Pennsylvania Large Load Tariff: 'But For' Cost Allocation

The Pennsylvania Public Utility Commission voted out a final order on April 30, 2026 establishing the first state-level model tariff framework for large-load customers in the country. The Pennsylvania large load tariff sets a “but for” cost allocation standard, defines a 50 MW individual / 100 MW aggregate threshold, mandates a six-month maximum interconnection study, and explicitly authorizes large customers to self-construct upgrades. Docket M-2025-3054271, published as a press release on May 13.

It is voluntary guidance, not a binding mandate on the EDCs. That does not soften its effect. Pennsylvania just gave Virginia, Ohio, Texas, and New Jersey a template, and gave hyperscalers a number to plan against.

Here is what changed and what procurement teams should expect to see hit RFP queues over the next two quarters.

What the Pennsylvania Large Load Tariff Actually Does

The core mechanic is Chairman Steve DeFrank’s amendment to the Contributions in Aid of Construction (CIAC) provision. Adopted at the April 30 public meeting, it codifies the “but for” cost causation standard that the Office of Consumer Advocate had been pushing through 2025 comments.

Under the amended framework, a large-load customer pays all distribution and transmission costs necessary to interconnect, except for upgrades or additions the EDC had already planned before the customer requested service. Future network upgrades that would not have been made but for a large-load customer’s interconnection get recovered through CIAC paid by that customer, even if other ratepayers later benefit from the resulting infrastructure (PA PUC press release, May 2026).

That last clause is the politically hard part and the procurement signal. Cost causation no longer pivots on who eventually uses the equipment. It pivots on who triggered the build.

A condensed read of the model tariff terms:

• Applicability: 50 MW individual customer or 100 MW aggregate. Aligns with the Pennsylvania PUC’s tentative order from November 2025 and is consistent with the 50 MW threshold AEP Ohio has been using since the PUCO approved its data center tariff in July 2025.
• Interconnection study clock: Six-month maximum, with public-facing queue transparency.
• Cost allocation: “But for” standard via CIAC.
• Self-construction: Large-load customers are permitted to self-construct certain upgrades, subject to EDC technical standards.
• Financial security: Deposits and collateral mandated to mitigate stranded asset risk.
• Contract structure: Load ramping schedules, minimum contract terms, and customer exit provisions are required but the model leaves specific length and minimum-bill numbers to the individual EDC filings.

That last item is where the model tariff stays deliberately loose. Pennsylvania did not lock every EDC into a single number the way Colorado’s PUC did with Xcel (15-year mandatory contract, 80% minimum bill, exit fee equal to remaining minimum bills). The PPL, PECO, Duquesne, and FirstEnergy Pennsylvania operating companies (Met-Ed, Penelec, Penn Power, West Penn Power) now each get to draft their version against this template.

Why “But For” Changes the Procurement Math

In every prior tariff generation, transmission and distribution upgrades drawn by a large new customer eventually rolled into the rate base and got socialized across the customer class that benefited. That socialization is the structural mechanic that “but for” deletes for the upgrade slice attributable to a single large load.

Three things change for procurement teams.

Hyperscaler-paid upgrades clear the EDC capital plan faster. When an upgrade falls under CIAC, it does not need to compete for room in a multi-year capital allocation. The customer wires the money, the EDC builds. That collapses one of the longest gates between “load committed” and “equipment ordered.” Procurement teams at PPL or Duquesne should expect their distribution-side substation, breaker, and transformer order books to lengthen this year as data center developers move from study queue to ordering against a known cost number.

Self-construction opens a parallel procurement channel. A hyperscaler that elects to self-construct a 138 kV interconnect substation buys steel, transformers, breakers, and protection relays directly from manufacturers rather than through the EDC’s preferred-supplier path. That is a structural shift, not a one-off. It is the same dynamic that played out under FERC’s large load interconnection option-to-build provisions. State-level tariffs putting the same mechanism into retail service mean the parallel procurement channel now exists at the distribution voltage class, not just transmission.

Six-month study clock forces upstream equipment commitments. If the EDC has to complete the interconnection study within 26 weeks of a complete application, the equipment specification work for any required upgrades has to be substantively done by month three. Lead times on the equipment classes that matter most for a hyperscale interconnect (138 kV / 230 kV transformers, gas-insulated switchgear, distance protection relays) run 26 to 144 weeks at major OEMs. Studies are now a leading indicator of large RFPs landing within the same calendar quarter.

The cost certainty also runs the other way. If a hyperscaler now knows up front that they will be wearing the upgrade cost, their internal review will get more aggressive on scope. Expect fewer speculative 150 MW interconnect requests that ultimately become 50 MW, and more “fully scoped at the request” applications. That filters the queue and shifts the equipment demand pipeline from speculative volume to committed volume. The same filtering effect was visible in Colorado after the Xcel large-load principles took effect.

