PPL Electric rates set to rise twice this summer for Lehigh Valley homes as data centers drive demand

BETHLEHEM, Pa. — PPL Electric Utilities customers across the Lehigh Valley will see their bills rise twice in about a month: once on June 1 and again on July 1.

The two increases come from different sources. An electric bill has two main components: the cost of the electricity itself, and the cost of delivering it to a home over poles and wires. The June 1 change affects the first. The July 1 change affects the second.

For a typical Lehigh Valley household using about 1,000 kilowatt-hours a month, the combined impact means an electric bill rising from about $176 to $184. That’s a jump of roughly $8, with most of that coming from the July hike.

The July increase reaches nearly every customer, because it covers delivery, the one part of the bill no one can shop around; the June increase falls only on those who buy their electricity from PPL by default rather than from another supplier.

What’s mainly driving both increases, in different ways, is the growing demand for electricity from artificial intelligence data centers. At least three local residents have officially challenged the bigger increase with state regulators.

The first increase is to what PPL calls its Price to Compare. This is the rate for the actual electricity, charged to customers who haven’t picked their own supplier. On June 1, it rises to 13.147 cents per kilowatt-hour from 12.953 cents, about 1.5 percent, according to a notice the company sent customers.

PPL doesn’t make money on this part. By law, it buys the electricity and passes the cost straight through, no markup. That price resets every June 1 and December 1, and it tracks the cost of power on the regional grid, which is managed by an operator called PJM Interconnection, a separate body from the state regulators who oversee PPL’s rates.

PPL is not alone in this. Other Pennsylvania utilities are raising their supply rates June 1 as well, driven by the same regional capacity costs. Met-Ed, which serves parts of the southern Lehigh Valley, is raising its Price to Compare about 7.6 percent, a steeper jump than PPL’s. The state’s other FirstEnergy utilities are increasing theirs too, the Pennsylvania Public Utility Commission said in a May 20 consumer alert.

None of this is the part the commission is voting on, though. The supply rate resets automatically twice a year to reflect wholesale power costs, without a rate-case vote.

The second increase, by contrast, is PPL’s alone. It is the one before state regulators, and the bigger one. It covers distribution, meaning the poles, wires and equipment that carry power to homes and businesses. It would be PPL’s first such increase since 2016.

PPL first asked for a $356 million-a-year increase when it filed last September. After months of negotiation, the company and a broad group of consumer and business advocates struck a settlement in March that trims it to $275 million.

PPL says that, if approved, a typical home would pay about $7.42 more a month, or 4.9 percent. Commercial customers would pay about $4.64 more, and large industrial customers about $382.63 more. The flat monthly charge that every residential customer pays, no matter how much power they use, would rise from $14.09 to $15. PPL had originally wanted $17.

The increase isn’t final, but it’s close. The settlement is now before the PUC for a final vote, expected by the end of June. Two of the commission’s judges recommended on April 16 that it be approved in full, calling it in the public interest.

When the deadline to object passed, only one group, a coalition of solar companies, was still fighting any part of it. If the commission signs off, the new delivery rates take effect July 1 and are frozen for at least two years.

Among those who formally challenged the increase are two Lehigh Valley households who filed complaints on the public record.

Brad and Jennifer Woolley of Easton filed in October. Stacey Kimmel-Smith of Bethlehem filed in December. Both appear in the official case file. The complainants could not be reached before publication.

In all, seven customers filed their own complaints against the increase, and the case drew a long list of organizations, including the state’s Office of Consumer Advocate, the Office of Small Business Advocate, the low-income advocacy group CAUSE-PA, Walmart and the U.S. Department of Defense.

At the center of the case is a question of who pays to build the grid that AI data centers require: the data centers, or other customers.

The settlement seeks to address that by placing the largest power users in a category of their own. It creates a new rate class for “large load” customers, such as data centers and similar operations. This applies to any customers with a demand of 50 megawatts or more at a single site, or 75 megawatts across nearby facilities.

The rules are meant to keep those costs off ordinary bills. A large-load customer would have to sign a contract for at least 10 years, provide financial security, such as a letter of credit, and pay a fee if it leaves early. Starting in 2027, these customers would also contribute $11 million annually to PPL’s program that helps low-income households pay their bills.

PPL’s chief executive, Vince Sorgi, told investors in late April that data center projects in advanced planning across PPL’s territory total 28.3 gigawatts, with about 5 gigawatts already under construction. For comparison, the most power PPL’s entire system uses at peak today is around 7.8 gigawatts.

PPL itself has warned regulators about the danger of that growth. If a data center backs out after the utility has built expensive infrastructure to serve it, the company said, those unrecovered costs could be passed on to other customers’ bills, including ordinary households. Its current pipeline of large projects under some form of agreement totals about 20 gigawatts, according to the case record.

One measure of how data center demand is reflected in household bills comes from PUC Vice Chair Kimberly M. Barrow, who included a statement in the settlement.

Citing PJM’s independent market monitor, she said large power users were responsible for 55 percent of a recent increase in grid costs — more than $7 billion. She added that one change last June raised what households pay to support the low-income program by $37 million a year, pushing some bills up anywhere from 5 to 41 percent.

The data center rules in this deal are a first pass, not the last word. The parties agree the new tariff doesn’t resolve every concern, and that bigger questions are still being worked out in a separate, statewide proceeding.

That effort took a step forward this month. On May 13, the PUC issued a statewide framework, which it called the first of its kind, to guide how every utility in Pennsylvania handles large power users.

“Pennsylvania is confronting a level of electric load growth that has not been seen in generations, driven largely by data centers and advanced manufacturing,” PUC Chairman Stephen M. DeFrank said in a statement. He said the framework “protects existing ratepayers from bearing the financial risks associated with unprecedented new demand.”

That statewide framework is a set of guidelines, though. It points utilities in a direction rather than setting rates itself.

The settlement isn’t all increases. Advocates secured several provisions in exchange. Households at or below 150 percent of the federal poverty line would stop paying reconnection fees. The budget for weatherizing low-income homes would grow by $1.5 million, to $13.5 million a year. And bill-assistance credits for the lowest-income customers would rise starting in 2027.

The deal also sets aside $32 million a year for storm repairs, money tied to two major storms in 2024.

One piece is still contested. A coalition of solar companies and a group of Pennsylvania dairy farmers objected to the settlement’s classification of customers who generate their own power, such as homes and businesses with rooftop solar.

The solar group argues the math improperly counts the power those customers send back to the grid, in a way that it says goes beyond what regulators are allowed to do. The judges rejected that argument, and the dairy group later dropped out, leaving the solar coalition alone in still pressing the point.

For people who already have solar, the deal locks in their current arrangement for 10 years, through 2036. This applies only up to a set limit on total solar capacity, granted on a first-come, first-served basis.

Because not everyone signed on, this is what’s called a non-unanimous settlement. Under its own terms, if the commission changes it, any party can walk away and the whole thing falls apart.

The full settlement is posted on the PUC’s docket. Anyone who wants to avoid the June 1 supply increase can shop for a different electricity supplier through the state’s PAPowerSwitch website. The July 1 delivery increase, if approved, applies no matter who supplies the power.