Pennsylvania Governor Josh Shapiro signed an executive order on Monday establishing strict guardrails on new data center development in the state, requiring developers to secure their own energy sources without passing costs on to residential ratepayers. The order, labeled Executive Order 2026-05, mandates that prospective builders agree to an energy plan that does not shift costs to households and must secure local community buy-in before proceeding.
The move comes as Pennsylvania has emerged as a frontline state in the national data center boom, with more than 20 projects proposed across the commonwealth. Data centers have been responsible for 46 percent of capacity charges in PJM Interconnection’s last four base residual auctions, totaling $29.4 billion borne by ratepayers, according to the executive order.
Guardrails Target Energy Affordability
Under the order, data center projects exceeding 25 megawatts of peak demand must undergo a Department of Environmental Protection review process if they commit to the governor’s GRID standards. Those standards require developers to build, bring, or buy the electric capacity needed to meet their energy demands, develop community outreach plans, and demonstrate economic benefits including job creation and wage requirements.
Average household electricity rates in Pennsylvania jumped nearly 14 percent in the last year, driven in part by surging demand from data centers and the broader AI industry. A Muhlenberg College poll found that 64 percent of Pennsylvania adults view data centers as a crisis or a problem.
Political Stakes in a Swing State
The executive order represents a sharp pivot for Shapiro, who had previously been a major proponent of attracting AI data center investment to Pennsylvania, including a $20 billion Amazon investment announcement. As public sentiment turned against the facilities, the first-term governor began emphasizing consumer protections and environmental safeguards.
That’s why I am putting clear guardrails in place to hold developers accountable to protect consumers, strengthen communities, and put Pennsylvanians first.
Policy experts noted that executive orders have limited reach and that lasting data center regulation will require legislative action. State lawmakers have introduced a series of bills that would enact moratoriums on development, ban data centers from receiving tax incentives, and prohibit utilities from passing data center costs on to residential customers. None have been signed into law.
The governor’s office has yet to detail how it plans to build legislative consensus on the issue. Multiple legislative offices did not respond to requests for comment on the executive order.
Sources: Pennsylvania Capital-Star; Spotlight PA; Wall Street Journal; The Morning Call; Muhlenberg College poll
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