Pennsylvania’s Data Center Order Turns on One Number

Governor Josh Shapiro signed Executive Order 2026-05, titled “Protecting Pennsylvania Consumers from Data Center Impacts,” in Harrisburg on August 18, 2026. It takes effect immediately and remains in effect until amended or rescinded. The order does not prohibit data centers and it does not create a moratorium. It sets a threshold and then routes every project above that threshold through a sequence the Commonwealth controls. The threshold is peak demand of over 25 megawatts, and it appears in each operative paragraph rather than in the summary language, which is why most coverage of the signing does not name it. Below 25 megawatts the order’s permit provisions do not reach a project. Above it, the Department of Environmental Protection is directed to develop a template Consent Order and Agreement that developers must execute, incorporating terms and conditions to ensure compliance with the Governor’s Responsible Infrastructure Development Requirements. Those requirements were announced February 3, 2026 and released as standards on May 27, 2026, and the order records their four areas as energy affordability, transparency and community engagement, workforce and economic development, and environmental protection.

From there the order splits developers into two tracks, and the difference between them is the substance of the thing. A developer that commits to the GRID Requirements must, before submitting any new application, identify the project to DEP with a notice of intent to comply, attend a pre-application meeting at which it identifies the permits it will seek and when it will or did obtain local approvals, and execute a project-specific Consent Order and Agreement. DEP then reviews that developer’s applications on a rolling basis, but issues a qualifying permit only after the applicant documents that the project is consistent with the local comprehensive plan and has received all local or municipal approvals under the applicable subdivision and zoning ordinance, adopted under Pennsylvania’s Municipalities Planning Code or Home Rule authority. GRID Requirements get written into the permits as conditions to the extent permitted by law. Critically for a schedule, the processing timelines under the PAyback program established by Executive Order 2023-07 and the Permit Decision Guarantee program established by Executive Order 2012-11 begin only after that local documentation arrives. A developer that will not execute the Consent Order and Agreement gets a harder version of the same logic: DEP will not begin reviewing applications until local approvals are documented, will not begin until any required water withdrawal or wastewater discharge authorization is received, will not issue anything on a rolling basis, will not issue until every necessary application has been received and reviewed, and excludes the review from PAyback and the Permit Decision Guarantee entirely.

Three further directives change the economics rather than the process. The Office of Transformation and Opportunity is directed to remove any existing data center project from the PA Permit Fast Track Program created by Executive Order 2024-04, and data center projects are no longer eligible for it. At the signing Shapiro put that plainly: “I am removing all data centers from the Fast Track permitting program.” The Department of Revenue is directed to update the Computer Data Center Equipment Exemption Program guidelines under Article XXIX-D of the Tax Reform Code of 1971 so that applicants for the sales and use tax exemption on or after the effective date comply with the GRID Requirements, which attaches the state’s main data center tax incentive to the same standards. And on transparency, the use of nondisclosure agreements in connection with a data center project is now impermissible for all agencies under the Governor’s jurisdiction, DEP is to publish a public map of current permitting information for every proposed project it or Revenue knows about, and data centers already operating in the Commonwealth must file an energy and water consumption report under the Fiscal Code by July 1, 2027 and every July 1 thereafter. The order enumerates twelve items for that report, including the parent company, total energy consumption by month and source, monthly natural gas consumption, estimated average energy use per hour at peak load in megawatt-hours, total and maximum-day water consumption with the water source and whether it was for cooling, waste heat recovery measures, and a projection of the following year’s total energy and water demand.

The consumer-protection section works through the Pennsylvania Public Utility Commission rather than by direct fiat, because retail rate authority sits there. The Governor’s Special Counsel for Energy Affordability is directed to engage the Commission and advocate for rules that would require each electric utility receiving a data center interconnection request to revise both its pre-emergency interim resource adequacy service and its emergency load control procedures so that utilities curtail data centers before any other customer, unless the data center has secured incremental electric capacity for the entirety of its demand, and that would bar utilities from classifying a data center as critical load exempt from curtailment. On cost, the Special Counsel is to advocate for tariffs that charge data center customers for PJM reliability backstop auction costs in accordance with the procedures ultimately approved by the Federal Energy Regulatory Commission in docket ER26-3380-000, that prevent an electric utility from charging non-data-center customers those backstop costs including in the event a data center becomes insolvent or is otherwise unable to pay, and that ensure data center customers pay all Commission-jurisdictional interconnection costs the utility incurs. Separately DEP is to recommend new regulations on impacts unique to data centers, naming backup generator emissions three times over: whether new technologies or emissions controls should be required, whether existing rules sufficiently consider the cumulative impact of multiple backup generators at a facility or at proximate facilities, and whether they should be updated for generators deployed as grid resources.