How This Compares to AEP Ohio, Virginia, and Colorado

Pennsylvania did not invent large-load cost allocation. It is the first state to publish a model tariff with the “but for” standard explicitly in the CIAC mechanic, which is a tighter formulation than the existing 75-plus large-load tariffs sitting across 36 states.

AEP Ohio’s PUCO-approved tariff from July 2025 requires data center customers to pay for contracted capacity even if they do not consume it, a take-or-pay structure with a 10-year minimum. Different mechanism, similar goal of protecting ratepayers. Pennsylvania goes further on the capital side by attributing the upgrade itself to the load, not just the consumption.

Virginia has been working through its own version via the State Corporation Commission, with Dominion’s tariff filings under review, but has not codified a “but for” CIAC standard. With Pennsylvania publishing first, expect Virginia SCC filings to cite the PA framework in stakeholder comments inside 60 days.

Colorado required Xcel to negotiate against principles that include the 15-year contract, 80 percent minimum bill, and an exit fee equal to remaining minimum bills. Pennsylvania’s order is more conservative on those terms but more aggressive on the upgrade-cost mechanic. The two states represent the two ends of the design space, with Pennsylvania prioritizing capital cost certainty and Colorado prioritizing operating revenue certainty.

Texas (ERCOT) and New Jersey are the next two states procurement teams should watch. ERCOT’s transmission cost allocation reform discussions and the New Jersey Board of Public Utilities’ large-load proceedings both pull from the same evidence record. The Pennsylvania PUC press release explicitly framed the order as offering an “exportable” model.

Procurement Implications for the Rest of 2026

If you run procurement at a PJM EDC, a hyperscale data center, or a manufacturer in either of those queues, the next six months get specific.

The Pennsylvania EDCs will file utility-specific tariffs against the model in Q3 and Q4. PPL and Duquesne have the most data-center exposure and will file first. PECO and the FirstEnergy operating companies will likely follow with tariffs that mirror the model with minor adjustments to ramping and minimum-bill terms. Each filing carries its own cost-of-service implications and changes the procurement boundary between EDC-built and customer-built upgrades.

Hyperscaler interconnection requests in Pennsylvania queues should accelerate. Cost certainty plus a six-month study clock is the combination data center developers have been asking for. Expect a wave of full applications from existing reserved-capacity holders inside Q3.

Distribution-voltage substation and pad-mount transformer demand in PPL and PECO territory should rise in 2027 deliveries as upgrade scope clears the study queue. The competing demand from PJM’s 14.9 GW reliability backstop and from utilities pursuing embrace-via-gas strategies like Dominion and Evergy will tighten lead times for the OEM short-list across 138/13.2 kV and 230/34.5 kV classes. AEP’s $4.2 billion Pike County transmission commitment in Ohio and the parallel Pennsylvania queue draw from the same manufacturer capacity base.

For self-construction-capable developers, this is the first state-level invitation to build upstream of the EDC. The procurement question becomes whether to qualify a domestic transformer OEM directly (Hitachi, GE Vernova, Eaton, Howard, ERMCO, Prolec GE) or to use an EPC that already has standing supply agreements. The cost-certainty side of “but for” makes the direct path more attractive than it has been in any prior tariff generation.

The cost-certainty arithmetic, the manufacturer short-list by voltage class, the contract-language audit for ramp and exit provisions across the four Pennsylvania EDCs, and the equipment-delivery sequencing for the 2027 build window are what procurement teams need to plan against this quarter. The Pennsylvania PUC just published the first national template, and the next four state PUCs are reading from it.

Related Reading

• Data Center Grid Infrastructure Costs: The $10B Fight Over Who Pays
• FERC Large Load Interconnection Rules
• Three Utility Data Center Strategies in May 2026
• Hyperscaler Capex Q1 2026: Three Utility Strategies
• Ohio $33 Billion Data Center and Power Project

Our intelligence reports go deeper, with EDC-specific tariff filing tracking, manufacturer capacity by voltage class, and procurement playbooks for hyperscaler and EDC buyers. Request a sample report to see how procurement teams are mapping the “but for” framework into their 2026-2027 equipment plans.

Sources

• PA PUC Final Order Press Release (May 13, 2026)
• Utility Dive: Pennsylvania releases first-of-its-kind large-load model tariff (May 18, 2026)
• PA PUC Docket M-2025-3054271
• PA PUC Final Order PDF (April 30, 2026)
• Daily Energy Insider: Pennsylvania PUC Adopts Large Load Tariff Framework (May 2026)