Pennsylvania Executive Order 2026-05 Makes Data Centers Pay Full Grid Costs and Win Local Approval First
- Executive order: 2026-05
- Data center projects in public databases: more than 100
- Projects that applied for a DEP permit: 15
- Projects holding all first-phase permits: 5
- Late-report penalty under the July budget law: $10,000 per day
Pennsylvania Governor Josh Shapiro signed Executive Order 2026-05 on August 18, 2026. It directs the state Department of Environmental Protection to review a data center permit application only under two conditions. The developer must make a legally binding commitment to the Governor’s Responsible Infrastructure Development requirements, and must secure local approval first. Those requirements force a developer to pay the full cost of the new generation, transmission and distribution its project needs. Shapiro said at the signing that he announced two projects last summer carrying $20 billion in new investment for Pennsylvania, so the order screens projects rather than banning them. Public databases list more than 100 data center projects in Pennsylvania. The Department of Environmental Protection has discussed permitting with 58 of them. Only 15 have applied for at least one permit, and 5 hold every permit they need for a first phase of construction. The order took effect immediately.
The order also removes AI data center proposals from Pennsylvania’s Fast Track permitting program. It prohibits nondisclosure agreements on data center projects. Four agencies must apply the standard: the Department of Environmental Protection, the Department of Revenue, the Office of Transformation and Opportunity, and the Department of Community and Economic Development.
What the requirements actually demand
The Governor’s office published four commitments a developer must sign before the Department of Environmental Protection opens a file. First, pay the full cost of new electricity generation, transmission, distribution and supporting infrastructure. That cost must not shift to Pennsylvania households and businesses. Second, run open engagement with local residents and officials. The order names written outreach plans, public meetings and early consultation on major design decisions. Third, hire and train local workers, and sign community benefit agreements covering schools, infrastructure and economic development. Fourth, meet the state’s highest environmental standards, including strict water conservation.
The cost-allocation clause is the one with grid consequences. It converts a question that normally reaches a utility commission years later, after a load is already interconnected, into a precondition of an environmental permit.
Why It Matters
Pennsylvania sits inside PJM, the market where large-load cost allocation has driven the sharpest fights of the past two years. A state that gates permits on a binding cost commitment removes a class of speculative interconnection requests before they ever reach the queue. Developers with financing, a signed tenant and an onsite generation plan clear the bar. Developers holding land options and a letter of intent do not.
For utilities the practical effect is a cleaner load forecast. For developers the practical effect is that “bring your own power” moves from a negotiating posture to a permitting requirement. Anyone building in Pennsylvania should now assume three documents must exist before the first permit review starts: the generation plan, the community agreement and the water plan.
Enforcement Reality
This is an executive order, not a statute. Its force comes from permit review. The Department of Environmental Protection issues the air and water permits a large campus needs. A developer who refuses the commitment keeps its land and loses its schedule. That grip is real in the near term. It is also a grip a later governor could drop with one signature, because no bill sits behind it.
Pennsylvania already had two weaker instruments pointed at the same problem. The budget Shapiro signed on July 12, 2026 requires each data center to report its annual water and power use. The same report covers projected demand for the following year and any onsite generation the operator builds. A late report costs $10,000 per day. That law measures consumption after the fact.
The Public Utility Commission’s large-load model tariff attacks the cost question from the other side. MGRID covered it when the 50 MW threshold rule passed. It tells utilities to charge large customers for the system upgrades they trigger, and it lets those customers self-build part of the work. The tariff prices the upgrade. The order decides whether a project ever reaches the tariff.
Two gaps stay open. The order does not define how the Department of Environmental Protection will price “full cost” on a project whose generation sits outside the state. It also does not say what happens to the 5 projects already fully permitted under the old rules.
Critical Perspective
Pennsylvania lists more than 100 data center proposals and only 5 that hold every permit needed for a first phase, so the order lands on a pipeline that has largely not moved yet. The Pennsylvania Public Utility Commission already approved a large-load tariff rule in May 2026, docket M-2025-3054271, that charges customers above 50 MW for the upgrades they trigger, which means the cost principle was state policy here before this order restated it. PJM went further on August 17 and asked the Federal Energy Regulatory Commission, in docket ER26-3380-000, to curtail new 50 MW data centers ahead of other load against a 6.8 GW shortfall, treating the same growth as a reliability problem rather than a permitting one. If the tariff already prices the interconnection and the market operator is already rationing it, what does an environmental permit condition add beyond a veto?
Sources
- Commonwealth of Pennsylvania, Office of the Governor
- Governor Shapiro, remarks at the signing ceremony
- Data Center Dynamics
- Utility Dive, data center reporting law
- Utility Dive, Pennsylvania large-load model tariff
- Natural Resources Defense Council
