed six-month timeframe, because the proposal removes speculative loads and improves regulatory certainty for developers. OCA, many EDCs, and EAP disagree with the proposal, arguing that the complexity of these studies may require a longer timeframe to provide comprehensive and technically sound studies. We are not persuaded to modify our Tentative Order proposal regarding the six-month timeframe. We find our proposal to be reasonable, providing an appropriate amount of accountability for EDCs while removing speculative loads from the interconnection queue.

We proposed a 50% application fee refund to the applicant for each 90-day period beyond the six-month completion deadline as well as the option for the applicant to seek independent studies conducted by approved contractors at the applicant’s expense if the EDC fails to complete the interconnection study after six months. CFPPA, OCA, OSBA, Mainspring, Invenergy, and DCC support the Tentative Order’s proposal because it reduces uncertainty for project developers. Multiple EDCs and EAP oppose the proposal, stating that refunds deny the utility its opportunity to recover prudently incurred costs, that independent studies raise serious security concerns, and that EDCs must review the independent study for accuracy. We agree with PECO and EAP that allowing interconnection studies conducted by third-party contractors after an EDC fails to meet the interconnection study deadline may raise serious security risks, compliance issues, and liability concerns. Therefore, we will remove the third-party contractor provisions from the model tariff. In addition, we acknowledge the OCA’s concerns regarding cost liability if the EDCs are unable to complete the studies within six months. Therefore, we expect that EDCs may be solely responsible for the costs associated with the refunds, which should not be allocated to other customers.

We proposed a biannual Network Open Season for cluster studies at the Large Load Customer’s expense. The majority of stakeholders accept the proposal for a biannual Network Open Season for cluster studies due to its efficiencies and reductions in overall costs, with many proposing additional requirements or seeking clarity and guidance. As we received few comments in opposition, we adopt the Network Open Season process as proposed in the Tentative Order.

We proposed a public listing of Large Load Customer interconnection applications by zip code listing the date accepted, the MW interconnection amount sought, and the stage of interconnection study process on the EDCs’ websites. NRDC, Earthjustice’s joint comments, Mainspring, Invenergy, KEEA, and DCC support the public listing of Large Load Customer interconnection applications, stating that the proposal is essential for informed stakeholder engagement and efficient infrastructure planning and investment decisions. However, multiple EDCs and EAP oppose the proposal because of potential confidentiality concerns for Large Load Customers as well as potential community opposition due to environmental, health, safety, climate, quality of life, energy, economic, and ethical impact concerns. We agree with the concerns raised by the EDCs and EAP regarding confidentiality of customer information. Accordingly, while we find our proposal for the public listing to be reasonable, we are adding a requirement that the list be posted on the website in a manner that protects the identity of the Large Load Customer, to provide an appropriate amount of transparency for engagement between infrastructure planners, Large Load Customers, the community, and other relevant stakeholders.”

Minimum Demand Charges

“We proposed an 80% minimum billing demand charge, and that any demand charge should be tied to the actual need for the utility to recover fixed costs associated with serving that particular customer’s load. Protect PT, EDF, NRDC, and KEEA support the Tentative Order’s proposal of an 80% minimum demand charge. Protect PT, PennFuture, Earthjustice’s joint comments, CAUSE-PA, TURN, and OCA, call for a minimum demand charge of 90%, arguing that it ensures the recovery of capacity investments, prevents cost shifting, and reduce volatility. We are not persuaded by stakeholders to modify our minimum demand charges proposal. We find an 80% minimum demand charge reasonably incentivizes accurate load projection and reasonably aligns with other state tariffs within the PJM region.”

Read the entire order here.