Pennsylvania’s Large Load Model Tariff Offers a Road Map for North Carolina

Why the Model Tariff Order Matters Now for Utilities, Large-Load Customers, and Policymakers

The timing of the Model Tariff Order and its included Model Tariff, entered May 12, 2026, is notable. In North Carolina, lawmakers are advancing a proposal that would require large data centers to bear electricity and infrastructure costs associated with serving them, while also addressing water use, siting, ownership, and contract protections intended to reduce cost shifting to other customers. At the regional level, PJM has moved up a planned reliability backstop auction to September 2026 as it confronts uncertainty over data center-driven load growth and the unresolved question of how any incremental procurement costs should be allocated. Together, these developments underscore the same core issue now confronting regulators across multiple jurisdictions: how to support economic development and digital infrastructure growth without imposing disproportionate reliability and cost risks on existing ratepayers.

The Model Tariff Order remains the central development because it does more than acknowledge the problem. It offers a concrete regulatory template. Across the country, commissions and legislatures are considering data-center-specific tariffs, special contract terms, and new cost-allocation rules. What distinguishes Pennsylvania’s approach is structural: rather than approving a utility-specific solution, the PUC articulated a statewide model framework intended to shape future filings. For clients evaluating new large-load service arrangements, utility tariff design, or legislative responses, that model is worth close attention because it reflects a serious effort to reconcile growth, reliability, and cost causation in a single framework.

1. Thresholds and Applicability: A Broad and Targeted Net

The Model Tariff applies to new large-load interconnections and incremental load from existing customers once the 50 MW individual or 100 MW aggregate thresholds are reached. Behind-the-meter generation does not reduce the threshold calculation. Existing customers are generally grandfathered, though utilities may allow them to opt in. The PUC retained utility discretion to apply the tariff below 50 MW in appropriate cases. See Order at 11–18; Model Tariff at Appendix 122–123. The positive effect is administrative clarity. Utilities, developers, and regulators now have a baseline framework for identifying which projects warrant special treatment. The exclusion of behind-the-meter generation from threshold calculations is also sensible from a planning standpoint, because the grid may still need to serve the full load under contingency conditions. The downside is that the thresholds are necessarily imperfect. Consumer and environmental advocates such as Office of Consumer Advocate (OCA), Natural Resources Defense Council (NRDC), and State Senator Katie J. Muth argued to the PUC that a 50 MW threshold may miss significant projects or invite project segmentation. Some utilities and industry voices urged higher thresholds or more utility flexibility to avoid sweeping in non-data-center industrial customers. The PUC chose a middle path, but threshold disputes may continue in utility-specific filings.

2. CIAC and Cost Allocation

The most significant substantive choice in the Final Order is the PUC’s adoption of a but-for approach to cost allocation for network improvements. The Final Order adopts a but-for cost-causation approach for customer-triggered Network Improvements and directs EDCs to assess Contributions in Aid of Construction (CIAC) to recover all distribution and transmission costs necessary to interconnect the new Large Load Customer, except for upgrades already planned pursuant to a Commission-approved Long-Term Infrastructure Improvement Plan before the service request. See Order at 41–43. The Model Tariff appears to retain some language from the earlier majority-beneficiary construct, which may require clarification in utility-specific filings. See Model Tariff at Appendix 129.The positive impact is obvious and substantial: it aligns with cost causation and reduces the risk that residential and small business customers subsidize speculative or highly concentrated new demand. The Environmental Defense Fund (EDF) praised the direction of requiring upfront customer payment for new infrastructure, while the OCA strongly supported the but-for standard. The potential downside of the aggressive cost assignment is the possible increased upfront development costs and possible jurisdictional friction where transmission issues overlap with FERC rules. Furthermore, the standard and its exceptions may invite litigation over what was truly already planned, what counts as but-for causation, and how mixed-benefit facilities are treated in practice. 