The order’s real effect is on sequence, and sequence is schedule, and schedule is carry. Until August 18 a Pennsylvania data center developer could run state permitting and local entitlement in parallel, which is how almost every large project in almost every state is built, because the two processes answer to different bodies and neither waits on the other. Executive Order 2026-05 serializes them. Local approval is now a precondition to the state permit rather than a parallel track, and for a developer refusing the Consent Order and Agreement it is a precondition to DEP even opening the file. The Governor said the quiet part at the podium: “If the local community doesn’t approve a project, the state won’t approve it either.” For an operator that means the municipal vote is no longer a risk to be managed alongside the permit calendar. It is the front of the calendar. Every month of township hearings is now a month before the state clock starts, and the two programs that used to bound that state clock, PAyback and the Permit Decision Guarantee, are either delayed to the same starting gun or unavailable entirely depending on which track the developer chose.

The 25 megawatt threshold deserves its own read, because it is the line that decides who is in the regime and it sits well below where most people assume data center regulation begins. PJM’s large load rules, which PSV covered on July 29, use a 50 megawatt definition measured at a single site inside a one-mile radius. Pennsylvania has now drawn a second line at half that, on a different metric, for a different purpose. A project can sit under PJM’s large load definition and still land squarely inside Pennsylvania’s permitting regime. That gap matters for the mid-sized colocation and enterprise builds that are not hyperscale campuses and whose sponsors may reasonably have assumed the policy fight was about someone else. It also matters for phasing. The order speaks to a project’s peak demand rather than to its initial energization, so a build designed to grow into 40 megawatts is not obviously a sub-threshold project because phase one draws 20. Nothing in the order text resolves how DEP will treat phased demand, and PSV is not going to guess at an answer the Commonwealth has not published.

Then there is what the order does to the ground under everyone else. Pennsylvania sits inside PJM, and the order’s own recitals lay out why the Commonwealth is acting: PJM’s 2025 Load Forecast projected 74 gigawatts of summer peak load growth through 2045, primarily driven by data center development, and across PJM’s last four base residual capacity auctions data centers were responsible for $29.4 billion in capacity charges to ratepayers, or 46 percent of total auction costs, according to the PJM Independent Market Monitor. Those two figures are the Commonwealth’s citation of the Market Monitor, not a PSV finding, but the arithmetic they imply is worth stating: $29.4 billion at 46 percent of the total computes to roughly $63.9 billion in total charges across those four auctions. That is the number behind the politics, and it is why the cost-allocation half of this order is likely to outlast the permitting half. A rule that data centers pay backstop auction costs and all Commission-jurisdictional interconnection costs, and that utilities may not push those onto other customers even when a data center goes insolvent, is a rule about who bears the risk of a speculative build failing. For an owner of anything else on that grid, an office tower, a hospital portfolio, an industrial park, that is the provision that touches their operating expense line.

The first workflow is a Pennsylvania exposure screen, and it is a records exercise with a deadline attached rather than a policy discussion. The inputs are primary and countable: the executed text of Executive Order 2026-05, the GRID Requirements standards released May 27, 2026, Executive Orders 2023-07, 2012-11 and 2024-04 for the permitting programs the order modifies, the DEP permitting map once it publishes, the Department of Revenue’s updated Computer Data Center Equipment Exemption Program guidelines when they issue, and then, per site, the project’s designed peak demand, its current DEP application inventory, its municipal approval status under the applicable subdivision and zoning ordinance, its local comprehensive plan consistency, any water withdrawal or wastewater discharge authorization, its Fast Track status as of August 18, and any executed nondisclosure agreement with a Commonwealth agency. An assistant reads each record against a fixed question set and returns a cited memo per site: is designed peak demand over 25 megawatts, which track is this project on, what specifically remains outstanding at the municipality, and does the project still qualify for the tax exemption under guidelines that have not yet been rewritten. The output is one row per site with a source document cited for every cell and an explicit unverified marker wherever the record is silent. The reviewer is the development lead working with land use counsel. The approval gate is that nothing enters a schedule, a lender package or an investment committee memo until a human has confirmed each classification against the executed permit file, because several of the operative documents in this regime do not exist yet.

The second workflow is a community benefit and disclosure file, and it exists because two provisions of this order quietly rewrite how a project talks about itself. Nondisclosure agreements with agencies under the Governor’s jurisdiction are impermissible, and DEP is to notify the local jurisdiction and the Department of Revenue once a developer executes a Consent Order and Agreement. A site search that assumed confidentiality through the state process no longer has it, and the Commonwealth will affirmatively tell the township. Meanwhile the Department of Community and Economic Development is directed to prepare best practices on zoning standards and community benefit agreements for municipalities to use, which means the counterparty across the table is about to be handed a template. The workflow assembles, per project, the community engagement record the GRID Requirements ask for: the outreach plan, the notifications to impacted local governments, the public meeting record, the local hiring and training commitments, and any community benefit agreement terms under discussion, each with dates and named participants. An assistant maintains it as a chronology and flags gaps against the four GRID areas. The reviewer is whoever will sign the Consent Order and Agreement, since it carries penalties for failure to follow through on those commitments. The point is not to generate community engagement, which no software can do. It is to make sure the record of it is complete and dated before a binding agreement references it.