Energy bills driven by data centers threaten Pa. small businesses, report says
A report from the Pennsylvania Sustainable Business Network warns that rising electricity costs, largely driven by data center development, threaten the state's small businesses. These businesses, often operating on thin margins, are struggling to absorb increases and may face closures, hiring freezes, or price hikes. The report advocates for state support, including energy bill assistance, tax credits, expanded energy efficiency grants, and strengthened community benefit agreements for data center projects.
A new report by the Pennsylvania Sustainable Business Network indicates that the proliferation of data centers in Pennsylvania is leading to significant increases in electricity costs, posing a substantial threat to the state's 1 million small businesses. These businesses, which employ 2.5 million people and typically operate on slim margins, are struggling to absorb higher utility bills, with a recent survey showing 81% experienced increases in the last year. More than half raised prices, and one in five froze hiring in response.
Michael Jarrett, the report's lead researcher, highlighted that even a 10% increase in energy costs could severely impact small businesses' ability to grow, hire, or even stay afloat. He noted that unlike large corporations or residential consumers, small businesses lack adequate ratepayer protections and negotiation power with energy providers. The report also projects a 10-20% rise in residential electricity bills and up to a 29% increase for businesses due to capacity cost increases in the PJM electric grid, which serves Pennsylvania.
The report's authors, including Jorge Luis Fontanez, expressed support for Governor Josh Shapiro’s GRID standards, aimed at protecting energy affordability and fostering community engagement in data center projects. However, they cautioned that mandating community benefit negotiations without providing technical assistance to communities could hinder their ability to negotiate effectively. Recommendations for immediate small business support include energy bill assistance, tax credits for energy expenses, and expanded energy efficiency grants. The report also emphasized the potential of clean energy to reduce electricity prices, despite structural issues in the regional grid that impede rapid integration of renewables.