3. Collateral, Contract Term, Minimum Billing, and Exit Protections

The Model Tariff also requires collateral sufficient to cover network improvement costs and interconnection facilities costs. It also allows for a refund or reduction of collateral as milestones are achieved, establishes a minimum initial contract term of five years after the load ramp period, sets minimum billing demand at 80 percent of contract capacity, and requires 48 months’ notice for termination or major capacity reduction. See Order at 18–29, 47–48, 70, 82–84; Model Tariff at Appendix 123–126. Taken together, these provisions are designed to address a real regulatory problem: large-load projects can move quickly from serious to speculative, and utilities may otherwise be left with stranded investments. The positive side is that the package gives utilities measurable tools to screen projects, secure costs, and preserve planning stability. It also gives customers some flexibility through gradual collateral step-downs and a defined contraction pathway. The obvious negative side is the cumulative burden on development. The Data Center Coalition, Amazon, Google, and other large-load stakeholders argued that if collateral, long notice periods, minimum demand charges, and longer contractual obligations are all set conservatively at once, the package can materially impair project finance and speed to market. Meanwhile, OCA, NRDC, Earthjustice, and others argued that five years is still too short relative to infrastructure lives and stranded-cost risk. In other words, one side sees overdeterrence; the other sees underprotection. That tension may be difficult to avoid.

4. Interconnection Studies, Transparency, and Queue Management

The Order also directs interconnection studies to be completed within six months after a complete application is accepted, requires utilities to refund 50 percent of the study fee for each 90 days of delay beyond that period, adopts biannual open seasons for cluster studies, and requires a public-facing queue that protects customer identity while disclosing the zip code, requested MW, acceptance date, and study stage. The Commission rejected third-party independent studies after utilities raised security, compliance, liability, and reliability concerns. See Order at 48–64; Model Tariff at Appendix 127. The positive impact is better queue discipline and improved transparency. The six-month study and public-facing transparency matter because speculative queue positions can distort planning and injure serious applicants. The downside is that complex transmission and distribution studies often involve third parties, right-of-way issues, and PJM coordination, which utilities argued may make a hard six-month deadline difficult. The PUC’s compromise was to keep the deadline and refund pressure, but remove the independent study option. Whether six months proves realistic in practice may be tested in actual utility dockets.

5. Interruptibility, Self-Construction, and Universal Service Contributions

The PUC also retained voluntary interruptible-service options where utilities already have them, allowed customer self-construction of certain infrastructure subject to utility, FERC, and NERC standards, and modified its guidance to allow utilities to require broader universal-service contributions from large loads rather than limiting such contributions to hardship funds; the Model Tariff includes a model annual contribution schedule by peak demand. See Order at 84–108; Model Tariff at Appendix 128–129. Through these features, the PUC seeks to create flexibility without surrendering control. Interruptible service can reduce system stress and potentially support faster or larger interconnections, though some stakeholders argued it should be mandatory while others insisted it remain voluntary. Recent events in PJM underscore why that issue is no longer theoretical: under a May 18, 2026 emergency order issued by the U.S. Department of Energy, PJM was authorized, as a last resort before rolling blackouts, to curtail data centers and other large-load customers with backup generation in order to preserve reliability during a heat-driven reserve shortfall. That episode illustrates the operational value of dispatchable backup capability and the increasing likelihood that regulators and grid operators will examine interruptibility, backup generation obligations, and curtailment rights more closely as large-load demand continues to rise. Self-construction may shorten lead times and avoid placing customer-funded assets into utility rate base, but utilities raised legitimate reliability, ownership, and safety concerns about non-utility construction of front-of-the-meter facilities. Universal-service contributions are perhaps the most politically sensitive item: supporters argued that large new loads should help offset broader affordability pressures, while opponents questioned statutory authority and administrative fit. The Commission’s decision to allow utilities to propose such charges, but not lock in a volumetric statewide mechanism, was another compromise.

Key Takeaways for Clients

The Model Tariff is best understood as an early example that may inform other jurisdictions as they consider how to address hyperscale load growth. Clients should expect increasing scrutiny of threshold definitions, but-for cost allocation, collateral and minimum billing requirements, termination protections, study timelines, and transparency obligations. For utilities, the Model Tariff Order provides a framework for proposing stronger large-load service protections. For developers and large-load customers, it highlights the need to evaluate project economics, contract structure, and interconnection strategy with greater attention to stranded-cost and reliability risk. And for policymakers in states such as North Carolina, the Model Tariff offers a useful point of reference as debates continue over whether and how large-load growth should proceed without shifting costs to existing customers.